3 min read
Summary Points:
- Nexus highlights key barriers to finance from entrepreneurs’ and investors’ perspectives.
- Inclusive dialogues between key stakeholders have addressed delivery of financing solutions for RE projects.
- View the report that maps more than 100 financial scheme: Financing Renewable Energy in South East Asia: Insights from Practitioners
Opportunity for low-carbon development in Asia
Countries across Asia have shown commitment to achieve the climate goals of the 2015 Paris Agreement; they have adopted national renewable energy (RE) targets, prioritized climate change in their national SDG implementation plans, and adopted policy and investment frameworks that seek to leverage the private sector. Despite their efforts to drive low-carbon development, according to IRENA’s latest report “Global Energy Transformation: A Roadmap for 2050”, renewable energy needs to be scaled at least six times faster for the world to meet the decarbonisation and climate mitigation goals. Supporting social enterprises that deliver sustainable energy solutions can increase the rate at which clean energy is accessed.
Local entrepreneurship uniquely positioned but face barriers
Local small and medium-sized enterprises (SMEs) and social enterprises are uniquely positioned to pioneer low-carbon development. By supplying communities with sustainable and affordable clean energy solutions, SMEs and social enterprises can address the key drivers of poverty while reducing carbon emissions. Unfortunately, RE projects and SMEs often face significant political, regulatory, or technological barriers during implementation. Particularly for those enterprises in the start-up, scale-up, or growth stages, access to finance is the primary obstacle they must overcome on the path to scaling and implementing RE solutions in SEA.
Mango farm owners in Cambodia smile proudly about their switch to a solar-powered irrigation system
Fostering dialogue between entrepreneurs and financiers
Nexus in cooperation with members, GERES and S3IDF, and with support from Rockefeller Brothers Fund and WISIONS, successfully hosted 65 market actors in Southeast Asia for a knowledge sharing workshop on access to finance for RE technology providers. Direct communication between renewable energy entrepreneurs and financers inspired mutual understanding and improved collaboration specifically on addressing barriers to scaling low-carbon solutions.
From the entrepreneur’s perspective, challenges to accessing finance are often linked to the lack of flexibility from traditional financiers and the limited suitability of products offered. Entrepreneurs also identified lack of awareness or understanding of existing financial options common challenges. From the investor’s perspective, the main barriers to providing finance to entrepreneurs include the latter’s lack of financial literacy and a misalignment of risk and return expectations.
Attendees at the December 2017 workshop included RE entrepreneurs and impact investors from across the SEA region including Cambodia Myanmar, Indonesia, Vietnam, Laos, Philippines, Nepal, India.
Report highlights innovative financial schemes
Following the workshop, Nexus published the report Financing Renewable Energy in South East Asia: Insights from Practitioners. The report summarizes key findings from the event and includes a complete mapping of 100 existing financial schemes currently funding RE technologies in SEA. Five case studies on both public and private innovative financing schemes are showcased, including their successes and challenges faced.
The event’s success reinforced Nexus’ theory that additional opportunities for cross-stakeholder dialogue will lead to an increase in the effectiveness and delivery of finance solutions for low-carbon development projects in the Asia and Southeast Asia (SEA) region. Nexus is continuing this work with partners across Asia. Keep an eye out for more in 2018!
