Good afternoon to everyone.
This is the best time of the day, as always,
after the break.
A warm welcome to everyone.
Maybe we will be a few people more in the room?
I would like to welcome you to the session
on leveraging public finance in future energy markets.
As mentioned before the break, the rooms changed
to make sure that you are in the right room.
The plan for the next one and a half hours
is first I would present a few slides on global
trends in energy markets, and in general ask
the honourable panellists on stage, and we
will start with a few questions around public/private,
how to leverage public money, how to leverage
private money with public money.
So this will be centrepiece of the session,
and I look very much to doing that.
I'm co-heading the Frankfurt School for Sustainable
Climate and sustainable Energy Finance.
So that way, I deal with climate every day.
I was involved before that in Allianz, mainstreaming
climate in asset management and investments,
and insurance, so that's quite a long-term
background I have.
Do we have the slides available?
The purpose of the slides is to provide a
brief introduction into the latest trends.
- the global investments in green energy were
stable from 2016 to 2017.
It was plus two per cent.
That's not too much.
The share of solar is very, very high now.
It is 57 per cent of energy plants, and, with
China, we will see it on a slide in a minute.
It has 58 per cent of new investments, so
this is remarkable.
Here, you can see this, global investment
by region.
China has a very large chunk.
That's not only solar, it is 45 per cent,
it is nearly half of the new investments.
Followed by Europe, and still, United States
on the same level as Europe.
The Middle East and India, and Brazil, they're
not bad, but there is I think quite some potential
to do more, and to have larger investments
over time.
Next, what can be seen on this slide is is
the distribution across developing countries
and developed countries.
This is pretty remarkable.
So, a trend we already saw in 2016, now exacerbated
as the share of the industrialised countries
decreased, while the share of developing countries
increased considerably, mostly due to China,
but when we look at the absolute numbers,
it is developing countries decreased by 19
per cent, while developing countries increased
by 20 per cent.
Looking at Germany and then the European Union,
it is pretty remarkable that both have -35
per cent in new investments and renewable
Jay while China has +31.
This is a regional development as can be seen
on this slide well-.
When you look at the top centre of the slide,
you see that Europe is falling pretty much
behind.
It seems there's a structural change, and
some longer term developments.
With China leading the pack, it can be seen
here very prominently.
What does it mean?
We will come to that in a second.
This is the second-but-last slide.
With comparing renewable energy and energy
produced by fossil fuel sources and nuclear.
What we see here is clearly that, in power
generation capacity added last year, was remarkably
on the energy side.
It is much more than 50 per cent - 68 per
cent, even.
Coal and gas was 14 and 15 per cent adding
to the total.
That is a big shift.
That is only continuing what has been seen
before.
Last but not least, this slide is showing
it all.
China was leading the pack with the United
States following - larger countries following.
Now we have the opportunity to listen of some
public and private stakeholders, investors,
governments, how they see the landscape going
forward.
What roles different actors can pray, and
this is very much to my heart, as I think
most of the instruments in financing renewable
energy are already there.
They have to be applied.
People have to work together, at I look forward
to learn more about that.
It is innovative partnerships in contrast
to innovative financing instruments, and,
with that, I invite my honourable panel to
come on stage, and I will do the introductions
whether everyone is on stage.
Please.
Before I do the introduction to the panel,
I would like to ask for support.
We have prepared a question.
Please, over to you.
Good afternoon again.
I have a fresh polling question for all of
you.
As you can see on the screen, it is: which
way of public and private collaboration looks
most promising for scaling energy partnerships
in future energy markets?
The first choice: investment partnerships
already has a few votes.
Blended finance.
Public role towards regulation.
Or is there no collaboration needed?
I will be back at the end of the session with
your answers.
Thank you very much for your input.
I would like to do a brief round of introductions
to my honourable panel, starting with the
honourable minister for energy of Thailand,
Dr Jirapongphan Siri.
I hope that is correctly pronounced!
With the honourable deputy minister for Ghana,
Mr William Owuraku Aidoo; with Dr Sei-Joong
Kwon, Director for Climate Change, Environmental
Affairs Bureau of the Minister of Foreign
Affairs of the Republic of Korea; with Mr
Ali Zerouali, Director of International Co-operation
and Partnership of MASEN, Morocco; with Noara
Kebir, co-founder and Managing Director of
MicroEnergy International; Karsten Fülster,
Culture Minister for Germany, and, last but
not least, Steve Sawyer, Secretary-General
of the Global Wind Energy Council.
First, I want to come to you, Minister.
There are some systemic barriers if the system,
obviously.
When we talk about systematic barriers, that
needs to be overcome to leverage private investment:
in energy, and even in energy efficiency projects,
in the oil markets but in particular in your
market.
How can, from your perspective, public finance
have to overcome these barriers?
Thank you, Excellencies, and participants
to this Berlin Energy Transition Dialogue.
In the last two days, we have heard about
technology, policy, and all the pertinent
matters, and I think for this session, and
the session earlier, and this session, we're
talking about the real mover to make things
happen.
That's money.
And financing is a critical component to make
what our aspirations become reality.
In Thailand, we have 
a power system of about 30,000 megawatts,
and we have fossil fuel base load power plants
of around the capacity of about 35,000 megawatts.
On top of that, we have installed renewable
energy both in solar, wind system, biomass
and gas as well, to a range of around 9,000
megawatts.
So we have over the past ten years quite extensive
experience in both financing renewable energy,
and energy efficiency programme from both
the public and the private financing as such.
Our strategy is to leverage our investment
in public programmes to bring in private investment,
to attract and induce private investment.
Private investment has a lot more consideration
than just looking at the public financing,
and financing renewable energy products with
those energy-efficient projects have have
two different characteristics together.
I think discussing both of them in the same
context would leave out all the pertinent
characteristics that are quite relevant and
critical to their success.
Thailand has - we have a programme that would
collect and invest about $300 million per
year in terms of promoting renewable energy,
and energy-efficiency programmes.
The funding for that is collected through
a fee taken on top, a fee of around 1 cent
per litre for every diesel and gasoline sold,
so diesel and gasoline consumers in the transport
sector pay for the renewable energy and the
efficiency programme.
