Working with Water Utilities SBA- REF - LAC

Promoting Resource Efficiency

July 2013

IFC in the Water Sector

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Water Demand Management and Efficiency

• Demand-Side Management • Water and Energy Efficiency • Performance-Based Contracting

(PBC) • Water Use Service companies

(WUSCOs) •  Industrial Water Use Efficiency • Agricultural Water Use Efficiency

Wastewater Treatment Sanitation and Solid Waste

• Wastewater /Reuse Treatment • Agricultural Water Reuse -

Irrigation • Private Industrial reuse and off

takers • Power sector off-takers • Solid Waste

Water Supply

• Bulk Water Supply BOOTs • Ground Water • Desalination • Multiple-Use Water Facilities

(MUWFs)

IFC Business Plan focuses on five key areas

Key Growth Opportunities on Demand and Supply sides

Distributed Services

• Un-served consumer access • Off-network water and sanitation

services

Innovative Technology

• Nano-technology • Sustainable technology (water/

energy efficient) • Distributed technology (e.g. on-site

treatment)

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Areas of potential support The objective is to support the sustainable delivery of services by utility

companies through provision of advisory services and follow-up client investment in efficiency and loss reduction activities.

• System optimization, distribution system automation, leak detection, storage tanks management, install pressure regulators, improve energy efficiency in pumping/facilities, etc.

• Metering programs, advance metering infrastructure, strategies for theft identification, advanced data analysis techniques, remote communication, etc.

Technical and Non-Technical

Loss Reduction

• Load profiling, DSM action plan design, implementation support. • Utility-led Efficiency (Support for utility implemented EE programs such as street

lighting, or establishment of ESCO subsidiary).

Demand Side Management

• Standard contract development, project structuring, performance-based contracting services, procurement assistance, promotion of contracts with ESCOs and WESCOs.

• Payment structuring based on performance metrics (e.g., guaranteed savings vs. shared savings), success monitoring, etc.

Contract Development Assistance

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Working with Water Utilities Triple A, Colombia

  Awarded a $3.5 million contract for the implementation of energy efficiency improvement measures identified by the SBA REF scoping.

  The client’s investments from internal funds will consist of high-efficiency electrical motors, pumps, and variable speed drives throughout the entire water network.

  Installation of new equipment is expected to recover investment in less than four years.

  In the second quarter of FY13, Triple A committed US$12.1 million to implement additional water loss reduction measures.

Water Utility Ref Project: Triple A, Colombia

  This investment will finance the installation of more than 120,000 water meters, including remote control flow and pressure meters throughout the entire network.

  The water loss reduction initiative will be implemented in combination with an energy efficiency action plan.

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Working with Water Utilities SEDAPAR, Colombia

  A state-owned water utility servicing nearly 1.2 million people in Arequipa metropolitan area.

  The scoping identified energy and water savings of about US$3 million/year.

  The identified investment is estimated at US$14 to 20 million.

Water Utility Ref Project: SEDAPAR, Perú

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Innovative Delivery Models Model Objective IFC’s Role JVs Target Sector

Supplier REF Strengthen the value chain by effectively channeling REF financing mechanisms through portfolio development.

Push-Pull approach to stimulate local markets by: 1. Aggregate market demand (via bidding mechanisms) for

financing offers that exist or being established. 2. Match existing market demand for REF financing with FI/

Funds. 3. Support SME achievements of resource efficiency/low carbon

footprint metrics and standards to enable supplier finance mechanisms

SBA, A2F, MAS, FM

MAS value chains, particularly in agriculture/ agribusiness.

REF-C3P Partnership

Enhance climate change interventions and the impact of C3P infrastructure projects

Join venture with C3P in LAC to actively participate in market mapping, business development, technical supervision and technology advise of infrastructure projects aimed to enhance climate change development impacts.

PPP Public entities

Captive Generation

Promote the use of renewable power sources among manufacturing clients/potential clients in agribusiness sectors.

1. Assist manufacturing firms with feasibility analysis, project structuring, and financing of captive power generation with renewable fuels.

2. Procure EPC/ESCO partners and structure and bid-out PPAs. 3. Strengthen EPC, ESCO’s and technology suppliers in the

local market.

SBA, PPP, Infra, MAS

Large MAS firms

ESCO Mechanism

Increase direct funding to utilities and large MAS firms to implement resource efficiency measures through ESCOs/WESCOs

Work with utilities on demand side management to make consumers energy efficient

1. Open up markets for ESCO model 2. Mobilize funding to establish or support a funding mechanism

for ESCO/WESCO to implement resource efficiency measures.

3. Develop the regulatory/legal framework to enhance ESCO/WESCO mechanisms applicable to local conditions.

SBA, A2F, PPP, FM, MAS, Infra./ Subnational

Public entities, Utilities, Large MAS firms

Green building

Catalyze the transition to more efficient (sustainable) building practices in the region

Work at three levels (i) regulatory, (ii) partner certification and (iii) firm (developers and FI). Develop a platform for deployment of EDGE tool as an initial market offering tied to a series of AS projects with authorities, FIs, developers, etc.

