PROMOTING RENEWABLE

ENERGY THROUGH THE

PRIVATE SECTOR

PATRICK WILLEMS

IFC EUROPE AND CENTRAL ASIA DEPARTMENT

RUSSIA RENEWABLE ENERGY PROGRAM

01 October 2015

Conciliation

and

arbitration of

investment

disputes

Guarantees

of foreign

direct

investment’s

non-

commercial

risks

Interest-free

loans and

grants to

governments

of poorest

countries

Loans to

middle-

income and

credit-worthy

low-income

country

governments

Solutions

in

private

sector

development

IBRD

International

Bank for

Reconstruction

and

Development

IDA

International

Development

Association

IFC

International

Finance

Corporation

MIGA

Multilateral

Investment and

Guarantee

Agency

ICSID

International

Centre for

Settlement of

Investment

Disputes

IFC: A MEMBER OF THE WORLD BANK GROUP

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Innovation

Finance

Cost efficiency

Execution capacity

80%financing expected from the

private sector (UNFCCC)

THE PRIVATE SECTOR’S ROLE IN CLIMATE MARKETS

2

Improving the Enabling Environment

Case Study: Albania Hydro

Demo Investments

Case Study: CSP in South Africa

Setting New Standards

Case Study: EDGE Green Building

Program

Charting New Territory

Case Study: Modern Karton

IFC’S APPROACH TO MOVING CLIMATE MARKETS

3

Mexico – Aura

Solar:

1st large-scale

merchant solar plant

in country

Chile - SunEdison:

Largest solar plant in

Latin America

Colombia- Recaudo:

Mobile payment

system for smart

transport

South Africa-

EDGE Program:

Green building

certifications and

access to finance

Cote d’Ivoire –Azito:

Efficiency for gas

plant to produce 50%

more energy

Turkey- Modern Karton:

Adaptation in water

stressed area

Romania-Timisoara:

District heating and

mass transit for city

Albania- Hydro:

Advisory program on

regulations and

access to finance

Lebanon-Fransabank:

RE/EE Financing

India- Gujarat Solar:

PPP for solar rooftops

Nepal- Hydro:

Market transformation

program

Bangladesh- Textiles:

Water efficiency

Philippines- Finance:

UNFCCC award-winning

program

China- CHUEE:

Risk-sharing with

banks for RE/EE

financing

OTHER PROJECTS OF NOTE WORLDWIDE:

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IFC InfraVentures

IFC InfraVentures is a global infrastructure project development fund

$100 million fund with five-year fund life

Mandate to invest in infrastructure projects in IDA borrowing countries*

For each project, IFC InfraVentures can fund up to US$ 4 million of project development expenses at an early stage. Typically, this would be 20-30% of the early-stage financing required to bring the project to financial close.

• In selected situations, IFC InfraVentures may take a larger stake or even lead project development as a “surrogate” sponsor

In return, IFC InfraVentures will take a stake in the equity of the project at financial close

• This is not grant funding

• Additional debt and equity to fund construction could come from other parts of IFC’s balance sheet (would be subject of a separate agreement)

Fund staff work proactively as co-developers of the project, alongside the lead sponsor. Dedicated, experienced senior professionals are deployed

Objectives, structure and working:

* For a list of IDA borrowing countries, see http://www.worldbank.org/ida/borrowing-countries.html

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Project eligibility criteria:

CLEAN TECHNOLOGY FUND (CTF)

The $5.3 billion Clean Technology Fund (CTF), a funding window of the Climate Investment Funds.

Established in 2008 to provide scaled-up financing to middle income countries to contribute to the demonstration, deployment and transfer of low carbon technologies with a significant potential for long-term greenhouse gas emissions savings.

CTF concessional financing, channeled through five partner multilateral development banks (MDB), focuses on large-scale, country-led projects in renewable energy, energy efficiency, and transport.

• AfDB, ADB, EBRD, IDB, WBG

• $6.1 billion is allocated under the CTF for 134 projects and programs, expecting co-financing of $51 billion from other sources.

• CTF allocations are projected to result in approximately 1.7 billion tons of CO2 emission reductions over their lifecycle—like taking 350 million cars off the road.

• CTF $3.3 billion (54% of CTF allocations) is approved and under implementation for 59 projects, expecting $31 billion in co-financing. Projects aim to deliver 15 GW of renewable energy capacity of which 2 GW is already installed.

