1. MES 2013 Conference 2nd International Conference Micro Perspectives for Decentralized Energy Supply Feb. 27 to Mar. 1, 2013 in Berlin, Germany Exploring Energy SME Financing in Developing and Emerging Countries Funded by A study realized by

2. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 2 Agenda 1.Introduction by Sustainable Business Institute 2.Report exploring energy SME financing 3.Introduction of discussion participants 4.Panel discussion – Access to finance: appraisal of the current situation – Recent developments – Characterization of the financing gap – Innovations for closing the gap – Bridging the gap from a public perspective

3. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 3 Agenda 1.Introduction by Sustainable Business Institute 2.Report exploring Energy SME financing 3.Introduction of discussion participants 4.Panel discussion

4. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 4 Initial questions 1.What are barriers for market development of Solar Home Systems? 2.What role do financial services of local companies play and how can they be implemented and refinanced? 3.How can public authorities facilitate market development effectively and efficiently? Questions at the outset

5. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 5 Initial questions 1.What are barriers for market development of Solar Home Systems? 2.What role do financial services of local companies play and how can they be implemented and refinanced? 3.How can public authorities facilitate market development effectively and efficiently? Research questions for this study 1. What is specific about energy SMEs, especially in terms of the challenges they face? 2.Can the existence of a financing gap for energy SMEs be confirmed? 3. If so, what are the reasons for this gap and how can the gap be bridged? Questions at the outset

6. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 6 The financing gap Asset backing High Low HighLow Size of financing Microfinance Institutions Private Equity / Venture Capital Traditional banks Financing gap for SMEs ca. $5k - $20kca. $200k - $2mn “Even after the businesses had already grown into 500k+ USD sales per year, they still did not get financing from local banks... despite the foreign funds put into local banks." – funder “Even after the businesses had already grown into 500k+ USD sales per year, they still did not get financing from local banks... despite the foreign funds put into local banks." – funder

7. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 7 Challenges along the value chain Local distributor Manufacturer National distributor Microfinance Institution Integrated distributor and service provider Integrated distributor, service provider and MFI End User

8. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 8 Challenges along the value chain Local distributor Manufacturer National distributor Microfinance Institution Integrated distributor and service provider Integrated distributor, service provider and MFI End User High upfront costs to build up distribution and service infrastructure

9. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 9 Challenges along the value chain Local distributor Manufacturer National distributor Microfinance Institution Integrated distributor and service provider Integrated distributor, service provider and MFI End User High upfront costs to build up distribution and service infrastructure Need to provide consumer financing

10. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 10 Challenges along the value chain Local distributor Manufacturer National distributor Microfinance Institution Integrated distributor and service provider Integrated distributor, service provider and MFI End User High upfront costs to build up distribution and service infrastructure Internationally- sourced components Need to provide consumer financing

11. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 11 Challenges along the value chain Local distributor Manufacturer National distributor Microfinance Institution Integrated distributor and service provider Integrated distributor, service provider and MFI End User High upfront costs to build up distribution and service infrastructure Internationally- sourced components Lack of funder understanding of energy SMEs and their products Need to provide consumer financing

12. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 12 Scoping and due diligence Identifying strong entrepreneurs Obtaining solid data on business cases Enterprise development Cost of technical assistance / enterprise development services Lack of local data for enterprise development Challenges from the funders' perspective “There’s lots of money but no deal flow. A major challenge is identifying investments, identifying strong entrepreneurs and building them up to be confident to engage in the business.” “The main challenge of [name omitted] working with energy SMEs lay in the fact that the SMEs did not provide [us] with primary data.” ”Technical assistance was the problem - there was too much face time, i.e. time spent face-to- face with our customers and their customers.”

13. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 13 Thank you

14. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 14 Agenda 1.Introduction by Sustainable Business Institute 2.Report exploring energy SME financing 3.Introduction of discussion participants 4.Panel discussion

15. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 15 Agenda 1.Introduction by Sustainable Business Institute 2.Report exploring energy SME financing 3.Introduction of discussion participants 4.Panel discussion – Access to finance: appraisal of the current situation – Recent developments – Characterization of the financing gap – Innovations for closing the gap – Bridging the gap from a public perspective

16. MES 2013 Conference, Feb. 27 to Mar. 1, 2013, in Berlin, Germany 16 What are current funding approaches in practice? What are innovative approaches that are addressing the gap? Where in the value chain can financing be deployed with the highest impact and lowest risk? How do funds effectively assess financing proposals? How do funders and entrepreneurs perceive the due diligence process? Which are the innovative approaches in the market? What is the impact of business model choice (i.e. cash-based, lending- based or fee-for-service) on financing needs? What are appropriate financing instruments? Discussion