For renewable energy, the government started
with a small pilot programme in terms of wind
turbine, and solar farm, but as of about from
the 15 years back, we had the private investment
in terms of renewable energy, solar, and wind
particularly, some biomass, some from garbage
as well.
Those financed by private sector of assurance
of an offtake agreement, what we call power-purchase
agreement, that is offered by the government
on a price premium which we call started off
as an adder to the retail market price, and
then to a feed-in tariff at a very high rate.
For example, our retail rate, our wholesale
rate, would be around eight cents per kilowatt
hour of today; our renewable projects had
a tariff of around more than double that,
some nearly 20 cents per unit, per kilowatt
hour.
So that has been the funding principle driving
the private investment.
The certainty of an offtake which is at a
higher rate, but those are learning experiences
that I think would not be sustainable up to
this moment, so we are discontinuing the programme
of subsidising renewable energy investment.
From the experiences we are seeing every country
moving towards more innovative financing,
plus the fast pace evolution of new technology,
that we're looking at creating a different
market whereby renewable energy has to be
competitive with with conventional fossil
fuel at great parity level, and we are drawing
a policy framework to make that as sustainable
a development programme out of that.
For energy-efficiency programme, they are
two different things.
Not too many large companies participate in
the efficiency programme, so, in Thailand,
the government takes a lead in conducting,
executing various energy efficiency programmes.
We have, for over the past ten years, a very
successful programme we call Number 5 Label
that we put on home appliances, particularly
air conditioning, and refrigerators.
Being in a humid country in the tropics, electricity
bill for air conditioning and refrigerator
constitute about one third of the total energy
bill.
So, these savings in terms of the electricity
consumption for the air conditioning units
and refrigerators will be a great help to
reduce our carbon CO2 generation within Thailand.
Standardised certain - every requirement on
power consumption per BTU cooling of air conditioning,
and the public has created the awareness in
public that, when they go to buy an air conditioner
appliances, refrigerator, they look Number
5 Label.
If they saw it, they will buy it, and it's
a good marketing ploy that people will then
identify themselves as being a good citizen,
and saving money for themselves buying appliances
with number 5 been let me stop with that,
that, with public funding of a programme to
create government funding of creating a programme
to create public awareness, we were successful
in inducing private investment to produce
appliances with the logo, energy efficiency
label number 5 so that they are competitive
vis-à-vis import appliances that can't be
registered with this energy-efficiency programme.
So we are spurring private investment into
industries that support energy-efficient use
of electricity for appliances at home.
So that is what we are leveraging public investment
which will induce into industry sectors that
use energy, but not directly, not necessarily
directly involved in energy sector itself.
Let me stop at that.
I think my time is up at the moment.
Even though I have a few more stories to tell.
Thank you, that is very interesting.
One way to get the public and private sector
interacting with each other.
I find this focus on the industrial side to
leverage investments and a very interesting
path to bring the private investments to fruition.
With that, I would like to move to Karsten
Fülster of the IFC.
I learned over time, and that my time at Allianz,
I was a little bit involved in that.
You have developed a few programmes trying
to involve larger investors like insurance
companies, pension funds, to co-invest basically
with IFC money.
I would be interested to learn what was your
first thought, why did you go that way?
What were the critical factors in making it
successful?
I have lots of questions that maybe we can
come to later.
We should start with the premise that the
overall investment money required to address
all investment needs in the infrastructure
sectors are going into the trillions.
For that, no public sector funding is sufficient,
theatre in the developed world, nor in the
developing world, and, even if you were to
add all the development finance capital on
top of it, it would still not fill that gap.
It's an order of magnitude that, ultimately,
then drove the international financing institution
into a situation whereby we are saying we
need to find mechanisms whereby we can crowd
in the private sector funding.
We've heard it in an earlier panel this morning
where there was a mentioning of no shortage
of funding itself.
The challenge is the funds are not available
where the demand for the infrastructure investments
are, and the infrastructure developments are
happening mostly in the emerging market countries.
With that, we essentially partnered with a
number of insurance companies and pension
funds to overcome first of all particularly
with regard to here to Europe one hurdle which
is the regulatory constraint just coming out
of the Solvency 2 requirements that ultimately
are geared towards protecting the investor
who is putting its money behind life assurances
and pension capital.
So, we needed to find a way in restructuring
the flow of funds for infrastructure investments
into the emerging markets in such a way that,
if these projects were to face economic or
political, or commercial constraints, that
the first loss does not affect the insurance
subscribers, or the premium-payers, but it
ultimately is two layers of what we call private
loss that we implemented.
Some of these funds are structured in various
ways.
I don't want to spend too many details on
this.
That this risk buffer ultimately is making
that the remaining part then provided by the
insurance companies is ultimately satisfactory
to the solvency two Koreas, and can therefore
be deployed into the infrastructure investments
in the emerging markets.
We have by now signed four of these agreements
each about half a billion, so that the ones
that are most known as the Allianz Agreement,
we just recently signed a couple of weeks
ago, additional agreements with Prudential,
with Axa, and with Three.
Each again providing half a billion of capital
that will be co-invested with IFC funding
into infrastructure projects that we would
be investing in, so it is always an IFC component
from an investment perspective coming along
with it that ultimately then drives that these
funds can be deployed into emerging market
projects.
Allow me also to address very quickly another
aspect of what kind of partnership is needed.
Because I think we have heard it also this
morning that there's a scarcity of bankable
projects, that ties quickly into it's not
just about the funding being available, but
we also need projects that these funds ultimately
can be invested in.
For that, the IFC built a partnership with
the World Bank and member governments essentially
to streamline and standardise the procurement
process, and the bidding process for solar
energy.
This is known under the name of "scaling solar"
and ultimately without it, in that the bidder
ultimately is bidding for a tariff that is
of a project that is entirely de-risked because
it is known which sides will be built, which
permits are necessary to start building it,
where the power is ultimately Fed into the
grid, so it also includes a financing component
and a power purchase agreement which is fully
negotiated.
So, with that entire package being designed,
ultimately, any investor would know what the
key risks of that project is in order to implement
it, and could start immediately after the
bidding contests to finalise financing, and
then immediately start construction.
So, this programme has been established with
extreme success, because we achieved ultimately
with two bidders a tariff of 6.1 and eight
cents per kilowatt hour which so far were
unheard of in Sub-Saharan Africa.
