Financing renewable energies in Myanmar COMMITTEE 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, 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)) - The costs of environmental and social harm is not integrated in business and investment activities - Inefficient energy use - 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 How to finance renewable energy deployment ? Facing the main energy challenges … Improving energy security Mitigating and adapting climate change … Offers solutions for context-related issues Reduction of the tensions over large projects (dams, coal plants) Increase rural energy access Create jobs and new markets

Unlocking financial constraints depends on many factors Delivering financing is higly context-specific Market development Enterprise’ need for funding End users Policy and regulatory framework Domestic financing institutions

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 Minigrids Micro scale Government decision level Agglomerated consumers in a village One or two households

Financing tools National scale Tax cuts Multilateral financial institutions Feed- in tariffs Cross- subsidies

Financing tools National scale 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 Tax cuts Multilateral financial institutions Feed- in tariffs Cross- subsidies

Financing tools National scale Feed-in tariffs 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. Tax cuts Multilateral financial institutions Feed- in tariffs Cross- subsidies

Financing tools National scale Cross-subsidies 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 Tax cuts Multilateral financial institutions Feed- in tariffs Cross- subsidies

Financing tools National scale 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 Tax cuts Multilateral financial institutions Feed- in tariffs Cross- subsidies

Financing tools Mini-grid and micro scale Subsidies PAYGO Empower CBOs Micro- credit

Financing tools Mini-grid and micro scale Subsidies Subsidies should either be oriented towards:  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 Ex. China’s Golden Sun Policy, which provides subsidies for 500 MW of photovoltaics projects until 2012 to temporarily support the domestic solar industry Subsidies PAYGO Empower CBOs Micro- credit

Mini-grid and micro scale 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 Subsidies PAYGO Empower CBOs Micro- credit

Mini-grid and micro scale Micro-credit institutions (especially for micro scale) 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 Subsidies PAYGO Empower CBOs Micro- credit

Mini-grid and micro scale 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) Subsidies PAYGO Empower CBOs Micro- credit

Thank you !