Funding Solar in SIDS: Commercial vs. Donor-Backed Viability

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1 Funding Solar in SIDS: Commercial vs. Donor-Backed Viability Workshop on Financing for Renewable Energy in Small Island Developing States (SIDS) 3 August, 2015 Andy Schroeter, CEO Sunlabob Renewable Energy, Ltd andy.schroeter@sunlabob.com

2 Rural Energy Experts Founded in Laos in 2000, venture-backed experts in off-grid renewable energy Internationally-focused: throughout 25+ countries in ASEAN, Pacific islands, Africa, India Deep experience in world s most challenging rural environments Approach to longevity: high-quality technology paired with local training and capacity building Customers: Development agencies, gov ts, NGOs, private sector

3 Sunlabob in Islands solar-charged lanterns in Micronesia, Vanuatu, Papua New Guinea and Solomon Islands solar home systems in Marshall Islands solar homes systems, 100+ community and schools, village mini-grids in Kiribati Partners include: EU Development Fund, Secretariat of the Pacific Community and local gov ts

4 SIDS Solar Investment: Key Issues What barriers currently hinder private sector investment into the SIDS renewable energy market? How can those barriers be removed or overcome to catalyze private sector engagement? How can experience with renewable energy development in other remote, rural areas of the world be leveraged facilitate the solar growth in SIDS?

5 SIDS Solar: Opportunities Abundant solar resources coupled with volatile fossil fuel prices Economic development can t occur w/o reliable, affordable energy Stated commitments to RE by several different national governments Solar cost-competitive against $1.00/kWh prices, which are prevalent in many outer island areas Huge opportunity for hybridization: 300+ diesel gen-sets relied on throughout PICTs Average age of gen-set in Pacific is 20 years (source: IRENA Pacific Lighthouse, 2013)

6 SIDS Solar: Challenges (1/2) Despite attractiveness, SIDS solar market also presents microand macro-level challenges: Lacking skills and capacity across the spectrum -- from endusers to policymakers Catch 22 of donor/development funding: often necessary, but sometimes deters market-based approaches Lack of clear, easy-to-navigate regulatory and permitting frameworks for alternative energy IPPs Deficiency of favorable policies to incentivize RE-generating IPPs to enter the market

7 SIDS Solar: Challenges (2/2) Fossil fuel-based energy subsidies far outweigh what is available for renewable sources Overcoming commitments and preferences for traditional technologies (ex. gensets) both by decision-makers and end-users Lack of understanding of new options Poor experiences previously with sub-par RE solutions/services Limited financing options for project developers and customers

8 SIDS Solar: Recommendations (1/3) Develop and test new types of public-private partnerships that: leverage public money to attract private investment use public sector capabilities to complement private sector skillsets don t undercut the market; in fact, should have end-goal of stimulating a viable market Use donor funds to offset costs for those who are already investing: Project developer costs End-user s product purchases or service fees Example: InfraCo Asia model

9 SIDS Solar: Recommendations (2/3) End-user, community-focused approach to implementation, operation and maintenance (particularly in remote off-grid areas) Properly address end-users energy needs Community involvement/commitment key to sustainability, longevity and effectiveness of RE systems Establish regional capacity building program Vocational training and technical skills Policies, regulations, permitting End-user education Improve policy and regulatory frameworks to encourage IPP participation Net-metering and/or feed-in-tariffs Streamline permitting processes (ex: ease path to PPA)

10 SIDS Solar: Recommendations (3/3) Establish quality standards and guidelines Products built to withstand temperatures, humidity, salinity, etc. High-quality product requirement (don t allow cheap, short-life product to undercut private sector RE growth) Create programs to address low-hanging fruit Incentives for hybridization or replacement of aging gen-sets Cross-industry anchor client partnerships Mining, telecoms, cold storage, resorts and hotels

11 Conclusion Even for commercially-attractive projects, role for public/donor sector still necessary to close gap For private sector investment to increase, financing options must improve, for both developers and customers Clarity, transparency and availability of supporting policies and government-backed mechanisms must improve. New PPP models that attract private investment and stimulate a viable market must be tested

12 Thank You Andy Schroeter CEO Sunlabob Renewable Energy