Download Clean Energy and Entrepreneurship Development AREED Model

Clean Energy and
Entrepreneurship Development
AREED Model
Outline
Clean energy barriers
AREED concept and partners
Results
Lessons learnt
Clean energy general barriers
Lack of focussed policy to promote clean
energy
Lack of awareness on clean energy
investment opportunities on the part
of:
– Public sector decision makers (partly blinded
by short-term political expediency)
– Private SME sector entrepreneurs
– Programme managers in international
financial, development and aid institutions
– Financial Institutions
Clean energy general barriers
Weakness of skills to develop business
proposals
Lack of appreciation of opportunities
to metigate/adapt climate change
such as CDM and adaptation funding
facilities
SME finance + capacity gaps
Innovation capital
Often
secured
Entrepreneur’s
equity
Occasionally
secured
Grants
Finance +
capacity
gaps
Interventions
Weak
business
planning
skills
Enterprise
development
services
Operating capital
Supplier
credit
Working
capital loans
Insufficient
risk capital
(growth
and startup)
Seed and
Patient
capital funds
Inadequate
experience
of Banks
Capacitybuilding and
risk sharing
with local
banks
Policy support for
SMEs
Stage 1: 0-10 years
Transaction finance
Stage 2:10 - 20 years
Consumer
credit
Nonexistent
end-user
finance
options
User finance, microcredit, lease/rentals,
third party financing:
Target group =
Productive users of
RE
Stage 3:20+ years
The AREED model
Enterprise
Development
Services
Start-up
Financing
Entrepreneur
NGOs / Dev.
organisations
Enabling
Gov’t policies
Energy business:
services and products
for rural and urban
clients
Financial
Institutions
- 2nd stage financing
Partners
UNEP: Initiator and facilitator, fund
mobilization
E
&
Co : Seed Fund Manager
Donors : UN Foundation, Sida, BMZ,
Dutch Government
5 African Partners
MFC, Mali
TaTEDO, Tanzania
ENDA, Senegal
CEEEZ, Zambia
KITE, Ghana
Key facts
May 1999: UNEP and E+Co present a proposal to the UN
Foundation to adapt the “enterprise-centered” model in
Africa
Total Amount : about US $ 7,5 m
Seed fund size: $1.4 m (2000) to $1.7m (today).
Enterprise development costs: $0.20 - $0.50 per $1
invested
Impacts: Slow to produce direct impacts (job creation,
GDP effects, GHG mitigation, etc) but can be significant
over time.
AREED enterprise types
AREED Investments 2000 - 2006
Eco'Home
Gladym
Lambark
Seeco
Type 3 REED Investment: Expansion
• e.g., Urban LPG, efficient lighting
• Moderate risk-adjusted returns
• High direct impacts
• Low Innovation impact
• Ave Loan Size: $130,000
• Ave defaults: 10%
• Ave returns: 5% - 8%
Anasset
Type 2 REED Investment: Commercialization
• e.g., Waste to energy, rural LPG
• Low risk-adjusted returns
•Ave Loan Size: $70,000
• Ave defaults: 15%
• Ave returns: 3%-5%
M38
Enterprises
Aprocer
Kalola Farms
AME
Energie R
BETL
VEV
Chavuma
Rasmas
Ubw ato
Energie R II
RCI
-
50,000
Type 1 Investment: Proof of Concept
• e.g., Jatropha, crop drying,
solar grinders.
• Very low risk-adjusted returns.
• High Innovation impact on sector dev.
• Typical150,000
Loan Size:
$25,000
100,000
200,000
• Ave
Size
(US$) defaults: 30%
• Ave returns: <3%
Results (cont)
Enterprises supported:
 35
Customers served:
 331,000
Qty C02 emissions avoided p.a:
 422,000 tons
Qty charcoal/firewood displaced:
 263,000 tons
Lessons learnt
Enterprise Centered Model is workable and
can be replicated
Innovative because it can be adapted with
local context of entrepreneurship
Removes barriers of financing of SMEs under
traditional financing conditions
Concept of partnership is crucial for success
Lessons learnt
To enhance market base of end
users requires consumers credit
facility
Need to provide post investment
support and monitoring
Merci beaucoup