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1 1 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Survey of sustainability in rural energy supply projects Results of the survey  March 2005 Universidad Politécnica de Madrid School of Industrial Engineering DISCLAIMER: Dissemination is encouraged indicating as reference: Rodríguez Monroy, C., San Segundo Hernández, A. 2005. “Survey of sustainability in rural energy supply projects. Results of the survey”. School of Industrial Engineering. Department of Business Administration. Universidad Politécnica de Madrid (UPM), Spain. March.

2 2 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Index Executive Summary. Main conclusions Methodology and participation Respondent’s Data Part A. Energy supply in developing countries Part B. The role of agents in sustainable energy supply Part C. Financing of renewable energy projects in developing countries Respondent’s Organizations and country of origin

3 3 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Executive Summary. Main conclusions “The survey in a nutshell”  185 respondents all over the World (69 different countries) with equilibrium among geographic areas and type of organizations. Broad coverage of areas with high concentration of developing countries with electrification problems  “Financial sustainability” and “Demand-side focus” are the most relevant parameters to be enhanced when considering long term sustainability of electrification projects. In particular 85% of respondents estimate that “Financial sustainability” is the leading issue to address in this kind of projects  “Financial innovation” and “Private sector involvement” are the two main topics that have the potential to increase renewable dissemination in developing countries. If sustainability is also considered, “Public-private partnerships” are the leading strategies to follow although innovation in the ways of financing is also a very relevant topic  “NGOs” seem to be the best performers in past renewable electrification projects, while “Private sector” it is the most criticized agent. Providing proper “Local assistance” and “Demand-side approach” are the two main skills needed to increase the impact of NGOs electrification projects. On the contrary, “Lack of profitability” and “Poor regulatory frameworks” are the two main concerns that justify lack of appropriate involvement of private sector in rural electrification projects. 71% of respondents consider that “Lack of profitability” is the main cause that justify the inadequate private sector involvement in this kind of projects  Financial sustainability of renewable projects is mainly considered from a demand-side point of view: existence of “Microfinancing schemes” and the development of “Productive initiatives” are the two main topics that have significant influence in financial viability of renewable projects  “Renewable energy funds” are considered as the most suitable financial instrument to deal with renewable rural electrification projects by a 72% of respondents. “Project finance” is the second preferred option. The percentage of respondents that didn’t know some opportunities for financing renewable electrification projects was still very important.  “Leasing” and “Commercial loans” are not considered very suitable by most of respondents when approaching down-side financing, being “Revolving funds” the most appropriate instrument  53% of respondents consider that Flexibility Kyoto Mechanisms have high potential to contribute to renewable deployment in developing countries. Europe and North-America’s respondents are much more sceptical about Corporate Social Responsibility  Finally almost 70% of respondents consider that “Institutional support”, “Local empowerment” and “Innovative financing” have a High or Very High potential to increase resource mobilisation to finance renewable projects

4 4 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Index Methodology and participation Respondent’s Data Part A. Energy supply in developing countries Part B. The role of agents in sustainable energy supply Part C. Financing of renewable energy projects in developing countries Respondent’s Organizations and country of origin

5 5 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es  Direct e-mail during 1 st November 2004 – 31 st December 2004 (*)  Broad coverage (major regions of the world, and different agents in energy supply)  Multiple-choice questionnaire: 11 questions divided into three parts  Dissemination enhanced (see note below):  Survey posted at www.gvep.org  Proposal of knowledge-sharing from:  www.hedon.info,  http://forums.seib.org, Commend Network, and  www.ises.org,  Bilingual survey: English and Spanish Methodology Multi-channel and bilingual survey to increase dissemination Methodology and participation NOTE: 1)www.gvep.org (Global Village Energy Partnership, a World Bank initiative, in conjunction with ESMAP (Energy Sector Management Assistance Programme), the US Agency for International Development, the US Department of Energy, the National Renewable Energy Laboratory and Winrock International) 2)www.hedon.info (Household Energy Network, informal forum dedicated to improving social, economic, and environmental conditions in the South) 3)Commend, http://forums.seib.org (Leap Forums, Community for Energy, Environment and Development. An initiative of the Boston Center of the Stockholm Environment Institute) 4)www.ises.org, International Solar Energy Society, UN-accredited NGO present in more than 50 countries. The Society supports its members in the advancement of renewable energy technology, implementation and education all over the world (*) Original deadline extended to allow late answers

6 6 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es  Total initial number of potential contacts (2)  Number of direct e_mail rejected (1)  Effective potential contacts  Estimated percentage of experts in most of the topics covered (3)  Final effective community of experts contacted  Answers received (2)  Percentage of Final community 185 Respondents 21.6% Participation 1,067 116 951 90% (1)Spam-avoided or incorrect address (2)Includes direct contacts by e_mail and answers received by e_mail thanks to the websites or communities indicated (3)Conservative estimation taking into account the answers received in the most technical questions Important number of answers received validates results obtained 856 185 21.6% Methodology and participation

7 7 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Index Methodology and participation Respondent’s Data Part A. Energy supply in developing countries Part B. The role of agents in sustainable energy supply Part C. Financing of renewable energy projects in developing countries Respondent’s Organizations and country of origin

