Video: Dr. Buchner on Translating NDCs into Investment Plans

June 21, 2016 |

 

The Paris Agreement commits countries to holding global temperature rise well below 2 degrees and to pursue efforts to limit it to 1.5 °C. Significant investments are needed to meet this target and accelerate the transition towards a low-carbon, climate-resilient future. In this video-lecture for the International Center for Climate Governance (ICCG), Dr. Barbara Buchner, Climate Policy Initiative’s Executive Director of Climate Finance explains how to scale up financing for climate action and how to translate countries’ nationally determined contributions (NDCs) into real investment plans.

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Philanthropy’s Role in Financing a Climate-Resilient World

June 16, 2016 |

 

Lorenzo Bernasconi, Associate Director, The Rockefeller Foundation and Dr. Barbara Buchner, Executive Director, Climate Finance, co-authored this piece, which originally appeared on The Rockefeller Foundation blog.

In April of this year, leaders from 177 countries signed the Paris Agreement, with a goal to put the world on track to keep global warming below 2°C in order to avoid the catastrophic impacts of a warming planet. While mitigating the future impacts of climate change is crucial, there is a concurrent need to address the effects that are already present, and that are sure to increase. The Paris Agreement also raised the political profile of climate resilience, recognizing that adaptation represents a challenge with local, national, and international dimensions.

This is good news given that the effects of climate change are already threatening communities around the world. The Guardian recently reported that five islands in the Pacific have already been lost due to rising sea levels, and just last month US$49 million was committed to relocating an entire community of ‘climate refugees’ in rural Louisiana, with plans to move several other towns in the United States for similar reasons.

With the Paris Agreement—as well as the UN Sustainable Development Goals adopted in 2015—international attention on climate adaptation and resilience is rising, but so too are the costs.

The 2016 UNEP Adaptation Gap report estimates that adapting to climate change in developing countries could cost between US$280 and US$500 billion per year by 2050. Despite these rising costs, actual investments in climate adaptation lag. According to the Global Landscape on Climate Finance, only US$25 billion was invested in climate adaption activities globally in 2015—around 7 percent of total climate-related investment. While this is only a rough estimate due to a lack of information on domestic and private resilience investments, current investments clearly constitute only a fraction of what is needed to avoid costly and catastrophic future impacts.

Further compounding this gap is the fact that climate change disproportionally affects the poorest communities and individuals globally—those that often lack the means to build adaptive capacity. For example, the world’s 450 million smallholder farmers are especially vulnerable to droughts, extreme weather events, and other climate-related shocks, but have little financial or educational resources to build the resilience necessary to withstand this volatility.

“What’s needed is a paradigm shift to ensure that the benefits of building climate resilience—and the costs of failing to do so—are integrated into investment and planning decisions in both public and private sectors.”

It is clear from the rising costs and impacts that investing now in climate resilience makes good economic sense in the near and long term, but constrained national and local public budgets will not be enough to finance this transition.

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Uncertain Future of the Climate Investment Funds Makes Achieving Climate Finance Goals Tougher

June 14, 2016 | and

 

On June 15th and 16th members of the Joint Trust Fund Committee of the Climate Investment Funds (CIF) meet in Oaxaca, Mexico, to discuss, among other issues, the strategic direction of the fund. One topic to be discussed is the CIF’s “sunset” clause, which was conceived at the fund’s establishment and requires it to conclude its operations once a new financial architecture – now embodied by the Green Climate Fund (GCF) – is effective.

Now that the GCF is operational, some feel that the “sunset” clause should be activated. In any case, the CIF does not currently have sufficient resources to finance the projects in its pipeline or those of new pilot countries.

Contributing governments are certainly in a tough position. They are faced with the question of whether or not to re-up their financial commitment to the CIF, but have recently pledged significant resources to the GCF – over $10 billion in total – and their budgets for climate aid are under pressure as resources are diverted to address other immediate needs such as the European migration crisis.

The lack of clarity regarding the future of the CIF is having a real impact. The dearth of financial resources for the CIF and uncertainty regarding whether new resources will be made available is disrupting recipient countries’ project pipelines and delaying the development of investment plans for new CIF pilot countries. This is also creating doubt within the multilateral development banks (MDBs) regarding how much and what type of concessional finance they will have access to. This is important because of the role concessional finance plays in overcoming investment barriers and helping MDBs to mobilize internal resources to meet their climate finance commitments.

