Financing Off-Grid applications

Shantanu Mitra DFID India Workshop for Solar Energy and Smart Grid Development Jodhpur 14th September 2011

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Off-grid is projected to make up 60% of total generation required for universal energy access by 2030

Source: World Energy Outlook 2010

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International evidence on renewable energy mini-grids

Decentralized green mini-grids are already the most economical option (on a levelized delivered cost basis) for small remote villages Green mini-grid technologies lend themselves to a wider range of applications and more continuous service than alternatives Green mini-grids can be a lower cost means of boosting the capacity and reliability of electricity supply both as stand-alone energy systems and when inter-connected with the main grid It is important to factor in community perceptions and preferences in order to enhance the systems long-term sustainability Poor rural households can afford the real levelized cost of electricity generated by several renewable energy technologies
Source: Building the Evidence Base for Green Mini-grids, Yadoo, DFID internal paper

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Mini-grid technologies provide opportunity to lever financing from the private sector
Research Demonstration Diffusion Commercial Deployment Private finance Volume Of finance Public finance

Increasing maturity of technology/business model

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How can international/public resources be deployed in smarter ways to catalyse private investment?

Address both supply of finance and demand-side Tailor responses needs of different applications in different areas & stages of maturity Focus on long-term sustainable market creation traditional grant support might not achieve this Incentivise and reward performance and innovation Target grant support where critical - e.g. early stage proof-ofconcept, basic R&D, capacity building Risk sharing: minimise subsidy, avoid crowding out

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DFID is exploring new approaches with partners

Climate Public Private Partnership (CP3)
Focus on Asia, incl. India Aims to catalyse private equity starting point of financing chain through: Blending of private and public equity Project preparation and capacity building Relevance for off-grid?

Results Based Financing for off-grid

Focus on revenue certainty rather than capital subsidy Reduce risks for early movers Strong incentives for performance, value-formoney Exploring design of fund for India Pilots planned in other countries

Climate Innovation Centres

One-stop shop support for technology entrepreneurs From research to commercial deployment India one of 3 pilots Need to rigorously evaluate and learn lessons from these innovations

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Thank You

Shantanu Mitra Email: S-Mitra@dfid.gov.uk DFID India B-28 Tara Crescent Qutab Institutional Area New Delhi 110016 Tel: +91 11 2652 9123 Fax: +91 11 2652 9296

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