Finance for Access to Clean Energy Technologies in South and South East Asia
In 2009, over 800 million people in Asia and the Pacific did not have access to electricity. About 1.8 billion people used wood, dung, crop waste, and other traditional biomass for cooking and heating (source: ADB). While access to modern, clean energy is essential to improving overall living conditions, still many households, small businesses and community organizations cannot afford purchasing clean energy technologies on a cash basis. Often some form of financing is needed to overcome the barrier of upfront costs. Yet many financial institutions have been slow in recognizing credit market opportunities.
FACET aimed at mobilizing end-user finance for small-scale clean energy technologies – particularly domestic biogas. The project offered a temporary financial support mechanism (interest rate softening) and technical assistance to participating financial institutions, potential borrowers, and other stakeholders of the clean energy sector. The Centre designed and initiated FACET in Indonesia and Vietnam.
Phase 1 – Project design:
Initially, the Centre assessed the overall market potential for clean energy finance in six pre-selected Asian countries (Bangladesh, Indonesia, Philippines, Sri Lanka, Thailand, and Vietnam). This analysis included aspects like commercial availability of small-scale clean energy technologies (such as solar PV, solar water heating, domestic biogas, efficient biomass cookstoves, and energy efficient household appliances), quality of financial sectors, existing donor programmes, as well as financial institutions’ interest in and experience with clean energy finance. Based on this desk research, the project team had consultation with political decision makers, financial institutions, technology providers, donors and other potential partners in Indonesia, Philippines, and Vietnam – and eventually developed detailed implementation plans for Indonesia and Vietnam.
Phase 2 – Project initiation (Indonesia and Vietnam):
The Centre supported two financial institutions in capacity building for financing of domestic biogas digesters. Technical assistance included:
- Familiarisation with small-scale biogas technologies (technical aspects, cost benefits, potential risks);
- Identification of potential borrowers (e.g. milk cooperatives);
- Loan product design (terms and conditions, reflecting risks of domestic biogas, and considering benefits of the FACET interest rate softening mechanism);
- Administration and monitoring of FACET project funds;
- Active lending support (joint client meetings, loan application processing, disbursement);
- Networking with technology providers and other partners/stakeholders associated with FACET and biogas in general (e.g. national biogas programmes, other donor organisations, and government bodies).
As part of a final evaluation, the Centre identified challenges and retrospectively reviewed the original project idea. Finally, the Centre drafted a lessons learnt paper and discussed findings with project funders and initiators.
This project was funded by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety within the framework of the International Climate Initiative.