Latest update on climate finance

The International Institute for Sustainable Development (IISD) provides the December 2015 update on global developments in climate finance.

 

December 2015 Sustainable Energy Finance Update

During the month of December, the African Development Bank (AfDB), Asian Development Bank (ADB), Caribbean Development Bank (CBD), European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank (IDB) and World Bank announced sustainable energy project funding and initiatives. ADB and EIB released reports on financing and deploying clean energy.

The announced sustainable energy initiatives are being implemented in Afghanistan, Burundi, China, the Democratic Republic of the Congo, the Dominican Republic, Egypt, El Salvador, France, Honduras, Hungary, India, Indonesia, Kazakhstan, Kenya, Kosovo, Moldova, Niger, Nigeria, Poland, Rwanda, Saint Vincent and the Grenadines, South Africa, Spain, Turkey, the UK and Ukraine, as well as the African and European regions.

In Afghanistan, ADB approved a US$1.2 billion grant to enhance the country’s energy security, including through power sector efficiency. In addition, some of the assistance will finance the development of domestic renewable energy projects.

In Burundi, the Democratic Republic of the Congo and Rwanda, AfDB approved a US$138 million loan and grant package to fund a regional hydropower public-private partnership to increase electricity supply and integration in the region. The project consists of a run-of-the-river dam, 147 megawatts (MW) power plant and transmission line.

In China, a US$130 million loan from ADB will support a smart energy use model in Qingdao, with the aim of cutting coal use and tapping low-carbon power sources. The city will replace coal with district heating, cooling and power production and distribution systems using, among others, waste heat recovered from industrial plants, shallow ground geothermal and solar. The city will also put in place a smart energy management system.

In the Dominican Republic, a US$120 million World Bank loan will support the Distribution Grid Modernization and Loss Reduction Project, with the goal of increasing electricity access.

In Egypt, the AfDB Board approved a US$500 million loan for the Economic Governance and Energy Support Program, which includes plans to reform public finance management, revenue collection, governance, efficiency and the business environment in the energy sector.

Also in Egypt, EBRD announced US$500 million in financing for Egypt’s solar programme, which aims to construct 2,000 MW of capacity through approximately 40 projects. The Bank also intends to mobilize up to US$1.5 billion in debt and equity from other financiers.

Also in Egypt, the World Bank is supporting economic reforms, including energy subsidy reform and promotion of clean energy, under a US$1 billion development policy finance package.

In El Salvador, IDB is financing a 100 MW photovoltaic (PV) solar energy project, the first utility scale solar power plant in the country, with a US$57.7 million loan, to be complemented with $30 million from the Canadian Climate Fund for the Private Sector in the Americas, which is administered by IDB.

In France, EIB loans of €1 billion will support a green energy transition. The financial package includes: €400 million in partnership with La Banque Postale, the BPCE Group and Crédit Agricole for energy efficiency of public buildings; €75 million in partnership with Crédit Coopératif for enterprises or associations to promote energy efficiency; €112 million for the development of four biomass power plants; and €400 million for access to renovated housing that is energy efficient.

In Honduras, IDB approved a US$40 million loan for financial sustainability, efficiency and safety reforms in the energy sector intended to encourage the participation of renewable energy through the creation of incentives.

In Hungary, EIB announced lending of €300 million, €100 million of which will go toward, inter alia, urban energy efficiency and renewables in the city of Budapest.

In India, the national transmission company will receive a US$500 million government-backed loan and an additional US$500 million in non-sovereign lending from ADB to support the government’s Green Energy Corridor initiative. The financing will be used to build transmission lines to connect renewables to the national grid.

Also in India, a US$6 million Clean Technology Fund (CTF) loan will be administered by ADB to expand off-grid solar home systems. The loan will help Simpa Energy finance an additional 75,000 solar home systems for both households and microenterprises in 2016.

In Indonesia, a development framework was announced by the World Bank, which, among other things, will support sustainable energy and connect millions to reliable electricity. Under the approved Country Partnership Framework, the Bank envisions lending of approximately US$10 billion over the period 2016-2020.

Also in Indonesia, US$500 million from the World Bank will finance efforts to reduce the fiscal cost of providing electricity, improve the investment climate in the energy sector, remove barriers to renewable energy expansion and boost access to modern, reliable energy.

In Kazakhstan, EBRD is loaning Alina, a producer and distributor of construction materials, up to €10 million for energy efficiency upgrades.

In Kenya, IFC, in partnership with Global Agriculture and Food Security Program, PROPARCO and The Netherlands Development Finance Company FMO, will finance seven small hydropower plants to power Kenya Tea Development Agency factories. The power plants will account for 16 MW of installed capacity thanks to the US$55 million loan.

In Kosovo, IFC has assisted Banka për Biznes in launching loan products for financing energy efficiency projects for homes and small businesses.

Also in Kosovo, EBRD is providing two €1 million loans through the Kosovo Sustainable Energy Projects Framework (KoSEP) to support two microfinance lending institutions. The funds will go to small businesses and the residential sector to finance energy efficiency projects.