So it shows that the standardisation of contracts,
that the fully thought-through bidding process
ultimately can result in tangible benefits
for the emerging market countries.
Similar programmes are under way in Ethiopia,
and Senegal, which was mentioned earlier this
morning.
We finished there the tender process a few
weeks ago.
We gradually want to roll it out of other
countries globally so that people can generate
more investment in private-sector projects.
Thank you.
I would like to ask a brief follow-up question
which goes again to the partnerships.
Up to now, there is not too much that is similar
that can be seen on the market.
What actually makes the process of you develop
different to what we've seen before, or why
haven't we seen it, to put it in different
words, why haven't we seen it may be years
ago?
I think it is driven by one driver which is
also the extremely low interest rate environment,
and where pension capital, and life insurance
capitals is looking for higher returns.
So, one had somehow to bring that gap of allowing
that capital to flow to projects, and we also
heard the number that the returns on projects
in the emerging markets generate higher returns,
allows the money to flow in that direction.
You needed to find mechanisms in order to
make that happen, and it took quite a lengthy
negotiation process with regulators, with
governments, ultimately to - writing agencies
were involved in it, so that in a nutshell,
there was a product whereby institutional
institutional investors, financial institutions
understood what the benefit of that structure
is, also without having a heavy scrutiny on
the due diligence process itself, because
it should be mentioned if the IFC is undertakes
the due diligence and this money will be co-invested
without a very stringent independent additional
due diligence process, because, if you have
just the due diligence process, it's costing
so much in transaction costs, that would also
then affect the return on these investments
again.
Thank you.
I think that is really critical to that.
Very good.
Minister, from a Ghanaian perspective, from
what you've heard from the IFC and Dr Siri,
how does that speak from your perspective
for being responsible for Ghana and its respect
to energy.
Thank you very much.
Good afternoon, ladies and gentlemen.
I think Mr Karsten has alluded to the challenges
which we in the emerging market of which we
in Africa, Ghana, forms part of.
I would add a few more by giving a background
to Ghana.
Ghana, a population of 25 million, we have
electricity access, a reach of 85 per cent,
which is quite high for Sub-Saharan Africa.
There are some challenges as far as - the
remaining last mile, so to speak.
15 per cent, that we intend as our government
to fill with renewables and that is where
the challenge comes in, the private and public
interaction.
The IFC, the AfD from France, FW, Germany,
they've been helping by providing the funding
and giving assurance to the private sector
that the more money they invest, they're short
of making some returns on their money, and
totally de-risk by the insurance policies
we get in place, the PCOAs that we negotiate
with them, that are sure that Ghana is a very
safe, politically safe country, and it is
- Africa, a good private transition.
When they are coming to Ghana in particular,
assured of making money, and being able to
take back whatever returns they make.
Some of you might be aware that we had challenges
in generation some three years back, and the
result, the then government signed a lot of
PPAs which now have resulted in us having
access generation.
The challenge for us as a government is to
find ways of weeding out some of these PPAs
that have not reached financial close.
For renewables to be filled with it.
However, whilst we are waiting to do this
clearance, there are a huge opportunities
in the distributive solar.
Ghana has changed all our - we have actually
started procurement of solar lamps for the
whole country.
We are changing all the lamps, I'm talking
about energy efficiency now.
We are change all of that with the help again
of public financing: We're using from the
Korean government, and also from the Chinese
government in combination with the locally
generated funding from the local government,
and we're hoping to change all these lights,
and the work that we have done at the end
of it, we should be able to save something
in the region of 200 megawatts, which is equivalent
to one power station.
These are some of the things that we are doing
in Ghana.
But the challenge as far as the public financing
and the private your, that any money by way
of loans or concessionary loans will take,
is due to on lend to the private sector.
Assure the rushes are guaranteed.
Is there serious money inflowing or private
money coming more prominently from local and
national sources?
No, right now, the public-backed generation
in the country is about 40 per cent but the
IPPs, which is mainly foreign, about 60 per
cent.
Money is coming into Ghana.
Individuals, who come in, and the government
enter like I said into option agreements,
which assures them of their returns.
So, we are getting some very good money, and,
in fact, there are so many people knocking
on our doors to come in, and because of the
excess capacity in nature, we are asking them
to have some patience whilst we sort ourselves
out.
Thank you.
Mr Kwon, when we look at the Korean situation,
the share of nuclear co-power generation is
expected to reduce.
I think as a result of the energy transition
that is currently happening in Korea.
Maybe you can introduce the Korean government's
plan to secure energy supply beyond renewable
energy sources.
Secondly, I would be interested how much do
you think the Korean energy transition can
contribute, actually, to the achievement of
the Korean NDCs, the nationally determined
contribution target?
Thank you, ladies and gentlemen.
First of all, I would like to offer a general
sketch of Korea's renewable energy authority
20 which is for the transition of energy in
Korea.
I think it is important and meaningful to
be able to here in Germany which is a first
move in energy transition, as Korea tries
to seek a long journey by securing and watching
the energy steps, and the footprints of Germany.
Since the new government was launched last
May, Korea has been creating, exerting great
efforts for expanding clean energy.
Indeed, our renewable energy which was announced
last December aims to achieve 20 per cent
of renewable energy generation by 2030.
I think energy transition is the Zeitgeist.
Why?
I give you three reasons.
In a Korean context and background.
First, it is to ensure long-term energy security.
Korea is energy scarce, and it is an island
country, and it is the eighth largest importer
of energy outside our countries.
It is why we are seeking to improve energy
independence, and also to identify energy
mix to a domestic supply in a clean and stable
way.
Second, the Korean government had to respond
to the increasing sensitivity of the people
about the potential and substantial ... of
the nuclear power plants, because, in a the
wake of Fukushima accident in 2011, and the
earthquakes which happened several times in
recent years, in the southern southeastern
part of Korea, with the intensity of nuclear
power plants out there, and Korea seeking
to commit the demand of people, expanding
to the supply of clean and safe energy, clean
and safe because of the gradual phase-out
of coal and the downsizing of the nuclear
power source.
Thirdly, to achieve global goals, we have
committed to the Paris Agreement.
