Greening Energy Supply - The Perspective of a Development Finance Institution -

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1 Greening Energy Supply - The Perspective of a Development Finance Institution - Thorsten Schneider Project Manager Energy & Climate Protection KfW Office Jakarta Jakarta, 26 October 2011

2 Agenda KfW at a Glance RE-Financing Perspective of a Development Bank 2

3 60 Years of KfW Financing with a Public Mission Promotional bank of the Federal Republic of Germany Founded in 1948 Shareholders: 80% Federal Republic, 20% federal states Headquarters: Frankfurt am Main Representative offices: about 70 offices worldwide Balance sheet total at end-2010: EUR 441,8 billion 4,530 employees (2010) Rating: AAA/Aaa/AAA 3

4 Our Reputation A Strong Environmental and Climate Protection Bank In 2010 commitments for environment and climate protection: EUR 25,3 billion energy efficiency: EUR 11.5 bn renewable energies: EUR 11.3 bn KfW is the Number One Environmental Bank in Germany and one of the world s leading financing institutions for EE and RE. 4

5 Environmental and Climate Portfolio New Commitments of KfW Entwicklungsbank 2010 million Sectors Energy Water/Waste Mitigation Adaptation Environment Others 2, , % Forests/Agriculture Financial Sector Infrastructure/Services Multisectoral Regions Europe/Caucasus Transregional Asia/Oceania Sub-Saharan Africa MENA Latin America

6 Environmental Protection and Climate Change Mitigation Expected CO 2 savings from new commitments 2010 t/year Sectors Energy Forests/Agriculture Others 10.3 million Regions Europe/Caucasus Latin America Asia/Oceania Transregional Sub-Saharan Africa MENA

7 Commitments in the Energy Sector 2010 Commitments FC Energy Sector 2010 Energy total: of which Renewable Energy: Mio. Euro 486 Mio. Euro Sector Programme 26% Electrical transmission/ distribution 21% Other renewable generation 23% Energy policy and administrative management 10% Wind power 16% Solar energy 1% Hydro-electric power plants 3% CRS categorisation

8 KfW Entwicklungsbank in Indonesia Prioritiy Area: Climate Protection 3 PRIORITIES Forests and Climate Change Emission Reduction in Cities Promotion of Geothermal Energy and Other Renewables + CDM Financing KfW Carbon Fund REDD+ Demonstration Activities Debt Swap IIIb Solid Waste Management Emission Reduction Investment Seulawah Agam Geothermal Power Plant Kotamobagu Geothermal Power Plant Environment and climate friendly mobility projects Debt Swap VI Debt Swap IIIa Sustainable Hydropower International Climate Initiative 1000 Islands Renewable Energy for Electrification Emission Reduction, Forest Protection, SME Credit Support, Improved Living Conditions, Improved Capacity

9 Climate Protection Geothermal Energy Partner: PT. PLN PT. Pertamina Geothermal Government of Aceh Activity: Exploration and exploitation of geothermal resources Financing Volume: over 210 m Impact: Exploration of Geothermal Resources at Seulawah Agam Geothermal Site: Promotion of private sector involvement Geological risk mitigation Implementation of Seulawah Agam (40MW) and Kotamobagu (80MW) Geothermal Power Plants Emission reduction 19m tco2 Energy supply to 480,000 households and 150,000 other consumers

10 Agenda KfW at a Glance RE-Financing Perspective of a Development Bank 10

11 Facing Global Challenges in the Energy Sector Massive Investments are required Challenges Investments Stakeholders Access to Energy Energy Security Global Climate Protection Worldwide massive investments required in: EE supply side EE demand side Renewable Energies State Private and public investors Banking / financial Sector Development Finance Institutions Carbon market 11

12 Renewable Energy Investments Dynamic Developments in recent years 60 Investment (bn. US$) Source: UNEP Europe USA Latin America Asia & Oceania Africa & Middle East 12

13 Barriers for Investment in Renewable Energies Many Challenges needs to tackled Scale effects New and unproven technologies Barriers for RE-Investments Imperfect financial markets Regulatory risks Investment conditions in developing / transition countries 13

14 Regulation or Promotion? Market failure? YES Regulation possible/efficient YES Regulation (correcting market failure) NO Instruments Development Finance Institutions Emission taxes Tradeable ermits Standards Development Finance Institutions financing new REtechnologies Development Finance Institutions: National Promotional Banks Bilateral Development Banks Multilateral- / Regional Development Banks 14

15 Instruments of Development Finance Institutions A Comprehensive Menu for RE Financing Loans Concessional loans Credit lines Guarantees Grants Project development R&D support Investment grants Mezzanine Risk sharing Structured Products Instruments of Development Finance Institutions Equity Public & private equity Venture capital Carbon Markets Carbon finance Innovative products Funds Structured funds with public & private investors 15

16 Key factors for Renewable Energy What is important to Renewable Energy Investments? Create a level-playing field for RE. Use of the Best-Available-Technology. Reduce the energy intensity. Promote private sector involvement. 16

17 Questions? Thorsten Schneider Menara BCA, 46th floor Fon Project Manager Jalan M. H. Thamrin No. 1 Fax KfW Office Jakarta Jakarta Thorsten.Schneider@kfw.de

18 RE New Capacities in 2009 Strong focus on proven RE Technologies Source: UNEP 18

19 Effects Approach Problem Concentrated Solar Power (CSP) in India A long way to the first CSP investment in India Increasing demand for energy due to economic development and population growth Barriers to the exploitation of solar energy -Higher investment costs -Lack of financial resources and know-how Installation of the first CSP plant in Asia Additional revenue via CDM certification Transfer of knowledge from implementation of CSP technology in Spain and USA (IPEX) Supply of clean energy for 50,000 people CO2 savings of more than 25,000 tons p.a. First experiences with this innovative technology 19