Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
Mobilizing Private Finance – The Success
of RE Projects in Bangladesh
S M Monirul Islam
Infrastructure Development Company Limited
Beirut, Lebanon, 18 April 2016
Brief Introduction to IDCOL
A fully Government owned financial institution
Started operation in 1997
Mission: to catalyze private sector participation in infrastructure, renewable energy, and energy efficient projects
Largest financier in private sector infrastructure projects
Market leader in renewable energy sector
Has access to financial resources of the government and multiple development partners, i.e. the World Bank, ADB, IDB, KfW, GIZ, GEF, GPOBA (SIDA & DFID), USAID, DFID, JICA and SNV
What We Offer
Infrastructure
Sector
Long-term local and foreign currency loans
Debt and equity arrangement
Corporate and financial advisory services
Concessionary financing and grant supports
Technical assistance and quality assurance
Capacity development of stakeholders
Arranger of Carbon Credits
Project Finance
Financial Modeling
Renewable Energy
Renewable Energy &
Energy Efficiency
Initiatives
Training
Programs
75% of the population has access to electricity where RE covers about 12% of population.
Generation capacity from RE is approx. 405 MW which is 3% of country’s total generation capacity (14,000 MW).
Electrification rate in rural areas is 43% only (2011) where 80% people live.
Rural remote areas are targeted for RE expansion where electrification through conventional energy is challenging and costly.
Present Renewable Energy Status
Government has a vision to make electricity available for all by 2021.
Government also intends to ensure 10% generation from RE by 2030.
SREDA was formed to coordinate and support RE and EE activities of government and non-government agencies.
Government launched 500 MW Solar Program which consists of the following:
• Commercial projects (340 MW): solar irrigation, mini-grid, solar park, rooftop solar etc.
• Social sector project (160 MW): solar electrification in health centers, education institutions, union e-centers, remote railway stations, government establishments, religious establishments etc.
Government’s Vision on Renewable Energy
IDCOL RE Initiatives
IDCOL Solar Home System (SHS) Program
IDCOL Domestic Biogas Program
Improved Cook Stoves (ICS) Program
Other Renewable Energy Projects
Solar Irrigation Pumps (SIP)
Solar Mini-grid Project
Biogas Based Power Plant
What is a Solar Home System (SHS)?
Capacity Appliances Operation
20Wp 3 W LED Lamp: 2
Mobile Charger: 1 4-5 hours
50Wp
3 W LED Lamp: 5
LED Color TV: 1
Mobile Charger: 1
4-5 hours
85Wp
3 W LED Lamp: 7
LED Color TV: 1
Mobile Charger: 1
12 W DC Table Fan:
1
4-5 hours
• Lead Acid Battery
• DC-DC Converter to run color
television, fan etc.
IDCOL SHS Program – at a Glance
Program Target : 6 million SHS by 2020
Program Achievement : 3.95 million SHS by Feb’2016
Number of Beneficiaries : 18 million people (11% population)
Power Generation : About 145 MW
Fossil Fuel Saving : 242,000 ton/year
Job Creation : 75,000 people
IDCOL Investment : Over USD 625 million
SHS Installation Status
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016(up to
Feb'16)
11,697 20,635 27,579
37,151 69,562
103,301 169,916
324,775
469,572
643,812
852,388
724,615
450,284
34,865
Year-wise installation
Program Structure: Result based Financing
Supply Equipment
Pay for Equipment
Seek grant & loan for outputs
Provide grant & loan on verification
IDCOL
Monitoring/
Evaluation/
Training
Technical Standards Committee
Suppliers Seek approval
Provide approval
Household
Sell SHS & provide service
Pay down-payment & installment
Operations Committee
NGO/PO PO Selection Committee
Select POs
Apply
GoB/Donors
Grant & soft
term credit
PO = Participating Organization; GoB = Government of Bangladesh
Quality Control Mechanisms
• Physical inspection by technical inspectors of IDCOL
• Verification of collection efficiency by collection efficiency inspectors
• Independent technical and financial audit
Physical inspection
• Training for trainers
• PO Staff / customer training
• Supplier consultation
Training Programs
Call Centre
IDCOL
PO Household
Informs PO Lodges complaint
Takes remedial measure
Fund Flow and Role of Partners
Multilateral Agencies
• Provides grant and soft loans
• Provides technical assistance needed
GoB
IDCOL
• Provides grants to reduce SHS cost and for capacity building
• Provides soft loans
• Provides training, promo support
• Monitors and evaluates implementation
PO
• Identify potential customers
• Installs SHS
• Extends micro-credit
• Provides after sales services
Household
Debt Service Debt Service Debt Service Debt Service
• Provides
grant and
soft loan to
IDCOL
• Provides
policy
support
• Maintain
system
• Repay loan
in monthly
installments
Mode of SHS Financing: an Example
(a) Market Price of 20 Wp SHS USD 138
(b) Buy-down Grant (Grant A) USD 20
(c) System Price for Household [(b)-(a)] USD 118
(d) Down Payment from Household to PO [15% of (c)] USD17.7
(e) Loan Payable from Household to PO [(c)-(d)] USD 100.3
Loan Tenor 3 years
Interest Rate 16% p.a.
