Wir unternehmen Entwicklung.

v2.0

DEG – Deutsche Investitions- undEntwicklungsgesellschaft mbH

Financing Climate investmentsin Emerging Markets,

The Role of DFIs

The Copenhagen Summit –Results and Opportunities for investors

12 November 2009

2

Climate ChangeMitigation & Adaptation

Energy efficiency

Renewable Energy

Biofuels

Avoided Deforestation

3

Globally: RenewablesDiversification in non- OECD countries has not yet been achieved

4

New investments in Renewables since 2002

5

Renewables in Germany 2002-2008Impetus by legal framework

[GWh]

6

Public Co-Financing effective support for Renewables

political will is the starting point : Incentives In emerging markets, Renewable Energy is just about to take off (except for hydro power) In order to reach a mature technological status, these technologies require some backing and support in

the beginning

Produkt / Technologie Push

F&E Demo Einführung Verbreitung Marktreife

Technologieentwicklung

Skalierung kommerzielleAusbreitung

Markt / Nachfrage Pull

Privatsektor

öffentlicher Sektor (Multi- /Bilateral)

Produkt / Technologie Push

F&E Demo Einführung Verbreitung Marktreife

Technologieentwicklung

Skalierung kommerzielleAusbreitung

Markt / Nachfrage Pull

Privatsektor

öffentlicher Sektor (Multi- /Bilateral)

7

PPP – important part in Climate Change public funds close a crucial financing gap

F&EDemonstration

Markt-einführung

Verbreitungkommerziell

wettbewerbsfähig

privateInvestorenbeginnenErträge

zu generieren

öffentlicheMittel

Finanzierungs-bedarf

Technologie-entwicklungsStadien

Privatsektor

Quelle: UNFCCC, 2007

F&EDemonstration

Markt-einführung

Verbreitungkommerziell

wettbewerbsfähig

privateInvestorenbeginnenErträge

zu generieren

öffentlicheMittel

Finanzierungs-bedarf

Technologie-entwicklungsStadien

Privatsektor

Quelle: UNFCCC, 2007

8

Financial Crisis with deep impact Regulation and Promotion stimulate investment

Rewards for renewable energies• 63 countries/states/provinces have regulations that

positively discriminate energy supply by renewables• 49 countries/states/provinces are committed to quotas for

renewables• These jurisdictions are able to attract main financing

resources

Bi- and Multilateral development finance• Increasing support during the crisis• KfW Group, EIB, IFC, GEF, ADB und IDB play an

important part to mobilise private capital

9

Necessary Steps to be taken

How can the positive development be broadened and rolled out?

• Providing Risk Capital for Developers and „brave“ pioneers.

• Strengthening local markets.- Transfer funds to flexible mechanisms (CDM)- Support the financial sector

• Reduce Investitment risk.- Manage Forex-risk- Provide First Loss – Capital and Credit Guarantees- Political Risk Insurance

• Setting the Regulatory Framework.- Regulation- Support- Setting of Standards

10

DEG – Private sector Specialist within theKfW Banking Group

DEG• Finances and structures investments

of private companies in emerging marketsand developing countries

• Offers experience and has been in the markets for 47 years

• Climate Change is a strategic focus since 2007

• invests Risik Capital in project development

• Tailor-made equities or flexibleMezzanin-solutions

• Long-term loans with local collateral

11

Fallbeispiel DEG: OLKARIA – Geothermiekraftwerk – KeniaBest EMEA Sustainability Deal 2008

OrPower IncGEOTHERMIEKRAFTWERK

Gesamtinvestition: 150 Million USDAufbau und Betrieb des Kraftwerks

Investitionsprojekt:- Kapazitätserweiterung des im Jahr 2000 errichteten Geothermkraftwerks Olkaria III von 13 MW auf 48 MW

- Lage: Rift Valey Province, 100 Km nordwestlich von Nairobi im Hells Gate Nationalpark

- Langfristiger Stromlieferungsvertrag mit staatlichem Stromversorger Kenya Power Lightning Company

EK-Partner/Sponsoren:

- ORMAT International Inc. 100 %

FK-Geber:

- DEG als Lead Arranger (40 Mio. USD davon KfW 20 Mio. USD)

- European Finance Partners/ EFP (40 Mio. EUR)

- FMO (15 Mio. USD)

- Proparco (15 Mio. USD)

- Emerging Africa Infrastructure Fund (15 Mio. USD)

12

Fallbeispiel DEG. Projektentwicklung.

The Solution

• Cooperation with a German company PCC with broad experience in electricity trade

• Support by experienced technical consultant

The Challenge

• Financing of up to 30 small hydro power plants in different countries

• High leverage

Value Added by DEG

• Long standing international experiences

• Deep knowledge of financing of renewable power projects

PCC DEG Renewables GmbH

Up to 30 small hydro power plants in South East Europe with an estimated capacity of 45 MW total.

Equity: up to EUR 9 million

13

Best Practice Report.Respondents.

14

Best Practice Report.Type of Climate Opportunity seen.

The survey found:

For respondents offering specialized financing products or targeted investments in climate-related areas, renewable energy (20 respondents or 31 percent), industrial energy efficiency (18 respondents) and waste management (18 respondents) lead in activity.

The least active area is adaptation-related services (2 respondents), an area that over time will require substantially increased investment in developing countries.

The most common investment area for commercial banks surveyed is industrial energy efficiency, while development banks are focused on waste management and investment funds are focused on renewable energy projects.

Only one participant had any involvement in Carbon Markets

15

Get in touch!

Kai BuntrockSenior Investment Manager Climate Change

DEG – Deutsche Investitions- undEntwicklungsgesellschaft mbHKämmergasse 22

50676 Köln

Deutschland

Telefon: 0221 4986 - 1808

E-Mail: Kai.Buntrock@deginvest.de Mobil: 0172 234 6867

Internet: www.deginvest.de