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Financing renewable energies in Myanmar COMMIT TEE 2 ON RENEWABLE ENERGIES AND CLIMATE CHANGE ADAPTATION Worldwide eagerness towards renewable energies Global New Investment in RE and Fuels, Developed and developing countries, 2004, 2013 Source : REN 21- Global status report 2014 Worldwide eagerness towards renewable energies Solar PV total capacity, 2004, 2013 Source : REN 21- Global status report 2014 Worldwide eagerness towards renewable energies Wind Power Total World Capacity, 2000-2013 Source : REN 21- Global status report 2014 Worldwide eagerness towards renewable energies Some countries considerably invested in renewable energy China, India or Nepal at a smaller scale Real growing market Strategic sector for green economy Unique opportunity for Myanmar … But the competition is not fair Fossil fuels subsidies are still huge - World fossil industries receive 550 billions USD/year (4 times more than renewable energy sector (WEO 2011)) - Inefficient energy use - The costs of environmental and social harm is not integrated in business and investment activities - Hinder investment in RE Global financial mechanisms are emerging… New sources of investment on green projects Creation of green fund/climate funds Role of development financial institutions to support green investment (WB, ADB, KfW …) Traditional investors interested in competitive market … But high investment is still needed Address the growing demand of energy Meet climate change mitigation target What about Myanmar ? Focus on Myanmar context Facing the main energy challenges … … Offers solutions for context-related issues Improving energy security Mitigating and adapting climate change Reduction of the tensions over large projects (dams, coal plants) Increase rural energy access Create jobs and new markets How to finance renewable energy deployment ? Unlocking financial constraints depends on many factors Market development Delivering financing is higly context-specific Domestic financing institutions Policy and regulatory framework Enterprise’ need for funding End users Public sector has a critical role at early stages … Define policy and regulatory frameworks feed-in-tariffs, direct subsidies, tax credits … Public-private partnership to share risky investment … But private sector role will be also important High capital in investment Expertise and technical knowledge Neccessary to scale-up renewable energy Three scales of financing tools National scale • Government decision level Minigrids • Agglomerated consumers in a village Micro scale • One or two households Financing tools National scale Tax cuts Feedin tariffs Crosssubsidies Multilateral financial institutions Financing tools National scale Tax cuts Feedin tariffs Crosssubsidies Multilateral financial institutions Tax cuts Reduction on imported parts for solar panels, wind turbines and other renewable energy technologies to encourage the private sector to use these renewable energy sources Financing tools National scale Feed-in tariffs Tax cuts Feedin tariffs Crosssubsidies Multilateral financial institutions Governments set prices for different types of renewable power to compensate producers for the higher cost of producing clean energy. This system guarantees for a company the payment of a fixed amount per unit of electricity produced on a defined time frame. Financing tools National scale Cross-subsidies Tax cuts Feedin tariffs Crosssubsidies Multilateral financial institutions Cross-subsidize energy access programmes with some of its revenues from the fossil energy sector to finance subsidies program for renewable energies Ex. The Brazilian Alcohol Program, for the purpose of reducing oil imports by producing ethanol from sugarcane Financing tools National scale Tax cuts Feedin tariffs Crosssubsidies Multilateral financial institutions Partner with multilateral financial institutions Assistance on country studies and funding to launch large scale projects for renewable energies. Ex. Sri Lanka Energy Services Delivery Project, with the Government of Sri Lanka, the World Bank and the Global Environment Facility (GEF) between 1997 and 2002 Financing tools Mini-grid and micro scale Subsidies Empower CBOs Microcredit PAYGO Financing tools Mini-grid and micro scale Subsidies Subsidies should either be oriented towards: Subsidies Empower CBOs The households, to help them buy their equipment or pay their electricity package, The companies, to help them sell their products to households which wouldn’t be able to afford it Microcredit PAYGO Ex. China’s Golden Sun Policy, which provides subsidies for 500 MW of photovoltaics projects until 2012 to temporarily support the domestic solar industry Mini-grid and micro scale Subsidies Empower CBOs Microcredit PAYGO Empower community-based organizations Couple energy access programmes with community development funds (CDFs), to promote non-lighting uses of electricity (agriculture, business …) and increase income to purchase renewable energy systems Ex. CFD in Nepal for microhydro diffusion Mini-grid and micro scale Micro-credit institutions (especially for micro scale) Subsidies Empower CBOs Microcredit PAYGO A rate at 15% per year (common rate), can help pay systems within a few years Renewable energy shops in villages themselves can implement a credit system to help their customers pay by several instalments Ex. Grameen Shakti (Grameen Bank), which provides electrification to rural communities in Bangladesh through microcredit Mini-grid and micro scale Subsidies Empower CBOs Microcredit PAYGO Pay as you go Especially known for solar kits, customers can pay an up-front fee for energy when they need it, on their net meter (or mobile phone) Thank you !