When more than eight per cent of greenhouse
gas emissions come from the energy sector,
the energy is definitely efficient and effective
area, there should be invested in a soul-searching
way.
Now I return to the renewable energy.
The share of renewable energy in Korea by
power-source generation in 2017 is only seven
per cent compared to 30.3 per cent for nuclear
power, and 45.3% for coal, and 16.9% for LNG.
So the current government plans to increase
the share of renewable energy generation for
electricity from seven per cent to 20 per
cent by 2030.
To achieve this goal, 48.7 gigawatts of newly
installed capacity is forecasted to be needed,
and this will mainly come from 20.8 gigawatts
of solar PVs, and 16.5 gigawatts of wind projects
are representing 64 per cent, and the 34 per
cent respectively.
This energy target will be mainly implemented
by a larger scale projects, and with other
project items of solar PV projects in rural
areas, and small-scale projects with co-operatives,
and also projects for presidential areas,
especially inner residential areas, especially
inner cities.
The faster deployment of renewable energy
source, and to enable us to meet the target,
also need to develop such technologies as
energy storage system, electric vehicles,
carbon capture use and storage.
With regard to the investment package, Korea
plans to invest 95 billion US dollars for
newly installed capacity by 2030, and the
figure of almost 95 billion dollars includes
15 billion from government budget, and also
other funding sources from public and private
sectors.
And the government will also form a collaborative
team comprising members of both public and
private sectors to monitor our plan.
With regards to the questions you asked, Korea,
as I mentioned, is an energy-scarce country
but some people are worried that the phase-out
of nuclear power plants will threaten the
security of energy in Korea, but it is a long-term
period.
It takes about 65 target periods, 65 years
of the target period for phase-out of nuclear
power, and then the six nuclear power plants
under construction continue to be built, so
I think it's no threat to the security, and
also, the part with regards to the gas is
bridging energy for achieving the Paris climate
goals, and will increase by 16.9 per cent
to 18.8 per cent, so some portion of the gas
will have increased.
And then also, we are seeking for the energy
dialogue, or energy co-operation amongst those
Asian countries, and also we are setting for
energy interconnection.
Paris is under review, and only private companies
do that, but also the Korean government is
supporting the kind of initiative that the
global - the north Asian power grid that can
link each other by electricity swap, and it
can bring peace and reconciliation and prosperity
on the Korean peninsula, and beyond.
And also, for that target, I think you know,
in 2016, the Korean government announced a
goal for greenhouse gas reductions road map.
According to the road map, the Korean government
plans to reduce greenhouse gas emissions by
37 per cent from business-as-usual by 2030.
If we achieve our plan, for initially, estimated
64.5 tonnes CO2 equivalent but now, last year's
eighth based for long-term energy supply and
demand, it can be bigger than the initial
cost, so the contribution of our energy - will
give more boost to achieve indices by 84.5
million tonnes of CO2 by 2030.
Thank you.
You mentioned the round table with private
and public sector participants.
Maybe you can add one sentence to say what
do you expect from that to happen?
How do you evolve corporations from that,
and are there any targets what you expect
from these round tables?
Collaboration is very important.
In the government sector, interagency collaboration
is also on the way, and then our Prime Minister's
office is co-ordinating the consultative body
to monitor the plan, and also, we are searching
for PPP - that is public-private partnership
- and then now, interestingly, we are an ally
with Denmark which is called Korean Growth
Alliance.
And then, Denmark, under the leadership of
Prime Minister Rasmussen, the people partnering
for green growth and global goals 2030, and
we are a partner of "People G" which means
partnership of partnerships, and Korea are
planning to participate as a board member
and partner.
We are preparing for a national platform.
National platform means also the platform
of networks to increase, promote, green growth
in the green economy.
Now, government sector is leading by now,
but more and more, we give more leverage,
and give more authority of power to our stable
society, and also the local governments, so
when you think of three dimensions, first,
high-level political mention also local government
and on the ground, you know, residents are
level, I think more and more decentralised
and more digitalised, so we can give more
authority to the local and civil society,
and the partnership also can do that, but
initial stage the government should play a
role, so we give some upfront investment,
maybe 15 or 20 per cent of the funding, and
also leverage private finance.
One of the examples is due to fund, fund the
most, the most important thing is how to introduce
the participation of local residents in the
cooperatives, and the farmers, and rural areas,
the residents - very important - so we are
searching for many ways to get participation
in our partnership, but now we already, but
at the initial stage, so we are more and more
want to hear from other practices and experience
to compliment and more develop our partnership
initiatives.
Thank you.
So there is this big success in Morocco 
with solar.
I would be very much interested in what your
view is in bringing private money to the investment.
The large installations, are there any barriers
left?
I apologise for my English.
I try to make myself clear.
I thank you for your invitation.
In Morocco, we began in 2010.
We were at 26 per cent in terms of installed
capacity from renewable energy, so, the target
is now 42 per cent by 2020, and we are pretty
comfortable passing this objective, and we
have another 52 per cent by 2030, so the gap,
ten points of gap, means that we need to double
the capacity, also for renewable energy, between
2020 and 2030.
And, some studies are currently in process,
in order, and are getting some forecast that
we could maybe reach more than 52 per cent,
and maybe between 60 and 70 per cent, and
this time, in terms of power generation in
terms of renewable energy.
The experience of Morocco was at the time
quite innovative because it mobilised all
the guarantees from the states in order to
bring projects to a bankable stage, and thanks
to this scheme, we achieve it from an optimal
price.
We don't like to talk about low price in Morocco
because, for example, we are focused on the
optimal price which means we are not ready
to destroy some value, for example, using
agricultural land for power generation.
We're looking for the best way what is the
best way to add the best value at the country
level, not just only for energy.
It brings me to talk about the buyers, and
maybe there is an observation.
I know it is quite difficult to compare between
prices, to compare prices between different
countries.
There are so many parameters that we have
to take into account, so it's not always a
very good thing to compare this price, but
we can say, we can see that in France, for
example, the last auctions came out with the
price a little bit above five cents, and,
in Germany, I think you achieved something
around six cents for solar.
And the lowest price in Africa, if you exclude
maybe north of Africa, and South Africa, it
is seven cents, or 6.5 cents in Zambia.
