Presentations

Financing for Small Countries

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Summary
  1. 18th Annual Caribbean Energy Conference Panel Discussion: Financing for Small Countries S. Brian Samuel Head of Public-Private Partnerships (PPPs) Caribbean Development Bank January 25–26, 2018, Grand Hyatt, Baha Mar, Nassau, Bahamas
  2. AGENDA • Challenges of PPPs in the Caribbean • Jamaica’s renewable energy auctions: A replicable model for utility-scale RE • Public/Private Partnerships: What is CDB doing? – Regional Support Mechanism (RSM) – PPP Helpdesk – PPP Toolkit • CDB financing for RE/EE projects: – Sustainable Energy for the Eastern Caribbean (SEEC) – Climate Action Line of Credit (CALC) – CDB GeoSmart Initiative – Canadian Support to Energy Sector in the Caribbean
  3. “The Seven Deadly Sins of PPPs” 1. Lack of technical capacity: key barrier to PPPs in the Caribbean 2. Mistakes in risk allocation invariably fall into the government’s lap 3. Too many BMCs enter into PPPs without sound technical/legal/financial advice 4. Small size: Most islands are below the radar screen of global investors 5. PPPs quickly become political hot potatoes 6. Too many unsolicited proposals 7. Lack of funding for project preparation
  4. In PPPs, Jamaica leads the way • Starting with Montego Bay Airport in 2003, Jamaica has implemented several large, transformative PPPs (ports, highways, RE) • Mature PPP Policy and capacity in PPPU • As a result, Jamaica leads in private infrastructure investments:
  5. Jamaica’s RE auctions led to boom in capacity • CDB case study* on Jamaica’s RE Auctions • A model for utility-scale private RE projects • Jamaica’s RE at 16%, highest in Caribbean • RE drive started by GOJ/PCJ, to prove the theory • After which, the private sector piled in: * http://www.caribank.org/uploads/2014/05/Booklet-Public-Private-Partnerships-in-the-Caribbean-Building-on-Early-Lessons.pdf Project Megawatts Investors Wigton I (wind) 20.7 Petrojam / GoJ Wigton II (wind) 18.0 Petrojam / GoJ Wigton III (wind) 24.0 Petrojam / GoJ BMR Wind 36.3 BMR Energy / Branson Content Solar 20.0 WRB Enterprises Eight Rivers Solar 33.1 Rekamniar Ventures / Neoen Total Renewable Energy 152.1 = 16% of installed capacity
  6. Lessons of experience from Jamaica’s RE auctions • Government leadership is key: Requires political will, technical capacity and financial commitment • Competition is paramount: More bidders result in better bids. Period. • Multiple rounds: With each new auction, Jamaica’s Office of Utility Regulation (OUR) learned from experience, and got better at it • Size matters: Bigger projects attract bigger, more qualified investors • Pre-negotiate the PPA: Include details on voltage, frequency and transmission • Involve the offtaker: Make sure the utility participates fully in the bidding process • Clear criteria: Evaluation criteria for winning bids must be clear and transparent
  7. CDB support to PPPs • Regional Support Mechanism (RSM): – PPP Helpdesk: Technical Assistance (TA) interventions, in project development, Policy and capacity building – PPP Boot Camps: Trained senior public sector employees, in PPP theory & practice – Caribbean PPP Toolkit*: Open knowledge resource on PPPs, tailored to Regional environment and market conditions – PPP Policy: Assisting governments implement PPP policies and procedures that promote transparency and competition * https://issuu.com/caribank/docs/ppp_toolkit-interactive?e=21431045/49237432
  8. CDB’s financing for RE/EE projects • Sustainable Energy for the Eastern Caribbean (SEEC): – US$21 million Pilot program for funding EE/RE projects in government buildings in EC – Public sector including EE/RE in government buildings and EE in street lighting through retrofit with LED lamps. – Blended financing: grant (EU-CIF; DFID) and loan from CDB • Climate Action Line of Credit (CALC): – EIB funding to CDB for Climate resilience, RE/EE, with interest rate subsidy, available to public and private sector projects • GeoSmart Initiative: – CDB’s umbrella support to Geological Energy (GE) – TA, Investments, grants, CRG, & concessional loans for GE in EC. Needed due to risk profile of GE Projects, constraints on Governments – Resources: (1) SEF/IDB loan; CTF-CRG; GEF grant: $42.9M; (2) SEF/GCF funds approved thru IDB: Loan, CRG, grant: US$80M; (3) EU-CIF, TA and investment grant: €12M
  9. CDB’s financing for RE/EE projects • Sustainable Energy Facility (SEF): – CDB/IDB Program for TA and Investments in RE/EE projects – mainly for Geothrmal energy, hence falls under GeoSmart (items 1, & 2) – Total resources approved/mobilized: US$122M funding thru IDB – IDB/OC, GEF & CTF, GCF • Canadian Support to the Energy Sector in the Caribbean (CSES-C): – CAD$5M TA fund for regulatory strengthening, capacity building and project development • Renewable Energy and Energy Efficiency Technical Assistance (REETA): – €3 million GIZ funding for Technical Assistance in addressing regulatory and market issues in RE/EE sector – Technical support for financial institutions, including CDB
  10. Focus on Geothermal • CDB’s GeoSmart Initiative: A basket of TA and funding mechanisms for geothermal development in the EC • CDB financed St. Vincent Geothermal with $9.5M Contingently Recoverable Grant (CRG), plus mobilizing DFID & other Grant resources • Current risk-cost profile of geothermal projects in the Eastern Caribbean:
  11. CDB’s Renewable Energy & Energy Efficiency Unit (REEEU) CDB established REEEU in 2014, to implement key goal of Strategic Plan: 1. Business Development & Technical Support: – Identification/screening/pre-feasibility of RE projects, then handed over to Projects Department, appraisal/due diligence and implementation supervision – TA for project preparation, Capacity Building 2. Manage Facilities and Programs: – E.g. SEEC; GeoSmart; CSES-C 3. Mobilize Resources for Renewable Energy: – Climate financing – Other concessional resources (e.g. EU-CIF) 4. Mainstream RE and EE within CDB: – Ensure that all projects being pursued by CDB consider RE/EE where relevant
  12. TITLE AND CONTENT WITH PICTURE CDB contacts: Renewable Energy / Energy Efficiency Unit (REEEU) Direct: (246) 431-1721 reee@caribank.org S. Brian Samuel Head of Regional PPPs Direct: (246) 431-1681 Cell: (246) 230-6408 samuels@caribank.org