Global Renewable Energy Fund to partner with many firms and countries

Between Energy, Telephony And Sustainable Devt

By Abimbola Akosile And Nseobong Okon-Ekong, Lagos

from www.allafrica.com

Despite encouraging prospects and robust records, energy efficiency technologies and renewable energy projects and businesses face significant difficulties in raising sufficient finance for investment. Indeed the problems are complex: mainly concerning lack of risk capital, which provides important collateral for lenders.

In emergent economies the need for risk capital is estimated at over -9 billion, far above existing levels. This shortfall largely accounts for why lenders are averse to financing even potentially viable commercial ventures.

Fortunately, aimed at the expansion of renewable energy, energy efficiency and other clean energy technologies, markets and services, the Global Energy Efficiency and Renewable Energy Fund (GEEREF) will enhance private sector access to risk capital through the patient capital mechanism because it offers various ways of risk sharing and co-funding in investment funds.

The GEEREF is a public-private investment fund focusing on developing countries and economies in transition. Set on making initial investments before the end of 2007, it will provide risk capital to investment funds specialised in advancing small and medium sized projects and companies in the renewable energy and energy efficiency sector.

GEEREF is expected to reach a first closing of around -140 million including -80 million of the European Commission (the Fund's promoting investor) and -24 million of the German Government. Italian (-8 million) and Norwegian Governments (-10 million) have shown strong interest and are expected to be among the group of initial investors.

Incidentally, fund management companies, financial institutions, project developers and individuals in the energy sector are invited to present their business plans.

The GEEREF can provide equity, or other applicable financing instruments with a typical investment horizon of between 10-15 years. Moreover, investments can be subordinated to other investors in the investment fund, as well as financially support the creation, operations and pipeline development of investment funds.

In as much as GEEREF will be active in Sub-Saharan Africa, East Asia and the Pacific, Non-EU Eastern Europe, Russia and Central Asia, Latin America and the Caribbean, the Middle East and North Africa, investments will be demand-driven with priority given to countries or regions with supportive energy efficiency and renewable energy policies that are conducive to private sector engagement.

Emphasis needs to be placed on deploying technologies with a proven technical record of accomplishment; such as small hydro projects, on-shore wind, geothermal, solar, biomass, biogas, modern cooking fuels and bio-fuels.

Energy efficiency projects will qualify in particular where similar financing barriers need to be resolved. Co-firing solutions, energy service companies and other small and medium scale energy efficient solutions will qualify.

Risk capital will be provided at affordable 'patient' terms whereby the degree of patience will reflect local and global benefits offered by the investment funds and their underlying projects. GEEREF's participation in an investment fund can range from between 25% to just below 50% for small and medium investment funds in underdeveloped markets with first-time management teams.

Participations in investment funds in more developed markets are more likely in a 5% - 15% range. In addition to investment capital, the fund can offer grants and seed capital to potential clients to support the creation, the operations and pipeline development in concert with improving or increasing the value of underlying assets of the investment funds.

This support is crucial to realise the full development potential of the GEEREF's investment objectives and for mitigating risks associated with investing in less advanced regions. Additional capital could be mobilised through the fund-in-fund structure including the project and SME level.

The fund also intends to recycle and reinvest the participations from public sector investors. The leverage of public funds could

be up to a factor of 10: considerably higher than for conventional grant-based schemes, which ask for 50-70% co-funding.

This innovative instrument could serve as a positive example to be replicated by other public and private investors. Once fully invested and leveraged, GEEREF could bring almost 1 Gigawatt of environmentally sound energy capacity to developing country markets. Annually, this could serve 1.25-1.75 million people with sustainable energy services, substituting 1-2 million tonnes of CO2 equivalents per annum.

The GEEREF will also broaden the range of instruments to effectively support the development and transfer of environmentally sound technologies between developed and emergent countries.