So, while the level of - it is higher in Zambia
than in Germany.
It means that, if we bring things at the same
level, technical basis, excluding the final
shell access, it means your price is more
than the double from Sub-Saharan countries
compared to northern countries.
We see here that the power of finance in bringing
the price down.
So, what it brings me to say is that it is
sure that there are a - it's true that there
are a lot of instruments, and I think the
instruments are not really adapted.
There is a perception of risk.
It's not really that some, in some cases,
it is right, but in many cases, it is not
right.
There is an expectation of a very high ROI
when they come to Sub-Saharan countries, and
in Europe, they would request an RRI of around
7 or 8 per cent.
Why they will not accept one below 15 per
cent in African countries?
When you put all these things one above the
other, you come out with a very high price.
Which is not - why are the resources more
abundant than in other countries.
We have to push ourselves to be more innovative,
and to give birth to new instruments, and
also to avoid the subsidies, because, to make
projects bankable, we have to bear in mind,
to keep in mind that it's massively subsidised,
because, when we give sovereign guarantees
for financing, when we give sovereign guarantees
for PRG, for PPAs, it is a kind of subsidy
because it costs a lot for the country to
be able to provide that, and major costs,
it is not when you focus just on the energy
but the major cost, it is we reduce the capacity
of the country to invest in social sectors,
like health, like education, so, the price,
if we compare the real price, it is much higher.
Maybe we are too focused on thinking energy
for energy production, and we're not having
a holistic approach which means that we had
to take energy, like in Germany, I think it's
under the Ministry of Economic - to take it
from the energy perspective, to produce the
right energy with the right price, maybe,
eight cents, which is the objective of the
country, if we are already paying 25 cents
per kilowatt hour, is it really interesting
to pay it at three cents or four cents, or
maybe we can pay it at eight cents.
Then set up an industry for that ask and remove
the subsidies for financing, et cetera?
I call for more innovations for the - and
not just to graduate ourselves.
Who would have to be brought together achieve
that?
Ultimately, there needs to be investors who
would be willing to invest, and, when we talk
about private investors, they want to be rewarded
for actual or perceived risks.
I think the scheme of the IFC, it's an equity
fund, if I understand it well, it's a very
good approach.
We have to see how we can improve our governance
to bring more confidence for the private sector,
and to mobilise private financing.
If we come back to 21, 22, 23, they are the
promise of hundreds of millions of dollars
and euros to be invested in renewable energy.
The reality is that they're not easy to be
reached, because we need to provide all the
sovereign guarantees to be able to mobilise
this financing, but also we cannot leverage
that by giving preferences in order to set
up local industries.
This is why we have GCA, saying that there
is a lot of money available, but they don't
fund projects.
This is why I call more to innovations with
the instrument, because the needs of the countries
are not really taken into account from a realistic
point of view, and an economic point of view
in order to refine the fine the right instruments,
but we take some instruments that are obliging
to countries to give a lot of concentrations,
where they're not always able to do so, and
this is why there is not a good match between
projects and financing which are available
but are not really easy to be mobilised.
I would have a lot of questions but maybe
we move first to Nora and Steve.
I would like to learn from the two of you,
having listened now for 45 minutes to the
different challenges and successes in different
settings and contexts, one of them being that
there is obviously a mismatch between risk,
pricing of risk, and what can be paid, actually,
locally.
How do you bridge that?
Is the solution in different new instruments?
Are there any other solutions that we might
come to?
Somewhere, this Gordian knot has to be solved.
Thank you for looking at me!
Taking reference to the last 55 minutes, including
what you've been presenting, I think one key
word here was "people", yes?
You mentioned it as well here.
So, as MicroEnergy International, the group
that I'm representing here, we are a group
of companies and organisations there the last
20 years towards bottom-up energy transition.
Bottom-up energy transition - by the way,
we got the energy transition award last year
here at the dialogue, means to look at the
energy transition from the perspective of
people, households and SMEs.
So what are incentives, mechanisms, to mobilise
private investment on the people's level,
on the level of households, of small enterprises
who bring forward the energy transition?
And, interestingly, for example, from the
slides that you've been showing, there were
slides looking at let's say, how much dollars,
euros, have been invested into renewable energies,
or how much is the share of in gigawatt.
I'm an engineer.
I love to hear gigawatt and kilowatt, et cetera.
One slide I'm missing, and I would love to
see more in this type of conference, was actually
how many people in which country, for example,
or how big is the share of people in a country
who are profiting from an energy transition?
You maybe will be surprised, if you look at
worldwide, in which country most of the, let's
say, the biggest share of the population is
actively involved in an energy transition
process, currently number one is Bangladesh.
25 per cent of rural population there are
using solar energy to create and generate
their electricity.
These are not megawatts, billions of dollars,
et cetera, but 25 per cent of voters in that
country who are part of this energy transition.
In Germany, it is number 2.
It is about two million people because also
here, many people are actually involved in
this transitional process, so, coming back
a little bit to the questions of risk, so,
for us, and for me personally now working
20 years, in different energy transition processes,
particularly in the global south, we believe
that there is derisking when we look not into
the big scale renewable energy but into the
smaller scale renewable energy has been very
keen to hear from Ghana the perspective on
PPAs from a public point of view, because
let's say Ghana and Morocco are countries
in Africa where normally investors are quite
trusting in, because it is quite politically
stable, et cetera, but in other places, it
is really a big question.
If you sign a PPA for 20 years, are you going
to get your money back?
So looking into renewable energy transition
which is where we turn on investment not 20
years, but two or three years, just because
these are smaller renewable energies, more
decentralised, you have more distributed risks,
this is at least something where I believe
it's promising, and there are a number of
instruments that I will not deploy here in
detail, but I'm happy to share this with you
if you approach me afterwards.
If you look into the instruments used in Bangladesh,
in terms of particularly distributing renewable
energy enabling millions of people to be part
of the transition, and also, my company is
currently mandated by AfD to deploy the African
renewable energy scale-up facility which is
an equity facility where we are investing
and doing equity investments across Africa
into companies who are deploying renewable
energy, and even there, our focus is really
on distributors, decentralised renewable energy,
because of a lower risk that we see in smaller,
in smaller renewables, and particularly let's
say where the dependencies from the political
processes are not so big but actually where
the businesses are really depending from a
tremendous demand that we have in the African
context.
