Partnering and Financing Opportunities for Biogas Projects in

Developing and Emerging Countries

Clemens Findeisen Consultant for Development Cooperation

German Biogas Association

Berlin, October 14th, 2013

Overview

o Background: Development Cooperation and Private Sector Development

o Institutions of the German Development Cooperation

o Energy and Biogas overview

o Partnering and Financing Instruments

o Cases from the Biogas sector

Collaboration: Private sector and development cooperation

Private Sectorobjectives

Development Cooperation

objectives

official development assistance(ODA)

foreign direct investment

700 BillionUSD

Engagement in Developing and Emerging Countries 2012 worldwide

260 Billion USD

Institutions of the German Development Cooperation

Technical Cooperation (political and technical

advice, Capacity Development/Training,

Colocation of development workers & experts

via: GIZ, CIM, BGR, PTB, as well as Sequa

(education and training, business membership

organizations)

Financial Cooperation and Promotion of

private Investments via: KfW

Entwicklungsbank and KfW IPEX-Bank as

well as DEG (Dt. Investitions- und

Entwicklungsgesellschaft)

Contractor Execution

Kfw group: A bank with a wide array of functions

10

The International Activities of KfWDegree of market maturation and target market – portfolio and new

businesses

Degree of market maturation

Very early phase Early phase Mature phase

Target market

Developing country Emerging market Industrialised country

KfW Entwicklungsbank

DEG

KfW IPEX-Bank

Portfolio and new businesses 2012

28,5 bn EUR · 4,9 bn EUR 6,0 bn EUR · 1,3 bn EUR 61 bn EUR · 13,4 bn EUR

Source of funds

Budget and market funds Market funds Market funds

Entwicklungsbank

GIZ Services for Energy

ongoing

Project portfolio:140 activities in 40 countriesVolume of orders: 490 million €Yearly turnover: 110 million €

biogas components

Some GIZ energy Programms with biogas components

o Brazil: Diffusion of climate friendly Biogas Technologies (BMZ, 2013–2017)

o Turkey: Resource-efficient and Climate-friendly Use of Animal waste (BMU, 2010–2014)

o China: Optimization of Efficient Biomass Utilization (BMZ, 2009–2013)

o India: Emission-neutral Rural Energy Supply Programme (BMZ, 2009–2014)

o Bangladesh: Programme for renewable energies and energy efficiency (BMZ, 2011–2013)

o Vietnam: Support for the establishment of a renewable energy agency (BMU, 2010–2014)

o Indonesia, Thailand, Vietnam, Philipines, Myanmar: PEP Renewable Energy South-East Asia(BMWi, 2012–2015)

o Cambodia: Renewable energies (BMZ, 2010–2012)

o Central America: Promotion of Renewable Energies and Energy Efficiency in Central America (BMZ, 2010–2014)

o Chile: Expansion strategy for grid-connected renewables (with grid study) (BMZ, 2009-2013)

o Serbia: Development of a sustainable Bioenergy market (BMZ, 2013-2017)

Biogas priorities in the development cooperation

Increasing development / economic growth in countries and regions

Decentralized Houshold-plants

Aim: Electricity generation, cooking / lightingCountries: Nepal, India, China, Kenia

Middle-Tech

Aim: Reduction of pollution / CDM and energy production for own use Countries: Brasil, China, Thailand, India

High-Tech (Industrialized)

Aim: Efficient electricity generation and feed-in to the grid Coutries: China, Philippines, Chile, Turkey…

Cambodia: Project implementation by SNV

o BMZ-Funding of 2.2 Mio. € to extend existing NationalBiogas Programe for household digestors (4-15 m3 digestor volume) to four more provinces

o Activities:

o Construction of Biogas plant

o Payment of subsidy (150 US$/plant)

o Organizing of finance

o Training of masons and maintenance staff and operators

o Information on slurry management

o CDM-Certificate generation

o 2 year warantee; Quality controll on quality controll

China: Optimization of Efficient Biomass Utilization

o More and more large projects are implemented in China, but the efficiency of the plants is very low.

o In cooperation with the Ministry of Agriculture and the Asian Development Bank

„Use of bioenergy for heat and power production in the framework of technical cooperation“

Vertical Support to Biogas-DEMO Projects

Component A: Support to 3-5 Biogas ‘best practice’ demonstration projects in 2-3 Provinces

SINO-German Biomass Utilization Project: Optimization of Biomass Utilization

Horizontal Support to ADB sub-projects

Component B: Capacity building, dissemination and replication for large scale biogas plants

Component C: Sector policy frameworkComponent D: Technical support to central and provincial PM for ADB Project implementation

Cooperation with the private sector !

� Improvement of local economic conditions

� Establishment of sustainable supply chains

� Mobilisation of capital and know-how

� Involvement of local communities in economic cycles

� Assurance of supply chains, market entry and expansion in developing and emerging countries

� Marketing of products

� Finding new customers and ensuring customer loyalty

� Corporate Social Responsibility (CSR)

Private Sectorobjectives

Development Cooperation

objectives

Development Partnerships

Development Partnerships: Common Goals

Areas of cooperation

� Development of education and training programmes: Demand / labor market oriented training with the involvement of prospective employers (in the field of agriculture: training in sustainable (ecological) crop cultivation, education in different harvesting methods, modern storage etc.)