8 8 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es World Area of Origin Diversified portfolio of respondents Respondent’s Data Type of Organization Equilibrium among different agents involved in energy supply projects in developing countries: Academic, Private Co., and NGO widely represented Broad coverage of areas with high percentages of developing countries: 44% of total answers received (Africa (20%), Asia-Pacific (15%) and Latin America&Caribbean (9%)) (ex Spain)

9 9 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Index Methodology and participation Respondent’s Data Part A. Energy supply in developing countries Part B. The role of agents in sustainable energy supply Part C. Financing of renewable energy projects in developing countries Respondent’s Organizations and country of origin

10 10 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 1 Results “Financial sustainability” and “Demand-side focus” are considered the most relevant parameters Analysis What is in your opinion the relevance of each of the following parameters to strengthen long- term viability of electrification projects?. “Financial sustainability of projects” it is the main parameter needed to assure long term viability of electrification projects (85% of respondents considers this factor as the most relevant (4.73 points) followed by “Demand-side focus approach”). In the opposite “Multilateral support” and “Environmental Issues” are the least relevant topics when considering long term viability (only 13% and 16% of respondents consider these elements as “Very relevant”) “Financial sustainability of projects” is also the parameter which obtains the highest percentage of “Very relevant” answers (62% of total respondents) Part A. Energy supply in developing countries Objective: Identify key parameters and barriers in sustainability of energy supply projects Average value Three main factors modal weighted and percentage of respondents covered (1) (1) Value calculated as the weighted average of two main modal values

11 11 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 1 Differences into groups of respondents (1) All groups consider “Financial sustainability” as the main parameter when looking for long term viability of electrification projects What is in your opinion the relevance of each of the following parameters to strengthen long- term viability of electrification projects?. Part A. Energy supply in developing countries Objective: Identify key parameters and barriers in sustainability of energy supply projects World Area of Origin Type of organization North and Latin America responses have the most important differences. Both groups consider “Financial sustainability” much more relevant in relative terms, while giving the second valuation to the existence of a “Stable regulatory framework” “Environmental Issues” are considered the second most important parameter by respondents from Rest of the World while respondents from Africa are less concerned about this issue Private Companies and Analyst seem to be less sensitive to “Demand-side” concerns than the average when dealing with an electrification project. By contrast Private Companies consider “Multilateral support” and “Stable regulatory framework” much more important parameters in relative terms In the opposite NGOs are those who rely the least in “Multilateral support” while focusing more in “Demand-side focus” (1) Only those four groups with the most significant differences to the average are shown in the graphics

12 12 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 2 Analysis What is the relevance of each of the following parameters to boost renewable technology deployment in developing countries? Part A. Energy supply in developing countries Objective: Identify key parameters and barriers in sustainability of energy supply projects Results Most respondents consider that “Financial Innovation” and “Private sector involvement” are the main parameters when dealing with renewable technology Average value Three main factors modal weighted and percentage of respondents covered (1) (1) Value calculated as the weighted average of two main modal values “Financial innovation” is the most relevant parameter considered to boost renewable technology deployment in developing countries (65% of respondents consider this factor as the most relevant followed by “Private sector involvement” and very close by “Transfer of technology”) Those three parameters are considered “Very relevant” by most respondents, while “Institutional strengthening” is considered mostly “Important” (4) or “Neutral” (3) (57% of respondents) “Financial innovation” it is also the parameter which obtains the higher percentage of “Very relevant (5)” answers (35% of total respondents). In the opposite, only 22% of respondents considers that “Global International cooperation” is a “Very relevant” topic

13 13 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Differences into groups of respondents (1) North Americans respondents seem to be the most worried about “Financial Innovation” while Multilateral organizations are very sceptic about “Global International Cooperation” Part A. Energy supply in developing countries Objective: Identify key parameters and barriers in sustainability of energy supply projects World Area of Origin Type of organization QUESTION 2 What is the relevance of each of the following parameters to boost renewable technology deployment in developing countries? “Financial innovation” and “Private sector involvement” are clearly considered the most relevant parameters by North America’s respondents Respondents from Latin America are also very concerned about “Financial innovation” but in the opposite they are very critic with “Private sector” RoW’s respondents give also little importance to “Private sector involvement” and are those who give the higher punctuation to “Global international cooperation” in relative terms Average value of “Global International Cooperation” is clearly lower between Multilateral/Bilateral/Financial organizations’ respondents, that seems to be more concerned about “Financial innovation” when dealing with renewable energy All groups give the highest importance to the “Financial innovation” except Private Companies that give much more importance to “Private sector involvement”. NGOs consider “Institutional strengthening” as the most important element in relative terms (1) Only those four groups with the most significant differences to the average are shown in the graphics

