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Uniting against Poverty 4 th IEF-OFID Symposium on Energy Poverty Cape Town,South Africa May 2-3, 2019 Namat Abu Al-Soof Addressing Energy Poverty: The OFID Approach
Uniting against Poverty
4th IEF-OFID Symposium on Energy Poverty Cape Town,South Africa
May 2-3, 2019
Namat Abu Al-Soof
Addressing Energy Poverty: The OFID Approach
Uniting against Poverty
Outlines• OFID at a glance• Energy access: Where we are today? • Financing Universal Energy Access • Beyond financing
– Investment enabling environment– Innovated financing Solutions– Technology solutions.
• OFID… A pioneer in fighting energy poverty.2
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OFID at a glance
3
− Established in 1976 by OPEC Member Countries
− The Vision: To aspire to a world where sustainable development centered on human capacity-building is a reality for all.
− The Mission: To foster South-South partnership with fellow developing countries worldwide with the aim of eradicating poverty.
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All regions and all sectors..
4 enter footnote
Africa49%Asia
29%
Latin America & Caribbean
16%
Europe5%
Multiregional1%
− 134 developing country partners
− US$22.5 billion committed since inception
$22.5 billion
Education
Energy
Industry
Water & Sanitation
Agriculture
Transportation
Health
3600 projects
Energy poverty alleviation is a focus area
Uniting against Poverty5 Source: IEA, Energy Access Oulook, 2017
27%
14%
0%
5%
10%
15%
20%
25%
30%
2000 2005 2010 2016
77%
57%
68%
27%
57%
18%
33%
11%
0%
20%
40%
60%
80%
2000 2005 2010 2016
Sub-Saharan Africa Other Developing Asia
India Other Southeast Asia
Significant reduction in non-access to electricity between 2000 and 2016
Shar
e of
pop
ulat
ion
with
no
acce
ss
… but with significant regional variations
Uniting against Poverty6 Source: IEA, Energy Access Oulook, 2017
2.7 billion people with no access to clean cooking fuels
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Total Annual Investment Needed to Achieve SDG7
7 Source: SE4All 2015
$ Bi
llion
Financing Universal Energy Access
Chart1
Renewable Energy
Energy Efficiency
Energy Access
Series 1
650
560
50
Sheet1
Series 1
Renewable Energy650
Energy Efficiency560
Energy Access50
To resize chart data range, drag lower right corner of range.
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Electricity access investment requirements (2017-2030)
8 Source: IEA, Energy Access Oulook, 2017
124 11497
237
301
187
0
40
80
120
160
200
240
280
320
Grid Mini-grid Off-grid
New Policies Scenario Energy for All Case
− $334 billion in NPS
− $725 in Energy for All case
$, billion
Finance to Close Global Electricity Access Gaps to Meet SDG 7 Insufficient
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Clean cooking investment requirements (2017-2030)
9 Source: IEA, Energy Access Oulook, 2017
1160%
420%
420%
LPG ICS & Biogas Others
$19 billion
2948%27
44%
58%
LPG ICS & Biogas Others
$61 billion
New policies scenario Energy for All case
− LPG penetrates urban areas in NPS
− Strong growth in ICS in Energy for All Case
− But LPG also grows in absolute terms, reaching rural areas
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Beyond financing
− Innovated financing solutions
− Investment-enabling environment
− Technology solutions
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OFID-REEEP Revolving Capital Pool
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Offering repayable grants to start-up entrepreneurs adopting the nexus approach in energy solutions in the agro-food value chains
Innovative grant giving mechanism – providing very patient loans to strengthen start-ups
Example: US$ 367,500 returnable grant to FuturePump Ltd. to bring solar irrigation to smallholder farmers in Kenya
Development impacts: Deploy 825 solar irrigation pumps on small farms and test three
alternate microfinance products, in preparation for private sector investment to unlock scale and increase uptake of solar irrigation, potentially reaching 20,000 smallholder farmers
Innovated Financing Solutions
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Aggregating Loans to Finance Mini-grids
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Term Loan Facility to Fund Small and Medium Enterprises (SMEs)
OFID received a financing request from an Armenian bank to provide a US$10 million Term Loan Facility to fund SMEs involved in the construction and operation of small-scale hydropower plants (SHPPs).
Around 8 SHPPS Will Be Financed
Through this Term Loan the Armenian bank will provide the necessary Funding to SMEs to construct and operate around 8 SHPPs.
Only Possible By Aggregating the Smaller Loans
Average size of an OFID Private Sector Loan is US$10 million. It would not have been feasible for OFID to provide US$1-1.3 million Term loans for single SHPPs.
This project is very specific to Armenia’s natural resources and
requirements. However the principle of aggregating smaller
loans to finance mini-grids is well demonstrated.