As the CIF Joint Trust Fund Committee meets this week and makes major decisions on the fund’s future direction, it is worth reflecting on what role the CIF has played within the global climate finance architecture and what unique elements it has brought to the table. A study recently published by CPI – The Role of the Climate Investment Funds in Meeting Investment Needs – can help inform this reflection. The report highlights climate-relevant investment needs and assesses the CIF’s distinctive role in bridging investment gaps compared to other multilateral climate funds.

It concludes that the CIF should be kept in operation to maintain progress towards meeting international climate finance targets, particularly while the GCF gets up to speed and in light of key temporal and structural differences that exist between the two funds. The CIF has played a particularly important role in financing climate action because of a few distinctive features. These include:

  • The CIF’s programmatic approach. In partnership with the MDBs – the CIF’s implementing entities – the fund involves recipient countries’ private and public stakeholders in the development and implementation of policy reforms and investments aligned with countries’ climate strategies. It starts with countries being informed of the indicative amount of resources they are eligible for, followed by the development and endorsement of the investment plans and finally approval of projects. This approach, which has provided a certain level of predictability to both the recipients and implementing partners, represents a role model for the development and implementation of countries’ Intended National Determined Contributions (INDCs). Translating INDCs into concrete investments will similarly require the mobilization of multiple stakeholders under coherent strategic investment plans and the development of supportive policy and governance frameworks.
  • The range of financial instruments available through the CIF and the fund’s risk appetite. Although some have yet to be fully utilized, the range of financial instruments offered by the CIF has proven to be particularly well-suited to foster the piloting of first-of-a-kind approaches and business models, and to take on market risks that others are not willing to take. A survey of developing countries and their climate finance priorities indicates that flexibility in financing terms and types of financial instruments provided is of “critical” importance to advance climate objectives.
  • The CIF’s focus on private sector engagement in mitigation, forestry and adaptation. The CIF has allocated more finance to drive private sector investment in these sectors than any other multilateral climate fund. It has also been the first to develop dedicated approaches to achieve this end, such as the private sector set-asides for forestry and adaptation, and is one of the only multilateral climate funds that offer concessional loans for these activities, as opposed to just grants. Building on this experience, the CIF holds the potential to further enhance private sector engagement in these areas going forward.

The CIF has experience and a functional structure in place, which can help to maintain momentum and bridge major climate investment gaps. Other climate funds have notable strengths, but do not necessarily offer the same capabilities as the CIF.

While the establishment of the GCF is intended to fill investment gaps, questions remain regarding the extent to which the fund will be able to deliver the scale and type of support recipient countries need in the short to medium-term as it gets up to speed.

As decision makers shape the international climate finance architecture and make choices about which funds and approaches they choose to support, they should consider the unique and positive features of existing funding mechanisms and how these features can help effectively address countries’ current and future investment needs.

Given the real scarcity of resources available, there is no easy answer. If they decide to keep the CIF alive, it may be worth exploring and taking decisions on alternative funding modalities to maintain at least certain elements of the CIF operational and mitigate a potential loss in the momentum it has created.

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Identifying strategic opportunities for philanthropy to engage in sustainable land use finance

May 2, 2016 |

 

With growing global demand for food and fuel in a climate-constrained world, the question of how to best reorient land use towards more sustainable and productive practices is a key challenge for governments, businesses, and individuals. This is particularly true for developing countries, where agricultural expansion is a major source of economic growth and development, but also a major source of emissions and environmental degradation.

In recent years, significant international efforts have focused on developing mechanisms to deliver incentives for developing countries to maintain high-value ecosystems. This has happened primarily through bilateral and multilateral funds in support of Reducing Emissions from Deforestation and Forest Degradation (REDD+), as well as through voluntary carbon markets and ad-hoc payments for ecosystem services (PES) pilots. However, such mechanisms have often proved disappointing, failing to deliver on the intended results or suffering from inadequate funding and difficult implementation.

There is a need to better understand how investments are currently being delivered on the ground to support the land use sector, and to support the most appropriate interventions to shape investments towards more sustainable and less destructive land use activities.