14 14 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 3 Analysis What is the potential of each of the following proposals to strengthen sustainability of renewable projects in developing countries? Part A. Energy supply in developing countries Objective: Identify key parameters and barriers in sustainability of energy supply projects Results “PPP” is the proposal with the highest potential to strengthen sustainability of renewable projects. “Financial innovation” need also to be empowered. Average value Three main factors modal weighted and percentage of respondents covered (1) (1) Value calculated as the weighted average of two main modal values “Public-private coordination and partnerships” it is the most relevant parameter considered to strengthen sustainability of renewable projects (67% of respondents). “Financial innovation” is also considered as a very important proposal when focusing on sustainability of renewable projects. 48% of respondents consider that “Credit guarantee from international agencies” is the third main parameter. Very close it is the proposal of considering a “Multi-stakeholder approach” which obtains higher average value, but a modal weighted value of 3.49 (57% of population) “IFIs and commercial banks coordination” is considered the proposal with the least potential and most respondents estimate that its valuation is only neutral (3)

15 15 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Differences into groups of respondents (1) Important differences between North America and Latin-America or RoW’s respondents. NGOs and Multilateral organizations don’t give to much potential to the “Credit guarantees from International agencies” Part A. Energy supply in developing countries Objective: Identify key parameters and barriers in sustainability of energy supply projects World Area of Origin Type of organization QUESTION 3 What is the potential of each of the following proposals to strengthen sustainability of renewable projects in developing countries? Respondents from Latin America are those who give less importance to “PPPs” and “Credit guarantee from international agencies” North Americans consider than “Financial innovation” and “IFI and commercial banks coordination” are the proposals with higher potential and rely less in “PPPs” in relative terms On the contrary RoW’s respondents give very little importance to the “Multi-stakeholder approach” and consider that “Credit Guarantees” is the proposal most relevant to focus on “PPPs” is the preference among Multilateral and Financial organizations that give very little importance to “Credit guarantees”. On the contrary Other group considers that “Financial innovation” and specially “Credit guarantees” are by far the proposals with the higher potential NGOs seem to be very sceptical towards “IFIs and commercial banks coordination” or “Credit guarantees from international agencies” and gives superior potential to “PPPs” Private Companies are also very concerned about “Credit guarantees” (3.67 points) (1) Only those four groups with the most significant differences to the average are shown in the graphics

16 16 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Index Methodology and participation Respondent’s Data Part A. Energy supply in developing countries Part B. The role of agents in sustainable energy supply Part C. Financing of renewable energy projects in developing countries Respondent’s Organizations and country of origin

17 17 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 4 Analysis In your opinion, how has been the role of each of the following agents in past rural electrification projects? Part B. The role of agents in sustainable energy supply Objective: Identify the relevance of the main agents involved in energy supply and the key parameters that have influence in their positioning Results First modal value is ‘3’ for all the agents, but “Private sector” obtain the less percentage (only 9%) of “Very relevant” responses (‘5’) Average value Main agents modal weighted and percentage of respondents covered (1) (1) Value calculated as the weighted average of two main modal values 55% of respondents considers that “NGOs” have been the agent that has had best performance in past rural electrification projects. “IFIs” have also been a relevant agent. This agent obtains superior average value but the responses are more concentrated in a ‘3’ level. “Private sector” is clearly the agent whose role has been less relevant when dealing with rural electrification projects. Only 9% of respondents considers that its role has been “Very relevant” (5) while 17% estimates that its involvement has been “Not relevant at all” (1)

18 18 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Differences into groups of respondents Respondents from Latin America and Africa are the most critical with each group. All groups of respondents consider that “Private sector’s” role has been the least important World Area of Origin Type of organization Part B. The role of agents in sustainable energy supply Objective: Identify the relevance of the main agents involved in energy supply and the key parameters that have influence in their positioning QUESTION 4 In your opinion, how has been the role of each of the following agents in past rural electrification projects? North America’s respondents consider that “NGOs” have been the most important agent in past rural electrification projects, and surprisingly respondents from Africa are those who give less importance to their role Respondents from Latin America are the most critical towards “Private sector” involvement In general terms, average value of each group is higher in responses from North America, Europe and Asia- Pacific countries. On the contrary responses from Africa and Latin America are the lowest Multilateral and Financial agencies are the most critical as they give as an average the lowest importance to each group Private Companies consider that their importance in past rural electrification projects has been highest than the average valuation in relative terms. The same is true when talking about NGOs and their own view about their role Academic, Analyst and Other communities consider that the best performers have been “IFIs”

19 19 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 5 Analysis What is the importance of each of the following topics to maximize Non Government Organization (NGO) electrification projects impact? Part B. The role of agents in sustainable energy supply Objective: Identify the relevance of the main agents involved in energy supply and the key parameters that have influence in their positioning Results “Provide assistance to local empowerment” and “Demand oriented approach” are the key topics to focus on to maximize the positive impact of NGOs electrification projects Average value Three main factors modal weighted and percentage of respondents covered (1) (1) Value calculated as the weighted average of two main modal values To maximize the impact of NGOs electrification projects, 67% of respondents consider that the main issue is to “Provide assistance to local empowerment”, followed by a “Demand oriented approach” (63% of respondents). “Previous experience” is the third most important topic to increase sustainability of projects started by NGO. All three issues obtain very similar modal weighted values These three parameters are the only that are considered “Very Important” (5) by most respondents (40% of respondents in the case of “Provide assistance to local empowerment”). First modal value of “Information and sharing of experience” is ‘4’ with a 33% of responses Least important value is the “Organization financial strength” although most respondents (33%) consider that its relevance is still neutral (‘3’)

