Edison Galbraith General Manager Loan Origination & Portfolio Management

Transcription

1 Edison Galbraith General Manager Loan Origination & Portfolio Management FINANCING ENERGY EFFICIENCY Presented at the Climate Change Learning Conference July 17, 2014

2 FINANCING ENERGY EFFICIENCY A discussion of the objectives, challenges and opportunities for the growth of energy conservation, energy efficiency and renewable energy investments from the perspective of the Development Bank of Jamaica. Energy Loans Approved (J$M) Number of Loans Approved Mar-10 Mar-11 Mar-12 Mar-13 Mar Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

3 Jamaica, the place of choice to live, work raise families and do business DBJ s role is to facilitate Internationally competitive businesses DBJ s MISSION: to facilitate and promote economic growth, national development and an enabling economic environment by providing businesses and government with appropriate Financing, Privatization & PPP and Technical Support solutions

4 GOJ National Renewable Energy Policy Indicator Percentage of renewables in energy mix 9% 30% Percentage diversification of energy supply 9% 70% OBJECTIVE: To reduce the cost of reliable electricity supply in Jamaica from over US$0.40 per kwh thereby increasing business competitiveness, output and growth while reducing green house gas emissions and foreign currency expenditure on oil OPTIONS BEING PURSUED: More efficient Utility scale generating capacity (JPSCo, IPPs, 380MW bid) Increase distributed generation (115MW Renewable Energy bid) and access to the Grid (Power Wheeling) Off-grid self generation (Bauxite etc) Increase individual energy conservation, efficiency and renewable energy

5 Context Generally high and rising cost of Energy Energy is a large % of business expenses Dependence on imported fossil fuel (FX) Jamaica Size, GDP, Major Industries, BOP, Oil bill Energy usage: Transportation / Electricity Transportation (Options) Electricity (Options - Fuel Sources, Generation, Distribution) Electricity Consumption patterns (Industrial, Residential, Day, Night) Implications and opportunities for GDP growth

6 DBJ s role in Energy DBJ promotes and finances investments in Energy Conservation Energy Efficiency and Renewable Energy Technologies DBJ s experience High cost of Energy Low cost financing Declining RE/EE Prices (INERTIA) Capacity Building Public Education Credit Enhancements / Incentives + = RESULTS

7 Energy financing results In FYE March 2014 DBJ approved J$658M for 102 projects Since 2009 DBJ has approved Energy loans totaling J$1.6 Billion to over 196 projects Energy Loans Approved (J$M) Number of Loans Approved Mar-10 Mar-11 Mar-12 Mar-13 Mar Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

8 Energy financing results DBJ has approved over J$1.6 Billion in Energy loans to over 196 projects All incorporated energy efficiency solutions with the renewable energy technologies implemented ranging from solar and PV systems to bio-digesters and wind turbines. Sectors include manufacturing, agriculture, agro-processing, restaurant/food service, tourist attraction, small hotel, retail store, contact centre, offices as well as energy equipment suppliers and ESCOs

9 DBJ provides loan financing in Jamaican dollars at 9.5% to 10.0% and at 7.25% United States dollars for up to 7 years primarily through a network of Approved Financial Institutions (AFIs) for 90% of the Project Cost for Micro and Small Enterprises and 70% for Large Enterprises to viable projects in Agriculture Agro-processing Manufacturing Mining and Quarrying Technology Tourism Services Energy (All Sectors)

10 DBJ provides loan financing through co-financing and direct lending to large projects in strategic sectors such as Renewable Energy and ICT/BPO DBJ also promotes the development of the Micro-finance Industry by accrediting and lending through Micro-finance Institutions (MFIs)

11 DBJ accredits and provides loan financing through COMMERCIAL AND MERCHANT BANKS Bank of Nova Scotia (BNS) National Commercial Bank (NCB) Capital & Credit Merchant Bank (CCMB) Citibank N/A First Caribbean International Bank (FCIB) OTHER APPROVED FINANCIAL INSTITUTIONS & AGENT Jamaica Co-operative Credit Union League (JCCUL) All Credit Unions National People s Co-operative Bank (NPCB) National Export Import Bank (EXIM) Jamaica Money Market Brokers (JMMB) MICRO FINANCE INSTITUTIONS Access Financial Services Jamaica National Small Business Loans Nation Growth Microfinance Limited MicroCredit Limited First Heritage Co-operative Credit Union First Global Bank (FGB) RBC Royal Bank (RBTT) Mayberry Investments Limited St. Elizabeth Co-operative Credit Union St. Thomas Co-operative Credit Union Sagicor Bank (PCB) AGENT: Jamaica Business Development Corporation (JBDC) McKayla Financial Services Limited First Union Financial Services Limited

