Financing urban
energy efficiency

Ivan Jaques
Senior Energy Specialist
Energy Sector Management Assistance Program (ESMAP) / World Bank
SE4All Global Energy Efficiency Forum on Cities
October 30, 2015 | Tokyo, Japan

Annual Energy Intensity Improvements(between 2010-2030)

Source: IEA, WB, Global Tracking Framework 20152

Annual Energy Efficiency Investments

Current Policies Scenario - cumulative additional investment of $4.8 trillion are needed from 2014-2030(or $280 billion per year, on average).
Investment in EE is anticipated to increase more than fourfold from today to 2030 in the central scenario, but needs toincrease a further 60% in 2030 to stay within a two degrees trajectory.
Source: IEA, WB, Global Tracking Framework 2015
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Investment Gap

Source: IEA, WB, Global Tracking Framework 2015
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Who will fill this gap?
Roles and capacity of public and private finance• No shortage of investment capital• Limited public/climate funds• Private capital is key5

EE Financing Mechanisms
MarketCommercial
Maturity
Financing
Advanced commercial or project financing (ESCOs)
Vendor credit, leasing

EE financing ladderCommercial financing, bonds
Partial risk guarantees
Credit line with commercial bank(s)Credit line with municipal (development) bankPublic ESCOs (Super ESCOs)
EE Funds (Revolving)

Utility financing (DSM)
MOF financing w/ budget capture

PublicFinancing

Budget financing, grants w/ co-financing

4Source: World Bank (2015)

GrantsFactors Determining Choice of Mechanism••••

Country/city context
End-use sector
Maturity of financial markets
Legislative/regulatory framework

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Typical Structure of EE Fund

Source: World Bank (2015)

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EE Funds - Examples••
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•
•
•
•
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•

Bulgaria Energy Efficiency Fund
Romania Energy Efficiency Fund
Armenia Renewable Energy and Energy Efficiency FundThailand - Energy Conservation Fund (ENCON)
Korea – Korea Energy Management Fund
India – State Energy Conservation Funds
Sri Lanka – Sustainable Energy Fund
China - National incentive fund based on coal savings
South Africa – Central Energy Fund9

Typical Structure of Dedicated EE Credit LineCreate interest on the part of commercial banks in financing EE projects
Enhance technical capacity of banks to scale up EE lendingLeverage parallel financing from the participating banks for EE financing
Strengthen the participating bank’s capacity in identifying and managing project risks
Assist banks in exploring business opportunities in other low carbon lending businesses.
Source: Sarkar et al (2014), Designing Credit Lines for Energy Efficiency, World Bank.

10EE Credit Line - World Bank Examples

Source: Sarkar et al (2014), Designing Credit Lines for Energy Efficiency, World Bank.

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India PRSF for Energy Efficiency(World Bank, approved 2015)
Partial Risk Sharing Facility
GEF $12 M + CTF $25 M

Technical Assistance(GEF $6 M)

EESL

Risk Sharing Facility

SIDBI

Access to Risk
Sharing
Lenders - Participating Financial
Institutions (PFIs)

Participants in Energy
Efficiency Lending under
PRSF
Energy Service Companies (ESCOs)

Independent M&V Agency

Monitoring &Verification

Host Entity (Municipalities, Large
Industries, MSMEs, and Commercial
Buildings)
Source: Ashok Sarkar, World Bank

12THANK YOU