Energy Efficiency finance landscape in South Africa

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Energy Efficiency finance landscape in South
Africa
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Content

• Introduction USAID Financial Sector Program (FSP)
• Value proposition of EE finance for Financial
  instutions
• EE finance models
• Overview of EE finance landscape in South Africa
• Identified capacity building needs
• USAID involvement in Energy efficiency finance
  space

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USAID Financial Sector Program (FSP)

• 5 year program coming to an end May 2013
• Focused on improving access to finance for SMEs
• Working with partner banks to develop new
  products to target the SME market.
• Key partners ABSA, Nedbank, Standard Bank,
  Sasfin
• Involvement in energy efficiency finance as
  partner banks indicated interest and lack of
  capacity in this field.

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Value proposition for financial institutions

• Deepen relationship with existing customers
• Promote Eskom rebates and cost effective
  opportunities
• Encourage EE to projects requesting financing
• Market to specific customer segments, such as
  corporate clients, to help them achieve
  sustainability goals
• Acquire new customers
• Rebranding/re-purposing existing product
• New products focused on specific segments
• Make use of credit guarantee programs
• Promote brand in new ways
• Sustainability can lead to ancillary business

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Opportunities for financial institutions

• Educate customers about efficiency opportunities,
  such as by having Eskom and ESCOs present about
  incentives and paybacks from specific
  technologies
• Explore mechanisms to use existing loan products,
  such as Purchase Order Financing, to help promote
  ESCO expansion and development
• Segment marketplace to find specific technologies
  that are easily scalable, such as outdoor LED
  lighting
• Engage franchises about working with their
  franchisees on implementing specific technologies

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Key players in EE finance
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Conventional EE finance model
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ESCO finance model
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Energy Efficiency finance landscape in South
Africa
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Further technical assistance needs

• Further awareness raising on business case for EE
  finance in the retail sector
• Energy efficiency lending strategy development
• Facilitation of partnerships between Financial
  institutions and energy efficiency players
  (ESCOs, Eskom, MV professionals, technology
  suppliers etc.)
• Creating understanding of ESCO business model and
  energy efficiency projects under FI staff,
  specifically credit officers

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USAID involvement in Energy efficiency finance
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EE finance mapping study

• Identified extremely favourable climate for
  expansion of EE market place (rising energy
  prices, incentives in place, supporting
  legislation)
• Identified opportunities for banks to become
  involved in EE finance.
• Identified delivery mechanisms to be used by
  financial institutions.
• Identified next steps to be taken by USAID to
  further promote EE finance.

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Energy Efficiency strategy development for Sasfin

• South African 2nd tier bank
• Focussed on SME lending (primarily leasing)
• Signed 10 million long term energy efficiency
  credit facility with IFC.
• received assistance from USAID in developing a
  strategy to tap into the energy efficiency market
  

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DCA guarantee

• Credit or performance guarantee
• Covering 50

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Next steps

• Development of EE finance toolkit
• Tool to assist banks in designing and
  implementing an energy efficiency strategy
• Tool will be piloted in South Africa, but can
  then be used in the region /globally
• Design of toolkit will encompasse a 1 day
  training workshop for selected financial
  institutions to assit them in assessing the
  characteristics, credit needs, and risk factors
  of the energy efficiency sector.