Green Building Program/EDGE

New housing/infra structure sector

Traditional Delivery Model

Consulting/Management Contracts No risk / reward structure No incentive No private capital invested Required utility to cover capex for rehab/repair

New Delivery Model

Performance-Based Contracting (PBC) Private companies work at risk

Performance reward for water saved High rate of return benefits both utility and contractor

Lower risk / lower profile Targets greatest efficiency gains

Opportunities Water loss management companies WESCOs and ESCO companies Industry –water savings plans Agribusiness/Irrigation companies Efficient irrigation, etc. Performance-based contracting Financial market Leasing companies (efficiency)

IFC Additionality Private sector contracting

expertise for PBC contracts Catalyze private capital

investment on PBC contracts Sub-national /advisory support

to utilities for NRW reduction Link to client portfolios

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Performance-based contracting An innovative delivery model

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Marco Giussani Operations Officer

IFC Sustainable Business Advisory in Latin America and the Caribbean

Tel: +52(55) 3098-0154 E-mail: Mgiussani@ifc.org

Luis Alberto Salomón Arguedas Resource Efficiency Specialist

IFC Sustainable Business Advisory in Latin America and the Caribbean

Tel: +52 (55) 3098-0136 E-mail: Lsalomon@ifc.org

Muito Obrigado Contact

Otras opciones de slides

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•  IFC’s Resource Efficiency teams work with firms to save costs, prevent waste, and reduce greenhouse gas emissions through more efficient use of energy, water, and materials.

•  At the sector level, we promote broader adoption of good practices through case studies and benchmarking energy, water, and material use.

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Resource Efficiency

Pulp and Paper Ref Project: FAPSA, México

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Private and Public stakeholders IFC works with private and public stakeholders to promote the adoption of more efficient resource use by:

 Assessing potential for increased energy, water, and material efficiency at the firm level.

 Developing and undertaking sector benchmarking of resource efficiency indicators for certain resource-intensive sectors to overcome knowledge gaps.

 Collaborating with financial institutions, industry groups, and other market aggregators to scale up investment in advanced technologies.

 Promoting resource-efficient best practices and standards such as green buildings standards.

 Analyzing and supporting policy and regulatory needs on energy/water efficiency and waste prevention/recycling.

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REF Utilities (power, water and municipal waste) in LAC Project

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Objective: Increase investment flows in resource efficiency in utilities thorough a combined firm-specific and sector level approach to reduce technical and non-technical losses and improve efficiency. The sector approach will promote demand-side solutions in industry, commerce and public infrastructure using utilities as aggregators.

Targets: contribute up to 220,000 tCO2e in GHG emission avoidance (IDG6a) by FY16 (Lifetime: 0.7 M tCO2e) and 30 M m3 of water saved by FY16 (lifetime: 100 M m3)

Key Strategic Focus, FY14-16

• Firm specific approach – focus will be the LAC region, with particular focus on Caribbean, Central America sub-regions.

• Sector approach - the focus will be water utilities in Brazil and municipalities in Mexico (frontier regions) promoting ESCO/WESCO and PPP solutions.

• Water Utilities (production, distribution and waste water treatment) • Power Utilities (distribution and renewable generation) • Municipal governments (municipal solid waste - renewable generation, street

lighting, green building retrofit)

• Utility efficiency (firm level approach) • REF-C3P partnership • ESCO / WESCO Mechanisms

• One additional staff/ STC with support of existing REF team.

Geographic Focus

Sector Focus

Delivery models (refer to slide 15)

Delivery Capacity

Budget FY14-16

Pricing Intention (to be tested) Supply-side REF - 50 to 80% contribution

Demand-side REF via utilities - up to 100% contribution at maturity

REF  U&li&es  Project  

Item   FY14   FY15   FY16   Total  

Staff   80,000   90,000   90,000   260,000  

Consultants   200,000   250,000   250,000   700,000  

Other   60,000   90,800   98,575   249,375  

Total   340,000   430,800   438,575  1,209,375  

Item   FY14   FY15   FY16   Total  

Reveues   168,000   204,000   204,000   576,000  

Donor     75,000   75,000   100,000   250,000  

Unsecured   97,000   151,800   134,575   383,375  

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Pilot Efforts: LAC Utility (p584727)

•  Project supported initial scoping visits to three clients, initial analysis of utility efficiency opportunities

• Delsur (Privatized distribution company in El Salvador)   Not current client, but interested in potential IFC investment engagement   Potential value add in smart meter/loss reduction advisory work

•  AAA (privatized water utility in Colombia)   Existing IFC client with high levels non-revenue water loss, high levels of

energy consumption   Good potential for efficiency investments, and appetite for follow on IFC

loan

•  NAWASA (public water utility in Grenada)   Potential IFC sub-national finance client, high interest from INF   High per unit energy costs, high levels of NRW

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Clients: Initial results •  Utility Efficiency pilot audits identified over $35.6 million of energy and water

loss reduction investment opportunities for three clients.

•  If implemented, these investments could provide $16.6 million in direct annual cost savings to the clients

•  Investments have the potential to trigger 6 million cubic meters (m3) of water saved and almost 17 million kilowatt hours of energy saved annually.

•  Results from successful implementation could trigger over 82,930 tonnes of avoided GHG over ten years.

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