Monthly Installment Amount USD 4.4
(f) IDCOL Refinance [70%~80% of (e)] USD 70~80
Loan Tenor 5~7 years
Interest Rate 6~9% p.a.
A Sustainable Financing Structure
Phased-out Subsidy:
2003 2004~5 2006~7 2008~9 2010~11 2012 2013~18
Capital Buy down
Grant $70 $55 $40 $40 $25 $25 $20*
Institutional
Development Grant $20 $15 $10 $5 $3 $3~$0 $0
Concessionary to Semi-Commercial Credit:
2003~8 2009 2010 2011 2012 2013 2013~18
Loan Tenor 10 yrs 6-10 yrs 6-8 yrs 6-8 yrs 5-7 yrs 5-7 yrs 5-7 yrs
Interest Rate 6% 6%-8% 6%-8% 6%-8% 6%-9% 6%-9% 6%-9%
% of Loan
Refinanced 80% 80% 80% 80% 70%-80% 70%-80% 70%-80%
*for small SHS (30 wp and below) only
Equipment Suppliers
Equipment Number of
Suppliers
Product
Warranty
Solar Panel (8 local) 96 20 years
Battery (16 local) 17 5 years
Charge Controller (44 local) 53 3 years
CFL Lamp (22 local) 26 1 year
LED Lamp (77 local) 80 3 years
DC-DC converter (all local) 7 3 years
Battery Recycling
Battery recycling policy was adopted in 2006.
Customers will receive 24% of new battery price as salvage value of warranty
expired batteries.
IDCOL inspected 75,172 warranty expired batteries since Nov’12.
91% of these batteries are functioning well, 5% has been replaced by PO.
POs are collecting old batteries while selling new batteries.
IDCOL provides USD 5 each to PO and battery recycler for collection and
recycling of battery.
POs receive up to USD 100 as refinance for selling of each new battery
There are 4 ISO certified battery recyclers in Bangladesh
Clean Development Mechanism
Fund
IDCOL signed agreement with the World Bank, the trustee of Community
Development Carbon Fund for SHS program.
393,203 Certified Emission Reductions (CER) generated from IDCOL SHS
program has been contracted to the Fund.
Selling rate is EUR 9 per CER.
UNFCCC have issued 230,855 CERs for IDCOL SHS Program for reporting year
July 1, 2012 to April 30, 2014.
CDM benefits will be passed through to the POs. IDCOL will retain 25% as
administration cost.
Mobilization of Investment in million USD
Source Allocation Disbursed till Aug 2015
Balance Credit Grant Total Credit Grant Total
IDA/GoB 420 9.8 429.8 363 9.8 372.8 57
ADB 88 2 90 78 2 80 10
IDB 15 - 15 15 - 15 -
JICA 90 - 90 90 - 90 -
Reflows (IDCOL) 134 - 134 - - - 134
GEF - 7 7 - 7 7 -
KfW - 19 19 - 19 19 -
GIZ - 14.6 14.6 - 14.6 14.6 -
GPOBA (DFID & SIDA) - 12.8 12.8 - 12.8 12.8 -
USAID - 3.4 3.4 - 2.3 2.3 1.1
DFID - 23.8 23.8 - 12 12 11.8
GPOBA (DFID) - 4.8 4.8 - - - 4.8
TOTAL 747 97.2 844.2 546 79.5 625.5 218.7
Timeline Project Cost IDCOL Financing Private Capital No. of SHS
Till Aug’2015 997 625 372 3.95 million
Sources of IDCOL financing:
IDCOL Domestic Biogas and ICS Programs
• Started in 2006 • 39,300 plants have been
constructed till Aug’2015 • Recently, registered as CDM
project under UNFCCC
Program Brief:
• To establish a sustainable and commercial biogas sector in Bangladesh
• To promote agricultural value of bio-slurry
Program Objective:
• To finance 100,000 Biogas Plants by 2018
Program Target:
• Started in 2014
• More than 100,000 ICSs have been installed till Aug’2015
• To increase energy efficiency while reducing exposure to indoor air pollution
• To strengthen supply of acceptable stoves
• To establish supply chain of alternative fuels
• To establish a strong base for achieving 100% clean cooking solutions by 2030
• To disseminate 1 million stoves by 2018
Biogas ICS
Challenges & Mitigations
Challenges Mitigation
Lack of awareness − Promotional campaigns
− Training programs
Untested
business model
− Social enterprise model with an ultimate goal of commercialization
− Presence of multiple POs ensures healthy competition
− Phased reduction nature of grant
Lack of
institutional capacity
− Institutional development grant / Long-term concessionary credit
− Staff training program
High cost of
SHS equipment
− Capital buy-down grant / Concessionary credit facility
− Local support industry development
Lack of
quality assurance
− Technical standard committee
− Quality control mechanisms by IDCOL
Lack of
fiscal support
− Tax holiday
− Duty free import
Success Factors
Innovative financing structure - results based financing
Financial contribution of all parties – Ownership model
Sustainable business model – phased out subsidy scheme toward commercialization
Cost-efficient standardized technical design
Quality control, after sales service and strong monitoring
Development of local support industries
Bangladesh’s micro-finance experience
Support from the Government and multiple development partners
Irrigation Scenario and IDCOL Solar Irrigation
Projects (SIP)
Irrigation pumps run by electricity
• Total : 0.27 million pumps
• Area coverage : 1.7 million hectares of land
• Electricity Consumption : 1500 MW
Irrigation pumps run by diesel
• Total : 1.34 million pumps (DTW – 3000, STW – 1.2 mil., LLP – 0.14 mil)
• Area coverage : 3.4 million hectares of land
• Fuel Consumption : 1 million tons diesel/yr worth USD 900 mil.
