Rate Payers and Governments: Investment Models for Success, EE Global 2007, Dr. Marianne Osterkorn, REEEP

1. Rate Payers and Governments: Investment Models
for Success
Marianne Osterkorn
REEEP International Director

2. Content
1. Overview about REEEP
2. Challenges for Finance Energy Efficiency
3. Finance Models and REEEP’s project contributions
CDM
ESCO
Policies
4. Importance of information sharing and international
collaboration

3. REEEP is a partnership of delivery
1. REEEP understands itself as a market facilitator and enabler
and is profiled as a change agent towards clean energy
systems
2. REEEP aims to reduce market barriers for renewables and
energy efficiency systems in emerging markets and developing
countries
3. REEEP believes in action on the ground via project activities
that are targeted on policy improvements and innovative
finance mechanisms
4. REEEP is recognized in the international political arena - G8,
UNFCC, APEC

4. REEEP currently comprises 240 partners, among those all
the G7 countries and many emerging economies
Currently more than 240
partners:
• 38 Governments
• International organizations,
NGOs and companies

5. REEEP delivers value via Regional Secretariats
REEEP Regional Office
REEEP International Russia and FSU
REEEP Regional Office Secretariat
North America
REEEP Regional Office
Central Europe
REEEP Regional Office
REEEP Regional Office
Latin America &
East Asia
Caribbean
REEEP Local Focal Point
MEDREP
REEEP Regional Office
South Asia
REEEP West Africa
Focal Point
REEEP Regional Office
South East Asia & Pacific
REEEP Regional Office
Africa

6. REEEP currently undertakes 68 projects in 39 countries
5
1 4 17
1
1 2
1
9 1 2
1
3 16
2 2
2 1 1
21 1 2
1 2 2
1 1 1
3
2
5
14
3
2
2
1
1
13
2

7. REEEP’s quot;energy efficiency basket quot; contains a range of
activities carried out jointly with other players
34 Regional projects currently address energy efficiency
3 Workshops in EE in buildings
1 EE Investment forum bi-annual
Global Review on Energy Efficiency in 2008
Hosting the Energy Efficiency Coalition

8. 50% of increase in energy demand in the last 20 years has
been absorbed by energy savings
160
IEA-11
140
50%
120 Additional energy
use w ithout
savings
100
exajoules
80
60
Actual energy use
40
20
0
1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997
Source: IEA Source: IEA

9. Economic growth can be de-linked from Energy
Consumption
Source: IEA

10. As the Danish example shows, the most impact can be
achieved by combining RES and EE measures
PJ
Index 1980 = 100
120
180
100
160
80
140
60
120
40
100
20
80
0
60
1980 '85 '90 '95 '00 '05
1980 '85 '90 '95 '00 '05
Wind Straw Wood Biogas
GDP, 2000 Prices
Wastes Heat Pumps
Gross Energy Consumption, Adjusted
..while at the same time the
Between 1980 and 2005 increased
production of energy from
energy efficiency in the industry and
renewable energy sources
buildings sectors lead to a decoupling of
increased tremendously
energy consumption and GDP growth...
Source: Danish Energy Authority

11. Energy Efficiency is increasingly attracting finance but is
still facing major obstacles
International Carbon Market is becoming a driving
force
ESCO business is becoming a billion dollar
business
Increased Access to public finance ( Green
Investment Funds, WB CEIF, others )
Lack of incentives and attractive regulations
The Finance sector still considers EE as high risk
investments ( small, not asset based )

12. Energy Efficiency gains momentum in the Carbon market
1. CDM market in 2006 - $5.25
Projected Emission Reductions till billion;
2012
2. Only 97 energy efficiency
Fuel Switch
projects out of 844 registered
Energy 7%
Efficiency
CDM projects - only 5% of
Industrial
11% Gases
emission reductions till 2012;
34%
Methane &
3. 398 EE projects in the
Cement
pipeline out of 2700 - 11% of
20%
Renewables
28%
emission reductions till 2012;
4. CDM Gold Standard supports
EE and RE projects to get
better prices

13. Programmatic CDM will boost Energy Efficiency
PCDM will allow multiple locations and different starting
times of individual projects
Procurement advantages can be materialized - CERs
will cover up to 50% of the total costs
Strong focus on end use energy efficiency – buildings,
agriculture,appliances and DMS
CERs for Kyoto compliance, no restriction for equipment
providers
Example: replacement of all lamps within Uganda

14. Financing Energy-efficient Street Lighting in India
Financing and implementing energy efficient
street lighting equipment at €1.5 million
5 Municipalities in the state of Madhya
Pradesh
Development of standard tender documents
for selecting and contracting ESCOs to
implement the project and CDM PDD
documentation
This standard documentation can be used
by any municipality to contract ESCOs and
finance efficient street lighting through CDM
Project partner: Econoler

