KfW and its activities in energy efficiency and renewable energies

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1 KfW and its activities in energy efficiency and renewable energies Dr Wolfgang Ryll Principal Project Manager KfW Development Bank Johannesburg, 25th of October 2012

2 Overview KfW Development Bank at a glance KfW - An environmental bank KfW projects in energy efficiency and renewable energies 2

3 60 Years of KfW Financing with a Public Mission Promotional bank of the Federal Republic of Germany Founded in 1948 as Kreditanstalt für Wiederaufbau Shareholders: 80% Federal Republic, 20% federal states Headquarters: Frankfurt am Main Branches: Berlin and Bonn Representative offices: about 70 offices and representations worldwide Balance sheet total at end-2011: EUR billion 5,063 employees (2011) Best rating: AAA/Aaa/AAA 3

4 We Are Part of KfW Bankengruppe Domestic promotion International business We promote Germany We ensure internationalisation We promote development Business Area Mittelstandsbank Promotion SMEs, business founders, start-ups Business Area Privatkundenbank Promotion construction of new housing and modernisation as well as education Business Area Kommunalbank Financing municipal infrastructure projects and global loans Germany/Europe agency business for Federal Government Business Area Export and Project Finance International project and export finance Business Area Promotion of Developing and Transition Countries Promotion of developing and transition countries Promotion of environmental and climate protection 45

5 About KfW Bankengruppe Worldwide presence: over 70 representative offices KfW employees

6 Overview KfW Development Bank at a glance KfW - An environmental bank KfW projects in energy efficiency and renewable energies 6

7 KfW Energy Portfolio Mio Energy Sector Commitments (including financial institutions) Renewable Energy Energy Efficiency Renewable Energy (FS) Energy Efficiency (FS) Total Energy (FS) 7

8 CO 2 Savings per Year through Financial Commitments of KfW Entwicklungsbank in 2011 kt CO 2 /year Renewable energy KfW Entwicklungsbank in total in 2011: kt CO 2 /year Energy efficiency Avoided deforestation Other 8

9 Our Reputation A strong environmental & climate protection bank promoting green investments of MSME and private Households KfW is acting on behalf of the German Government and one of the leading environmental and climate protection banks world-wide. In 2011, approx. EUR 23 billion new commitments for environmental and climate protection were made. Thereof EUR 2.75 billion commitments can be attributed to environmental finance in transition and developing countries by KfW Development Bank. Broad experience as a leading Environmental Bank in Germany 9

10 Project Types - Demand Side Energy Efficiency Credit lines with local financial institutions Small and medium-sized enterprises, commercial and industrial sector (incl. buidlings) Residential buildings (private households and developers) Approx. 30 credit lines in Eastern Europe, Asia, Latin America and Afrika Projects with public sector entities Public Buildings (e.g. schools, administrative buildings), e.g. Turkey Other public infrastructure (e.g. street lighting, water supply, agricultural pumping) Rehabilitation of residential buildings and quarters, e.g. China Efficiency programmes through utilities Financing and implementing EE investments through utilites ( utility DSM, e.g. Mexico, Croatia) Structured Investment Funds Mobilising private capital for EE investments (e.g. Global Climate Partnership Fund, GEEREF, Green for Growth) 10

11 Bilateral cooperation with local Financial Institutions Target Group and Volume Green investments (mainly, in regard to renewable energy and energy efficiency measures) for MSMEs and private households Sub-loan volume up to USD 1 million, -sub-loan: SME USD 100, ,000 / private households up to USD 25,000 Instruments Impact Credit lines to financial institutions at close to market conditions (slightly reduced interest rates for green loan product implementation) Technical Assistance Implementation of a widespread, standardised and established green loan product energy savings and reduction of greenhouse gas (GHG)-emissions Awareness raising within the Partner Institution and sub-borrowers 11

