Developing Countries Get Financing for Clean Energy
FrontLines - October 2009
By Collin Green and Anay Shah
Increasing energy is essential to developing countries. It moves water and communications. It brings schools into the 21st century and allows merchants to compete in broader markets through information technology. It lights, heats, and refrigerates health clinics around the world.
But how energy is produced and used can potentially harm the environment and contribute to global climate change.
As developing countries grow, they are faced with ever-increasing demands for adequate energy services. However, many countries have trouble attracting private financing and face a range of other barriers to using clean energy options as a way to meet these needs in a climate friendly way.
The Private Financing Advisory Network (PFAN) connects
small- and mid-size clean energy developers with international
financiers and financial consultants. As a multilateral initiative, PFAN helps developers learn to speak the same language as their potential financiers.
In 2009, USAID joined PFAN to expand the initiative from a pilot to a global network and to help the Agency’s missions interested in clean energy. When necessary, PFAN also draws on USAID’s financing mechanism,
the Development Credit Authority, to unleash new investment
in clean energy activities.
During PFAN’s pilot phase in 2006, 10 projects were selected to receive support, including a small hydroelectric power station in Mexico and a biodiesel refinery
in Brazil. The two projects raised a total of $35 million in private sector investments. In South Africa, PFAN also supported
a project that converts biomass materials to clean fuel pellets for furnaces.
PFAN financial advisory services
leveraged South African ZAR 10.000.000 (about $1 million) of investment from Sephaku Holdings Ltd. Sephaku is a diversified Black Economic Empowerment Company active in the mining, commodities, and energy sectors in Southern Africa.
One upcoming project: rehabilitation
and expansion of a 9.3 megawatt geothermal facility in Georgia that will provide heating and hot water. In addition, over a dozen new projects are currently undergoing initial review and analysis, including a small hydro facility in China, biofuel facilities in Mozambique and Zambia, and waste-to-energy projects in Sri Lanka and South Africa.
In March, PFAN co-hosted the Asia Forum for Clean Energy Financing in Singapore, drawing
more than 120 industry experts and investors from the Association of Southeast Asian Nations region. Projects involving
biogas, biocompost, clean diesel, and desalination are now receiving funding and consultant services.
In June, PFAN sponsored Clean Energy Investor Forums in Indonesia and the Philippines which each attracted more than 100 industry experts and investors.
Entrepreneurs presented renewable energy business projects
in biomass, biogas, wind energy, waste-to-energy, landfill methane capture, and small hydropower.
PFAN is currently supported by the International Energy Agency’s Climate Technology Initiative, the International Center for Environmental Technology Transfer in Japan, and various private sector companies including
the LaGuardia Foundation, FE Clean Energy, E+Co, ReEx Capital Asia, and Pan Pet Ltd.
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