� Transfer of technology: Ensuring the sustainability of technological innovations by the commercial interests of the private partner

� Optimisation of value creation / supply chain: Improvements to secure the success of a market-based value chain by integrating the product-specific know-how of the buyer

� Introduction of guidelines and standards: For example, labor standards or environmental standards

� Introduction of internal improvements: For example, through HIV / AIDS workplace programmes

Integrated

Development

Partnerships

Africa Facility Fund Fragile States

West Africa

Ideas

competitions

Strategic alliances

Private

partner

All companies (local,

regional & international)

African companies,internationalcompanies with a branch office in an African country

Companies of the respective country,international companies with a branch office in a respective country

German & European

companies

German & European companies

Sector Direct contribution to

achievement of

Technical Cooperation

(TC) project objectives

Sectors of the target countries Ghana, Kenya,Cameroon, Tanzania,

Southafrica, Tunisia

Sectors of the target countries Ivory Coast, Liberia,Sierra Leone, (Guinea)

Supra-regional, often entire

sectors, different stakeholders

Term Within project duration max. 3 years max. 3 years max. 3 years max. 3 years

Contribution Up to EUR 193,000

Public share

possibly more in co-

operation agreements

Up to EUR 193,000 Public shareGIZ ≤ 50%

Up to EUR 193,000 public share GIZ ≤ 50%

Up to EUR 200,000

Public share

GIZ ≤ 50%

At least EUR 750,000 Total volume

GIZ ≤ 50%

Acquisition Active acquisition Active acquisition Active acquisition Through ideas

competition, GIZ

advisory services

Active acquisition

Public share

funded by

TC-project Africa Facility Fund Fragile States West Africa

develoPPP.de

Sequence of a Development Partnership

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

Submission of proposals*

•

Closing date on the last day of each

quarter

(ideas competitions)

Business solvencycheck

•

Assessment ofproposals according

to criteria

Joint elaboration of project concept

•Budget

Concept review

•

Finalisation ofcontract

Implementation

•

Payout according toprogress

•

Progress reports

End of project

•

Final report

•

Final payment

* In Strategic alliances an approval by the BMZ is required. In addition to the general criteria, there are also quantitative and qualitative criteria to be fulfilled. Typically, a cooperation agreement is chosen.

Criteria for develoPPP.de projects

� Compliance: Every development partnership has to comply with the development-policy principles of the German Government.

� Complementarity: Public and private contributions must be mutually complementary, i.e. cooperation must enable both partners to achieve their objectives more cost-efficiently, effectively and swiftly.

� Subsidiarity: Public support for the partnership measure is only given if the private partner would not otherwise implement the project and if the project is not a legal necessity.

� Competitive neutrality: The measure must not distort competition.

� Private sector's own contribution: The company has to make a substantial contribution to the measure, at least 50 percent of overall costs (public contribution fixed at 200.000 Euros)

� Commercial interest of the company implementing the project must be clearly recognizable

Establishment of an „International Centre of Excellence of Training in Biogas and Biomass“

The existing pilot biogas plant for fermentation of sisal waste on the premises of KATANI Ltd. in Hale / Tanzania has been realized with a UNIDO project and Bio Energy Berlin GmbH

Approach

o Installation of a trainig center next to biogas plant, offering of theoretical and practicaltraining on biogas and biomass, as well as consultancy and labratory services

o Know How Transfer from the German Humboldt University (Institute of Agricultural andUrban Ecological Projects) with local universities

o Sensiblisation of public and private organisations for the use of biogas

Impact

o Diffusion of the biogas technology in Africa,

o Motivation to implement further projects

o Reduction of the lack of energy in Tanzania

o Contribution to poverty reduction

06/2009 – 11/2010

BIOMETEC – Biomethane Generation through Fiber Membrane Technology in China

Evonik and GIZ transfer skills and technology for the improvement of the efficiency of biogas Evonik is an expert in producing polymer membranes to purify biogas to biomethane. Hollow fibre membranes are a new technology for biogas upgrading.

Approach

o Evonik will supply the equipment for demonstration. Biogas plant owners and original equipment manufactures will be trained to enable the Chinese biogas sector to adopttechnology.

o The GIZ Sino German Project of Optimization of Biomass Utilization will provide the access to the Chinese biogas industry. Cooperation with the China University of Petroleum Beijing (CUPB)

Expected impact

o Selected biogas plants demonstrate the benefits from the application of the innovative fiber membrane technology.

o The awareness and acceptance of the technologyin the Chinese biogas sector has increased.

o The output efficiency of biogas purification processes has been increased012/2012 – 11/2015

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Clemens Findeisen

Consultant Development Cooperation

German Biogas Association

Telefon: 0049 (0) 1763 / 17 88 290Email: clemens.findeisen@biogas.org

Internet: www.biogas.org