12 DBJ loan financing results DBJ s lending has increased from 4,430 loans valued J$2.7B in FYE March 2011 to 9,799 loans valued J$6.7B in FYE March 2014 DBJ MSME Loans J$'000M Number of MSME Loans 2,500 2,000 1,500 1, Mar-11 Mar-12 Mar-13 Mar-14 15,000 10,000 5,000 0 Mar-11 Mar-12 Mar-13 Mar-14 Overall DBJ Loans J$'000M Number of DBJ Loans 8,000 15,000 6,000 4,000 2,000 10,000 5,000 0 Mar-11 Mar-12 Mar-13 Mar-14 0 Mar-11 Mar-12 Mar-13 Mar-14

13 Energy financing in summary DBJ has Energy Loans available for ALL Businesses at 9.5% and 10.5% for up to 7 years (including Energy Auditors, Energy Equipment Suppliers) Householders at 9.5% for up to 8 years Funding for Energy Audits DBJ also has available funding to offset J$200,000 of the cost of Energy Audits Credit Enhancement Fund DBJ also has available partial loan guarantees of J$10M available for SME Energy projects

14 Credit Enhancement Facility Guarantee Partial Credit Guarantee facility for SME loans Maximum guarantee per project J$10M 50% coverage for general SME loans 80% coverage for SME Energy loans To date DBJ has issued J$263M in CEF guarantees allowing 140 borrowers to access J$540M in loans CEF Supported Loan Amount (J$M) Value of Guarantee (J$M) Number of CEF Loans 0 Mar-10 Mar-11 Mar-12 Mar-13 0 Mar-10 Mar-11 Mar-12 Mar-13 0 Mar-10 Mar-11 Mar-12 Mar-13

15 Energy financing DBJ loans are currently available through AFIs and MFIs in Jamaican dollars at 9.5% to 10.0% for up to 7 years to all sectors for projects involving Energy Conservation, Energy Efficiency and Renewable Energy as well as for Energy Auditors Energy Equipment Suppliers and Energy Service Companies in addition a special Line of Credit is available allowing Householders up to J$2M at 9.5% for up to 8 years

16 Promoting EE/RE DBJ facilitates Public Education, Training and Workshops Involving Banks Businesses Engineers and Auditors Certified Energy Managers Energy Equipment Suppliers ESCOs DBJ also serves on various GOJ Committees

17 Promoting EE/RE Inter-American Development Bank (IDB) DBJ has partnered with the IDB to secure funding to Promote Energy Efficiency/Conservation in the SME Sector 3 Components: 1. Demand Study on Energy efficiency, conservation and alternative sources of energy 2. Training Programme for Certified Energy Auditors/Managers (CEM) 3. Demonstration Projects for Public Education /dbjgreenbiz

18 Promoting EE/RE Inter-American Development Bank (IDB) Public Sector Energy Efficiency and Conservation Programme IDB-Fundación Chile Knowledge transfer to facilitate the establishment of an ESCO Industry in Jamaica European Union Developing an ESCO Industry in Jamaica - through the Jamaica Productivity Centre Caribbean Hotel Energy Efficiency and Renewable Energy Action Program (CHENACT-2) Energy efficiency to improve the competitiveness of small and medium sized hotels

19 Energy opportunities Energy Conservation Energy Efficiency Renewable Energy Growth of Green Economy and Green Jobs Consumers Businesses - Existing and New Householders Government Service Providers Certified Energy Auditors/Managers/Engineers Energy Equipment Suppliers/Energy Service Companies Electricians/Technicians - Installation, Maintenance and Repairs Bankers/Financial Institutions - Loans, Leases New Businesses Energy Generation and Supply, Co-generation

20 Energy project considerations / incentives Opportunity Cost The high cost of electricity at over US$0.40 yields attractive returns for Energy Conservation, Efficiency and Renewable Energy projects Duties and Sales Taxes While there are no special investment tax credits, most EE/RE inputs were exempt from import duties and sales taxes. Access to the Grid Legislation is in place to facilitate Net Billing, and Power Wheeling. Funding for Energy Audits DBJ provides grants to MSMEs for up to J$200,000 towards the cost of Energy Audits Credit Enhancement Facility DBJ provides partial loan guarantees of J$10M to Banks to support loans for SME Energy projects

21 Thank you. Edison Galbraith General Manager Loan Origination & Portfolio Management Development Bank of Jamaica Limited 11A 15 Oxford Road Kingston 5, Jamaica