The benefits of an innovative investment tool such as the GEEREF exceeds the mere availability of risk capital at appropriate terms. Therefore, cooperation is sought amongst local fund managers and project developers, to create optimal conditions for each investment fund to serve the development of a vibrant and market-based local market for renewable energy and energy efficiency.

Development efforts (e.g. search for markets for their perishable goods) by indigenes could be aided by mobile phones, which need electricity to charge up.

Issues like this (including many others) limit the people's ability to achieve self-determination. Moreover, from March through December 2005, MTN Nigeria's subscriber base increased significantly from 5.6 to 8.4 million.

In the first quarter of 2006, Glo Mobile announced its subscription base had reached 5 million, two years after it began operations. Celtel (formerly Econet, and Vmobile) said at the end of 2005 it had approximately three million subscribers; current figures estimated at over four million.

Figures above are from 2005 and 2006. Presently, the assessment is that between MTN, Glo Mobile and Celtel, alone, GSM subscribers in Nigeria exceed 25 million and is growing.

Solar technology is tested and proven. Still, it is sad to note that though the African continent receives significant radiant energy, solar is not commanding enough support through research, development and implementation.

In Europe, solar electricity is nearly five times as expensive as conventional electricity but grid-connected PV is gaining cost/benefit advantages through integration into buildings and other designs.

If solar is to make significant contributions towards socio-economic and environmental sustainability in Nigeria, green tariffs and green electricity accessible to everyone including a fair price to groups generating solar electricity should be explored.

Adopting a centrally funded energy-efficiency programme with subsidies for renewable energy sources can encourage the citizenry to do more with less. The time to act is now.

- Additional vital information provided by Mr. Melford Ita, a Lagos based energy consultan.


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Copyright © 2007 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com).

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Forbes article on solar power in India and China

India's Powerful Dilemma

by Paul Maidment, Forbes.com


Over the past quarter of a century, India's energy consumption has tripled. The rate of growth is faster than China's, albeit from a lower base, though the causes are the same: rapid economic development, a large and growing population and increasing urbanization. So is the potential threat to air quality and water supplies.

Even under conservative estimates of growth, India's energy requirements are likely to increase by a further third in the second half of this decade, driven by industry, transportation and domestic electricity consumption as living standards rise. Yet India's ambition to grow its economy at a long-term annual rate of 8% is running up against an energy constraint.

Solving it will require continued reliance on fossil fuels--notably coal--greater energy imports and root-and-branch reform of electricity generation, which in India is an inadequate, insufficient and insolvent provision of power that is already causing environmental damage to water supplies.

India currently uses coal for about half of its energy needs. Few see that share changing much over the next two decades, even as overall energy use grows. The country risks creating the same environmental problems for itself that now confront China? (See "Pollution and Prosperity.")

India already has energy-related water shortages. The country's legions of small farmers are heavily subsidized to pump water for irrigation. This not only drains an unreliable and insufficient supply of rural power but also depletes water tables across the subcontinent. This creates a vicious cycle. Lower water tables require farmers to consume more energy to pump ever-deeper water supplies with ever larger pumps. This, in turn, puts more strain on power supplies and contributes to higher levels of greenhouse gases.

Electricity reform is central to both India's economic development and its environmental protection. India produces a lot of electricity, but 30% to 50% is lost along the delivery chain. Utilities that collectively lose $7 billion a year not only fail to deliver the power needed but are soaking up billions of rupees in bail-outs--money that could otherwise be spent on education and health services.

The government has been liberalizing the sector for the past 15 years, but progress is slow, despite the priority given to distribution reform. Thousands of villages are still off-grid, and power shortages in cities are common.

Power generation accounts for most of the coal consumed in India, with heavy industry a distant second. Most electricity is generated from pollution-generating, high-ash coal. The government is promoting a switch from coal-fired to natural-gas plants for power generation and cutting subsidies for low-quality coal--part of a general move to market pricing for energy and anti-pollution measures.