To explore these opportunities, CPI partnered with the Climate and Land Use Alliance (CLUA) to identify entry points for philanthropic funders to unlock capital in support of more sustainable land use practices. CPI analysis shows that there are distinct, powerful, and accessible finance-related levers that philanthropy can use to unlock investment in and reorient capital towards more sustainable land use practices. Philanthropy can often act in more nimble and strategic ways compared with public donors who may be constrained by slow bureaucratic processes and competing political priorities.

These opportunities were presented to CLUA and key stakeholders at a retreat in early March, and are now presented here. In the coming months, CPI will continue this work with CLUA and will rank and more fully develop the most promising interventions that can be supported by philanthropy.

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Two policy improvements to drive more renewable energy deployment through mini-grids in Uttar Pradesh, India

April 26, 2016 | and

 

This post is co-authored by Stephen Comello, Associate Director of the Sustainable Energy Initiative at Stanford Graduate School of Business and a Research Fellow at the Steyer-Taylor Center for Energy Policy and Finance.

With about 80 million households across rural India lacking access to electricity, the country’s policymakers have been searching for solutions to close this development gap. At the same time, the public-sector electricity distribution companies (DISCOMs) are unable to systematically extend the central grid to where it is needed.

Off-grid alternatives include kerosene lanterns and small, individual home solar systems. However, another alternative, called mini-grids, offers what these lanterns and small solar systems cannot ­­– the promise of at-scale, off-grid electrification with productive capacity; that is, the ability to simultaneously power multiple loads such as lighting, tools, appliances and machinery.

A mini-grid is a group of interconnected loads and distributed energy resources that acts as a single entity. On a per unit basis, mini-grids offer electricity at least 50% lower life-cycle cost than diesel generators, kerosene lanterns and individual home systems. Moreover, mini-grid development could spur entrepreneurship and local business opportunities in the energy sector.

Enabling mini-grid development by the private sector is mainly the purview of the State Energy Boards (SEBs) across India. While the central government has developed national mini-grid guidance, clear policy that creates the mini-grid market must originate with the state governments. Formation of such a policy is a delicate balance, as there are multiple significant barriers to mini-grid development, such as financing, revenue collection and system maintenance. Most of these hurdles can be overcome with well-formed business models, supported by effective policies.

Uttar Pradesh (UP), which has some of the lowest electricity access rates in the country, has recently announced a promising first-of-its-kind new policy promoting mini-grids, which could set the benchmark for other states to follow.

Uttar-pradesh Photo credit: Flickr user sandeepachetan

The policy offers developers flexibility with respect to the general business model to be pursued through the choice of two models. Model 1 offers a 30% capital subsidy, in exchange for the DISCOM regulating project location, mini-grid technical specification, the service level, and, customer-wise tariff rates. Model 2 is arguably the diametric opposite; no subsidy offered, with the developer free to choose location, technology service level and rate charged. Given the flexibility, there has been great interest in Model 2, with 85% of applications made under this scheme.

The policy also provides guidance with respect to the key risk for mini-grids – the threat of central grid extension. There have been multiple instances where the central grid eventually extended to a mini-grid and forced the operator out because entrepreneurs couldn’t compete with DISCOMs’ highly subsidized rates. This situation is known as a hold-up problem, where a developer is deterred from making any investment, given the lack of safeguards to provide the confidence of earning an appropriate return.

The UP policy specifies that if or when the central grid extends to the mini-grid, mini-grid electricity would be purchased by the DISCOM at “the tariff decided by UP Electricity Regulatory Commission or a tariff decided on mutual consent”, and “based on the cost-benefit analysis of the installed project, the project will be transferred to the DISCOM at the cost determined on mutual consent between DISCOM and developer by the estimation of cost (or profit loss) of the project installed by the developer.”

Unfortunately, the UP policy does not fully address the hold-up problem, primarily because of the ambiguity faced by the developer in terms of securing his investment at the time of central grid extension. Specifically, the prospect of the stated “cost-benefit analysis of the installed project”, provides no guidance or methodology necessary for a developer to understand the expected value of the mini-grid in the event of grid extension before the initial investment is made. This raises concerns about the effectiveness of the policy in deploying mini-grid capacity.

Thankfully, based on a recent study at Stanford Graduate School of Business, this policy gap can be closed with two amendments which ensure that the entrepreneur would be indifferent between the event of grid extension and continuing as an independent operator.

First, the entrepreneur should have the unilateral right to transfer ownership of all distribution and generation assets of the mini-grid to the DISCOM.

