Unlocking Private Investment in Emerging Market Solar Power
THE CHALLENGE
Solar power has enormous potential as an energy source in emerging markets. At the same time, the cost of solar photovoltaic technology has fallen dramatically—solar PV can now deliver power less expensively and with more long-term price certainty, than coal-fired power.
Many countries have struggled to develop utility-scale solar power plants as a result of challenges that include:
1.Limited Institutional Capacity
Many governments in emerging markets have limited capacity to manage, structure and negotiate private power concessions.
2.Lack Of Scale
Navigating small and distinct power markets can deter investors and small grids can only absorb small projects.
3.Lack Of Compettetion
Many power projects in emerging markets are not competitively tendered.
4.High Transaction Cost
Individually negotiated contracts have high transaction costs.
5.High Perceived Risk
Poor credit utility off-takers and political risks increase the cost of capital, driving up tariffs.
THE SOLUTION
Scaling Solar brings together a suite of World Bank Group services under a single engagement aimed at creating viable markets for solar power in each client country. The “one stop shop” program aims to make privately funded grid-connected solar projects operational within two years and at competitive tariffs. When implemented across multiple countries, the program will create a new regional market for solar investment.
We offer a package that includes:
1.Advice
To assess the right size and location for solar PV power plants in a country’s grid.
2.Simple & Rapid Tendering
To ensure strong participation and competition from committed industry players.
3.Fully Developed Templates
Of bankable project documents that can eliminate negotiation and speed up financing.
4.Competitive Financing & Insurance
Attached to the tender and available to all bidders, delivering competitive bidding and ensuring rapid financial close.
5.Risk Management & Credit Enhancement
To lower financing costs and deliver power at lower tariffs.
THE BENEFITS
Governments and Utilities :
SPEED
Templates for all processes and documents enable rapid preparation, tendering and financial close.
CERTAINTY
Balanced, bankable documents that can be offered to bidders on a non-negotiable basis with the comfort of pre-approved financing available to all suitable bidders.
LOW COSTS
Tenders designed to attract competition among top-tier investors and minimize resulting tarrifs.
Project Developers and Investors :
MARKET CREATION
Consistent tendering and bankable documentation will open up regional opportunities for qualified developers looking for new markets.
REDUCED DEVELOPMENT TIME AND COSTS
Technical diligence and approval requirements in place. Set of bankable documents and pre-approved financing.
A LEVEL PLAYING FIELD
Clear and transparent award process allowing developers and investors to compete on the basis of lowest tariffs and long-term commitment.
International Donors and Development Partners :
REACH
Support to multiple low-income, fragile and conflict-affected states to achieve energy security and sustainable low-carbon growth.
LEVERAGE
Donor support will leverage significant amounts of private capital through transparent, competitive tenders.
IMPACT
Rapid delivery of low-cost, sustainable electricity, helping countries meet urgent needs.
THE PROCESS
The World Bank Group has decades of experience leading power projects across the globe. A key objective is making renewable energy more accessible in developing countries – particularly places with abundant sun, wind, and hydro resources. We are experienced in developing and investing in bankable private power projects and have a substantial track record in both tendering and financing solar power plants.
Solar generation can be achieved within two years of engaging Scaling Solar advisers.
STEPS 1 – 3 TAKE 8 MONTHS
- PROJECT PREPARATION
- Technical and economic analysis
- Site investigation
- Legal & regulatory analysis
- BID PREPARATION
- Localization of tender and project documents
- Attachment of financing, insurance, and credit enhancement
- TENDER PROCESS & AWARD
- Request for qualification
- Bidder consultation
- Request for proposals
- Proposal review and award
- Signing of project documents
STEP 4 TAKES 6 MONTHS
- FINANCIAL CLOSE
- Finalization of contracts
- Final project approvals
- Finalization of loan agreements, insurance, and risk management
STEP 5 TAKES 10 MONTHS
- CONSTRUCTION & OPERATION
- Construction
- Commissioning
- Operations
Source: scalingsolar.org