That is happening slowly, too. Replacing existing coal-fired plants is a capital-intensive and time-consuming process. Many of India's highly polluting, low-efficiency coal-fired power plants will stay in operation for years to come. The most feasible alternative, natural gas, has seen its share of India's energy consumption rise from 1.4% in 1980 to only 7% today.

While natural gas is at the heart of the government's policy for cleaner power generation and fertilizer production for the country's huge farm sector, India faces potential problems. Its natural gas imports come from Turkmenistan, Bangladesh, Iran, Miramar--all places that raise questions about the reliability of supply. India's own untapped natural gas fields lie under deep seas.

Renewables are not seen to be feasible on a commercial scale in the foreseeable future. India has one of the largest national programs to promote the use of solar energy, but unlike many developed countries that have turned to solar energy mainly out of concern about the environment and energy security, solar power in India is seen as a cost-effective way to provide energy to small villages and remote areas off the national grid where there is a shortage of electricity.

Nuclear power may by the long-term alternative to coal, but for now, there is little that will check the rapid growth of India's carbon emissions--rising faster than even China's. India has not made the same progress in energy efficiency as China. Its ability to wring economic growth out of each unit of energy it consumes has remained flat for two decades, whereas China has improved markedly.

A big reason is the lack of energy efficiency and conservation measures in most industries at the local level. Ever since the Bhopal disaster in 1984, India has had strong environment protections enshrined in law. However, their effectiveness diminishes due to a lack of enforcement that grows laxer the closer administration gets to the local level.

Thus, air pollution has become India's most severe environmental problem, and one that is likely to continue to worsen. India's per capita carbon emissions are relatively low, at 1.2 metric tons of carbon per person in 2003. (China's emissions were 3.2 metric tons per person, and the U.S.'s 19.8). But India's emissions are forecast to triple by 2020 due to the rapid pace of urbanization, increased use of cars and trucks and the continued use of older and more inefficient coal-fired plants for power generation.

As in China, continued urbanization has exacerbated the problem of rapid industrialization. Cities are frequently unable to implement adequate pollution control, and some India cities--including New Delhi, Mumbai, Chennai and Kolkata--are among the world's most polluted. Urban air quality ranks among the world's worst.

Also as in China, sheer population growth and urbanization make it all the more difficult to pull off the balancing trick of continuing to generate economic growth without destroying the quality of life in both the cities and villages. But unlike China, India has a strained power generation, transmission and distribution infrastructure that is already hampering growth.

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Canadian windpower firm Boralex sees sales rise 56%, profit triples

Boralex profit, sales catch fire

from TheStar.com / Canada Press - Business - Boralex profit, sales catch fire

Second-quarter results unseasonably strong

August 09, 2007

MONTREAL–Alternative-energy producer Boralex Inc. is feeling pretty flush as it develops its first Canadian wind farm, in Ontario, and bids for a massive Quebec project.

"These projects, our first on Canadian soil, will further diversify our income source coming from wind, while providing us better geographical diversification," Boralex chief executive officer Patrick Lemaire said yesterday during a conference call on second-quarter results.

The Montreal-based company recorded an unseasonably stronger second quarter as higher wood-generation power in the United States helped to quadruple earnings and energy sales increased 56 per cent. Last month, Boralex signed a deal to acquire nine wind farms, with an installed capacity of 10 megawatts each, in the Windsor region.

The company is also setting its sights on Quebec's massive wind farm proposal. Lemaire said Boralex and partners Gaz Metro and the Seminaire de Quebec are in a good position to secure 400 megawatts of the total slated to come on stream in 2010.

The 300-employee company has 22 power stations totalling 347 megawatts in Quebec, the northeastern United States and France.

Company revenue grew to $32.4 million from $20.8 million, while earnings more than tripled to $4.8 million, or 15 cents a share, from $1.4 million, or five cents.

Lemaire said Boralex should benefit from strong long-term fundamentals in renewable energy.