Routing civil society savings and investments to - PowerPoint Presentation

Slide1

Routing civil society savings and investments to renewable energy projects

STRATEGIC INSIGHTS FROM SOUTH AFRICA

1

Who are we?The South African landscapeWhat are the opportunities?Strategic risk perspectiveWhat are we proposing?

Strategic questions for discussion

2

Contents

Sustainability Institute (SI) and Prof Mark Swilling (MS)SI: Independently funded, attached to Stellenbosch University

Lynedoch, a transition town project (renewable energy, organic agriculture, rain water harvesting, gray water & mixed social classesGraduate and post graduate sustainable development programmes

MS:

Specialises - complex social formations in transitionUrban sustainability policies/strategies

Theorised

societies’ “just transitions” and energy provision/usage

United Nations Environment Programme (UNEP) report – decoupling material inputs from economic processes

A

lternative macro-economic paradigms to neo-liberalismSPV units for installation in rural and urban poor communities

3

Who are we?

INSITE – Dr. Arumugam Pillay (AP) and Dr. Paul Hendler (PH)AP:PhD - Micro-finance systems

Has worked for:Standard Commercial BankNational Housing Finance

Corporation (micro & housing finance)National Urban Reconstruction and Housing Agency

Department of Public Enterprises – bankability & fundingCurrently,

Ekurhuleni Metropolitan Municipality,

CEO -

Ekurhuleni Development

CompanyProject role - structuring of financial intermediation

4

Who are we (cont.)?

INSITE – Dr. Arumugam Pillay (AP) and Dr. Paul Hendler (PH)PH:

PhD - Affordable Housing Markets and Urban Strategies Worked for:

Affordable Housing Company (Social Housing) – financial packagingSocial Housing entities – M&E of funding and grants

SA Presidency – Energy Scenarios 2019 (Oil Depletion, Climate Change, Financial Imbalances)National

Dept

of Transport

-

Impact of Oil Depletion on Transportation

National Treasury – performance management of sustainable strategies for eight metropolitan municipalities

Grassroots environmental education, eco-tourism and job creationProject role – research/analysis of financial intermediation & project pipelines

5

Who are we (cont.)?

South African landscape

Situational analysisIRP 2010-2030 – Demand and base load required

65% of electricity from coal, and only 9% from renewables

2013 IRP update: significant increase in gas fired electricityPresidency-supported nuclear

option

REI4P – rapid drop in renewable priced energy and increasing RE to 17

%

REI4P funded initially by debt increasingly by

equity

Much of REI4P investment will be in off-shore manufacturing of components

South African landscape (cont.)

Situational analysisOff grid production of renewable energy: urban and rural, subsidised and unsubsidised

Government and municipal grants for poorer communities

Suburban installations funded by household equity/credit linesDiversified manufacturing potential – relates to One 1 Climate Fund objective of reducing energy poverty

Currently shareholder equity provides bridging finance –

but a need for lines of bridging credit

Savings and credit cooperatives – limited potential because

for consumption

South African landscape (cont.)

REI4P

South African landscape (cont.)

Subsidised off-grid RE

South African landscape (cont.)

Suburban off-grid RE

The on-grid REI4P market segmentAlready at 5% of GDPNo

trail to specific renewable energy projectsFunding/investment well establishedInstitutional investors (life

/retirement policy holders)High order of

magnitudeThe off-grid suburban market segmentO

rganisations

servicing this market

Higher income

levels

(discretionary income)Affordability constraintsAffordable funding could deepen RE outreach

What are the opportunities?

The off-grid subsidised market segmentResearched: 23 000

+ households benefitting from RE SPVRelies on government grants

Shareholder (of manufacturers) equity provides bridging financeC

onstrained by household poverty and insolvent municipalitiesThe non-bank funding segment

Regulated micro-lenders and Savings and Credit

Cooperatives

Unregulated savings

clubs (“

stokvels

”) – consumption savingsStokvels precluded from taking depositsNon-bank micro-lenders – no potential to capture savings and make investments to RE

What are the

opportunities (cont.)?

Institutions

Impact

on RE

Capacity

Facilitating SMMEs

Extent of Savings

Private Banks

✔

✔

✖

✔

Private Asset Managers

✔

✓

✖

✔

Private Developers

✓

✓

✖

✖

Private Investors

✓

✔

✖

✖

Public DFIs and Credit Agencies

✔

✔

✓

✗

✖

Public Asset Managers ✓✔✓✗✔

13

Strategic risk perspective – REI4P

14

Strategic risk perspective (off-grid suburban)

Institutions

Impact

on RE

Capacity

Facilitating SMMEs

Extent of Savings

SSS Suburban Households Market

✔

✔

✔

✖

90 X 230 Facilitation of Renewable Energy to the Suburban Market

✔

✔

N/A

✖

15

Strategic risk perspective (off-grid subsidised)

Institutions

Impact

on RE

Capacity

Facilitating SMMEs

Extent of Savings

Community cooperative integrated Energy Shops

✔

✔

✓

✗

✖

NURA SHS/installations/ maintenance

✔

✔

✖

✖

SSS produced/ assembled Solar Units/ installations/ maintenance

✔

✔

✔

✖

16

Strategic risk perspective (non banks)

Institutions

Impact

on RE

Capacity

Facilitating SMMEs

Extent of Savings

SACCOs

✖

✓

✖

✓

✗

Micro-finance institutions

✖

✔

✖

✖

Stokvels

and savings clubs

✖

✓

✖

✖

Market segments (potential impact)

17

What are

we proposing?

Suburban off-grid segment

(energy rich, high carbon footprint)

Subsidised off-grid segment

(energy poor, low carbon footprint)

REI4P on-grid segment

(low carbon footprint)

Private equity

Banks

Private equity

(i.e. for SU

divestment/

reinvestment)

DFI

Private Equity

Do we understand household income distribution?How developed is the culture of savings?

Can households afford to save?Where is energy poverty located?Is it where communities are off-grid?

Is it mainly rural communities?Is it mainly urban communities?

Strategic questions for discussion

Can we create employment through investment in RE?

Do we think this is developmentally necessary?Is “local content” of RE components legislatively required?

Are the RE components being manufactured locally?Can the RE components be manufactured locally?

Can we quantify Climate Justice?What should be the value

of funding coming

from “North”?

At what interest rates?

Under what terms

&

conditions?

Strategic questions for discussion