Just as a final example, yesterday, I was
speaking with an entrepreneur in Congo who
runs mini grids in eastern Congo, and his
customers pay two dollars a kilowatt hour,
and, for this entrepreneur, it is super attractive
to shift to solar energy, and he even doesn't
need subsidies for this, et cetera.
He needs securities, guarantees, et cetera,
but on another level.
I would like to ask you, Steve, we've heard
a lot about barriers, and the dichotomy between
willingness to pay, and returns required by
investors, and looking at the larger ones,
and you as the representative of the - maybe
best -
I think you perceive risk differently if you're
spending your own money, or, as with governments,
you're spending someone else's money, the
taxpayers'.
You have a different perspective on what constitutes
risk.
With our partners at the global solar coups,
and the business and investors group, we put
together a paper which I would like to refer
you to, which is from a private sector perspective
about the barriers and risks associated with
scaling up renewables in emerging markets.
Having said that, since 2010, the vast majority
of the investments in the wind energy sector
has been outside the OECD, and the same has
been true for the solar sector for the last
two years, I believe, maybe even longer.
But it is the big markets, and it is the China,
Brazil, Mexico, India, et cetera, where the
majority of that investment has been going,
and the challenge we looked at was much more
the smaller markets we were talking about
which haven't really taken off yet.
As the previous session said, there's no lack
of capital.
There's no lack of capital seeking a good
home in renewable energy projects around the
world.
There is a lack of bankable projects.
Because of the risks, identified by the previous
speakers, I could add to that list the biggest
one really that the offtaker risk, because
most of the time, when you go to do a PPA
with the public sector-owned utility in an
emerging economy, you will find on paper,
the utility is bankrupt, and your financier
says 20 years?
Really?
They're bankrupt.
This is the case in Sub-Saharan Africa, many
parts of south-east Asia, and certainly in
Latin America where, to use an example, Argentina,
for instance, which has defaulted on all its
public loans, three times in the last 14 years,
a new government comes in, they want to get
energy revolution going in Argentina.
Not only did they have to get the government
to place a sovereign guarantee on the distribution
company that was responsible for paying the
PPAs, but also get the World Bank to back
up the government.
Investment is flowing now.
Billions of dollars have come into the sector
over the last two or three years, and it is
taking off, and that confidence will be restored.
But I don't think you should underestimate
the risk from the perceived perception of
an investment of a public sector utility which
is, in fact, bankrupt.
So, those are the kinds - that is the prays
where the role of public finance is critical,
is to provide the guarantees to release those
kind of risks.
There is also currency risk, political risks,
a wide variety of other things.
Then there is the market risk of course because
you can sign a PPA.
You can build your plant, but if you want
get your product to market, or if you get
curtailed because somebody who owns a fossil
fuel plant knows that the system better, you
curtail the wind rather than curtail a coal
plant, it is a problem.
It has been a huge problem in China.
It is getting better but something we have
to deal with.
All of these things add to cost.
When we talk about subsidies, let's not forget
that the fossil fuel industry by the conservative
estimates of the IEA are still 300 or 400
billion dollars a year still on the consumption
side, not to mention the 200 billion on the
production side.
If you use the IMF metric, you add a zero
on to that.
That completely dwarfs any subsidies that
you are paying for the development of renewables.
I agree very much with what you said that
the role of public finance, not only to have
a reliable electricity system but also to
achieve other social objectives, which are
equally important, not only for buy-in of
consumers, but also to help develop the local
economy, and I would point to the REIPPP programme
in South Africa is a very good example of
how local investment is part of the tendering
system.
You still get PPAs for wind and solar for
well below five US cents in South Africa but
with 30 per cent of the value of the criteria
by which the bids are evaluated is on social
criteria, in terms of black empowerment and
local enterprise ownership, community ownership
and development, and things like that, and
they're built right into the auction process,
which to me is a much more effective way than
local content requirements in terms of developing
investments that are going to matter in the
long-term in the local communities when you
talk about attracting FDI.
The other thing about reducing risk which
has been deployed across Latin America very
successfully is the dollarisation of the PPAs.
Everywhere in Latin America, PPAs for wind
and solar are denominated in dollars, except
Brazil.
They can do it in Brazil because they have
the large public sector institution with billions
and billions with the licence to print money,
and lend billions of dollars for energy and
infrastructure projects.
They've created a local industry.
As a result of that, because, in order to
qualify for that finance, which is the only
long-term finance available in Brazilian - they've
created a very large industry but now they
have an industry growing up right next door
in Argentina and can't compete because the
local content requirement means their products
are 30 to 40 per cent higher, so cheaper to
ship in wind turbines from China, or Europe,
or anywhere else rather than drive them across
the border in Brazil.
There are trade-offs, and every country needs
to look at its own public policy objectives
in addition to energy when designing these
systems - you're absolutely right.
Don't ask us to compete directly against incredibly
heavily subsidised components - opponents,
or the incumbents, the fossil fuel industry,
or the nuclear fuel industry whose subsidies
are infinite, because if we required nuclear
power plants to buy insurance, none could
operate because nobody would insure them for
obvious reasons.
This is the thing that kind of annoys me a
bit, when I hear about the thing that renewables
have to compete on their own.
Make the nukes and fossils compete on their
own without subsidies, and we will get on
the same dance floor any day.
Don't forget that.
We know the subsidies won't be taken away
from fossil fuels.
Nuclear will never go away or they will have
to shut the plants down tomorrow.
So, accept that or do something about it,
and then talk about how we incentivise renewables.
Thanks very much, Steve.
I would like to come back in a moment.
There was one question to you on the PPA,
how they are perceived from the public view
in Ghana.
The PPA, the previous government entered into
several participatory agreements in the hope
of getting these entities to reach financial
close within a couple of years.
Unfortunately, they couldn't reach financial
close, and we are lumbered with these PPAs.
We are now finding ways of rescheduling them,
because, if you allow them, and indeed, we've
cancelled some of them and paid penalties
for them, for the simple reason, that if you
had allowed them to proceed, we would have
ended up paying a lot of money for - paying
money for power that we don't need.