15. London- Beijing Olympic Games CDM project
A CDM cooperation
programme in China between
the Beijing and London
Olympics
Reduction of emissions from
the Games, and creation of
infrastructure in China
Global promotion of CDM
project initiation at the time of
Beijing 2008 – London 2012
Development of scaleable RE
projects and financing facilities
in China
Project Partner: LOCOG

16. ESCOs are the best outsourcing tool for energy
efficiency solutions
ESCOs, especially in the public sector, have an
increasing importance in the emerging market ( India,
China, Mexico )
For SME’s ESCOs can provide important technical and
financial support
ESCOs have purchase advantages for equipment and
power
ESCOs understand the mode of energy efficiency
projects

17. Create a replicable financing model for the use of ESCOs
for energy efficiency solutions in Tamil Nadu
Increase significant water supply through
improvements in water infrastructure
Create a replicable ESCO model which will
facilitate investments and provide training to the
involved stakeholders in the state of Tamil Nadu
Assistance in financing to implement energy
efficiency projects on the water supply systems
of 45 towns with possibility of scaling up to 150
Case studies and tool kits to enable other states
to replicate the financing approach
Project partner: ASE

18. Establishing a ESCO in the commercial and industrial
sector in Brazil
Reduce energy intensity of big energy industrial and
commercial customers of PETROBAS by up to 10%
Undertake a business analysis of customer
consumption data and establish a feasibility of an
ESCO operation
Establish a independent ESCO and a business plan
to capitalize the identified market (attracting equity
and debt financing, app 5 mio€)
Establishing a model for big energy utilities to
diversify into the sustainable sector (not core
business)
Project partner: Econoler International

19. Governments are the drivers of Energy Efficiency
Implementation
Setting of dynamic energy performance requirements
for a wide range of products, buildings and services
Appropriate and cost reflective price signals are
essential ( targeted tax measures,internalizing of
external costs, access to funding )
Standards and Labeling to enable consumers to make a
choice ( Energy Star, top runner )
Education, information and awareness raising
Public sector leadership ( public procurement )

20. Sustainable Energy Policy development in LAC region
Increase penetration of RES and EE in the
LAC region
Create policy frameworks to facilitate transition
to sustainable energy systems in Guatemala,
Argentina,Mexico and Peru
Assessment and analysis of existing policies
and best practices in the region
Regional consultation and awareness raising
among key governments in the region during
the UNIDO Inter ministerial meting in
Montevideo
Project partner: OAS

21. Transform the voluntary S&L system in India in a
mandatory scheme
Support the introduction of a
mandatory S&L scheme in India
Support the industrial change,
harmonize standards and
implement testing facilities
Preparation of outreach
materials and training NGO
partners for public dissemination
Project partner: CLASP

22. Government Procurement and Energy Efficiency in China
Harmonization roadmap for energy
efficiency government procurement in
APEC economies with a focus on China.
Roadmap for procurement policy
harmonization in China and 3 to 5
selected APEC Countries;
Review testing, labeling and
procurement practices and and identify
categories for harmonization.
Harness government procurement power
for energy efficiency market
transformation.
Project Partner: CSC

23. If we know where we stand we know where to move
First Global Status Report on Energy
Efficiency will provide currently missing data
about energy efficiency implementation
Provide an up-to-date characterization of the
markets, policies & incentive systems and
involved stakeholders
Target OECD countries and the emerging
market economies of Brazil, China, India,
Mexico and South Africa
Thermal and electrical EE, Demand-Side and
Supply-Side EE
Project partner: Ecofys

24. International Cooperation is important to make energy
efficiency the mainstream
Initiation of the Energy Efficiency Coalition : A REEEP initiative
and driven by the industry - will comprise of a wide group of
relevant stakeholders in energy efficiency
Global approach with focus on OECD and Plus Five countries
Sustainable platform which increases advocacy for EE and
helps to bridge the gap between quot;talkingquot; and implementation
Sharing of best practices and finance solutions
Coalition will be launched at COP 13 end of 2007

25. Marianne Moscoso-Osterkorn
REEEP International Secretariat
Vienna International Centre
Vienna, Austria
Marianne.Osterkorn@reeep.org
+43 1 26026 3425
www.reeep.org
www.reegle.info

26. Performance/Credit Risk Guarantees and Financing
Mechanisms for ESCO-structured EE Projects
Develop and finance three ESCO-
structured projects in Mexico
based on “lessons learned”
Creating risk guarantees to enable
local banks to provide financing for
ESCO-structured projects
Introducing a mechanisms of
replication of financing ESCOS
Project partner: EPS Capital Corp

27. The total REEEP project portfolio is well balanced in
terms of thematic and sectoral objectives
Energy Efficiency
43%
Finance
49%
Renewable Energy
57%
Policy
51%