European Union Renewable Energy Financing instruments .pdf
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Renewable Energy Financing
Team Leader Infrastructures
EU Delegation to Zambia
What the EU does in Zambia and globally
for the Energy sector
A distinction must be made between National instruments and Global ones.
At National level, funds are earmarked in what is called the National
Indicative Programme. In the case of Zambia, last financial cycle has
dedicated more than 240 Millions EURO to the Energy sector.
All this funds are now fully committed in projects related to Power
Generation (Kariba dam rehabilitation), Transmission (LTDRP transmission
for Lusaka), and Governance (IAEREP).
At Global level the EU is now promoting the use of new Financial
Instruments, like the use of t Guarantee schemes to address Private Sector
How do we implement our interventions
At National Level we can indicate:
Blending modality (Kariba dam rehabilitation project, 60 Meuro grant)
Call for Proposals (IAEREP Demonstration projects, 25 Meuro grant)
Standard tendering procedures (LTDRP, ongoing 45 Meuro grant)
Sector Budget Support (n/a in Zambia)
Future Call on Energy Efficiency (ZE2ST, 25 grant contribution)
How do we implement our interventions
At Global level there are different instruments for enhancing the Private
31 Meuro, EDFI ElectriFI Zambia is an EU-funded impact investment facility,
financing in early stage private companies and projects, de-risking investments,
focusing on new/improved electricity connections as well as on generation
capacity from sustainable energy sources. On-grid or off-grid renewable
energy generation or distribution project, creating or improving access to
electricity by adding new connections and/or increasing renewable
EU guarantees schemes for Renewable Energy under EFSD - European Fund for
Sustainable Development , with a focus on the European Guarantee for
Renewable Energy (EGRE)
A bit more on Guarantees…
The External Investment Plan (EIP) is a new EU initiative launched in 2017
The EIP follows an integrated approach based on three interlinked pillars:
Pillar 1, the European Fund for Sustainable development (EFSD), with an
innovative guarantees and regional investment platforms/blending facilities
Pillar 2, Technical Assistance, seeking to develop financially attractive projects
as well as improvements to regulatory and policy environment and
Pillar 3, Policy reforms and dialogue.
EFSD investments should complement and reinforce efforts carried out in
the context of the Agreement on Climate Change (Paris Agreement).
…and again a bit more on EFSD…
There are 28 EFSD guarantees in the following priority areas:
Financing for MSMEs,
In April 2020, contracts had been signed with Financial institutions for about
40% of the total EIP guarantee amount of 1.5 billion EUR. The undisbursed
amounts are currently being recalibrated in order to facilitate the provision
of liquidity to sectors most exposed to the consequences of the COVID-19
crisis, which includes liquidity support for renewable energy.
…guarantees on Renewable Energies…
Seven guarantee schemes under the External Investment Plan are specifically
aiming at sustainable energy projects, three of those are:
European Guarantee for renewable energy (EGRE) with EIB, AFD, CDP and KfW. It will
address the lack of creditworthiness and delays in payment by off-takers, creating
around 12,000 jobs and 2GW renewable energy capacity in Sub-Saharan Africa,
with a guarantee of up to EUR 168 million and EUR 24 million of technical assistance,
The African Energy Guarantee Facility ‘AEGF’, which is a partnership with KfW and
forms part of EGRE, amounts to EUR 46 million. This guarantee will bring more
renewable energy generation to African countries by bridging the gap between
real and perceived risks in the African energy market.
AFD and EFSD guarantees will support an independently managed power
intermediary. GreenCo will buy electricity from renewable electricity generation
companies, and sell such electricity to both state-owned and private sector
companies that buy electricity ('off-takers') mitigating the risk of payment defaults.
This will allow to install around 330 MW additional renewable electricity generation
capacity and will result in new electricity connections for 600.000 households.
List of energy-‐related guarantee schemes in the European Fund for Sustainable Development (EFSD)
Title of guarantee
Guarantee limit (Mn EUR)
capacity to be
for Mainly Rural
Areas in SSA
Framework to Scale- 100
covering only Tunisia
50 (100% NEAR)
Cities in EU
Sustainable Logistics 50
…a bit more on EGRE - European
Guarantee for Renewable Energy
EGRE) is a European platform of collaboration for guarantees jointly proposed
by AFD, EIB, KfW and CDP to support the energy transition and expand energy
access in Sub Saharan Africa.
Key risks in renewable energy projects include the off-take risk and related risks,
such as convertibility and transferability risks. The credibility of the power
purchase agreement-PPAs constitutes a key risk affecting the bankability of
Independent Power Producers, the "IPPs".
It consists of four distinct yet complementary financial instruments:
Offtake Guarantees with a sovereign recourse (or "EGRE S");
Offtake Guarantees without a sovereign recourse (or “EGRE NS”);
European Liquidity Support for Sustainable Energy (or "RLSF+");
the African Energy Guarantee Facility (or "AEGF")
…objectives and status of EGRE
Promote renewable energy solutions to meet growing energy demand in
Sub Saharan Africa
Contribute to the transformation of country economies to become lowcarbon and climate resilient
Crowd in private sector funds for investment in renewable energy projects
Address a market failure (due to risk of non-payment by energy off-takers)
Bridge the gap between real and perceived risks in the African energy
Status of the guarantees:
Signature of the guarantees with the Financial Institutions is undergoing.
Possible start of activities is in due course of 2021
Overview of the instruments under the European Guarantee for Renewable Energy (EGRE)
Short term liquidity support to IPPs in case of non-payment
obligations of energy off-takers
Amount (Mn EUR)
AFD: 10 Mn EUR
CDP: 12.5 Mn
Total: 22.5 Mn
KfW: 22., AFD: 25
Total: 47.5 Mn
Total before reorientation: 168.5
amount after COVID-19
reorientation of funds
./. (not a priority,
likely to be
Total after reorientation: 168
Thanks for your attention!