In Moldova, EBRD financing will help private companies save energy through a €5.5 million loan to an in-country bank for on-lending. Eligible companies will be able to borrow funds, which were made available under the Moldovan Sustainable Energy Financing Facility Extension (MoSEFF II), for energy efficiency and renewable energy projects. The loan will be complemented by grants from the EU of up to 20% of the loan amount.

In Niger, the World Bank approved an International Development Association (IDA) credit of US$54.5 million and a US$10.5 million grant to boost electricity access. The financing will reduce bottlenecks in the distribution network and address pending connection requests in urban areas, as well as expand access in rural areas.

In Nigeria, IFC signed a Joint Development Agreement with Alten’s Middle Band Solar One Limited, a Nigerian solar power company, to co-develop a 120 MW, peak solar PV power project.

In Poland, Bank Millennium will receive a €50 million EBRD loan, 70% of which will be used to finance sustainable energy projects by Polish small- and medium-sized enterprises (SMEs). The loan, extended under the Polish Sustainable Energy Financing Facility (PolSEFF Leasing), will help reduce their energy costs with new and more efficient equipment.

Also in Poland, the 50 MW Banie Wind Farm will receive approximately €35 million from EBRD in the form of a loan to help the country reduce its dependence on fossil fuels.

In Rwanda, an IDA US$95 million World Bank credit aims to expand access to electricity, as well as improving the operational efficiency of the energy utility. The financing will help connect 72,000 new consumers to the national grid under the Government’s electricity Rollout Access Program, strengthen Kigali’s distribution network to meet increased demand and reduce the frequency of electricity supply interruptions.

In Saint Vincent and the Grenadines, CDB is providing a US$48,500 grant to finance the cost of energy audits of selected public buildings, allowing them to identify energy efficiency and renewable energy opportunities to reduce the country’s electricity consumption and lower carbon emissions.

In South Africa, AfDB is providing a senior corporate US$375 million loan and a corresponding A/B syndicated loan for up to US$750 million for the construction and maintenance of transmission lines and power stations, including a 1,332 MW renewable energy peaking station.

In Spain, an agreement between EIB and Banco Santander will finance investments in hotel energy efficiency under the Private Finance for Energy Efficiency (PF4EE) initiative. The financing, totaling €50 million, will improve energy efficiency in both hotel establishments and other buildings for touristic lodging across Spain.

In Turkey, EBRD announced its first direct equity investment in the power sector, acquiring a 20% stake in the renewable energy arm of Akfen Holding, AkfenRE, with US$100 million. AkfenRE’s portfolio will include hydro, wind and solar.

In the UK, over 7 million homes will be outfitted with smart meters under a mass roll-out supported by EIB and six commercial banks with GBP1 billion. The meters are expected to reduce energy use, and represent the largest project backed by EIB under the European Fund for Strategic Investments (EFSI), with funding of GBP360 million.

In Ukraine, EBRD announced €14 million in financing to improve the energy efficiency of the city of Chernivtsi. The package, co-financed by EBRD (€7 million loan), the CTF (€3 million loan) and the Eastern Europe Energy Efficiency and Environment Partnership (E5P) (€4 million investment grant), is expected to reduce energy losses and electricity consumption, improve district heating services, reduce gas consumption and carbon emissions, reduce gas consumption and support a switch to biomass.

In Africa, the Sustainable Energy Fund for Africa (SEFA) garnered a new supporter: Italy. The country contributed US$8 million, which raised the Fund’s total value to almost US$95 million.

Also in Africa, the AfDB helped launch the African Renewable Energy Initiative (AREI), which aims to produce 300 gigawatts (GW) of electricity by 2030, in support of universal electricity access and low-carbon development strategies. AfDB, as a major sponsor of AREI, announced it would dedicate 40% of its resources to climate change efforts by 2020.

In Europe, as part of €12.7 billion in approved loans, EIB is investing in, among others, a windfarm in southern Mongolia, an Icelandic geothermal power plant, energy networks in southern England, Poland, Finland, Italy and Nicaragua, as well as seven EFSI projects, which include smart meters in Italy.

On publications, ADB released a report summarizing lessons learned from two loans directed to Eastern Indonesia: the Renewable Energy Development Sector Project, and the Power Transmission Improvement Sector Project. The paper draws on these experiences from the early 2000s as case studies in facilitating rural electrification.

ADB also published a review of the state of the energy sector in Indonesia. The energy sector assessment summarized in the document quantifies the energy resources available in the country, including its potential for conventional, micro and mini hydropower, solar, biomass, and wind. The paper notes that the country holds 40% of the world’s geothermal reserves.

Another ADB publication examines the success of the solar home system programme in Bangladesh, which is responsible for spreading clean, reliable electricity to over 16 million people in rural, off-grid areas. The document offers insight into how the business model lent itself to impressive scalability. It also considers challenges and other renewable energy applications.

EIB released a document detailing information on the Mediterranean Solar Plan, which aims to accelerate the implementation of renewable energy and energy efficiency projects in Algeria, Egypt, Palestine, Jordan, Lebanon, Morocco and Tunisia.

EIB also published the findings of a study on the capability of Mediterranean Partner Countries to develop local renewable energy manufacturing industries, with particular focus on Morocco, Tunisia and Egypt. Based on the experience of other countries and discussions with stakeholders on difficulties and expectations, the report also offers recommendations.

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