Funding Mechanisms for Solar Energy - Revision history

Ranisha at 09:44, 1 August 2018

2018-08-01T09:44:00Z

Johanna von Behaim at 14:20, 5 July 2016

2016-07-05T14:20:15Z

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Wiki Gardener at 11:47, 17 November 2014

2014-11-17T11:47:08Z

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Ranisha: Ranisha Basnet moved page Funding Mechanisms for Solar Energy Measures to Funding Mechanisms for Solar Energy without leaving a redirect

2014-08-04T12:31:03Z

Ranisha Basnet moved page Funding Mechanisms for Solar Energy Measures to Funding Mechanisms for Solar Energy without leaving a redirect

Ranisha at 13:50, 1 August 2014

2014-08-01T13:50:58Z

Uschuetzenmeister at 13:43, 19 March 2014

2014-03-19T13:43:50Z

Ranisha: /* Further Information */

2014-03-12T09:35:17Z

Further Information

Ranisha: /* Further Information */

2014-03-12T09:32:17Z

Further Information

Ranisha: /* Further Information */

2014-03-12T09:28:25Z

Further Information

Ranisha: /* Sources of Investment Capital for PV in Developing Countries */

2014-03-12T09:27:18Z

Sources of Investment Capital for PV in Developing Countries

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+[[Portal:Solar|►Back to Solar Portal]]
 = Overview =
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 <references />
 [[Category:Financing_Solar]]