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7

Ongoing activities in Europe and Central Asia

Standard service offerings

Renewable Energy in Russia, Western Balkans, Central Asia,

Caucasus, Turkey, Morocco, Pakistan, Ukraine

Resource Efficiency in 26 countries of EMENA region

Sustainable Energy Finance with banks in Russia, Ukraine, Morocco,

Jordan, Armenia, Albania, Lebanon, Azerbaijan, Turkey, Belarus

Government: Regulatory reform advice

Power sector companies (utilities, transmission and distribution

operators, generating companies, private project developers, IPPs):

feasibility support, targeted assistance

Energy use/ IndustryT&DGenerationPipelinedev.Regulation

Industry: resource efficiency and captive power

scoping and in-depth assessments

IFC: NOT ONLY INVESTMENT BUT ALSO ADVISORY SERVICES

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RENEWABLE ENERGY IN RUSSIA

Russia is endowed with more than just fossil fuels and minerals:

• Significant renewable resources, many of them untapped.

• Renewable energy market is far from fully developed.

• Russia has been dubbed the “Green Giant” due to its renewable energy

potential.8

Development

Environmental

To reduce GHG emissions on a continuous basis by overcoming barriers

to the development of renewable energy in the Russian Federation

To facilitate a sustainable market for renewable energy in the Russian

Federation by supporting the development of enabling policies,

institutional capacity, market facilitation and financing mechanisms

Infrastructure

205 MW of installed capacity of new, renewable power generation

RUSSIA RENEWABLE ENERGY PROGRAM (RREP) GOALS:

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Services:

• Energy market research and regulation analysis;

• Technical support / identification of optimal technical solutions and project design;

• Financial and mathematical modeling of project performance for presentation to

investors;

• Analysis and verification of feasibility studies and technical documentation of

investment projects;

• Third party opinions on expected performance of investment projects for

investors/financial institutions;

• Legal and transaction support.

• provides on-going support to governmental bodies (on federal and regional levels)

• provides on-going technical and economic advice to investors and project

developers

• facilitates consensus building among industry players (different RE technologies)

RREP ADVISORY SERVICES

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Current clients with projects in Russia:

• Private hydro generation company developing projects for retail and wholesale

electricity markets (several regions);

• Private investment company developing 200MW wind generation project;

• Private company developing wind generation projects in isolated/off-grid areas;

• Russian Investment Fund considering financing for wind generation project;

• State generation company considering investment into renewable energy project;

• Pre-feasibility studies for private clients in the mining sector for hybrid systems.

RREP TRACK RECORD WITH THE PRIVATE SECTOR

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1. Kaluga 2. Nizhny Novgorod 3. Belgorod

4. Tomsk 5. Far East

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WORKING LOCALLY IN PILOT REGIONS

Case Study

200 MW wind park in northwest Russia

Support to client

Market intelligence

Analysis of renewable energy support

legislation

Financial modeling

Support with 3rd party investors

WORK IN PRIVATE SECTOR: PROJECT DEVELOPERS

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Decree No. 449 on the Mechanism for the Promotion of Renewable Energy

on the Wholesale Electricity and Capacity Market

Adopted: 28th May 2013

Supported Technologies: Wind, Solar, Small Hydro

Support mechanism: Capacity payments (not FIT)

Complex support scheme specifically tailored to Russian electricity market

• RREP developed advanced financial model based on the legislation

• Specialized training for banks and other financial institutions

• Gathered key industry players for regular “business breakfasts” to foster

dialogue

SUPPORT LEGISLATION FOR RENEWABLE ENERGY IN RUSSIA

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SUPPORT WITH LOCAL CONTENT REQUIREMENTS

0%

10%

20%

30%

40%

50%

60%

70%

Local content requirement for wind projects under current Russian legislation • Worked with government and

industry organizations to

formulate and express

concerns on local content

requirements

• Levels were adjusted to match

market conditions

• Advisory support to

international OEMs looking at

production in Russia

• Supply chain studies for local

companies interested in

equipment manufacturing

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Many isolated regions of Russia rely on

expensive and polluting diesel

generation.

Hybrid renewable energy systems can

help bring affordable and reliable power

to local populations.

Alaska has been at the forefront of

developing these technologies and

know-how.

IFC has helped connect local

governments and private companies in

isolated regions with experts from

Renewable Energy Alaska Project.

St. Paul Island, Alaska

TECHNOLOGY TRANSFER: ISOLATED REGIONS

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IFC AND CTCN: AREAS FOR COOPERATION

Capacity Building and Technical Assistance

• Joint trainings for private sector and/or government agencies

• Best practices for RE incentive schemes

• Development of market infrastructure

Connections and Market Intelligence

• Data sharing and market trends

• Connecting interested parties with respective organizations

• Promotion of both organizations to reach common goals

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Foster Technology Transfer

• Identify local markets’ technological needs

• Financing of clean energy projects based on latest technologies

RREP@ifc.org