20 20 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Differences into groups of respondents (1) Important differences among Europe and North America respondents and those from RoW. “Previous experience” is mostly valued by Multilateral and Financial Institutions World Area of Origin Type of organization Part B. The role of agents in sustainable energy supply Objective: Identify the relevance of the main agents involved in energy supply and the key parameters that have influence in their positioning QUESTION 5 What is the importance of each of the following topics to maximize Non Government Organization (NGO) electrification projects impact? Europe, North America and Africa respondents agree that those three topics are the main issues to maximize the NGO electrification impact Respondents from North America give much more importance to “Information and sharing of experience” than the average. Latin America’s respondents, on the contrary, consider that this is the least important topic RoW’s respondents are the only group that considers “Organization financial strength” as the most important issue to consider. On the contrary they estimate that “Demand oriented approach” is the least important parameter. Other group is the only that considers “Organizational financial strength” as the most important topic. Academics estimate also that this topic is most important than “Previous experience” Multilateral and financial agencies are those that value the “Previous experience” as the leading parameter in an NGO electrification project. In relative terms this is also the group that gives “Information and sharing of experience” the most importance (1) Only those four groups with the most significant differences to the average are shown in the graphics

21 21 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 6 Analysis What is your agreement with each of the following sentences related to the causes that justify lack of adequate private sector involvement in rural electrification projects? Part B. The role of agents in sustainable energy supply Objective: Identify the relevance of the main agents involved in energy supply and the key parameters that have influence in their positioning Results 71% of respondents considers that “Lack of profitability” is the main cause that justify lack of adequate private sector involvement in rural electrification projects Average value Three main factors modal weighted and percentage of respondents covered (1) (1) Value calculated as the weighted average of two main modal values “Lack of profitability” and “Poor regulatory framework” are the main topics that respondents consider when talking about private sector involvement in rural electrification projects (71% and 60% of responses respectively) “Lack of appropriate financial instruments” although gets a superior average value obtains most responses concentrated in a Neutral (3) degree of agreement (32%) The absence of “Appropriate IFIs guarantees” is the least important cause that justify lack of adequate involvement of private sector. Only 13% of respondents firmly believes (5) that this is an important issue “Subsidies” are primary considered as Neutral (28% of respondents) although 20% of respondents really believes that this topic justify lack of adequate private involvement

22 22 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Differences into groups of respondents (1) “Lack of appropriate financial instruments” seems to be a more important argument for respondents from development countries. Except for Private Companies, “Lack of Profitability” is the main sentence considered World Area of Origin Type of organization Part B. The role of agents in sustainable energy supply Objective: Identify the relevance of the main agents involved in energy supply and the key parameters that have influence in their positioning QUESTION 6 What is your agreement with each of the following sentences related to the causes that justify lack of adequate private sector involvement in rural electrification projects? Most respondents agree that the absence of “Appropriate IFIs guarantees” is the least important cause Respondents from Africa, Asia-Pacific, Latin America and RoW consider that the “Lack of appropriate financial instruments” is really the main cause that justify the role of private sector North America’s respondents seems to be the most concerned in relative terms about the “Existence of badly oriented subsidies” Apart form “Lack of profitability” European respondents consider “Poor regulatory framework” as the second main cause Private Companies consider that “Poor regulatory framework” is the main cause to justify their involvement although they agree that profitability matters NGO is the group that gives more importance to the “Existence of badly oriented subsidies” in relative terms All groups, except Other communities, consider that “Lack of appropriate IFIs guarantees” is the least important justification (1) Only those four groups with the most significant differences to the average are shown in the graphics

23 23 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Index Methodology and participation Respondent’s Data Part A. Energy supply in developing countries Part B. The role of agents in sustainable energy supply Part C. Financing of renewable energy projects in developing countries Respondent’s Organizations and country of origin

24 24 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 7 Analysis What is in your opinion the importance of each of the following topics that influence financial sustainability of renewable electrification projects? Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries Results Financial sustainability of renewable projects is mainly considered from a demand-side point of view: “Micro financing schemes” and “Productive initiatives” are the two main topics that have significant influence Average value Three main factors modal weighted and percentage of respondents covered (1) (1) Value calculated as the weighted average of two main modal values “Microfinancing” and linking electrification with “Productive initiatives” are the leading topics that influence financial sustainability in renewable electrification projects (32% of respondents consider “Micro financing” as a “Very important” (‘5’) topic). “Availability of proper subsidies” is considered by 59% of respondents as the third main factor that has importance on sustainability. All three main factors get very similar punctuations “Local schemes for collecting” is mainly considered as an “important” (‘4’) topic (34% of total respondents) while “Participation of local financial resources”, although with superior average value, is seemed as a neutral element by the majority of respondents (33% of respondents consider that its importance is only ‘3’)

