Finance for Access to Clean Energy Technologies in South and South East Asia
End-user Finance for Access to Clean Energy Technologies (FACET)
In 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 aims at mobilising financial access to clean energy in Vietnam and Indonesia. FACET provides temporary financial support mechanisms in the form of interest rate softening, combined with technical assistance and capacity building measures.
After having successfully designed individual country programmes for Indonesia and Vietnam, the project entered the implementation phase in 2013. In both countries, FACET will support lending for domestic biogas digesters (up to 12m3). Additionally, in Vietnam, the project will promote financing of household-sized solar water heaters. There are already existing programmes for providing partial subsidies and training of local technicians. However, local financial institutions have only been insufficiently involved to close the remaining financing gap. Many potential users of clean technologies do not have access to credit. Ultimately the project should lead to the disbursement of 10,000 to 15,000 loans.
In Indonesia, FACET will create synergies with the Indonesia Domestic Biogas Programme (IDBP, or BIRU), managed by the Dutch development organisations Hivos and SNV. IDBP provides subsidies and technical assistance required to build and maintain the digesters. FACET will supplement IDBP by establishing the missing link to financial institutions and providing funds for temporary interest rate reduction. In addition, FACET will train loan officers and raise awareness for the new financing products among potential borrowers. The aim is to familiarise bankers and endusers with the new loan product, in order to prepare for a commercial lending market. FACET signed cooperation agreement with Bank Syariah Mandiri (BSM) in February 2013.
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.