Second, the transaction price must be given by the current book value of these assets. The book value must be calculated so as to reflect economic fundamentals, based on the concept of replacement cost accounting. What this means is that if revenues are set so as to cover all operating costs, depreciation and a fair return, the developer will be indifferent between receiving a one-time buyout of the mini-grid equal to current book value, or continuing to operate the mini-grid.

Taken together, these amendments would significantly improve UP’s mini-grid policy, leading to UP maximizing mini-grid investment and, therefore, deployment. The success of UP’s mini-grid policy would send a positive signal to other states, and enable them to help India move towards its off-grid deployment targets of 3 GW.

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Video: Dr. Buchner on Climate Finance Beyond Paris

April 22, 2016 |

 

Today, delegates gather at the United Nations to sign the historic agreement to tackle climate change. Dr. Barbara Buchner, Climate Policy Initiative’s Executive Director of Climate Finance discusses next steps, pointing to three areas in particular where nations and investors should focus.

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From Talking the Talk to Walking the Walk on Climate Finance

April 18, 2016 |

 

After Paris – The need to move from talk to action

The Paris Agreement reached by 194 countries at the COP21 Climate Summit in December 2015 marks a historic turning point in a 20-year conversation about how to tackle climate change. Up to this point, there have been examples of incremental progress, though the overarching policy ambition necessary to curb climate change have been slow to come. The need to act is urgent in order to keep global temperature rise to ‘well below 2 degrees C,’ the stated goal of the Paris Agreement.

How to finance the transition to a low-carbon and climate-resilient world is a challenging question, especially for developing countries, which often lack the policy and financial capacity needed to spur the necessary investment.

Since 2009, developed countries have been working to scale up climate finance for developing nations, with a goal to mobilize USD 100 billion per year from multiple sources. The good news is that investment is growing – especially in key emerging economies such as China. According to the Global Landscape of Climate Finance, 2015 saw the largest amount of climate-related investment to date, with USD 391 billion of finance flowing to mitigation and adaption globally. In the lead up to Paris, the OECD, in collaboration with CPI found that countries are well on their way to achieving this goal, with an average of USD 57 billion of mobilized climate finance flowing from developed to developing countries in 2013-14.

While progress is certainly being made, the IEA estimates that approximately USD 16.5 trillion will be required from 2015-2030 to re-orient global systems to a scenario consistent with a sub 2-degree future. The need to pick up the pace and move from talk to the most concrete of actions is what defines the post-Paris world. The challenge of bridging this gap is profound, and will require concerted efforts from private and public actors, households around the world, and civil society. It will require an understanding of the actual barriers faced by all types and classes of investors, and the use of public policies and finance to minimize these. This in turn necessitates political will, robust technical analysis, and above all, innovation.

Crowdsourcing Innovation for Climate Finance

The Global Innovation Lab for Climate Finance (The Lab) supports efforts to leverage investment flows to the developing world to speed up the transition to a low-carbon future by identifying, developing and piloting new financial instruments and public-private partnerships designed to overcome barriers, maximize impact, and attract private sector capital. The Lab crowd-sources ideas from the global climate finance community, including private and public investors, financial institutions, technical experts, and policy makers. Then, incorporating the guidance of a diverse set of advisors and external experts, the Lab develops, stress-tests, and refines the best of these ideas into innovative, instruments with financial backing for concrete pilots on the ground.

The approach is simple – solving the climate finance challenge, and addressing climate change on a broader level, will require bold collaboration and innovation that spans actors and sectors. Successful pilots can be scaled to incorporate larger investments, new investors, other sectors and geographies.

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EU Curtailment Rules Could Increase German Wind Costs by 17% by 2020

April 14, 2016 |

 

This week, members of CPI’s Energy Finance team traveled to Brussels to present and discuss findings from our analysis of financing for European low-carbon energy transitions to a panel of EU policymakers and regulators including representatives from DG Energy and DG Competition and investors. This followed a meeting in February to present findings on the German low-carbon energy transition to the Federal Ministry of Economic Affairs and Energy (BMWi) and the Federal Ministry of Finance (BMF). The discussions focused in particular on the subject of economic curtailment an issue that is not yet fully appreciated by most investors but has the potential to reduce the availability and increase the cost investment. BMWi are in the process of designing policy to help mitigate this risk.