25 25 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Differences into groups of respondents (1) “Micro financing” is specially regarded by Academics, Private Co and NGOs. “Local schemes for collecting” it is least important factor by respondents from Africa and Asia-Pacific World Area of Origin Type of organization Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries QUESTION 7 What is in your opinion the importance of each of the following topics that influence financial sustainability of renewable electrification projects? “Micro financing” is considered as the main factor by respondents from Europe, North America and Latin America. Respondents from Africa and RoW estimate that “Development of productive initiatives” is the leading topic that influences financial sustainability. Latin Americans are also very concerned about that issue “Collecting” is the least important factor to consider by Asia-Pacific’s respondents and specially by Africans. “Availability of subsidies” is considered as the least important topic by respondents from Asia-Pacific and Latin America “Micro financing” is specially regarded by Private Co, Academics and NGOs. Analysts and specially Other group estimate that the existence of “Proper Subsidies” are the most important element that influences financial sustainability. Multilateral and financial organizations are the most concerned with the “Development of productive initiatives” and, as NGOs, consider the existence of “Proper Subsidies” as the least important factor that has influence in financial sustainability “Local schemes for collecting” is not considered as the main topic by any of the groups. (1) Only those four groups with the most significant differences to the average are shown in the graphics

26 26 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 8 Analysis What is in your opinion the suitability of each of these financial instruments when dealing with renewable rural electrification projects from an upstream point of view (entrepreneurs finance)? Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries Results “Renewable energy funds” are considered as the most suitable financial instrument to deal with renewable rural electrification projects by a 72% of respondents Average value (2) (1)Value calculated as the weighted average of two main modal values (2)Responses “Unknown/Not Answered” not considered “Renewable energy funds” and “Project financing” are the two main financial instruments considered by respondents when thinking about financing renewable electrification projects from an entrepreneur point of view. “Renewable energy funds” are specially “Very suitable” (‘5’) according to 43% of respondents “Securitisation” and “Portfolio risk instruments” obtained quite similar punctuations and most respondents consider that the suitability of those ways of financing is “Neutral” (‘3’) (23% of respondents in both cases) “Mezzanine finance” or quasi “risk capital” is clearly the least suitable way of financing renewable projects in developing countries. Only 2% of respondents consider this way of financing as “Very suitable” Three main factors modal weighted and percentage of respondents covered (1) (2)

27 27 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 8 Analysis What is in your opinion the suitability of each of these financial instruments when dealing with renewable rural electrification projects from an upstream point of view (entrepreneurs finance)? Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries Results The percentage of “Unknown/Not Answered” responses was quite important in each category, specially in “Mezzanine finance” or “Securitisation” Percentage of responses in each category First modal value in “Mezzanine finance”, “Securitisation” and even “Portfolio risk management instruments” was “Unknown / Not Answered”. Specially significant is that 53% of respondents didn’t know or consider mezzanine finance opportunities of financing when dealing with renewable in developing countries. Even among those who valued suitability of mezzanine finance, the most frequent answer was ‘3’. Country and project risks and lack of institutional support determine the absence of involvement of this kind of financing Although “Securitisation” obtains a high percentage of ‘4’ responses, most participants didn’t consider or know this kind of financing. Lack of institutional support and inappropriate regulatory frameworks in developing countries could explain the absence of opportunities for this financing instrument

28 28 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Analysis of “Unknown/Not Answered” responses (as % of total answers in each group) Financing instruments like “Project finance” are still unknown by more than 15% of Europe, North and Latin America’s respondents. Academics is the group that obtain the worst percentages in each category World Area of Origin Type of organization Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries QUESTION 8 What is in your opinion the suitability of each of these financial instruments when dealing with renewable rural electrification projects from an upstream point of view (entrepreneurs finance)? “Mezzanine finance” is not known by more than 50% of respondents from each area except from Asia-Pacific’s respondents (30%) RoW countries seem to be the best knower of new forms of financing apart from “Mezzanine finance” “Project finance” was even unknown by more than 15% of European, North and Latin America’s respondents Europe’s respondents were those more unaware of “Securitisation” tools (almost 40% of respondents) Academics obtain the worst percentages in each category and specially, in relative terms, in “Portfolio risk instruments” or “Mezzanine finance” By contrast Private Companies are those who best know instruments like “Project finance” or “Renewable energy funds” Multilateral and Financing agencies are the group that is more in touch with “Mezzanine finance” or “Portfolio risk management instruments” NGOs seems to be quite balanced although the percentage of Unknown responses in Risk management tools is high in relative terms

29 29 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Differences into groups of respondents excluding “Unknown/Not Answered” responses (1) “Renewable energy funds” are specially regarded by all groups. Latin America’s respondents are quite sceptical towards “Securitisation” and NGO’s seems to be more fond of “Risk Instruments” than the average World Area of Origin Type of organization Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries QUESTION 8 What is in your opinion the suitability of each of these financial instruments when dealing with renewable rural electrification projects from an upstream point of view (entrepreneurs finance)? Latin America’s respondents are those who think that suitability of “Renewable energy funds” is the higher, while confidence in “Securitisation” is the lowest All groups except from Latin America and RoW consider that “Mezzanine finance” is the least suitable instrument North America’s respondents consider that suitability of “Securitisation” is higher than the average value “Renewable energy funds” are positively considered by Africa’s respondents while suitability of “Project finance” instruments is much lower than the average All groups consider “Renewable energy funds” as the best instruments to deal with renewable rural electrification projects Surprisingly NGO’s respondents are those that consider suitability of “Portfolio risk management instruments” as the highest in relative terms All groups except from Multilateral and Financing agencies consider that suitability of “Mezzanine financing” is the lowest. Multilateral and Financing agencies, by contrast, consider its suitability as higher even than “Securitisation” or “Portfolio risk management instruments” (1) Only those four groups with the most significant differences to the average are shown in the graphics

