FINANCING ENERGY INDEPENDENCE

Transcription

1 FINANCING ENERGY INDEPENDENCE The CDB Perspective: Options Available to the Region viz-a-viz Renewable Energy Lloyd Erskine Sandiford Centre, Barbados November 10, 2016 Tessa Williams-Robertson Head, Renewable Energy and Energy Efficiency Unit Office Vice President, Operations

2 The Energy Sector is important The macro-economic impact of the high cost of imported fuel and the consequential high electricity price are reflected in deteriorating performance indicators in most BMCs. High levels of debt to GDP and depletion of foreign reserves are directly related to this dependence on imported oil. High electricity prices erode the competitiveness of the regional economies and, therefore, their ability to earn the required foreign exchange to pay for imports, including oil. Unless, therefore, we can reduce our dependency on imported fossil fuels, and unless we can substantially reduce energy costs, we will not succeed in improving our competitiveness and reducing our vulnerability to external shocks. Dr. Warren Smith, President, CDB Address to the CDB Board of Governors, May 2014

3 Cost of imported fuel - still relatively high Development Challenges High electricity prices - small scale of operations; How to reduce GHG emissions NDCs High % Government spend on electricity fiscal implications; contributing to indebtedness Little focus on EE wasted energy Low to no Economic Growth ignoring Green Economy opportunities. Capacity issues at all levels technical, financial, legislative, regulatory COMPETITIVENESS FOREIGN EXCHANGE SAVINGS ATTAIN SDG 7 ENERGY SECURITY= ECONOMIC SECURITY REDUCE GHG EMISSIONS - NDCs STABLE ENERGY PRICES GREEN JOB CREATION

4 Electricity prices (2015) based on published utility data

5 CDB Policy Perspective Strategic Plan ; Energy Sector Policy & Strategy CDB supports: Energy Efficiency: buildings, transport, SMEs, water, agriculture Renewable Energy: mature technology focus: SWH; PV; wind; hydro; Geothermal; SWAC Policy development; legislative & regulatory frameworks Resource assessments Off-grid RE: for energy access in remote areas [BNTF] Development Banks Dedicated Lines of Credit for SMEs

6 Case for Concessional Financing REGIONAL CONSTRAINTS Mostly small domestic markets, no interconnection Governments unable to provide subsidies High indebtedness Fiscal constraints Low growth High price of electricity impacting competitiveness FDI, trade Vulnerability to CC impacts, disaster-prone Perceived high risk of investment

7 CDB Energy Sector Response RESOURCE MOBILIZATION Global Climate Change Concessional Resources for Investment CDB Accreditation means access to Green Climate Fund, Adaptation Fund EIB Climate Action Line of Credit interest rate subsidy EU-CIF/DFID - Sustainable Energy in the Eastern Caribbean GeoSmart Initiative Geothermal Energy development in the Eastern Caribbean IDB/CDB Sustainable Energy Facility Loans, Blended Grants/Loans Investment Projects Technical Assistance: Capacity building/institutional strengthening, Energy Audits Canadian Support for Energy Sector in the Caribbean GIZ-REETA support for FIs SEEC-EU-CIF/DFID

8 Consider These First! Integrated Resource Plan done for the Energy Sector? Does the Legal Framework allow/support investment? Feasibility established: Technical, Financial, ESIA? Appropriate mechanism for financing: Government/public sector ownership Private sector: equity + debt IPP + adequate PPA, off-taker risk? PPP credible investor as partner; adequate PPA, off-taker risk? Financial viability of investment Terms of financing: price, term, grace impact on tariff to consumer? TA/Capacity building required?

9 Partnerships CDB CDB

10 An Example: CDB GeoSmart Initiative CDB-GSI: Mobilising suitable resources for geothermal energy Responds to need for risk mitigation in GE dev. Resources address specific risks at each stage of GE dev. Resources mobilized include: Technical Assistance grants For investment: grants (parallel financing development partners) contingently recoverable grants concessional loans loans at market terms

11 Typical Risk-Cost Profiles for Geothermal & Appropriate Financing Source: ESMAP; & IDB/CDB elaboration

12 THANK YOU Pictured: Ground-mounted section of CDB S 150kW Solar PV Plant