Enabling Sustainable and Decentralized Electrification Bali Clean Energy Forum 12 February 2016 Lazeena Rahman Private Sector Operations

Public sector operations Sovereign loans, grants, technical assistance, and co-financing (i.e. Ministry of Finance) Private sector operations Lending on commercial/market basis (i.e. corporates) $2.6 billion direct financing and investment $4.5 billion in co-financing $7.1 billion $27.2 billion 2015 Approved Investments and Cofinancing ADB = public sector (sovereign) + private sector (non-sovereign) 1

PSOD provides a range of financing solutions to meet its clients’ needs 2 2  Direct loans: market-based pricing in major international and/or local currencies  B-loans: ADB acts as Lender of Record and administers the loan, but it is funded by 3 rd - party financing  Unfunded risk participations: fronting arrangement whereby IFIs, commercial banks and insurers bear underlying credit risk on ADB financings  Direct investments in enterprises and financial institutions through common shares, preferred stock, and/or convertibles  Investments in private equity funds as a general partner (GP) or limited partner (LP)  Political Risk Guarantee (PRG): protection against political risks, including foreign exchange restrictions, expropriation, political violence and contract dispute  Partial Credit Guarantee (PCG): protection against credit risks, including non-payment by the borrower of the principal and interest due  Technical assistance funding for project preparation, capacity development, R&D, etc.  Deployment and management of 3 rd party commercial capital in ADB-led transactions  Deployment and management of 3 rd party concessional and returnable capital for targeted industries / geographies Debt Equity Guarantees & Technical Assistance Asset Management

Selected Overview of Recent ADB Renewable Energy Transactions in Asia 3 India Indonesia Philippines Thailand ACME-EDF Solar Power NSL Renewable Power ReNew Power Off-grid Pay-As-You-Go Solar Solar and Wind Power Rantau Dedap Geothermal Power (Phase 1) Sarulla Geothermal Power Generation Central Thailand Solar Power NED Solar Power Provincial Solar Power Subyai Wind Power Nam Ngiep Hydropower Lao PDR Geothermal project bond Georgia Adjaristsqali Hydropower Pakistan New Bong Escape Hydropower Patrind Hydropower Gulpur Hydropower Zorlu Wind Power

Case Studies: Indonesia geothermal $: US dollars; JBIC: Japan Bank for International Cooperation (1)Project Name: Sarulla Geothermal Power Development Project (2)Mezzanine Finance (3)Canadian Climate Fund for Private Sector in Asia Description:  Geothermal Independent Power Producer (IPP) with approx. 320 MW of installed capacity in N. Sumatra and 30-year power offtake with state-owned utility PLN. Total project cost of $1.6 billion.  Sponsors: Itochu Corporation, Kyushu Electric Power Company, Ormat International, Medco Power Indonesia. Total ADB assistance:  $250 million ADB direct loan; $80 million loan via ADB-managed Clean Technology Fund (2) ; $20 million loan via ADB-managed Canadian Climate Fund. (2)(3)  20 year tenor with 4 year grace period. Key features:  Accelerating development of the Indonesia geothermal sector via the financing, implementation, and commissioning of the first geothermal IPP in Indonesia in over 10 years.  Avoiding the emission of 1.3 million tons of greenhouse gases (CO 2 equivalent) per annum. 4 4 STRICTLY CONFIDENTIAL Sarulla 320MW Geothermal Power (1)

Case Studies: Indonesia geothermal Description:  Given the high barriers to entry and capped returns facing geothermal projects, the relative absence of risk sharing solutions during the resource discovery phase has limited geothermal power expansion across the globe.  Approx. 240 MW geothermal IPP development in S. Sumatra requiring early stage financing to support drilling exploration program.  Sponsors: Supreme Energy, GDF Suez and Marubeni Corporation. Total ADB assistance:  $50 million loan via ADB-managed Clean Technology Fund.  Maximum 4 year loan with bullet repayment. Key features:  Bridging financing gap – It is the first significant non-recourse loan in which risks are shared with the private sector during the resource discovery phase of a geothermal project, setting new milestone for the Indonesian geothermal sector and the regional power market.  Catalyzes more private investment in geothermal energy by demonstrating resource viability in Indonesia. 5 5 STRICTLY CONFIDENTIAL Rantau Dedap 240MW Geothermal Power (Phase 1)

Enabling sustainable and decentralized generation Purpose: Financing clean energy companies with proven business models for decentralized electrification. For example, the concessional funds can be used to:  Finance gaps in the project’s financing or company’s plans to scale up implementation  Partially mitigate credit risks of project sponsors, or other perceived risks of other lenders  Guarantee short or medium term loans to bridge timing gaps between capital expenditure needs and payment of government subsidies  Provide lower-cost loans to help mitigate the high upfront capital costs of RE systems. Approved funds: $30 million investment capital (available funds of $26.5 million as of December 2015) Modalities: Equity, senior debt, subordinated debt, common equity. Average investment: $0.5 million to $7 million, depending on project structure/company needs Structuring: Tenor, security, seniority, hold periods, rights/protections, pricing will depend, project to project. Monitored development impacts:  GHG Emissions avoided  ADB-CTF financial leverage (how much private capital was catalyzed relative to CTF?)  Installed capacity of distributed power resources  Generation of distributed power resources  Number of previously non-electrified households provided with access to electricity  Number of new jobs generated (directly or indirectly). 6 6 STRICTLY CONFIDENTIAL ADB Clean Technology Fund (CTF) Renewable Energy and Distributed Power Generation Program

Case Study – Simpa Networks (India) 7 STRICTLY CONFIDENTIAL

Case Studies: Off Grid Pay-As-You-Go Solar Power Project Company: Simpa Energy India Private Limited (Simpa Networks) provides a secure, prepaid platform to enable simple, affordable, sustainable solar energy solutions for underserved consumers in (mainly) rural India. ADB role:  $2.0 million equity investment (2012)  $4.5 million ADB CTF debt financing (2015) to partially fund $24 million in expansion and capex needs. Key Features:  Mobile payments for solar energy through SMS  Recurring energy expenditure is transformed into an asset purchase  Directly contributes to the outcome of increasing the number of households with access to electricity and indirectly contributes to health, education gender and productivity outcomes. 8 8 STRICTLY CONFIDENTIAL ADB Equity (2012) + ADB CTF Debt (2015)

Simpa Networks 9 9 STRICTLY CONFIDENTIAL

10 STRICTLY CONFIDENTIAL Simpa Networks

11 STRICTLY CONFIDENTIAL Simpa Networks

12 STRICTLY CONFIDENTIAL Simpa Networks

13 STRICTLY CONFIDENTIAL Simpa Networks

14 STRICTLY CONFIDENTIAL Simpa Networks

15 Thank you Lazeena Rahman Investment Specialist Asian Development Bank Private Sector Operations Department Indonesia Resident Mission Bank BRI II Building 7th Floor JL. Jend. Sudirman, Kav DKI Jakarta Phone: