The ECT sat down with Dean Cooper, Energy Finance Programme Manager at the United Nations Environment Programme (UNEP), to discuss projects and opportunities for individuals and organisations to get involved with UNEP’s work in developing countries.
What are the upcoming opportunities for stakeholders investing in clean energy projects?
Dean Cooper, United Nations UNEP: There are a wide range of opportunities for stakeholders – in many ways, there are more opportunities than resources available to meet them all – and our challenge is to focus on the areas where we think we can have the greatest impact.
One such opportunity relates to the UN Secretary General’s Sustainable Energy for All (SE4All) initiative, which now extends for a decade from 2014-2024. SE4All has three main goals and corresponding targets linked to each of these: ensure universal energy access, double the use of renewable energy and double the rate of energy efficiency. One activity that we have been developing for some time, and has a big impact on all three of these areas, is clean energy mini-grids. Consequently, we have adopted this as a focus project at the energy branch of the UN’s Environment Programme (UNEP).
How did clean energy mini-grids become a focus of your work at UNEP?
Dean Cooper: There are still 1.4 billion people worldwide in rural areas who don’t have access to electricity. We know that 60% of people in Africa in rural areas are in this situation and in Asia, for example, there are thousands of inhabited islands in places like the Philippines and Indonesia where they don’t have direct access to any main grid structures for electricity. Perhaps the most significant report on this issue was the 2011 World Energy Outlook from the International Energy Agency. The report concluded that the most cost-efficient way to connect people who currently don’t have electricity in rural areas will be via mini-grids.
The issue of clean energy mini-grids has been an important part of our programme development work for the last three years: for example, the topic of mini-grids was one of the focus areas of the Global Round Tables which were organised by the European Energy Centre and UNEP in March 2013.
How can private sector investment be encouraged in this area and what are the key factors to consider?
Dean Cooper: When looking to attract private sector investment, it is not just about funds available: local conditions need to be in place which reduce the risks for the investor. If there is uncertainty regarding the local environment or the structures this will mean greater risk for investors – making it more likely that they will look to support projects elsewhere. One of the key issues is the need for a stable framework as far as regulations, policies and legal structures are concerned.
Additionally, the technology has to match the needs in these locations, local resources need to be used and the local conditions understood in order to advance such projects. Local understanding and local capacity-building is critical and forms part of the preparations that need to be undertaken for investment.
You mentioned the technology that is currently available – What technology will be used for the mini-grids?
Dean Cooper: From a technology perspective, we have to look at the types of fuel that are available locally, and how best a mini-grid can be powered – this often means that hybrid mini-grid structures are best. The target countries often have a good solar power supply; but the sun doesn’t shine for all the time that we want to supply electricity so therefore we need to look at either back-up options or other energy sources to make the hybrids.
Batteries are often the most expensive part of a renewable energy mini-grid system, so they are not necessarily the best way to go. Bio-energy does appear to have a lot of potential, which could be used as a back-up source for when Solar PV is not available, or if there is no wind or hydro power source available locally. But considering bio-energy raises the issue of the energy-food-water nexus: if you are using land available for growing crops that feed the community, it might not be appropriate to use this land for crops that feed energy production. To address this, there are good examples of activities where waste production of agriculture can be used to provide energy as well. This can create a win-win situation all round, both by getting rid of the waste and using this for energy.
What are the next steps in order to advance the clean energy mini-grids?
Dean Cooper: The first step is to involve both the public and private sectors, and to get the locals involved in stakeholder management. We then need to get the business model prepared to make sure we can demonstrate the investment potential most effectively. This could have been done via a report; however we didn’t think this would be enough to convince people of the investment opportunities.
So instead we are taking this one step further and organising practical demonstrations with different business models in different areas because we know that in each location this will be different. We can then show different types of financing models and approach an investor who may be looking elsewhere, and show them the sorts of approaches they can use to get a good return.
How can people practically get involved?
Dean Cooper: In terms of getting people involved, we need partners for these demonstrations who are going to be interested in the long term prospects. We have selected a number of countries where we want to hold the demonstrations and have involved a range of partners, from the technology providers – PV, wind, hydro, biomass providers – to the financiers and potential investors who want to get involved, and the public funders. Many local governments and international funding bodies are keen to become part of this demonstration process.
We already have a good range of partners, but we’re currently looking to add more for these demonstration programmes. So if there are people interested to become involved at this stage, we would be very interested to hear from them. Otherwise we would be happy to circulate the results of this project so far to any potential investors or technology suppliers who feel that this is an opportunity for them in the longer term.
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