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

2. 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 % 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 ($bn); Source: Bloomberg New Energy Finance

3. 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

4. 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)

5. Perspective III: Simplified / Generalized Project Development Process

6. 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

7. 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, …

8. 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.

9. 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

10. 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

11. 10. Mai 2002
Thank you for your attention! Suggestions & Feedback always welcome! Contact: Michael Franz,