Finance for Access to Clean Energy Technologies in South and South East Asia

End-user Finance for Access to Clean Energy Technologies (FACET)

Asia and the Pacific, over 800 million people do not have access to electricity. About 1.8 billion people still use wood, dung, crop waste, and other traditional biomass for cooking and heating (source: ADB). Access to modern, clean energy is essential to improving overall living conditions. However, to date, only a small percentage of South- and Southeast Asian end-users can afford to purchase clean energy technologies. Most technologies such as Solar Home Systems (SHS), biogas digesters, and Energy Efficient appliances are too capital intensive to buy cash.

While financing is generally need­ed, many financial institutions have not yet realised these new credit op­por­tunities. However, microfinance approa­ches have proven effective for financing small-scale clean en­er­gy technologies. The FACET project - currently in preparation - aims at mobilising financial access to clean energy in the Philippines, Vietnam, and Indonesia. FACET could for instance provide temporary finan­ci­al support mechanisms like interest rate softening or partial guarantees, combined with technical assis­­tance and capacity building measures.

In an initial stage, UNEP had pre-selected 14 South- and Southeast Asian countries as potential partners under FACET. Frankfurt School – in close consultation with UNEP – first shortened this country list by broadly estimating the respective impact and visibility of FACET. The short-listed countries were assessed in a desk study on the status of Renewable Energy technology deployment, capacities within the financial sectors, and the potential for clean energy lending. As a result, three countries were selected as partners for FACET: Vietnam, the Philippines and Indonesia.

Frankfurt School is currently assessing the feasibility of the three individual country programmes. During this phase, highlighted in the graph above, Frankfurt School conducts various interviews with representatives of the government as well as the financial and energy sectors to assess the potential of the relevant clean energy technologies and possible financial support mechanisms that could be supported by FACET.

Upon completion of the preparation phase, Frankfurt School will implement the proposed financial support mechanisms in each country, and provide technical support in form of trainings and network development. Ultimately the project should lead to the disbursement of 10,000 to 20,000 loans. 

This project is funded by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety within the framework of the International Climate Initiative.