PPPs for Rural Energy Access

Transcription

1 Regional Training Workshop on Widening Access to Energy Services through Pro-Poor Public-Private Partnerships September 2013, Bangkok PPPs for Rural Energy Access Debajit Palit Associate Director and Fellow The Energy and Resources Institute (TERI), New Delhi

2 What is TERI A not-for-profit research & development and policy think tank; Established in 1974 in New Delhi; More than 1000 professionals, with centers spread across 5 cities in India; Overseas presence in London, Washington DC, Tokyo, Dubai and Addis Ababa Working Areas Energy & Power Regulatory practices Habitats and transport Environment Addis Ababa * Water and NRM Climate policy Bio technology Social Transformation

3 People lacking access to electricity Number of people lacking access to electricity (in million) Number of people relying on traditional use of biomass for cooking (in million) Africa Sub-Saharan Africa Developing Asia China India Other Asia Latin America Developing Countries* World Source: World Energy Outlook 2011

4 Energy Poverty In Asia and the Pacific The pink region indicates population density. The white region indicates where modern energy is accessible. Energy poverty is a global problem that demands a global solution. 1.9 billion people in Asia and the Pacific depend on burning traditional biomass for energy*** * ***IEA.2011.World Energy Outlook billion total population of Asia and the Pacific* *UNESCAP.2010.Statistical Yearbook for Asia and the Pacific million people in developing Asia have no access to basic electricity services** **IEA.2011.World Energy Outlook 2011.

5 Defining energy access Household having reliable and affordable access to clean cooking facilities, a first connection to electricity and then an increasing level of electricity consumption over time to reach regional average (IEA) Different countries may have different benchmarks The World Bank has proposed a multi-tier approach for energy access under SE4ALL framework Means for providing energy access central grid, minigrid, small renewables, diesel? Ambiguity in the metrics for energy access

6 Key discussion points What are the current policies and practices in encouraging private sector participation in energy sector projects? What are the key barriers or perceived risks that prohibit rural renewable energy investments What policies and enabling environment is needed to encourage partnerships for rural renewable energy initiatives

7 Scaling up Mission, Margin & Mandate Margin For profit companies Mission Non Profit Organisations PPP Source: Adapted from Trelstad & Katz, 2011 Mandate Government PPP projects Power Generation Projects Distribution Companies Concessionaire Distribution Franchisees (DF) SPV - BOOT/BOM Instrument: IDG by IDCOL, Subsidy & impact investments in HPS, Rural Elec DF in India

8 Prevalent Business Models Biomass: Provided through company-owned mini-grids; electricity priced to existing fuel expenditure levels. Small hydro: Supplied to villages using existing underutilized grid infrastructure; paid at government-determined tariffs. Solar AC mini-grid: mainly for remote areas, capital costs subsidized; tariff set based on local socio-economics Solar Home Systems: Sold on credit, in partnership with local banks. Users typically pay 10 to 25 percent upfront and the rest in installments. Solar Lanterns -Bulk sales to corporate, NGO & MFI partners; sold directly to consumers through local retailers Improved cookstoves - sold directly to consumers through local retailers

9 Shared vision and commitment PEOPLE Civil Society PUBLIC Government PRIVATE Corporates Three P s need to come together to address the challenge of ENERGY ACCESS

10 Challenges.. Regulatory Financial Technology

11 Rural Market: What are the Challenges Large consumer base but Limited affordability Low awareness Routine maintenance? Plug and Play Product? Dispersed population Poor access/communication Lack of trained persons Above leads to higher costs Peculiarities of human and social capital of low-income communities

12 Overcoming challenges

13 Technology Awareness Text Policy Delivery Technology Text Finance Untested products/ Absence of benchmarks/standards Quality of service Limited local technical capacity Battery technology still vulnerable (over drawl by most consumers) Suite of technology designs/ models; E.g. hybrid models New research & pilots by Private sector with enabling policies & mandate by Govt

14 Financing Policy Awareness Delivery Technology Finance Financial mechanisms are not in line with income level of poor HHs (the section w/o electricity access) Debt financing from banks difficult due to higher perceived financial & technology risks in rural setup Improved & affordable access to capital with flexibility along entire value chain/ Priority sector lending Viability gap funding / Risk guarantee fund Low cost fund and Mix of Grant: Debt: Equity

15 Institutions/delivery Policy Awareness Delivery Technology Finance Absence of organized delivery model (e.g. involving Utility etc.) Lack of standard process and metrics for scaling up Last mile access for products and (spares) Single Window model visà-vis Two Window model Reducing costs New operating models Build scale/bundling to cut costs & ensure bankability

16 Policy Awareness Technology Dissemination suffers from uncertainty in political framework conditions Policy Delivery Finance Cross- subsidy in grid electrified villages/ Regulatory uncertainty No clarity on LT grid connection, rules out grid as an anchor load Strong political will

17 End User Awareness Awareness Technology Regular stakeholder engagement Policy Delivery Finance Product/Model awareness Intensive sensitization Small is tender

18 The Challenging decision How much energy, for what and what technical and delivery model? What government policies (mandate) could increase the support (such as availability of low cost/priority capital, regulatory certainty, etc. for companies to come forward to increase access? What kind of returns (margins) the company should expect? How viability can be enhanced through mission support (CSR, volunteer etc.)? What should be the role of different stakeholderscommunity, companies, donor agencies, government?

19 In conclusion Sustainability condition Enabling Policy Appropriate technical design Ecosystem (AAQS) Innovative Financing Local Skills

20 Any Questions?