RENEWABLE ENERGY FINANCING Challenges, Opportunities ...?RENEWABLE ENERGY FINANCING Challenges,...

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  • 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 DIvore10. 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

    3

  • 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

  • 13

    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 Intl

    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 intl.

    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

  • Thank you

    oolowo@ecobank.com08087180208

    mailto:oolowo@ecobank.com