New Institutions and Financing Innovations in Clean Energy

Gregor Paterson-Jones

Austria Trend Savoyen Hotel

Vienna

20 October 2016

New types of Public Institutions

Context: the rise of the Green Banks

What are Green Banks really?

• Key Issues – They are not Banks – Public finance

• Tool of public policy • Associated with incumbent

party

– Commercial with consequences

– Time limited • Funding • Political process

– Other non financial metrics – Supposed to do the difficult

stuff – state aid / additionality – vs commerciality

New players

• Shifting Economic and political reality – BRICS Bank

– AIIB

• Climate – Green Climate Fund

• Economic stimulus – EFSI

European Fund for Strategic Investment

European Fund for Strategic Investment

Examples of financial product innovation - technology

- structural impediments - leverage

The Energy Access need by percentage is more acute in Africa

Percentage of population without grid access

A brief digression

Africa is a lot bigger than you think …

Mobile banking is driving PAYG growth in Africa

Key rivers are the differential between mobile payment and energy penetration AND price advantage against traditional lighting provision

Source MMU 2014, M-Kopa 2015

M-Kopa’s target market is those in the gap between mobile money subscribers vs those who are electrified

M-Kopa model is replacement spend using mobile micro payments

Those who are not served by electrification often have the ability to make micropayments as they are paying for lighting fuel at a rate which can more than sustain pay as you go micropayments on a daily basis

BBOXX – Oikocredit: first off grid solar securitisation

Sale of receivables model There s no tranching of the security and it is a bilateral deal Nonetheless it is a landmark deal.

Green Loan for Streetlighting

Leveraging small donor funding contributions

FI FI

Cap

Guaranteed Unguaranteed

Realised loss Probability of default * loss given default * exposure at default Donor funded (ODA) guarantees • Traditional full cash collateralized 100% cash

deposit against loan cover for guarantee • Doesn’t leverage regulatory LGD model • Guarantee cap to leverage more capital into the

structure.