30 30 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 9 Analysis What is the suitability of each of these financial instruments when dealing with renewable rural electrification projects from a downstream point of view (end-user finance)?. Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries Results Except from “Commercial loans” and “Leasing” the rest of instruments are considered very suitable by most respondents, being “Revolving funds” the most appropriate instrument Average value (2) Three main factors modal weighted and percentage of respondents covered (1) (2) “Revolving funds” and “Productive end-user application linkage” are the preferred financial instruments by most respondents. The majority of respondents (26% and 29% respectively) consider these proposals as “Very suitable” (‘5’). First modal value for “Micro credits” is ‘4’ with 33% of respondents, although 29% of respondents consider also this instruments as “Very suitable” Clearly “Leasing instruments” are identified as the least suitable for financing renewable rural electrification projects from a downstream point of view. Only11% of respondents consider this instrument as “Very suitable” “Commercial loans” are also considered not to be very appropriate. 26% of respondents think that suitability is only ‘1’ or ‘2’, while only 9% value those instruments as “Very suitable” (1)Value calculated as the weighted average of two main modal values (2)Responses “Unknown/Not Answered” not considered

31 31 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 9 Analysis Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries Results Instruments that are considered most suitable for financing renewable rural electrification projects from a end- user perspective are also those which get the higher percentages of “Unknown/Not Answered” responses Percentage of responses in each category What is the suitability of each of these financial instruments when dealing with renewable rural electrification projects from a downstream point of view (end-user finance)?. “Revolving funds” are considered the most appropriate instruments although the percentage of respondents that didn’t know this tool was quite high (20%). The same is true for “Productive end-user application linkage” that obtains 16% of responses as “Unknown/Not Answered” First modal value in “Revolving funds” and “Productive end-user application linkage” was “Very suitable” (‘5’) while “Commercial loans” and “Leasing” only got a ‘3’ as the most frequent value. Percentage of respondents that considered “Leasing” been “Not suitable at all” was 14% “Microcredits” and “Commercial loans” are the instruments whose percentage of Unknown responses is the lowest (11%)

32 32 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Analysis of “Unknown/Not Answered” responses (as % of total answers in each group) The relative percentage of “Unknown” in all the instruments proposed was higher in between European and Academic’s responses. Only Multilateral and Financing Institutions were aware of all the alternatives proposed World Area of Origin Type of organization Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries QUESTION 9 European respondents are those who are more unaware of most financing instruments from a downstream point of view (33% of respondents didn’t know “Revolving funds”) On the contrary respondents from Africa and Asia-Pacific were those with the lowest percentages of unknown answers in each of the different opportunities for financing Percentage of U/N.A for “Leasing” in RoW’s countries is specially high (31%) Only Multilateral and Financing institutions were aware of all the instruments proposed Apart from the previous group, in relative terms, NGO and Analyst were also the best knowers of different alternatives On the contrary Academic’s responses obtained the highest percentages of “Unknown/Not answered” in all the categories Among Private Companies’ responses the percentage of “Unknown” for “Revolving funds” or “Leasing” was quite high What is the suitability of each of these financial instruments when dealing with renewable rural electrification projects from a downstream point of view (end-user finance)?.

33 33 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Differences into groups of respondents excluding “Unknown/Not Answered” responses (1) North America’s respondents still consider “Micro credits” as the most suitable instrument. All groups agree that “Leasing” instruments are among the worst World Area of Origin Type of organization Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries QUESTION 9 What is the suitability of each of these financial instruments when dealing with renewable rural electrification projects from a downstream point of view (end-user finance)?. Africa’s respondents are those that consider that “Revolving funds” are the most suitable instrument even better than “Micro credits”. Notwithstanding respondents from North America estimate than “Micro credits” are by far the most appropriate financial instrument Respondents from Latin America and RoW are the most critical towards “Commercial loans”, while North America’s respondents consider that “Leasing” is the worst instrument in relative terms. Asia-Pacific’s respondents also estimate that “Revolving funds” are the most suitable instruments All groups except NGO’s consider “Commercial loans” the least suitable instrument. This group of respondents estimates that “Leasing” is the least appropriate while “Micro credits” should be clearly empowered Multilateral and financial agencies, Academics and Private Companies agree that linking electrification with “Productive end-user applications” is the most suitable instrument to assure sustainability. On the contrary NGOs and specially Analyst or researchers give much less punctuation to this proposal in relative terms (1) Only those four groups with the most significant differences to the average are shown in the graphics

