Distributed Generation in the Developing World Linking Markets and Entrepreneurs to Private and Publ

1
Distributed Generation in the Developing
WorldLinking Markets and Entrepreneurs to
Private and Public Sector

• 2004 World Energy Technologies Summit
• Paris, 11 February 2004
• Paul van Aalst
• ECo
• paul_at_energyhouse.com
• www.energyhouse.com

2
ECo ?

• ECo delivers services to and invests in clean
  energy enterprises in developing countries,
• in order to create economic opportunity,
  improve quality of life and preserve the
  environment.

3
SME and Energy a New Opportunity

• Providing energy services increasingly viable for
  Small and Medium Sized Energy Enterprises (SMEEs)
• Outreach of SMEEs to the energy-poor often is
  very strong and efficient.
• run by local entrepreneurs who understand local
  demand and business environment
• know better how to bring business to rural areas
  where the need for access to energy is greater,
  but where larger companies have difficulties
  reaching out.
• Energy services not the preserve of large grid
  connected power stations any more.

4
G8 Renewable Energy Task Force

• G8 10 Yr Energy Targets regards 800 million
  people US 107 billion (ECo estimate)
• Non-electricity improvements for 200 million
  people cooking fuels, cook stoves etc.
  enterprises like KBPS.
• Off-grid electricity to 300 million people
  lighting, motor power etc. enterprises like
  RAPS.
• On-grid clean energy to 300 million people
  enterprises like La Esperanza and Kanata.

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ECo Overview

• Enterprise Development Services are provided Pre-
  and Post Investment.
• Investments (equity and debt) at the early stage
  and up to 250,000.
• Sponsors include social investors, charitable
  foundations, financial institutions, multilateral
  banks and development organizations and
  multi-national corporations.
• ECo blends public and private resources.

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ECo Global Organization with an extensive
network

• Ongoing Regional Programs
• FENERCA (USAID sponsored) 5 countries in Central
  America
• AREED (UNF sponsored) 5 African countries
• BREED (UNF sponsored) Northeastern Brazil
• CREED (UNF sponsored) Western China
• Outreach into additional 11 countries in Central
  America, Africa and Western China
• Offices Costa Rica, Bolivia, Brazil, South
  Africa, Thailand, The Netherlands, USA
• Partnerships 9 local Institutions/NGOs

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ECo Funding A Unique Public-Private Partnership
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ECo services
ECos Program Partners
ECos Implementation Partners
Energy Entrepreneurs
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The ECo Enterprise Centered Model
ECo services and financing
Growth Capital with Financial Institutions
Enterprise Development Services (Post)
Enterprise Development Services (Pre)
Tools Training
Seed Capital
Energy Entrepreneurs
Local Partners
Local Partners
Energy Services
Energy Services result in micro enterprises,
productive uses and income generation
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ECo Financial Overview

• Since 1998 74 investments, 7.7 million in 35
  developing countries
• 59 active investments 6.0 million
• 6 written off 341,500
• 9 repaid in full 1.3 million
  ROI 10.0
• Net assets 8.9 million
• 2004 Budget 3 million for operations 3.5
  for investment
• Numbers from January 1998 through May 2003.
• ROI excludes enterprise development costs and
  a portion of operating costs, which are funded
  separately through contracts and grants

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ECo Results

• ECo supported enterprises are delivering clean
  energy to 1.7 million people.
• ECo investments have leveraged gt 50 million of
  co-financing Sharing its renewable energy
  financing experience, ECo has provided training
  to 70 Central American financial institutions
  and 45 financial institutions in Africa.
• ECo enterprises prevent an estimated 60,000 tons
  of CO2 per year ECo structured the sale of
  333,000 tons of carbon from an ECo-supported
  Guatemalan hydro plant to a Dutch utility, valued
  at 900,000, over a 10 year period.
• ECo received the 2002 Energy Globe Award for
  innovation in sustainable energy and
  the 2003 Platts Global Energy
  Entrepreneur Award.