So, somehow I've been left, and we have rescheduled
them, and still, we're looking for opportunities
to disincentivise them so we can create the
space for much cheaper renewables, and that
is what we are doing right now.
We're very optimistic that we will create
that space for the private sector in collaboration
with the public sector to come in with the
new renewables, and, like I said earlier,
the remaining 15 per cent accessibility that
is still there, we are more than happy if
an investor is here and willing to come to
Ghana to help with the distributors, solar,
and the mini grade system to - mini grid system
to reach these communities that is too expensive
for the local government to string lines to
these communities, so that is what it happening
at any rate now in Ghana.
Steve, we talked a lot about the challenge
to get over these risks, to address these
risks.
- is this a route.
What do you think about this?
I think the standardised contracts can be
a tremendous help.
Then the dynamic of how much conditionality
do you want to impose on the receiving country
versus making the project, in fact, bankable
and attracting finance.
There's always going to be a trade-off there,
but I think each country could find the balance
and use these tools.
The IFC is one.
I know IRENA is working on another set for
solar.
It can be expanded to be done for wind.
It is early days, but I would agree with your
analysis.
We have the tools, we just need to deploy
them in a combination of the right places
and the right times.
We will get there.
What do you think about the partnerships?
They seem to happen now with the support of
the IFC, with these large pools of money,
so is this one of the solutions that you can
think of beneficial to get money deployed?
Should they go directly without the IFC, maybe
with other means?
Because IFC was, might even at times have
the risk of crowding out local private investments?
The best solution is to create a local financial
sector that can handle it.
To everyone's surprise, it has well in South
Africa.
The financial sector has remained robust and
provided most of the finance for the build
out of the renewables.
They are nominated in rand.
There are still currency risks involved in
the projects, and, at the beginning, all the
equipment is imported, tied to a dollar, row,
but that's a big ask for a country the size
of Ghana, or other countries in Sub-Saharan
Africa.
We would like to see the participation of
the local finance sector as much as possible,
but if you're talking about a rapid scale-up
and giving loans at a rating which will make
renewable possible, that's a big ask for the
financial sector of a small country, and it's
going to need time to develop, and so you're
going to need international investors, either
public or private to play the lion's share
of the role in the beginning, and then obviously
hand it over to locals as quickly as possible.
Like the example I used in Argentina, there
is no local finance in Argentina of course.
Given the recent history of the country, that's
not surprising.
We hope it will come but that will take years
and years and years.
Every country's different.
Dr Siri, we have five to ten to 15 minute
left, we have a final round so everyone can
respond to the various contexts, but as well,
there were some solutions mentioned by all
of you and maybe reflecting a little bit on
that so you know what it is to try to find
the way that supports the way forward in the
local context, of course.
Thank you for ending the sentence with 
the term "local context".
But I think we all concur on one item, that,
moving forward, private financing will be
the way.
It's a key to go, okay?
It is the way forward.
Moving forward.
Public financing would be very limited, and,
if in countries or regions that have that
limitation, then institutional - then institutions
like the IFC, World Bank, and all the rest,
could play a critical role, as they have done
in the past, in terms of fostering the credibility
of various countries to guarantee the PPAs
and all the rest.
When I said that I land, most Asian countries,
I think that issue is a little bit less prevalent
or less stressed than another region.
We are moving forward in terms of our financial
institutions, local financial institutions
in Thailand are strong and their credit ratings
are word class.
So the issue of credit ratings, or private
financing for renewables, including wind,
solar, and in biomasses, it is not the issue
of funding, it's an issue of putting together
large-scale projects, or disputed projects
that has a strong sustainable policy framework
that would benefit all, both the investors
and the consumers.
Today, things are very transparent.
You can read here and there that solar has
been a bit out two or cents here or there.
It is raising public awareness that, in a
competitive market, okay, it is feasible or
possible to achieve, so low or equitable cost
of renewable energy power, okay?
I mean, to do good for the environment doesn't
cost an arm as a leg, but the country needs
to do a foundation or framework of regulatory
legal certainty, okay?
Including the credibility and sovereign trustworthiness
to bring about that condition.
It is not the role of the private-sector or
private sector.
It should worked hand in hand.
What could be achieved including local industrial
development as well, the local components,
to be fit in appropriately.
So I think this dialogue of exchanging views
would foster understanding for us to move
forward.
Critically, the IFC has a very important role,
as you have done for the oil and gas industry
for over 40 or 50 years now of fostering this
understanding and this equitable distribution
of development throughout various countries,
big, small, less developed.
Thank you, and this dialogue has been excellent.
Thank you.
Nora, what is your perspective?
Having listened to everyone, is there a silver
bullet to this?
Actually, I liked your sentence "what is the
right energy at the right price?
" I would add to this something like what
is the right energy?
What is the right price?
And what is actually the right target group?
I think that in the energy space, we are still
very much trapped in a kind of technological
trap looking mainly at centralised and larger
energy generation means which make it very
difficult actually to let the economy, the
local economy, economy of small people, participate
in the energy system itself.
I think this is totally crucial, and taking
really exactly what you've been saying, we
have to think about a more inclusive energy
sector in the sense that there is a public
duty to take care of economic social aspects,
et cetera, but energy is not detached of social
development, but economic development anyhow
not, but if we think maybe, and we can think
today smaller, not because we are more modest
but because today, a computer IT technology
allows us to put a lot of smartness and intelligence
into something small, and we don't need any
more rooms like this to host a computer.
This is when I speak about small things.
Small can mean very big, smartness, yes?
We have to think more cross-sectoral.
When we think about the energy systems of
the future, it means exactly how can farmers,
how can small industries, et cetera, become
not only consumers of energy but actually
become prosumers?
Today, the technology, the technological development
that we see, not only in the solar panels,
solar cells, wind turbines, etc, is this storage
technology, and particularly in ICT, enable
us really to think about other energy, and
supporting by public means, the development
of energy system of the future, we can in
the same means develop the economy, develop
specific social means, et cetera.
So it's more for me and from my perspective,
an important mind set change into a more cross-sectoral
thinking.
Dr Kwon, in the Korean context, what would
be the next measure you will have now in your
mind to activate private investment?
A good question.
The economy is related to the psychology.
The psychological effect is important, in
to energy transition.