12 Tailor made Technical Assistance to Financial Institutions 1. Screening of existing Loan Portfolio und Clustering Screening of existing loan portfolio to filter already financed green investments Definition of clusters First Impact Analysis 2. Analysis and Adaptation of Credit Process Development and Integration of additional questions in application form Efficient integration into the whole credit process 3. Training of Loan Officers General Awareness within the Partner Institution Particular technical knowledge in order to enable the Loan Officer to recognize respective investments and sell the advantages (e.g. through cost reduction, payback periods, etc.) 4. Support in Marketing Support the set-up marketing activities and promotional material 5. Monitoring of energy saving and CO2 reduction Impact Analysis Development of a Monitoring/Reporting Tool to be applied by the Partner Institution 12

13 Challenges in Promoting Energy Efficiency Supporting partner countries with respect to EE framework conditions (energy prices, standards, awareness) Promoting cooperation between stakeholders (e.g. energy agencies, auditors, financial institutions, technology suppliers; critical: incentives and transaction costs) Adequte definition of EE saving targets and eligibility criteria (e.g. demonstration of innovative technologies vs. broad-scale programmes, cost effectiveness) Sustainable introduction of new products in partner institutions Monitoring of energy savings and CO 2 -reduction Mobilising private capital 13

14 Overview KfW Development Bank at a glance KfW - An environmental bank KfW projects in energy efficiency and renewable energies 14

15 Eco-Loans in Serbia Overview Short Description Providing financing and technical assistance for investments in energy efficiency (EE) and renewable energy (RE) Objective Energy savings / CO2 emission reduction of at least 20% Distribution channel Serbian banking sector => broadening the financing base Facts Total volume: 93 million EUR 6 partner banks (+2 in 2012) Target group: SMEs, private households Maximum loan size: 1 million EUR Average loan size: SME: 50, ,000 Housing: 5,000-10,000 15

16 Eco-Loans in Serbia Typical Investments Housing Improve lighting Building insulation Replacement of windows Heating system modernisation SME Building envelope improvements Heating system improvements Replacement of production machinery Utilization of renewable energy 16

17 Promoting EE Buildings in India Energy Efficient New Housing Programme Loan (Eur 50 million) and Technical Assistance (EUR 1.5 million) to the National Housing Bank (NHB) as apex bank to refinance sub-loans for buyers of energy efficient new urban apartments Highest energy savings potential in new apartment blocks for middle income residents: 46-51% depending on climate zone - out of which 20-36% Building Envelope 16-22% Appliances Investments to achieve up to 40% savings financially attractive at 5 yr. payback (Average FIRR 25%) Preconditions for feasibility: - optimization of whole building design at planning stage - early contact to advise architects/developers - robust energy performance assessment tool - training of auditors and energy advisors 17

18 Energy Efficiency/Renewable Energy Credit line to IDC The Green Energy Efficiency Fund (GEEF) Aim Encourage investments of households and SMEs in renewable energy and energy efficiency Improvement of energy security and of environmental performance of the energy sector (Access to energy) Contribution to government objective to achieve 4% renewable energy until 2013 and increase energy efficiency by 12% until 2015 Development of know-how for the registration of clean development mechanism (CDM) projects New products for the South African banking sector Sectors: energy efficiency in industry and commerce, biomass, biogas, solar PV and Solar Water Heater Energy Efficiency: Reduction of greenhouse gas emissions by 20 % at the level of the final borrowers Overall financial means 40 million interest-subsidized loan, 8.1 million concessionary long-term loan 2.2 million accompanying measure (TA) 18

19 German Development Cooperation South Africa (SA) Capacity constraints, adaption to climate change and mitigation of greenhous gas (GHG) emissions support expansion of efficiency and renewable energy market in future in SA Need for financing and offering financial institutions (FI) an opportunity to expand lending Critical elements for successful programmes: Finding borrowers that match FI s underwriting stands Development of mechanism for aggregating projects Financial and Private Sector Sub-Sahara Africa supports: SMEs in the form of low interest rates for loans and grants via FI Innovative projects in the areas of energy saving, energy generation, storage as well as the use of renewable energies (e.g. GEEF) Objective: Republic of SA and Germany have agreed to intensify their cooperation in the field of climate change and energy 19

20 Thank you for your attention! Dr Wolfgang Ryll Principal Project Manager KfW Development Bank Financial Sector Development Palmengartenstr. 5-9 D Frankfurt a. M. Germany Tel: wolfgang.ryll@kfw.de 20