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ECo Investment Funding Multilateral Investment
Funds

• Multilateral Investment Fund of IADB
• 2.2 million Venture Capital Facility
• 1 million Grant Facility
• ? Investments made per agreed-to criteria.
• ? Grant funds to support enterprise development
  services, high risk investments and fund
  operations 8-year term Portfolio Risk Sharing
• IFC 1 million Loan invested per agreed-to
  criteria.
• 8 year term, 5 interest rate with fees for
  closing and asset management.

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ECo Investment Funding Regional Investment
Funds

• ETEF - Africa Enterprise Through Energy Fund
• Rand 50 million built on the ECo model
• Implemented by ECo investee company, RAPS
• Purpose
• Small and medium clean energy enterprises
• Black economic empowerment focus in South Africa.
  
• Investors Amalgamated Bank of South Africa
  (ABSA), the Industrial Development Corporation of
  South Africa (IDC) and the Shell Foundation.

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ECo Investment Funding Other Investment Funds

• Mertz-Gilmore Foundation, MacArthur Foundation,
  Threshold Foundation, Calvert Foundation
  Program Related Investments (loans) ranging from
  3-5 for terms of 3-7 years invested per
  agreed-to criteria.
• NOVIB (Dutch Development Agency) 200,000 loan
  at 9 for years invested per agreed-to criteria
• The Body Shop 200,000 at 3 for a 5 year term.
  To be invested in renewable energy projects in
  Africa.
• Socially Responsible Investors 275,000 at 3
  for a 5 year term through unsecured notes.

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ECo ProgramsProgram Funding Relationships

• AREED, BREED, CREED Programs contract services
  and management of Investment Facility, funded by
  the United Nations Foundation, via UNEP
• FENERCA USAID contract to provide services to
  enterprises, NGOs and financial institutions in
  Central America, Brazil and Africa.
• Oak Foundation Provided grant support for
  deployment of ECo model especially in Africa.
• Citigroup Grant support in 2003 for advanced
  entrepreneur training in Central America and in
  2004 for preparation of enterprises carbon
  transactions.

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ECo key success factors
ECo experienced team with market presence
Strong and expanding pipeline
Integration of Services and Capital
The EnergyEnterprise
Strong Local NGO partnerships
Policy linkages to promote RE
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ECo portfolio

• Off-grid investments
• Red Ceramics (La Paz, Bolivia)
• RAPS (South Africa)
• Tecnosol (Nicaragua)
• KBPS (Zambia)
• On-grid investments
• Kanata 7.6 MW Hydro Plant (Bolivia)
• Snow Mt 480 kW (Honduras)
• LaEsperanza 1.4MW ? 14 MW Hydro Plant (Honduras)

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The Future Market Outlook

• ECos potential project dealflow and pipeline
  represent investment opportunities for itself and
  co-financiers (local banks, third-party
  investors) in excess of 250 million.
• Investment needs to be channeled through
  implementers with proven track record, local
  presence and success case stories.

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The Future ECo

• The market for ECo's financial products and
  services is the 20-25 developing countries where
  ECo has an established and growing presence.
  This is an estimated demand of 750 million of
  ECo Products and Services.
• To serve 6,000 small and medium energy
  enterprises in this market over the next five
  years, ECo requires 100 Million
• Operations 20 mln
• Seed Capital 30 mln
• Debt Financing 50 mln

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ECo current developments

• Wide acknowledgement of ECo model
• Fine-tuning of financing instruments
• Scaling up financing maximum for specific cases
• Stronger focus on providing 2nd stage financing
• Creation of regional funds and involve local FIs
  (e.g. ETEF)
• Create new ECo finance products Unsecured
  Notes, Managed Accounts
• Specialized services to SMEs (e.g. carbon
  credits)
• Broadening of funding base
• Portfolio performance over last 9 years offers
  new opportunities
• Negotiating additional debt funding with various
  multilateral financial institutions

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• ECo, Inc.
• ECo Europe

• 383 Franklin Street
• Bloomfield, NJ, USA 07003
• tel. [phone]
• www.energyhouse.com
• Ruysdaelkade 153
• 1072 AS Amsterdam
• The Netherlands
• tel. [phone]
• paul_at_energyhouse.com