1. Capital access for clean energy businesses in Africa
LCEDN, London 24/25 June 2013

2. How the energy access gap will be closed. Africa (IEA)
Large infrastructure is less critical to closing the universal energy access gap
How the energy access gap will be closed. Africa (IEA)
Off-grid
On-grid
Mini-grid

3. Conventional approach won’t solve most of the energy access challenge
How the energy access gap will be closed. Africa (IEA)
Asset types:
Domestic scale solar, diesel, wind
Capital;
SME early stage equity, growth capital, inventory / working cap/consumer credit finance,
Mostly private
Asset types:
Regional interconnectors, 50MW-1GW+ power stations, grid extensions, etc
Capital;
Public, national governments, ODA, MDBs. Not much private
Off-grid
On-grid
Mini-grid
Asset types:
50kW to 2MW hydro/solar/wind/AD/gasifier/biomass plus local distribution
Capital;
Asset/project finance/SME & project development equity. Mostly private, some public/NGO support

4. Comparing LCOE of various electrification options
30km 3 per km
1.500
Diesel $1.50/l
US$ per kWh
1.000
Diesel $1.50/l
1700 kWh /m2/yr
$ Wp
Diesel $0.70/l
0.500
$ Wp
2600 kWh /m2/yr
Diesel $0.70/l
1 Km 100 per km
Source: NORPLAN Cost competitiveness of rural electrification solutions

5. There are as many different types of capital need in RE as there are in any other sector
Examples
Early stage project development
Cane-to-ethanol plus IPP in Belize needs to spend $200k developing its $200m investment case
Project construction
$1-7m capex for a series of 0.3-3MW small hydro facilities in Tanzania & Rwanda
Product / technology development
$400k for innovative concentrated solar PV configuration component development, Kenya
Proof of concept trialling
$200k for trial establishment of a mingrid powered by a 30kW maize cob gasifier in Haiti
Growth capital
$1m for a pay-as-you-go solar home systems rollout, Rwanda
Working capital – inventory
$250k for a solar lantern distributor to replenish its supply chain from Asia to rural Tanzania & Kenya
Working capital – consumer
$300k for credit to a portfolio of schools buying improved cookstoves in Uganda

6. Public capital can support private participation in most types of capital need
Private capital – challenges
Public funding - role
Early stage project development
High risk – “a punt”
Cost share, with or without upside interest
Project construction
Expected returns?
Some risks hard to assess
Capital grant or revenue subsidy (FiT supplement)
Product /technology development
Very thin early stage equity/VC markets
Proof of concept trialling
Growth capital
Shallow equity market
Debt mkt appetite for RE sme’s
Seed/cornerstone , new funds
Credit support for debt markets
Working capital – inventory
Working capital – consumer

7. Challenges for DFIs in small scale renewable projects
Aggregation
How to aggregate up the deal flow into something that is manageable?
Integration
How to create an integrated approach that tackles all aspects of the problem?
Allocation
What process for deciding which business/project to allocate capital/resources to?
Risk
How to balance the financial objectives of the DFI and the “pioneering” objective of the intervention?