The SDG Knowledge Hub of the International Institute for Sustainable Development (IISD) provides the August update on global climate mitigation finance compiled by Beate Antonich.
Mitigation Finance Update: Support for Tidal Energy in France, Loans for Energy Efficiency and Distribution in India
During the Month of August 2018, India demonstrated its commitment to improve energy distribution and efficiency by signing on new loans with the World Bank. In Europe, support for renewable energy continues with a tidal technology pilot project in France and the expansion of a Wind Power Park in Greece.
India Scales Up Energy Efficiency with US$220 million IBRD Loan
Demand for energy end-use appliances and equipment, such as lighting, ceiling fans, air conditioners, refrigerators, agricultural pumps, and industrial motors is projected to grow significantly in India. Nonetheless, India’s energy efficiency market, estimated by the World Bank to be over US$12 billion per year, continues to face implementation barriers, particularly in the residential and public sectors.
In August 2018, the World Bank, India and Energy Efficiency Services Limited (EESL), signed a US$220 million Loan Agreement and a US$80 million Guarantee Agreement for the India Energy Efficiency Scale-Up Program. The Program, to be implemented by EESL, aims at: creating sustainable markets for LED lights and energy efficient ceiling fans; facilitating scalable investments in public street lighting; and developing sustainable business models for efficient air conditioning and agricultural water pumping systems. Outcomes are expected to avoid lifetime greenhouse gas emissions of 170 million tons of CO2.
The US$220 million loan to EESL comes from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a maturity of 19 years. The $80 million IBRD guarantee, expected to leverage substantial additional financing, will partially cover re-payment risks to commercial lenders or investors, to enable EESL to raise funds for its program.
India’s State Rajasthan Reforms Electricity Distribution Sector with US$250 million IBRD Loan
India and its state government of Rajasthan also signed with the World Bank a US$250 million development policy loan to improve the state’s electricity distribution utilities (DISCOMs), which serves about 9.5 million customers. The loan from the IBRD has a 3-year grace period, and a maturity of 21 years.
The he supported ‘24×7 Power for All’ reform program focuses on: financial restructuring of DISCOMs; enhancing performance management systems; disciplining revenue requirements; and reducing energy procurement costs. To address concerns of affordability and access to electricity for the poor, the program also supports India’s Efficient Lighting Program, under which more than 15 million LED lamps have been distributed in the state.
EU Approves Support for Tidal Energy Pilot Project in France
France, which seeks to source 23 percent of its energy from renewable sources by 2020, plans to subsidize and invest in a tidal energy pilot project off the coast of Normandy. The government will cover nearly 50 percent of the project’s estimated €112 million costs, which the European Commission in July assessed as proportionate for the purpose of market penetration and in line with the Guidelines on State Aid for Environmental Protection and Energy.
The plant, comprising seven underwater turbines to provide a maximum capacity of 14 megawatts, will be built by Dublin-based OpenHydro and operated by state-owned energy company Électricité de France. Other trial projects for tidal technology have been supported by the UK in the North Sea and in the English Channel.
European Investment Bank Commits €24 Million to Greek Wind Power Park
As of 2016, Greece sources 15 percent of its energy from renewable sources with a target to reach 18 percent by 2020. With support of a €24 million loan from the European Investment Bank (EIB), three new onshore wind farms with a combined installed capacity of 48.6 megawatts are on their way to be constructed and operated by Terna Energy Group in central Greece. The wind farms will connect to two existing substations adding to a wind park estimated to generate more than 120 Gigawatt hours per year for the Greek electricity system. The EIB loan, with Eurobank and Ergasias as co-lenders, forms part of the Investment Plan for Europe, which has already exceeded its initial target to mobilize €315 billion over the past three years.