CHALLENGES & RECOMMENDATIONS
FOR THE FINANCING
OF SUSTAINABLE ENERGY
Sandton Convention Centre
Thursday, 20 May 2010
Introduction
• Will present some thoughts on private sector financing
challenges.
• Limit input to solar heaters because case studies looking at
this.
• See this as part of engagement with government to arrive at
optimal process for financing of solar heaters.
• Need to address numerous uncertainties in process.
• So that certainty is created to enable manufacture of solar
heaters and financing.
Prerequisites for lenders
• Finance is unemotional
– It follows opportunities
• Milestone opportunities (industrial revolution, technology revolution, green
revolution!!)
– Risk vs return – depositors money (business case)
– Enabled environment
• Legislative framework/recourse to borrowers (law of contract)
• Planning (ongoing viability/longevity)
Prerequisites for lenders (cont)
– Consumer demand
• Ongoing affordability (product/cashflow/interest rate mismatch)
• Size
• Useful life match
• Economic viability (initial/ongoing)
• Certainty
• Strategic alignment with legislative framework
• Ongoing planning
• Simplicity (capacity/costs)
• Consumer
• Lender
• Government
Some Issues
• Complexity of process, including plethora of institutions – as
per Implementation model from Dept of Energy:
– SANEDI and its role
• Understand it will, amongst other things, authorise payments to ESCO’s
from financial service providers?
– ESCO’s
•
•
•
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Criteria for establishment
Capacity
Funding
Role
• Indications are that our water quality will corrode elements of
imported heaters, thus reducing life-span.
•
Rebates vs subsidies.
Recommendations
• Refine the current model
– A central body to administer rebates and coordinate funds:
• Rebate coupon on basis of income, which can be used by consumer to
purchase heater.
• Body coordinates all donor funding and state funds and administers “soft”
loans to financial service providers.
• Inclusive framework (residential (new/retrofits/replacement/ commercial &
industrial – alternatives timers/heaters/gas based on circumstances etc)
• Consumer goes to financial services provider for loan, which
must be preferential given access by FSP to “soft” funding. Such
funding could also leverage private funding.
• Involve institutions like UNEP and others to optimise learning's
from international examples.
• Create risk enhancers to promote start-up heater distributors.
• Education campaign on viability, maintenance and other issues.
Conclusion
• Solar heaters critical to energy strategy, so got to get it right.
• Need to simplify process, rather than complicate it.
– Complexity results in increased cost.
• Empower consumer to negotiate best deal with rebate and
engage with FSP’s.
• Must expedite policy certainty.
– Continuing uncertainty and changes to policy and process will delay
entry of private sector/consumers.
• Incentivise manufacturers, and enable policy certainty, to
produce locally.
• Consider central structure.
• Engage relevant stakeholders to achieve above.
THANK YOU