RENEWABLE ENERGY FINANCING Challenges, Opportunities...

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RENEWABLE ENERGY FINANCING Challenges, Opportunities & prospects The Ecobank experience Sunkanmi Olowo

Transcript of RENEWABLE ENERGY FINANCING Challenges, Opportunities...

RENEWABLE ENERGY FINANCING

Challenges, Opportunities & prospects

The Ecobank experience

Sunkanmi Olowo

Slide 1

Our Pan-African HeritageIntroduction

30 Country Operations across Africa

1. Benin2. Burkina Faso3. Burundi4. Cameroon5. Cape Verde6. Chad7. Central Africa8. Congo Brazzaville9. Cote D’Ivore10. Dem. Rep of Congo12. Gambia13. Ghana14. Guinea Bissau15. Guinea16. Kenya17. Liberia18. Malawi19. Mali20. Niger21. Nigeria22. Rwanda23. Sao Tome24. Senegal25. Sierra Leone26. Togo27. Uganda11. Gabon

• The Pan African Bank Incorporated 1985, Nigerian operation since 1989

• Leading pan-African banking group, presence in 37 African countries, trading in over 20 currencies and international offices in Paris, London, Dubai and Beijing.

• At year-end 2014, the Group had US$24.5 billion in assets and revenue of over US$2.5 billion.

• Listed on the Lagos, Accra and Abidjan (BRVM) stock exchanges Operates Covers 37 Countries in Africa

• Key alliance with NEDBANK (South Africa) to deliver world-class service to customers across Africa

• Services to more than 11.5 million individuals, small businesses, local corporates and public sector organizations, through our extensive network of 1,600 branches and offices, 2,700 ATMs and over 10,000 POS terminals.

• Over 20,000 employees

Ecobank Sustainability Framework

• Risk management

• Green business

• Global initiatives

• Internal carbon footprint management

• Creating economic value

• Fostering integration

• Partnership for development

•Diversity and culture

•Training and development

•Pan-African spirit

• Microfinance and micro banking

•Women in business

•Ecobank Foundation

•Community engagement Social

Responsible Financing

Human Capital: Attracting and

retaining employees

Protecting our natural

resources: Environmental sustainability

Driving Economic

Transformation

Commitments to RE-Finance

• Set up of sustainability desks in every affiliates.

• All credit requests must pass the sustainability test toqualify for funding.

• Signatures to key protocols.

• Alliances with key partners in the renewable energyfield.

• Focus on renewable energy as a key segment of ourbusiness.

• Trained Relationship managers on RE finance.

• Have a consumer finance product for Renewableenergy

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•Nigeria is endowed with abundant renewable and non-renewable energy resources

•Current energy supply depends mostly on fossil fuels (petroleum)and firewood.

•Only about 40% of households in Nigeria are connected to the national electricity grid.

• Provision of electricity is largely supplemented by private generators powered with fossil fuels.

• Though enriched with abundant hydrocarbons, the current capacity is not able to meet the power consumption in the country.

• The present dependence on fossil fuel is not enough to meet energy needs of the country.

•Nigeria requires power generating / handling capacity of about 140,000 MW as against the current capacity of 6,000 MW.

•Power Government policy is targeted at ensuring that 7% of Nigeria energy supply will be provided through RE by 2025)

RE Potentials in Nigeria

Challenges of financing RE in Nigeria

• Absence of serious players with capacity and industry knowledge to work with

• Inadequate knowledge from bank personnel's.

• Lack of capacity (Financial, Technical, experience) of most companies & Bankers

• Many are new / recent entrants.

• Desired growth not seen.

• Absence of standards and regulatory frameworks

Challenges

• Most project brought up were not well thought with untested and unreliable cash flow

• Too many substandard and failed solar installations

• Failed projects due to non standardization

• Absence of the required long term low priced funds to unlock the sector

Challenges

Key considerations in RE finance• Clean energy

• Carbon credit

• Grant, rebate & fiscal incentives

• Government policy (7% target by 2025)

• Tariff structure

• Off taker agreement

• Cash flow

• Captive power

• Power purchase agreement

• Sustainable finance / green bank

Clean energy

Carbon credit

Grant, rebate & fiscal incentives

Captive power

Power purchase agreement

Government policy (7% target by 2025)

Tariff structure

Off taker agreement

Cash flow

Key considerations in RE finance

Ecobank set up RE desk and sustainable

energy finance at the group.

Appoint Sustainable

Finance Champion in all

affiliates.

Training of at lease 60 staff on RE and

the financing models.

Working with Key partners, the bank Set aside funding for RE sector and energy

efficient products.

Flexible financing

models in a bid to provide favorable

solutions for RE financing.

Synergy with Consultant of international

repute to support

financing of RE businesses.

Seeking & exploring

other collaboratio

ns with multilateral

agencies.

Reasonably priced loans

with less stringent

collateral s.

Good working

relationship with the

CBN for RE financing.

Using the CBN MSME

funds to offer single

digit interest rate loans to

RE companies.

Introduce Consumer

Finance product to boost RE

uptake

The Journey so far

Financing Renewables In Ecobank• Financing is available for RE Business owners for

the procurement of components: solar panels, inverters, batteries, charge controllers etc.

• Funding has also been provided in the past to major distributors/suppliers of RE products.

• All developers must pass through due diligence tests to qualify for funding.

• Financing of businesses who wish to off-take renewable energy solutions is also available however projects must be assigned to approved project developers.

Financing Renewables In Ecobank• Total financing disbursed till date is in excess of

$1.5mm with a healthy pipeline of over $3b undergoing review.

• Due to challenges with capacity, the renewable energy Consumer finance scheme was launched to scale-up the business uptake of project developers.

• Financing will be available to staff and individuals with staff salary accounts domiciled in Ecobank.

• Project Developers are encouraged to offer this product as a sweetener whilst doing independent marketing.

Must have be in business for minimum of 3 years.

Accounts must have been satisfactorily operated for minimum of 6 months

No existing bad credit anywhere

Must have full Understanding of the business

Verifiable office or factory address.

Business must be profitable

Sound and realistic business proposal, not speculative

Requirements for accessing Credit

Ownership of the company –shareholding structure

Profile of key stake holders & Mgt, (background/qualification/experience)

Off-taker agreement

Technical support / Affiliation

Existing loans?

Competitors / industry knowledge

Assets conversion cycle

Requirements for Accessing Credit

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Target Market – This loan program will be focused on Individuals working in reputable multinationals and blue chips, local corporates and Public sector institutions

Qualifying products (will include but will not be limited to); Household installations and Energy efficiency Products certified by Winrock Int’l

Tenor will be maximum of 24 months

Amount to be financed will be N20Million maximum.

Product will be available as asset finance and salary-backed loans.

Qualifying products are to be determined by industry experts - WinrockInternational.

Approved vendors for the scheme must successfully go through a due diligence examination conducted by Winrock int’l.

Other financing arrangements to be developed are currently in the pipeline.

The Consumer Finance Scheme for Renewable Energy/Energy Efficiency

products

The Journey started with me, my 5kw solar solution