Innovated Financing Solutions
Innovated Financing Solutions
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Investment enabling environment− Achieving universal access to modern energy services
needs to be higher on the development agendas of countries
− Energy-access strategies and implementation plans linked to national development plans
− Governments need to remove structural barriers that constrain more investment in energy access:
− Regulatory frameworks that can attract the support of national and international financial institutions and project developers
− Enhancing local and regional capital markets
− Institutional capacity to prepare and implement qualified pipelines of deals and bankable projects
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A growing role for mini grids and distributed renewable energy systems
14 Source: Mini-grid Policy Toolkit, EU Energy Initiative Partnership Dialogue Facility
Technology Solutions
− Mini-grids whenever costs are lower than grid extension and stand-alone systems
− Potential to provide more than 40% of new capacity required to achieve universal electricity access, by 2030
− Structural barriers in governance, finance and business models are constricting a large scale mini-grid market− Need to promote actions and partnerships that
would help resolve these challenges
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OFID.. A pioneer in fighting energy poverty
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−Alleviation of energy poverty is a central theme in OFID’s work
−November 2007: Declaration of the 3rd OPEC Summit
−“Continue to align the programmes of our aid institutions, including those of the OPEC Fund for International Development, with the objective of achieving sustainable development and the eradication of energy poverty in the developing countries, and study ways and means of enhancing this endeavour, in association with the energy industry and other financial institutions”
- 3rd
OPEC Summit, Riyadh Declaration, November 2007
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Operations on ground
(Partner countries, co-financiers, Arab
Coordination Group)
Partnerships(EAP, REEEP, ARE, WPC)
Advocacy(Conferences, Workshops, Publications)
The Three Pillars of OFID’s Energy Poverty Strategy
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SDG7 is now at the core of the 2030 Develpment Agenda
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Significant growth in energy operations
− Total energy approvals grew at an average 52% pa since 2008
− By December 2018, total energy approvals reached $US 3.7 billion
− This represents 26% of all operations for the period
Cumulative Approvals
18 Source: OFID Database
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
58
372
697
928
1,358
1,857
2,306
2,519
2,964
3,428
3,814
Energy Other
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OFID’s energy operations by finance window since inception
19 Source: OFID Database
Public Sector, US$ 2,661 m,
53%Trade Finance, US$ 1,428 m,
28%
Private Sector, US$ 890 m, 18%
Grant Assistance, US$
54 m, 1%
Total energy sector commitments:US$5.0B
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Guiding Principles
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− Access to affordable and reliable modern energy services is a prerequisite to sustainable development.
− The aim is to alleviate energy poverty – universal energy access.
− The approach should be pragmatic, based on the technology-neutral principle.
− Projects should target productive uses of energy and be income generating.
− Projects should target inclusive development and promote local ownership.
− Universal energy access requires all sources of funding, and private sector must play a significant role.
− Respects choices of beneficiary countries and respond to their wishes based on their own priorities.
Sustainable development
Universal Access
Technology Neutral
Productive Use
Local Ownership
Private Sector
Country Choices
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Partnerships: Creating synergies and developing joint resourcesPublic sector leveraging investments
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Partnerships: Creating synergies and developing joint resourcesPrivate sector partners
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Partnerships: Creating synergies and developing joint resourcesGrants network
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− EAP launched in March 2016 by OFID and WPC− The goal of the EAP is to contribute to the
achievement universal energy access through thepotential of the industry to build upon its leadership,technology and much relevant business experience.
− The EAP provides a platform for the Oil and GasCompanies to collaborate with other stakeholders onspecific actions
Partnerships: Creating synergies and developing joint resourcesOil and Gas Industry Energy Access Platform
− Share best practices, data and disseminate knowledgeabout energy access solutions.
− Leverage industry capabilities to support access to energy.− Help the industry in identifying corporate social
responsibility opportunities in host countries, andharmonize robust, practical and cost-effective approachesfor facing energy access challenges.
− Foster communication of industry on energy accesssolutions.
− Contribute to better integrate energy access in policies andprojects at country level.
www.energyaccessplatform.org
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http://www.energyaccessplatform.org/
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An example of collaboration:Supporting innovative technologies and business models
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− OFID, ARAMCO and Shell Foundation, members of EAP,joined in supporting Envirofit International
− Initiative enables families to pay-as-you-cook in India
− Smart Valve measures and regulates the flow of LPG
− Prepayment via mobile phone for the amount of gasused
− Meter also measures how much fuel remains.Information transmitted back to the customer and thecentral database, allowing for cost efficient deliveryplans to be made.
A pay-as-you go-modelwould create a system toreduce the upfront cost ofLPG through daily payments
OBJECTIVE:To evaluate how the solution could ultimately be scaledto increase adoption for target customers both within andbeyond the Government’s PMUY scheme
SmartGasTM LPG: Increase Access to Affordable Clean Cooking
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ofid_opec_fund
@OFIDnews
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��4th IEF-OFID Symposium on Energy Poverty �Cape Town,South Africa�May 2-3, 2019��Namat Abu Al-Soof��OutlinesOFID at a glanceAll regions and all sectors..Significant reduction in non-access to electricity between 2000 and 20162.7 billion people with no access to clean cooking fuelsTotal Annual Investment Needed to Achieve SDG7Electricity access investment requirements (2017-2030)Clean cooking investment requirements (2017-2030)Beyond financingOFID-REEEP Revolving Capital PoolAggregating Loans to Finance Mini-gridsInvestment enabling environmentA growing role for mini grids and distributed renewable energy systemsOFID.. A pioneer in fighting energy povertyThe Three Pillars of OFID’s Energy Poverty StrategySDG7 is now at the core of the 2030 Develpment AgendaSignificant growth in energy operationsOFID’s energy operations by finance window since inceptionGuiding PrinciplesPartnerships: Creating synergies and developing joint resources�Public sector leveraging investmentsSlide Number 22Slide Number 23Slide Number 24An example of collaboration:�Supporting innovative technologies and business modelsPlease visit ofid.org
