MEDREP Finance Mediterranean Renewable Energy Program MEDREP Jan Kappen Project Manager, Energy Finance UNEP-DTIE

MEDREP Finance MEDREP Finance A WSSD Type II Initiative Sponsored by the Italian Ministry for Environment and Territory for the Mediterranean Basin

MEDREP Finance - Key Objectives OBJECTIVES  Investigate different approaches for positively influencing financial flows to RE projects  Structure support mechanisms that help lenders and investors scale up financing OUTPUTS  Assessment of barriers to RE financing  Opportunities for development of RE projects in the 3 countries  Solar Water Heating Loan and Leasing Facilities to facilitate access to credit in Tunisia and Morocco  Transaction Support Facility for the entire region

Solar Water Heating (SWH) Loan Facility in Tunisia – What it is The SWH Loan Facility is a finance mechanism: to create credit facilities using the state utility, STEG as a channel for recovering the loan payments through the utility bill; to help local banks build loan portfolios in RE area by implementing an interest rate subsidy to provide to the end user a capital cost subsidy to partially reduce the SWH financing (Tunisian government has passed a law to provide 20% subsidy) The SWH Loan Facility is a finance mechanism: to create credit facilities using the state utility, STEG as a channel for recovering the loan payments through the utility bill; to help local banks build loan portfolios in RE area by implementing an interest rate subsidy to provide to the end user a capital cost subsidy to partially reduce the SWH financing (Tunisian government has passed a law to provide 20% subsidy)

Solar Water Heating Loan Facility in Tunisia - How it works UNEP and ANME establish a 2 million US$ Facility  STEG will promote the use of SWH by recovering the loan via a STEG customer’s utility bill  Banks provide loans to the end users via the SWH suppliers by lowering the interest rates by 5-6 points because the risk of nonpayment is almost non-existent  The end user repay his loan via the STEG utility bill over 5 years to make the monthly payments equal to other conventional energy expenditures  UNEP provides an Interest Rate Subsidy decreasing over time

Solar Water Heating Loan Facility in Tunisia - What it does Buy CHEAP and Pay SLOWLY SWH Size200 liters300 liters Net Cost of SWH USD 550 USD 700 Monthly payment (5 yrs) USD 9 USD A Quick and Simplified Procedure Customer contacts the SWH supplier Customer fills out the application form at the SWH supplier office, presents his latest STEG bill and ID The installation is immediate once the application form and engagement form are signed

Solar Water Heating Loan Facility in Tunisia - Objectives The objectives of this project  In 2005, installation of m², equivalent to 8,800 households  By 2011, m² will be installed  Over , the Tunisian government would have transferred approx. 15 millions USD from LPG subsidy to a solar subsidy  The development of the SWH market will become sustainable

MEDREP Finance Thank you for your attention