RENEWABLE ENERGY FINANCING Challenges, Opportunities...
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