Financing Renewable Energy

#WorldInCommon AGENCE FRANÇAISE DE DÉVELOPPEMENT | FRENCH DEVELOPMENT AGENCY

Financing Renewable Energy

Semaine de la France

April 5th, 2017

2

AFD IN THE ENERGY SECTOR

A 3-pillar strategy

05.04.17 Financing Renewable Energy

Secured energy: protecting and strengthening energy systems

Sustainable energy: prioritising renewable energy and energy efficiency

Energy access: closing the energy fracture and

improving access in rural and suburban areas

A cross-cutting support to strengthen sustainable energy policies and capacity building for stakeholders in the energy sector

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Fuel supply Generation Transmission Distribution Sector reform

& tariff setting

RUZIZI III (Rwanda) Pande and Temane

gasfields (Moz.)

Nam Theu 2 (Laos)

Olkaria (Kenya)

Geita-Nyakanazi line

(Tanzania)

Last mile connectivity

(Kenya)

exam

ple

s

sub-

secto

r 1.1

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Key figures

AFD group total commitments in the energy sector :

• Worldwide, over EUR2 billion per year (2.2 bn in 2016),

• Over 1/3 in Africa

• In Africa, EUR1.6 billion dedicated to renewable energy and energy efficiency between 2012 and 2015

Impacts of 2013-2015 project commitments (ex ante) :

• Worldwide,1,750 MW of renewable energy capacity installed through projects financed between 2013-2015

1.2


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Renewables are central to energy transition 1.3


AREI (Africa Renewable Energy Initiative)

Additional 10 Gigawatts (GW) of renewable energy by 2020

Deployment of new digital technologies (« smart grids »)

Sommet de Bamako : €3 billion between 2016-2020

Launch of African Renewable Energy Scale-Up (ARE Scale Up), a €24m facility in partnership with

the EU

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Financing tools

AFD GROUP INSTRUMENTS 2.1

. States

. Possible on-lending or on-ganting to public entity

. Municipalities

. State-owned companies

. Public banks

. Primarily meant to fund the poorest African countries in social

sectors and NGO-led projects

. In Tanzania in the energy sector: mostly Technical Assistance

and feasibility studies

. Commercial debt

. Equity

Sovereign loans

Non sovereign loans

Grants

Private sector

(Proparco)


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Key features of AFD group support

AFD GROUP INSTRUMENTS 2.2

. Capacity building / Regulatory policy improvement

. Financing public feasibility studies

. Supporting the development phase through equity

. Financing public equity in PPP projects

. Improving E&S benefits through concerted group approach (rural

electrification and social programs, revenue generating

activities, etc.)

. Structuring longer term facilities

Proparco :

. Cornestone of the European IFIs: friendship facilities, ICCF/EFP – EMIF

. Partnership with IFC and IDB

. Catalyst for commercial / regional banks

AFD :

. Partnerships with other institutions such as WB, AFDB.

. Mutual Reliance Initiative with EIB and KFW.

. Cooperation with EU : blending with subsidies (access to energy,

renewable energy, regional infrastructures…)

. Expertise throughout the project life in order to i) ensure it complies with the international environmental and social standards and ii) foster

its impact

Upstream support

Group synergy Joint cooperation within AFD

Partnerships/Arrangement

E&S Expertise


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RENEWABLE ENERGY PROJECTS

AFD energy projects in Africa 3.1


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Secteur : Production

ENR

Année d’octroi : 2010

Coût du projet : 1 Md USD

Engagement AFD : 87 MEUR

Outil financier : Prêt souverain

rétrocédé en prêt

Mise en oeuvre : KenGen

Cofinanciers : BEI, KfW, JICA,

BM

Impacts

Contenu

Résumé

o 2 nouvelles turbines de 70 MW sur le site d’Olkaria I

o 2 turbines de 70 MW sur le site d’Olkaria IV

o Utiliser les 45 MW existants sur Olkaria I pour turbiner de la vapeur

provenant du site d’Olkaria II

o Coût total initial:1,3 milliards USD. Coût du projet revu à 1 Md USD.

KenGen + GoK ont couvert l’intégralité des coûts de forage

o 280 MW (+16%) de capacité de production, en base

o Ressource nationale, très compétitive, renouvelable

o Croissance sobre en carbone par le développement d’énergie propre

o Projet pilote de l’initiative de Reconnaissance Mutuelle des Procédures

(MRI)

A noter

Olkaria I & IV geothermal plant (Kenya)

RENEWABLE ENERGY PROJECTS 3.2

o Inauguration de la centrale d’Olkaria IV en octobre 2014

Statut


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Hybridisation of secondary centers (Kenya) 3.3

Secteur : Distribution

ENR/Accès

Année d’octroi : 2014

Coût du projet : 33 MEUR


Outil financier : Prêt souverain

Mise en oeuvre : Kenya Power

Cofinanciers : -

Impacts

o Octroi fin septembre 2014

o Signature convention prévue mi 2016

Statut

Contenu

Résumé

o Mise en place de systèmes hybrides diesel – éolien / solaire dans 23

centres secondaires

o Réduire le coût de production d’électricité des centres secondaires de 20%

o Améliorer la sécurité énergétique et appuyer le développement

économique local

o Réduire les émissions de GES liées aux générateurs diesel.