• GoB Subsidy : USD 280 million
SIP Target : 50,000 by 2025
• Pilot : 1,500 up to 2018
• Next : 48,500 within 2019-2025
SIP Program Structure
TSC
Supply equipment
Pay for equipment
IDCOL
Suppliers
Farmers
Sell water Pay irrigation charges
Sponsor
GoB/Development
Partners
Grant & soft
term credit
Approve equipment
Seek equipment approval
Seek grant & loan on completion
Provide grant & loan on verification
Monitoring/
Evaluation/
Training
SIP Financing Structure
Particulars (%)
Equity 15%
Debt 35%
Grant 50%
Total 100%
Facility Interest rate Tenor Grace
Term loan 6% p.a. 8 years 9 months
Financing structure: Financing terms:
Particulars Description
PV capacity 11.0 kWp
Flow rate 800,000 liter/day
Total head 14.0 m
Major equipment Pump and PV panel
Project cost USD 32,000
Grant USD 16,000
Land coverage Boro :5~6 hectares; Others: 19 hectares
Irrigation charges USD 296/hectares for paddy (Boro)
Features and cost of a typical SIP:
Overview of Solar Mini-grid Projects
Area Selection
• Isolated off-grid areas
• Concentration of customers
• Willingness and ability to pay
• Consult with Power Division on possibility of grid extension in next 5-10 yrs Target : Install 50 solar mini-grid by 2018
Progress : 4 in operation, 3 under construction, 16 approved, 17 in pipeline
Project cost : USD 810,000 (for a typical 150 kWp project)
Financing structure : Equity, Loan and Grant: 20%: 30%:50%
Financing terms : Interest rate: 6% p.a.; tenor: 10 yrs; grace period: 2 years
Funding sources : Grant: KfW, DFID, GPOBA, USAID, ADB
: Credit: IDA, JICA
Overview of Biogas based Electricity Projects
Area Selection :
• Poultry or dairy firms
• Grid and/or off-grid areas
• May only be used for captive consumption
Target : Install 130 plants by 2018.
Progress : 5 in operation, 4 under construction, 10 in pipeline
Project cost : USD 460,000 (for a typical 300m3 plant)
Financing structure : Equity: Loan : 20%: 80%
Grant: 20% up to 100 kW plant capacity
Financing terms : Interest rate: 6% p.a.; tenor: 8 years; grace period: 1 year
Funding sources : Grant: KfW, GPOBA, USAID
: Loan: IDA, JICA
Solar Mini-grid, SIP and Biogas base power -
Challenges & Mitigation
Challenges Mitigation
High upfront
cost
• Local capacity for manufacturing of pump components
• Development of more suppliers to increase competition
Funding constraints
for upfront investment -
RBFA
• Disbursement of loan in stages based on milestones (grant after
verification of outputs)
• Introduction of ‘ownership model’ to distribute the burden of
upfront investment (individual/community)
Collateral requirement
on top of investment
• Limited recourse financing based on assessment of sponsors’
capacity
• Strong monitoring on operation and cash-flow
• Development of a guarantee fund
Long installation
timeline
• Efficient inventory management
• Capacity development of suppliers/POs
Revenue
collection
• Ownership model
• Community approach
• Pre-paid system, if applicable
Thank you very much
Solar Home System
Domestic Biogas
ICS
Solar Irrigation
Solar Mini-grid
Biomass based power plant
جزيالشكرا
www.idcol.org