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 = Introduction =
-Recently, '''multilateral development banks (MDBs)''' and bilateral agencies provided the majority of the investment capital for '''Photovoltaic (PV)''' projects in developing countries. This was accomplished by host governments. There is only small contribution of the private sector in PV projects. That might be due to private institutional investors' perception of PV projects as being too small and highly risky<ref>Philips, Michael; Browne, Brooks, H. Accelerating PV Markets in Developing Countries: http://www.repp.org/repp_pubs/articles/pv/7/7.html</ref><span style="line-height: 1.5em;  font-size: 0.85em">.</span>
+Recently, '''multilateral development banks (MDBs)''' and bilateral agencies provided the majority of the investment capital for '''Photovoltaic (PV)''' projects in developing countries. This was accomplished by host governments. There is only small contribution of the private sector in PV projects. That might be due to private institutional investors' perception of PV projects as being too small and highly risky<ref>Philips, Michael; Browne, Brooks, H. Accelerating PV Markets in Developing Countries: http://www.repp.org/repp_pubs/articles/pv/7/7.html</ref><span style="line-height: 1.5em; font-size: 0.85em">.</span>
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 Institutions, such as MDBs as well as bilateral agencies in host countries, have contributed the major part of financial support for PV projects. Especially bilateral institutions have shown themselves responsible for training of PV system installers, designing project staff and for administration of PV programs, and PV equipment for demonstration projects. Bilateral and multilateral institutions aim for financial sustainability of PV projects, for example providing seed funding to establish a [[Revolving Funds|revolving fund]]. However, the approach to establish revolving funds is often not successful. As a consequence the revolving funds become “dissolving” funds: they fail to charge interests that cover normal level of defaults and communities do not participate. Therefore high defaults, and inadequately trained staffs are common.
 A new program called '''Photovoltaic Market Transformation Initiative (PVMTI)''' is financed by the '''International Finance Corporation (IFC) '''and the '''Global Environment Facility (GEF)'''. It provides technical assistance and risk capital to the manufacturers, dealers and other private participants who are involved in providing, installing and maintaining of PV systems. The PVMTI will offer working capital loans on a competitive basis to PV businesses. The PVMTI will take place in India, Morocco, and Kenya.
 Both export credit insurance and working capital loans for international U.S. PV businesses has been offered by the U.S. Export-Import Bank. As one of the various criteria to apply for the loans, the company has to prove an order for a large number of units. For most PV companies, if a single large order were to materialize at all, it would come only after a substantial period of business development and historical sales. Thus, the Export-Import Bank’s loans are mainly provided to already-established distribution companies. The Export-Import Bank also will offer intermediary loans (up to maximum principal amount of $5 million and maximum repayment term of 5 years). Intermediary loans are offered to fund intermediaries who loan to foreign buyers of U.S. capital and quasi-capital goods and related services. But so far, there has not taken place an exploration of the application of intermediary loans to PV credit institutions.
 The '''Overseas Private Investment Corporation (OPIC)''' provides U.S. companies which want to invest internationally with investment services and political risk insurance. Project financing, direct loans and loan guarantees are also provided. Recently, participation by small and medium-sized businesses and corporations has been strongly encouraged.
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 *''Gaia Capital ''and ''Swiss Reinsurance Company ''have provided equity capital to PV project developers in developing countries.
 *''Triodos Bank ''has established a $3 million Solar Investment Fund, capitalized by the Dutch government and the Dutch power utility ENW. In Sri Lanka, the Solar Investment Fund offers loans to the private '''Renewable Energy Services Company of Asia (RESCO)''', which supports rural households by providing loans for SHS. It offers also a partial guarantee on the first 600 PV systems in order to increase participation. In Bolivia, the Solar Investment Fund is funding Co-Operativa Rural de Electrificación LTDA (CRE). CRE is an electric cooperative utility that has provided electricity through the national grid in the past. Now it adapted its objective to provide solar energy for rural households on a fee-for-service basis.
 But presented private institutional investments in PV projects such as those made by Gaia Capital, Swiss Reinsurance Company, and Triodos Bank are not common. PV industry claims that PV was overcome by the capital markets.
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 The development of any SHS project, especially in developing countries, are long and can take 2 to 5 years: At its inception, equity capital investment is needed for the working capital to penetrate the cash market. In the next step, debt is required to finance for example a modest amount of working capital, and as next step a portfolio of consumer finance or lease paper. Attracting debt the relatively small size of SHS projects is an obstacle, because international project financing organizations usually support only large projects with an amount of at least $15 million. Therefore, new SHS companies might be evaluated as being not large enough to attract debt financing without outside collateral. SHS projects are often capitalized in rollout stages: first to exploit cash market; next conducting pilot studies to find out optimal financing models; afterwards attracting finance in order to get one region to reach cashflow breakeven level; finally the replication of those programs in other regions, and so on. If financed prudently in this way no reasons exist for any of the described stages of financing to need more than $1 million.
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+The '''Energy Capital Holding Company (ECHCO)''' is interested in financing PV projects in combination with other energy projects in order to fulfill the demands of financing entities. ECHCO aims to accomplish energy projects, including some PV, of an amount of $1 billion. Furthermore, ECHCO supports project sponsors with a combination of legal, engineering, insurance, fiduciary and financial advisory services, as well as sourcing equity capital. When this report was published, the first deal was not yet finished. Thus, "the viability of its approach, while promising, is still theoretical."<ref name="Michael Philips, “ECHCO to Close on $1 Billion Package, Including Renewables,” Clean Energy Finance, Volume 3, Number 1, Spring 1998 (Winrock International and Energy Ventures International), p. 3."> Michael Philips, “ECHCO to Close on $1 Billion Package, Including Renewables,” Clean Energy Finance, Volume 3, Number 1, Spring 1998 (Winrock International and Energy Ventures International), p. 3.</ref>
 = Further Information =
-[[Microfinance#Microfinance for RE Projects|Microfinance for Renewable Energy]]
+*[[Microfinance#Microfinance for RE Projects|Microfinance for Renewable Energy]]
+*[[Import of Energy Products|Import of Energy Products]]
-[[Import of Energy Products|Import of Energy Products]]
+*[[Microfinance Institutions - Financing Renewable Energy|Microfinance Institutions- Financing Renewable Energy]]
+*[[Portal:Solar|Solar portal on energypedia]]<br/>
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 <references />
 [[Category:Solar]]