34 34 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 10 Analysis What is in your opinion the potential of the following topics to contribute to rural renewable projects deployment in developing countries? Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries Results 53% of respondents consider that Flexibility Kyoto Mechanisms have high potential to contribute to renewable deployment in developing countries Average value Main factors modal weighted and percentage of respondents covered (1) (1) Value calculated as the weighted average of two main modal values Potential of both topics seems to be as much important from an average value perspective. Notwithstanding potential of “Flexibility Kyoto Mechanisms” is much more considered from a modal point of view (28% of respondents consider that Kyoto Mechanisms have a “Very high” (‘5’) potential, while most respondents (31%) consider that the potential of “Corporate Social Responsibility” is only “Medium” (‘3’)) Still 10% of respondents consider that the potential to contribute to rural renewable projects deployment could be “Not important at all” (‘1’) in the case of Kyoto Mechanisms

35 35 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Differences into groups of respondents Multilateral and Financial institutions are the most sceptical towards both topics. Respondents from Asia-Pacific and Africa are those that consider that CSR has a higher potential to explore World Area of Origin Type of organization Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries QUESTION 10 What is in your opinion the potential of the following topics to contribute to rural renewable projects deployment in developing countries? RoW countries seem to be the more enthusiastic with Kyoto instruments while the rest of regions of the World have a similar point of view Respondents from Africa and specially Asia-Pacific give much more importance to CSR than the average, and on the contrary Europe and North-America’s respondents are much more sceptical Latin America and Caribbean’s respondents do not discriminate in between both proposals Multilateral and financial institutions are clearly the most sceptical towards both topics as they consider that their potential is lower than ‘3’ Private Companies, Academics and Other group are those who rely the most on Flexibility Kyoto mechanisms NGOs and Analyst are the only groups that estimate that CSR could have superior potential that Flexibility Kyoto mechanisms

36 36 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es QUESTION 11 Analysis What is in your opinion the potential of each of this topics to increase resource mobilisation to finance renewable electrification solutions in developing countries? Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries Results Approximately 70% of respondents consider that “Institutional support”, “Local empowerment” and “Innovative financing” have a High or Very High potential to increase resource mobilisation to finance renewable electrification solutions Average value Three main factors modal weighted and percentage of respondents covered (1) (1) Value calculated as the weighted average of two main modal values Approximately 40% of respondents consider that those three topics have “Very high” (‘5’) potential to increase resource mobilisation. Only 3% of respondents estimate that “Innovative financing” has a “Very low” (‘1’) potential to increase the possibility of new financing “Adjustment of existing subsidies” is considered the proposal with lowest potential to obtain resources but 57.5% of respondents estimate that its potential is still medium-high (3.5) Most respondents’ opinion with regard to “R&D and demonstration activities” (29%) is that their potential to increase resource mobilisation is medium (‘3’)

37 37 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Differences into groups of respondents (1) “Innovative financing” should be clearly empowered by North America’s respondents and Multilateral and Financial Institutions while Private Companies and Europeans are more concerned about “Institutional support and good regulatory framework” World Area of Origin Type of organization Part C. Financing of renewable energy projects in developing countries Objective: Identify best practices when financing renewable projects in developing countries QUESTION 11 What is in your opinion the potential of each of this topics to increase resource mobilisation to finance renewable electrification solutions in developing countries? “Adjustment of subsidies” is the proposal with the lowest potential except for North America and Europe respondents that clearly agree that R&D has the lowest potential to increase resource mobilisation “Innovative financing” is the main topic considered by North America, Asia-Pacific and Africa respondents. Latin America’s countries estimate that “Local empowerment” has superior potential to boost resource mobilisation Multilateral and Financial institutions are those who rely the most on “Innovative financing” and “Local empowerment”. They don’t consider R&D has a high potential to increase resource mobilisation “Institutional support and good regulatory framework” are the main concerns of Private Companies that, by the opposite, do not rely on “R&D” as a way of obtaining new resources Academics agree that “Innovative financing” and “Institutional support” are the leading topics to address in the future (1) Only those four groups with the most significant differences to the average are shown in the graphics

38 38 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Index Methodology and participation Respondent’s Data Part A. Energy supply in developing countries Part B. The role of agents in sustainable energy supply Part C. Financing of renewable energy projects in developing countries Respondent’s Organizations and country of origin