Analysis from our latest report suggests that without appropriate policies to lessen curtailment risk the cost of onshore wind in Germany could increase by over 17% by 2020 and by even more in future years. German policymakers are in the process of designing policy to help mitigate this risk.

So what is economic curtailment? Under European Commission state aid guidelines, renewable energy generators should have no incentive to generate electricity at times of negative prices. In other words, revenue support should be suspended during these times so that suppliers of renewable power will stop generating electricity because they will be out of pocket if they continue to do so. We have defined this issue as ‘economic curtailment’ (as distinct from ‘grid curtailment’ which occurs when the grid has no more capacity to take on power) and, as renewable energy deployment increases, it is an issue that is likely to become more relevant until such time as effective energy flexibility solutions (e.g. storage and demand response) are found.

Germany has an agreement with the European Commission that this rule does not need to be applied until prices are negative for six consecutive hours or more. This reduces the potential impact on the levelised cost of electricity somewhat. Curtailing support on an hourly basis could increase the cost of electricity by over 30% in 2020. Applying a six hour rule almost halves the cost increase requirement to 17% by significantly reducing the number of negative price hours affected and therefore lowering the cost of investment by increasing the amount that debt investors would lend.

We identified and tested additional approaches that could further address the needs of policymakers and investors. The solutions we evaluated were:

Take-or-pay: One option would be to curtail production from renewable energy but continue to pay generators for the lost output. This option provides the lowest cost and risk while still offering flexibility, but under current interpretations would fall foul of EU state aid regulations by incentivising production when it was not needed.
Proportional curtailment: Negative prices generally occur when wind or solar generation is high. Our analysis shows that on average a reduction of only 15% of wind output during negative price hours would move prices into positive territory. Thus, a system that could curtail only the excess generation and allocate the cost of this curtailment amongst all fixed tariff generators would better reflect system economics. This option would only be 5% more expensive than the cost of electricity under the take or pay option.
Add to the end: Under this option any hours that are curtailed during the 20-year support period – after incorporating the 6 hour rule – can be accrued and power generation beyond this support period can claim additional support until such time as the accrued hours are used up. However, high discounting of cash flows 20 years from now, as well as the fact that such a policy does not extend the operating life of the generation assets (and therefore would add no value if future energy prices are at or higher than the fixed tariff prices), means that this policy would add almost no additional value to investors.
Cap: under this option we assume that in addition to the 6 hour cut-off there is a limit to the number of hours that can be economically curtailed each year. The impact varies depending on the cap level.

Figure 37 - Impact on bid prices of hourly, 6 hour rule and proportional

The appeal of these additional approaches depends on policymakers’ priorities and investors’ needs but our analysis suggests that if take-or-pay was not available as an option to remove economic curtailment risk then a low level cap or proportional curtailment would be the next best approaches for attracting levels of investment consistent with meeting renewable energy deployment targets and doing so at low cost.

The analysis presented in Brussels was financed by the European Climate Foundation and the Global Commission on the Economy and Climate to examine how policy impacts the availability and cost of investment for low-carbon energy transitions. It aims to inform thinking on how renewable energy deployment targets can be achieved whilst minimising the cost to consumers.

For more information, please see our paper ‘Policy and investment in German renewable energy’.

And keep a look out for a forthcoming paper that will also examine finance for renewable energy in other European countries, namely the UK, Nordic countries, Spain and Portugal.

A version of this blog appeared on EurActiv. Click here to read it.

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Two instruments for attracting foreign investment to renewable energy in India

March 17, 2016 |

 

As India prepares to meet its increasing energy demands, which will likely double by 2030, the government has set a path towards ambitious renewable energy targets of 175GW by 2022, and likely 350GW by 2030. These targets are good for the Indian economy, the climate, and the 400 million Indian citizens who currently lack access to electricity.

Raising enough finance will be an essential piece of achieving these targets. Currently, it’s estimated that reaching the 2022 targets would require USD $160 billion.

Domestically, India faces a shortage of available capital for renewable energy projects. The Indian government has stated several times, most recently at the Paris climate talks, that, in order to meet these targets, a significant portion of funding will need to come from foreign sources.

At the same time, the governments of developed countries are willing to provide some of this capital, but would also like to leverage their public-sector spending, by attracting private investment to renewable energy. Indeed, greatly scaling up investment from the private sector will be essential to mobilize the full amount of capital needed to meet India’s renewable energy targets.