A noter

o Projet exemplaire, en phase avec l’initiative SE4All (accès et ENR)

o Sujet complexe techniquement. Forte mobilisation prévue des équipes AFD

o Intervention dans des zones où la sécurité est un sujet d’attention



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Anné d’octroi : 2007



Outil financier : Prêt Non

souverain

Mise en oeuvre : Sec. privé

(Bujagali Energy Limited

(BEL))

Cofinanciers : Proparco (46

MEUR), SFI, BEI, BAfD,

FMO (Pays-Bas), KfW

Impacts

o Achevé; centrale inaugurée en 2012

Statut

Contenu

Résumé

o Augmentation de 40% de la production électrique en Ouganda et réduction

des délestages

o Initiatives en faveur des populations locales: électrification rurale (800

familles), micro-crédit, accès à l’eau potable, construction d’un centre

sanitaire et d’une école, augmentation des revenus par le développement

de l’écotourisme le long du Nil, reforestation des berges du Nil en aval

o Soutien au développement du secteur privé

A noter

o 2017: Souhait de restructurer la dette pour baisser le coût de l’électricité

Bujagali HPP (Uganda)

RENEWABLE ENERGY PROJECTS 3.4

o Construction d’une centrale hydroélectrique de 250 MW


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Meru Wind Farm (Kenya) 3.5


ENR

Année d’octroi : déc. 2015


Montant AFD : 60 MEUR

Outil financier : prêt non-

souverain

Mise en oeuvre : KenGen

Cofinanciers : KfW

Impacts

o Etudes réalisées en 2012 sur subvention AFD

o Financement approuvé en décembre 2015

Statut

Contenu

Résumé

o Développement d’un parc éolien de 50-80 MW

o Augmentation des capacités de production

o Ressource nationale, compétitive, renouvelable

o Croissance sobre en carbone

A noter

o Recapitalisation de KenGen en cours



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SUNREF East Africa: Achievements 3.6 RENEWABLE ENERGY PROJECTS

50 M$ signed by SUNREF East Africa for 69M$ of green investments (14 projects)

10 new projects eligible and ready, over 200 projects at different stage of maturity

Cross technologies: mini-hydro, PV, biomass, biogas, ESCO, Energy Efficiency

Cross sectors: agriculture, manufacturing, tourism, services

Training provided to 95 people and 6 banks

Policy advocacy: standard PPA and net-metering policies


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SUNREF East Africa: Examples of projects financed 3.7 RENEWABLE ENERGY PROJECTS

A Solar PV rooftop project / Strathmore University (Nairobi, Kenya) . 0,6MW rooftop installation with polycrystalline cells on turnkey contract . European quality standard – 25 years warranty . Energy bill reduced by 50% . Key financials: Investment: 1,3M$ - Debt: 1,3M$ Payback: 8,5 years not counting excess energy to be sold to utility

A Biogas installation for an avocado oil producer / Olivado (Sagana, Kenya) . 0,3MW biogas installation using the waste of avocados

. Energy bill reduced by 30%

. Expected savings for avoiding dumping the avocado waste of 100k$/year

. Key financials: Investment: 1,7M$ - Debt: 1,5M$ Payback: 8,5 years on energy bill savings only

Hydropower for self consumption in a tea factory/ GURA / KTDA (Gura River, Kenya) . 5,6MW power plant feeding 4 factories (2 x 2,8MW Francis turbines)

. Energy bill reduced by 30%

. 18GWh/y of electricity produced; no more power cuts; excess energy sold to the grid

. Key financials: Investment: 15,5M$ - Debt: 10,8M$


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Proparco: Lake Turkana (Kenya)



ROLE OF PROPARCO AND ADDED VALUE

PROFILE

Sector: Energy/Climate

Countries: Kenya

Year: 2014

Main Sponsor: LTWP

Amount: €50M

Financing Tool: Debt

• The project will help avoid the emission of 380 000 tons of CO2 per year.

• LTWP will also contribute to reduce the country heavy reliance on

hydropower and on imported expensive fossil fuels.

• The project is expected to produce energy nearly 60% cheaper than in thermal power plants

OVERVIEW The wind farm will be located in Marsabit County (north of the

country), a site found to have some of the most consistent

winds in Africa. The project include 365 wind turbines, each

capable of generating 850 kW, as well as associated power

and road connections. The Lake Turkana Wind Power Project

(LTWP) will be the largest single wind farm project in sub-

Saharan African.

FINANCING

A loan financing of € 50M

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Proparco: KTDA (Kenya)



ROLE OF PROPARCO AND ADDED VALUE

• KTDA will enhance reliability of the electric supply of its factories of tea while

reducing its greenhouse gas emissions. • This operation will also allow it to reduce its energy costs and to contribute

to the increase of income for 350 000 small planters of tea. • This project will gear towards the rural electrification of the regions of

Kirinyaga, Meru, Settet and Nyakwana..

OVERVIEW Kenya Tea Development Agency Limited is one of the largest private tea management agencies. KTDA currently manages 67 factories in the small-scale tea sub-sector in Kenya. The loan of PROPARCO will allow to finance the construction of seven small hydroelectric power plants continuous-flow. Of a total capacity of 16 MW, these power plants will supply twenty four factories managed by KTDA and will be connected to the Kenyan electricity network.

FINANCING

A loan financing of US$ 15M

PROFILE

Type: Agriculture/Agro-

Industry

Country: Kenya

Year: 2015

Main Sponsor: KTDA Power Ltd

Amount: USD 15M

Financing Tool: Debt

3.9

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Financing Renewable Energy

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