39 39 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Respondent’s Organizations and country of origin (1) (1) List of organizations that explicitly have provided their name and country in the survey. Only respondents data Academic NGO Universidad Oriente, Uttaranchal Academy Of Administration, Nainital, Uttaranchal, IUCN Commission on Environmental Law, Fundacion Bariloche, U. P. Comillas, Research Centre for Applied Science and Technology (RECAST), Universidad Central de Las Villas, U. Carlos III, Montorf University, IIT-UPCO, Ecole des Mines de Nantes, University of Engineering and Technology Taxila,Indian Institute of Science, Aalborg University, Universidad Politécnica de Madrid, Imperial College London, Ankara Univ. Science, Universidad de Antioquia, University of Twente, Atmospheric Research and Information Analysis, Centre for Energy Research and Development, Obafemi Awolowo University, Ile-Ife,Kwame Nkrumah University of Science and Technology, University of Bahrain, Ho Chi Minh City University of Technology, Kao-Mei Institute of Technology, American University of Beirut, V. P. & R.P. T. P. Science College, Brno University of Technology, South Pacific Applied Geoscience Commission, University of São Paulo, Politehnica University of Timisoara, Graz University of Technology, Universidade Federal do Pará, Universidad Nacional De San Juan, University of applied sciences, West Switzerland, Higher Technical Institute, The University of Melbourne, Cairo University, Al-Nahrain University College of Engineering,Santa Clara University, Worldwatch Institute, Universidad Católica de Valparaiso, Omdurman Islamic University, Advanced School of Business Novi Sad, MIT, University of Texas, University of Chile, Sts. Cyril and Methodius University Energy and Development Action (EDA), Electriciens sans frontières, Energia sin Fronteras, Kora Evangelistic Family Associate’s, Enerwise Africa, Energy Conservation Research & Development Center (ENERTEAM), Centre for EcoHarmony and Development,Integrated Development Foundation Nepal, SESSA, Iranian Society of Environmentalists, Egyptian Solar Energy Society, Tanzania Solar Energy Association, NEPA-Núcleo de Ensino e Pesquisa Aplicada, European Copper Institute, Association for promoting renewable energy in Cyprus, Skyheat Associates, Friends of Lanka,Working Group on Development Techniques (WOT),Energy Forum,Fundación IPADE,Grupo Interdisciplinario de Tecnología Rural Apropiada A.C.,International Solar Energy Association, NGO Loke Dalan, Fundación Gente Nueva, The Danish Organisation for Renewable Energy

40 40 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Respondent’s Organizations and country of origin (1) (1) List of organizations that voluntary have provided their name and country in the survey. Only respondents data Private Co Multilateral, or Financial organization Research or consultancy Other Clouston Energy Research, LLC, StonePower AB, Parallax – Sustainable Development Solutions, ECO Ltd, Telefonica, InterMoney Energía, Iberdrola, Unión Fenosa, Ecosynchron Pvt. Ltd., Tinytech India, Social Energy, UNESA, NORESCO LLC, +GM+ Engg Industries, Deng Limited, Marstal District Heating, Rahimafrooz Batteries Ltd, Conti Enterprises Inc.,SUZLON Energy Limited, Energía Dinamica S,A, Cogen Energía España SAU, Isofoton, Propel Bhd., Beta Engineering Services,ICPE-Laboratory for Energy Conversion Technology- 02, IOSYS LIMITED, Solar Ice Company, Umeme Jua Ltd,Solar Technology Ltd, Solar technospread plc, Soldata, Aquila Energy, RAPS Consulting Pty Ltd, NET Nowak Energy & Technology Ltd. International Science and Technology Center (ISTC), FAO- UN Food and Agriculture Organization, UE, DoE (Department of Energy), African Development Bank, Organización Latinoamericana de Energía - OLADE, World Bank, World Energy Council, DFID, UNDP, UNECA CNE, DG Tren, Energy Management Centre-Kerala, Trivandrum-14, Soccièté National des Eaux du Cameroun (SNEC), Texas Solar Cookers, MECC, Arsenal research, Ministry of Energy and Mineral Development, Kampala, Green Empowerment, Sumitomo electric industry, Instituto de Investigaciones Eléctricas, Ormat Systems Ltd ATDE S.L.,Bureau of Environmental Analysis (BEA) International,CCH Consulting,Compuserve,Palmer Development Consulting, EnerConsult,PA Energy A/S, InterEnergy s.r.l., Energy Research Centre, Univ. Cape Town, Carl Bro as, Midsummer Sparks Electrics, Council for Scientific and Industrial Research, Instituto Tecnológico de Canarias (ITC), Bureau d’Etudes Techniques et de Surveillance,Rural Industries Promotions Company (RIPCO), Green Energy System, Universal Trading,

41 41 Rodríguez Monroy, C., San Segundo Hernández, A. (2005) School of Industrial Engineering Department of Business Administration © Universidad Politécnica de Madrid www.upm.es Worldwide survey: 69 Countries of origin Europe Asia-Pacific Africa North America Latin America and Caribbean Rest of the World Cameroon, Congo, South Africa, Kenya, Zimbabwe, Chair, Uganda, Tunisia, The State of Eritrea, Cabo Verde, Nigeria, Mauritania, Tanzania, Ghana, Mali, Ethiopia, Bostwana, Timor-Leste, Sudan Nepal, India, Pakistan, Vietnam, China, Iran, Japan, Bangladesh, Taiwan, Sri Lanka, Australia, Fiji, Malaysia, Indonesia Spain, Sweden, Germany, UK, France, Italy, Belgium, Netherlands, Denmark, Austria, Cyprus, Czech Republic, Romania, Switzerland, Serbia and Montenegro, Switzerland, Macedonia USA, Canada Cuba, Argentina, Ecuador, Colombia, Brasil, Mexico, Guatemala, Chile Jordan, Russia, Turkey, Nepal, Egypt, Israel, Kingdom of Bahrain, Lebanon, Iraq (1) List of organizations that voluntary have provided their name and country in the survey. Only respondents data Respondent’s Organizations and country of origin (1)


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