However, private foreign investment in renewable energy projects in India faces two key barriers: currency risk and off-taker risk.

To address both of these major risks, there are potential short-to-mid-term solutions that can both drive private foreign investment and leverage public finance from Indian and foreign development institutions and governments.

Outside of Jaisalmer, Rajasthan.

Photo credit: Flickr user Daniel Bachhuber

A Currency Hedging Facility to mitigate currency risk

Because currency exchange rates can be volatile, when a renewable energy project is financed by foreign capital, it requires a currency hedge to protect against the risk of currency devaluation; otherwise, foreign investors risk losing their gains due to depreciations in the Indian currency. However, longer-term currency hedges (beyond three to five years) are not easily available in the Indian market. In addition, market-based hedging in India is expensive (for example, 7% or higher for a ten year hedge), ultimately making foreign financing just as expensive as domestic financing.

One solution to currency risk could be currency hedging sponsored by the Indian government. Recent analysis by Climate Policy Initiative shows that a government-sponsored currency hedging facility, if designed appropriately, could not only provide long-term hedges (ten years) but also reduce the hedging costs by up to 50%. To do so, this standby facility, in order to reach India’s sovereign credit rating, would need to be approximately 30% of the hedged capital.

A Payment Security Mechanism to mitigate off-taker risk

The second major barrier to foreign investment is off-taker risk. In India, the major off-takers are the public sector electricity distribution companies (DISCOMs), which are in a precarious financial situation. Because of the financial state of DISCOMs, investors are concerned that the DISCOMs might default, jeopardizing their investment.

One solution to mitigate off-taker risk could be a payment security mechanism which would cover payments to investors in case of potential defaults. This would significantly reduce the perception of default risk and encourage foreign investment, thereby improving the availability of foreign capital. Climate Policy Initiative’s analysis shows that payment security mechanisms would need to be approximately 7% of capital expenditure to cover defaults over one year.

How the Indian government can help

The Indian government is in the best position to manage both currency and off-taker risks. For currency risk, macroeconomic conditions are key drivers of currency movements, and government policy can influence macroeconomic conditions. For off-taker risk, the DISCOMs are public-sector entities, essentially supported by the government.

Therefore, the Indian government and public finance should play a significant role. The Indian government can use some of its own money to fund the currency hedging facility as well as the payment security mechanism – for example, from the National Clean Energy Fund, or from the expenditure budget.

How international governments and development institutions can help

The international community can pitch in by not only supporting technical assistance but also contributing funds to these facilities. For the currency hedging facility, there may also be gains from diversification by creating the facility for multiple currencies, given that currency movements will likely offset each other.

The international community can also help by creating political will around this process of creating these facilities. This would require key engagement from government stakeholders from both developed countries and developing countries, in addition to development finance institutions like the World Bank, Asian Development Bank and the Asian Infrastructure Investment Bank.

As we move forward with the historic climate agreement that emerged from COP21 in Paris, there has never been a better or more important time to develop and implement the solutions that can drive the required finance to India’s renewable energy targets.

The Indian government, governments of other nations, development finance institutions, and private investors all have key roles to play in moving these targets from dreams to reality.

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Graphic Spotlight: What is the role of public finance in deploying geothermal energy in developing countries?

March 9, 2016 |

 

Despite great potential, geothermal deployment in developing countries has been below expectations since 2010. Geothermal energy has the potential to provide significant amounts of low-carbon electricity in many developing countries and is the cheapest source of available power in some developing countries.

The major barrier is securing early-stage project finance given the scarce public resources available to invest in exploration and development. While some countries are pursuing policies to liberalize energy and electricity markets to attract private investment, significant difficulties remain.

CPI analyzed three case studies on behalf of the Climate Investment Funds, with the aim of helping policymakers and development finance institutions understand which policy and financing tools to use in order to enable rapid and cost-effective deployment of geothermal for electricity.

Role_of_public_finance_in_deploying_geothermal_energy

Our case studies show that the increase in tariffs needed to provide sufficient returns to incentivize private investment can be entirely offset by public measures addressing specific risks. This graphic illustrates how these public risk mitigation measures (orange) combine to result in a final levelized cost of electricity for a privately developed project (dark grey) that is even lower than what it would have been for the state to develop it (light grey).

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