10. Mai 2002 Capacity Development towards Project Development and Financing for RE and Access Projects in Africa Michael Franz

Background: why are we doing this? SSA: 13% of the world’s population, but only 4% of its energy demand Since 2000 energy use has risen by 45% Only 290 out of 915 million people have access to electricity 80% rely on traditional use of solid biomass, mainly fuelwood, for cooking “Modern” renewables account for less than 2% of the primary energy mix Annual (private!) investment in the range of double-digit billion US$ is required per year to meet Africa’s energy needs Enormous challenge = huge opportunities! Prerequise: capacity development! New Investment in Clean energy in Sub-Saharan Africa 2004-15 ($bn); Source: Bloomberg New Energy Finance

Perspective I: Success Factors for Private Investment (simplified) These success factors must come together for project development and financing to occur, and thus investment with all associated benefits to materialise Each success factor requires targeted capacity development activities, through a combination of all forms and tools available General Investment Climate, ease of “Doing Business” Sector / Market-Segment-Success Factors Policy- and Regulatory Framework Information and Network / Contacts Financing Technical- and Doing-Business Capacity Business Models / Project Preparation Implemen-tation and Operation

Perspective II: Key Target Groups of CD / CB Every target group needs to be capacitated through appropriate forms of CD / CB Key challenge: how to build capacity of African project owners and developers! Sector - / Market-Specific Enabling Environment Policy and Regulatory Framework (Capacity of Regulators) Project Development Process Early Preparation Late Preparation Financing / Implementation Operation Capacity of Project Proponents / Developers Capacity of Financiers (local banks)

Perspective III: Simplified / Generalized Project Development Process

Focus: Small / Meso-Scale RE, both on- and off-grid Large / Meso- scale on-grid (IPP) Ticket size: XX-XXX US$m (meso: X-XX US$) Key regulations: PPA (FiT) Off-Grid (Mini-Grids) Ticket size: 0.X-X US$m (bundled X-XX US$m) Key regulations: Licences, Tariffs, Grid-connection standards © KPLC © Gigawatt Global © GIZ Small on-grid (captive power) Ticket size: 0.X-X US$m (bundled X-XX US$m) Key regulations: FiT / Net-Metering Off-Grid (Standalone Systems) Ticket size: X-XX US$m (“bundled”) Key regulations: Standards, Import Tax / Duties © GIZ © MKOPA © GIZ © Mobisol 6

Key Challenges re. Project Development and Financing Lack of finance is not the problem, neither in the national nor the international capital markets Problem I: Systemic / Structural Disadvantage of Smaller Projects (Transaction Costs) Problem II: „Disconnect“ between Developers and Financiers: Perspective Financiers: lack of viable projects Perspective Developers: complex access to finance, overwhelming number of opportunities, each with specific access requirements Good news: the problem is increasingly appreciated, solutions emerging Financing: new/improved instruments, e.g. ElectriFI, AfDB SEFA, GEEREF, AREF, … Developers (CD/DB): support instruments, e.g. REPP, CTI PFAN, REEEP, EEP, RECP, …

What is the RECP? 10. Mai 2002 The RECP is rooted in the Africa-EU Energy Partnership (AEEP) as its delivery instrument for tangible results in terms of Africa-EU cooperation Objective: to mobilise private sector, stimulate private sector cooperation, project pipeline development for financing instruments (small-medium scale, on & off grid) It contributes directly to SDG, AREI, NDC and other international initiatives Funded by the European Commission, the Netherlands, Germany, Austria and Finland (total deployable budget: approx. 10.5m EUR, de facto over two years) Implemented by EUEI PDF (GIZ, G310); 6 technical staff (2 in Brussels, 2 in Addis Ababa, 2 in Eschborn) General purpose here is to introduce the key stakeholder groups AND the fact that RECP understands itself as a facilitator linking actors and instruments. No need to reinvent the Wheel! Work with partners, support instruments, etc. is at the heart of RECP.

How can the RECP provide support? 10. Mai 2002 Well structured and accessible Market Information Identifying Project Opportunities in Partner Countries Match-Making Events in Africa and Europe Project preparation support and access to financial support Successful Access to Financing + complementary framework support + support to skills development and innovation

Summary and Take-Aways Investment requires various success factors to be in place, each of which are associated with capacity development needs Capacity needs can be further grouped according to key target groups in relation to project development and financing The project development process as such is complex, and requires capacity development in every step; appropriate forms of CD / CB differ depending on the “maturity” of the project and the level of experience of project developers Capacity needs of all actors, in all three perspectives, may differ considerably between “market segments” For project development and –financing, all forms of CD / CB may be appropriate At some point, open / group / online formats need to give way to face-to-face “coaching” in order to be effective The Africa-EU Renewable Energy Cooperation Programme, in cooperation with a wide range of partners, offers CD / CB on all aforementioned aspects, with a focus on linking project developers with financiers

10. Mai 2002 Thank you for your attention! Suggestions & Feedback always welcome! www.africa-eu-renewables.org Contact: Michael Franz, michael.franz@euei-pdf.org