Mr. Ram Prasad Dhital Executive Director

Alternative Energy Promotion Center/Ministry of Population and Environment, Nepal

LDC Renewable Energy and Energy Efficiency Initiatives (LDC REEEI)

A case from Nepal

Presentation Outline

• Status of Energy Access in LDCs

•Global Initiatives and Actions Undertaken to improve access

•Need & Impact of Energy Finance for LDCs

• Barriers and Challenges

• Case: Impact of AEPC on Nepal

•Way Forward

Energy Poverty in the World

1.2 Billion Population is Without Electricity Access (WEO 2016)

2.7 Billion People rely on Inefficient Cooking (WEO 2016)

730 Million People live on less than $ 1.90 a day (World Bank 2015)

663 Million People live without safe drinking Water (WHO 2016)

Access in Least Developed Countries

• United Nations designates 48 Countries as

Least Developed Countries (LDCs)

• Between 1971 and 2013, Per Capita Energy Use in LDCs increased by only

12.5 %, compared with 169 % across ODCs (WB 2016)

More Than Half of 1.2 Million Population Without Electricity Access

Live in LDCs

4 out of 5 Lack Access to Electricity

9 out of 10 Lack Access to Modern Cooking

Ranked 35 LDC Countries in the bottom 40 based on Energy Access, Energy Efficiency & Renewable Energy

Identified 16 LDC Countries out of 20 as High Impact Countries

Access By Region

Electricity

Cooking

INITIATIVES & ACTIONS

Global Initiatives

Special Initiative for LDCs “Only initiative catering specifically to the needs of the world’s poorest countries”

Two Limbs

--Strengthen capacity of LDCs to tap into existing initiatives, including AREI--

--Provide support to those who fall within cracks in current frameworks--

-- Increase Share of RE in National Production & Consumption -- Increase RE Producers in National Grid & Mini Grids – -- Engage RE Enterprises – Increase Level & Specificity of RE Components in Nationally Determined Contributions --

Priority Action Areas • Stocktaking existing activities and experiences

• Strengthening national policies and regulatory

frameworks

• Access to financial resource and investment for

renewable energy and energy efficiency

• Transfer of technologies and technology assessment

• Capacity building

• Multi-stakeholder engagement and participation

• Outreach and communications

• Monitoring, assessment and continuous improvement

Key Periods and Governing Arrangements

• Launch: COP 22

– one of the key, concrete outcomes of the Marrakech climate conference

• Period 1: 2017-2020 – initial mapping of opportunities, strengthening of regulatory and incentive frameworks; implementation of initial project/programme pipeline

• Period 2: 2020-2030 – full implementation of the initiative, rapidly scaling up renewable energy to be substantial fraction of energy capacity in LDCs

• Steering committee

• Technical working group

• Secretariat and implementation unit

• Trustee

BARRIERS

Estimate of Total Investment Needs to reach Universal Access by 2030

USD 14.1 Bn approved for International Public Climate Finance

USD 5.6 Bn allocated for Energy Projects and Programs

IIED, 2016

USD 0.3 Bn allocated for Low Income Countries

CHALLENGE IN FINANCING

• LDCs receive less than USD 300 Mn in Energy Finance

• Almost half of this, USD 118 Mn focused on decentralized energy solutions including mini-grids and off-grid energy

• Nearly, 90 % of the total grid-tied energy investment in low income countries are spent across three countries: Ethiopia, Tajikistan and Kenya

• Even, middle income group countries such as India and Ukraine received finance for decentralized energy

“Middle income countries are less in need of grant based public finance as they can potentially raise significant capital from private sources of

finance”

BARRIERS

• Economic – High Cost of Capital, Limited Market Size, Limited

Access to Finance • Socio-Cultural, Political & Institutional – Political Instability, Regulatory Uncertainty, Currency

Risk • Investor Returns – Longer Returns, Limited Commercial Finance • Climate Funds – Preference for Loans, Large Sized Projects

IMPACT OF ENERGY FINANACE ON LDC:

CASE NEPAL

Alternative Energy Promotion Centre Central Agency for RE Promotion Member Secretary for Access

component (SEforAll) • Country Action Agenda

• Investor Prospectus

Recommended for GCF accreditation New initiatives for PPP - Reverse auctioning,

Best Available Technology (BAT), Incentive to Energy Services etc.

Benefitting More than

3.6 Million Households From Over

35 MW RETs

In the last 20 Years of AEPC, Renewable Energy Mix Growth increased from 0.15% in 1996 to 2.67% in 2016

8 CDM Projects registered in UNFCCC

USD 1.2 Million CERs Generated

USD 6.7 Million Revenue Generated

till date

1500 %

Creating Enablers for Financing Energy Access in Rural Nepal

Support in Policy Formulation, Planning and facilitating Implementations

with Innovative Approaches – SPV, ESCO

Technical Intermediary between Governments/Donors and

Financial Intermediaries – Banks, MFIs, NGOs, DDCs, Technology Providers

CREF to steer funding for Decentralized RE via

Commercial banks and Micro-finance

Channelize Finance for RE Investment to

Households and Communities

GLOBAL OPPORTUNITIES FOR ENABLING ENERGY ACCESS

OPTIONS TO CONSIDER

• Enact Supportive Policies – Tax incentives to support deployment of RETs – Reformation of Subsidies for Sustainable Development – Loan Guarantees for Small & Medium RE Developers and Service

Providers – Effective Government Oversight and Regulations

• Building Capacity – Training & Learning Exchanges for Regulators, Policy Makers & Energy

Planners – Business Development Assistance for Private Sectors

• Promote Investment – Design Ease-to-Understand and Ease-to-Access Climate Finances – Flexible and Fit-for-purpose instuments – Support LDCs in Developing Applicable Market Instruments

Identify 15 LDCs as part of the 20 ‘fast-moving’ countries

Energy Finance for Sustainable Impact • Local Savings Group

• Government Subsidy

• Loan

• Retailer Finance Scheme

Energy User

• Concessional Loans

• Market-rate Loans

• Equity

• Result Based Financing/ Business Model Innovation

Energy Provider

• Grants

• Concessional Loans

• Credit Guarantees

Financial Institutions

• Grants & Loans from Development Finance Institutions

• Domestic Taxes

National

Government

ENSURING NO ONE IS LEFT BEHIND

There is A Larger, Quicker and Critical Role to Play

Based on World Energy Outlook 2016, an estimated

1.2 Billion Population is Without Electricity Access And

2.7 Billion People rely on Inefficient Cooking

THANK YOU

For further communication:

Ram Prasad Dhital

Executive Director

Alternative Energy Promotion Centre

Khumaltar, Lalitpur

P.O. Box 14364, Kathmandu, Nepal Tel. No.: +977-1-5539390, 5539237 Extn. 235

E-mail: ram.dhital@aepc.gov.np

www.aepc.gov.np

Q&A

• Easy to process application for the receipt country based on the commitments under the Paris Declaration to “Implement, where feasible, common arrangements at country level for planning funding, disbursement, monitoring, evaluation and reporting to government on donor activities and aid flows” (OECD, 2008: para. 32)

• Engage private businesses and investors

• Developing innovative relationships with financial institutions active in renewable energy