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 = Introduction =
-Recently, '''multilateral development banks (MDBs)''' and bilateral agencies provided the majority of the investment capital for '''Photovoltaic (PV)''' projects in developing countries. This was accomplished by host governments. There is only small contribution of the private sector in PV projects. That might be due to private institutional investors' perception of PV projects as being too small and highly risky<ref>Philips, Michael; Browne, Brooks, H. Accelerating PV Markets in Developing Countries: http://www.repp.org/repp_pubs/articles/pv/7/7.html</ref><span style="line-height: 1.5em; font-size: 0.85em;">.</span>
+Recently, '''multilateral development banks (MDBs)''' and bilateral agencies provided the majority of the investment capital for '''Photovoltaic (PV)''' projects in developing countries. This was accomplished by host governments. There is only small contribution of the private sector in PV projects. That might be due to private institutional investors' perception of PV projects as being too small and highly risky<ref>Philips, Michael; Browne, Brooks, H. Accelerating PV Markets in Developing Countries: http://www.repp.org/repp_pubs/articles/pv/7/7.html</ref><span style="line-height: 1.5em;  font-size: 0.85em">.</span>
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 = Further Information =
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 [[Import of Energy Products|Import of Energy Products]]
-[[Microfinance_Institutions_-_Financing_Renewable_Energy|Microfinance Institutions- Financing Renewable Energy]]
+[[Microfinance Institutions - Financing Renewable Energy|Microfinance Institutions- Financing Renewable Energy]]
 = References<br/> =
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 <references />
 [[Category:Financing_Solar]]

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 [[Microfinance#Microfinance for RE Projects|Microfinance for Renewable Energy]]
-[[Import_of_Energy_Products|Import of Energy Products]]
+[[Import of Energy Products|Import of Energy Products]]

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 = Further Information =
-[[Microfinance#Microfinance_for_RE_Projects|Microfinance for Renewable Energy]]
+[[Microfinance#Microfinance for RE Projects|Microfinance for Renewable Energy]]

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-Recently, '''multilateral development banks (MDBs)''' and bilateral agencies provided the majority of the investment capital for '''Photovoltaic (PV)''' projects in developing countries. This was accomplished by host governments. There is only small contribution of the private sector in PV projects. The same goes for enterprises in developing countries. That might be caused by private institutional investors' perception of PV projects as being too small and highly risky<ref>Philips, Michael; Browne, Brooks, H. Accelerating PV Markets in Developing Countries: http://www.repp.org/repp_pubs/articles/pv/7/7.html</ref>.
+= Introduction =
 <br/>
-== Bilateral and Multilateral Institutions That Provide Capital for PV ==
+= Bilateral and Multilateral Institutions That Provide Capital for PV =
-Institutions, such as MDBs as well as bilateral agencies in host countries, contributed the majorian part of financial support of PV projects. Especially bilateral institutions have shown themselves responsible for training for PV system installers, designing project staff and for administration of PV programs, and PV equipment for demonstration projects. Bilateral and multilateral institutions aim for financial sustainability of PV projects, for example providing seed funding to establish a [[Revolving Funds|revolving fund]]. However, the approach to to establish revolving funds is often not successful. As a consequence the revolving funds become “dissolving” funds: they fail to charge interests that cover normal level of defaults, community do not participate. Therefore high defaults, and inadequately trained staffs are common.
+Institutions, such as MDBs as well as bilateral agencies in host countries, have contributed the major part of financial support for PV projects. Especially bilateral institutions have shown themselves responsible for training of PV system installers, designing project staff and for administration of PV programs, and PV equipment for demonstration projects. Bilateral and multilateral institutions aim for financial sustainability of PV projects, for example providing seed funding to establish a [[Revolving Funds|revolving fund]]. However, the approach to establish revolving funds is often not successful. As a consequence the revolving funds become “dissolving” funds: they fail to charge interests that cover normal level of defaults and communities do not participate. Therefore high defaults, and inadequately trained staffs are common.
 A new program called '''Photovoltaic Market Transformation Initiative (PVMTI)''' is financed by the '''International Finance Corporation (IFC) '''and the '''Global Environment Facility (GEF)'''. It provides technical assistance and risk capital to the manufacturers, dealers and other private participants who are involved in providing, installing and maintaining of PV systems. The PVMTI will offer working capital loans on a competitive basis to PV businesses. The PVMTI will take place in India, Morocco, and Kenya.