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International Investment Funds in Bioenergy and Energy Efficiency

International Investment Funds in Bioenergy and Energy Efficiency. Susan Legro, Eco Ltd. “Issues and Solutions in Bioenergy….” December 11, 2007 Minsk. Overview . Types of Funds Investor Requirements Lessons Learned Conclusions “Рубить дерево по плечу”. Types of Funds.

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International Investment Funds in Bioenergy and Energy Efficiency

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  1. International Investment Funds in Bioenergy and Energy Efficiency Susan Legro, Eco Ltd. “Issues and Solutions in Bioenergy….” December 11, 2007 Minsk

  2. Overview • Types of Funds • Investor Requirements • Lessons Learned • Conclusions • “Рубить дерево по плечу”

  3. Types of Funds • Private Equity Investment Funds • Dedicated Renewable Energy Funds • Bioenergy Development Fund • UNECE/SwissRe Fund • Fuel and power companies • Shell • GE Energy Financial Services

  4. Types of Funds • Other project equity investment • Foreign partner • Sawn wood companies • Furniture companies • Foreign partner + investment fund • Company + NEFCO • Vendor financing • Carbon equity investments • Emission reduction purchase agreement • Combination of project and carbon equity

  5. Types of Funds • Debt • Loan from a multilateral financial institution (MFI) • EBRD, IBRD/IFC • On-lending • Combination of Debt and Equity • Common within projects • Some MFIs offer both

  6. Other Types of Intl. Support • Credit Enhancement Products • Investment guarantees • Political risk insurance • “Market development” support

  7. Investor Requirements • Risk management • Project risk • Country risk • Risk vs. return • The market--and the competition--is global

  8. Investor Profiles • Interest in private sector • Interest in small and medium enterprises (SMEs) • Interest in combined project and carbon equity

  9. Investor Requirements • Project investment document • The more data, the better • History of site and equipment • Details on owners and investors • Details on consumers (residential, industrial) • What kind of document? • Project documents should provide a “starting point” for investors • Individual investors have their own unique templates, methodologies, and due diligence procedures

  10. Lessons Learned, 1 of 2 • Energy efficiency investments should be made before or concurrently with supply-side investments, not after • Heat demand may be overestimated • Innovative financial mechanisms = need for very specialized legal expertise

  11. Lessons Learned, 2 of 2 • Potential conflict of interest: private sector partners may want maximum heat consumption. • Contracts are the key means of managing risk • Need to coordinate timing of funding • Relatively low internal rate of return (IRR) can make it difficult to attract investors

  12. Conclusions • Re-visit pipeline of projects for “niche” investors • Emphasize risk management • Continue to include private sector projects • Follow status of emissions market

  13. Спасибо за внимание

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