But how to give credibility to the investors,
and the citizens?
They should give more political consistency
that can ensure their long-term credibility
for the people to invest in a new energy,
but to ensure this long-term credibility,
we should also redesign and market the system
that, in a way, that introduces the internalisation
of external costs, and also the establish
a clean energy calm in terms of socio- - energy
ecosystem, and 
the process of production, and distribution,
and consumption, that it is by a clean energy
ecosystem can give more long-term stability.
It is very low, seven per cent, I think it
is due to the limited space, because it creates
industrialised but small country, so our limited
space for renewable energy potential, and
then also technological breakthrough is also
important, but, on the official phenomenon,
as I mentioned, the credibility issues, and
also how to induce private investment?
That's why we need to emphasise the role of
public finance, the government sector, but,
because of limited budgets, we cannot give
much budget to this area.
So, but in Korea, we have six public power
companies.
We can give more roles to play for them, because
this is a sort of monopolistic system.
The six public power companies, they can give
more incentives to local citizens to participate,
and also, we can create some sort of fund,
sort of participating participatory fund,
crowding source, or the renewable energy fund
whatsoever, so, this fund can induce a local
residents, farmers, they can participate,
or give equity or debt repayment.
Also, the local governments, because in the
world of - decarbonisation, and centralisation
in the digitised world, the mid-level stakeholders
and actors like local governments, they're
in a good position to play, so in Korean context,
the psychological issues, the institutional,
and also legal instruments have also - the
system would be -
Yes, that's interesting.
We have to be conscious of time.
I think we are now running out of time.
I want to hear briefly you, Ali, what you
make of this brief exchange.
Then I would like to hear one or two sentences
from each of you as well.
I'm going to make just a point on something,
not directly in relation, but with what you
are asking for.
But, I'm going to jump off what you said.
This is the first time I hear this word "prosumers",
which is quite interesting, and I'm wondering
that we are talking about what are the truth
and the instruments to leverage private finance,
and, even if we had today the solution, it
shall be visible in five years.
I'm just thinking when prosumers, if we see
in Morocco that some industries that are putting
solar panels in the rooftops, they are lowering
their bills by more than 50 to 60 per cent.
This is also the case in Germany.
This is prosumers.
This is why you have I think you are the third
country in the world in Germany with PV capacity.
The price of batteries are coming down heavily.
Which would happen with solars with batteries
are below the costs of the network?
And we are all talking about the network.
So, maybe we're just talking, realising that
we're talking about how to finance very large-scale
renewable energy power plants, but what if
we were in front of a huge disruption, and
most of the times, experts like us are not
the right people to talk about it!
We are always completely wrong.
Maybe, we're facing a disruption, and some
financial instrument should be adapted to
what is coming very rapidly than thinking
about how financial instruments called sustained,
or things that are old, or I don't know how
we say it in English, but our - old!
Thanks.
Risks, the Ghanaian situation, anything new
to you, disruption coming to you in Ghana
as well as to everywhere else?
I would like to dwell on this "fear" by the
international financial community in investing
in the major markets.
There are huge opportunities, and a huge amount
of money to be made there.
Companies, private money in the west, notwithstanding
the assurances that have been given by the
IFCs of this world, are still risk-averse,
and I would urge the private money here herein
gathered to get rid of this fear, come to
Africa.
There are a lot of opportunities there.
Come to Ghana.
It is the gateway to West Africa.
It is a huge potential market, and you will
not regret it.
Very nice.
I would very much like to second the statement.
The opportunities are there.
Institutions like us have been involved in
the emerging markets for more than 60 years.
I think we will be needed for a few more years
in order to overcome or some real risks related
to emerging markets but the world is going
to become more connected, so there will be
more knowledge about market opportunities,
and hopefully getting them financed with instruments
that we will continue to developing, so I'm
very positive about certainly also the energy
sector.
Simply what you said about the rate of change,
and the disruption happening so quickly, that
a lot will be happening now, that, in the
ten or 15 years, we could not possibly predict
today, or maybe out there has figured it out.
That's a good thing, because, on the current
track, there is no chance that we will get
anywhere near the goals agreed in the Paris
Agreement.
We need basically, if, when we will see the
1.5 degrees report from the IPCC coming out
over the next six months, and other scenarios
that are done, and we need a decarbonised
power sector by 2030.
Certainly in the OECD, and the rest of the
world thereafter, if we have any chance of
meeting the Paris climate targets, and while
we have the technology to do it now, we don't
have the financing instruments or the policy
to get that us there.
So massive disruption is not only inevitable,
it's required.
Thanks.
If you can come on stage to present the result
of the poll?
When you saw me last, we asked you which way
of public and private collaboration looks
most problem for scaling renewable energy
and energy partnerships in future energy markets.
The winning answer was 58 per cent.
It is investment partnerships, followed by
the public role being towards regulation.
Nobody voted for the options blended finance,
and no clap rakes needed.
So, take what you will out of that.
That is a very interesting result.
I would have expected that someone would vote
for blended finance, but, it is an interesting
result.
... difference between the first two.
Yes, I think blended finance focuses of more
on bringing the public and the private money
together, so it is similar to IEC does.
It is the first part.
I think it is slightly different - at least
in my understanding.
We can discuss that another time.
Summarising the panel in only a few words,
so what I heard is very much about some disruption
is maybe looming because of different reasons
- prices seem to be a big issue.
Level playing field is still not there at
all places but there is quite some hope, in
particular, with involving smaller-scale investors,
smaller-scale actors.
People that like your example of Bangladesh
are more and more benefitting from the energy
transition, be it with energy efficiency,
be it with involvement in small-scale solar
solutions.
That's one, and this that encompassed, and
that is your point, and your point from Korea,
and from Thailand in particular, with increased
credibility that is added to the sector, that
ultimately drives down price differentials
when it comes to investment return requirements.
This isn't for me personally the major takeaway,
and I think you're pretty much right and kind
of pushing, okay, we don't have time too much.
There is quite a lot ongoing but certainly
not enough, even not with the numbers we just
see, for there are gaps still there.
So, with that, I would like to close this
panel.
I would like to thank you all for your contributions.
I think that was very helpful, very constructive.
Yes, and I look forward to collaborating some
time in the future.
Thank you.
