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INVESTING IN RENEWABLE ENERGY: THE GEF EXPERIENCE

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INVESTING IN RENEWABLE ENERGY: THE GEF EXPERIENCE ( investing-in-renewable-energygef-experience )

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8 THE GLOBAL ENVIRONMENT FACILITY The average cost-effectiveness of GEF funding for renewable energy projects is estimated to be about US$3.97 per tonne of CO2 directly avoided. Over their lifetime, RE projects approved by the GEF to June 2009 are estimated to avoid, directly and indirectly, 290 million and 1.2 billion tonnes of CO2, respectively. Interventions for Advancing Renewable Energy Technologies The GEF’s catalytic approach to the promotion of renewable energy is multidimensional, mixing interventions that range from “soft” actions (barrier removal and capacity building) to tangible actions (direct financing of investments in RETs). The RE projects undertaken also involve many stakeholders—governments, private firms (manufacturers and dealers), financial intermediaries, recipients of technical assistance, technology suppliers and contractors, and project developers. Building favorable market conditions The GEF pursues the development of market conditions for increased renewable energy production and use through development of enabling policies and regulatory frameworks, standards and certification, information and awareness, and capacity building. National policies are seen as critical in creating the conditions necessary for RE markets development. Most GEF projects have contributed directly to the development of such policies, for example, by drafting or revising national strategies, or by developing roadmaps and national action plans for RE development. Another area where the GEF has been successful is in developing standards, testing, and certification of RETs. This is a vitally important contribution; effective standards and testing can significantly improve quality, reliability, and consumer acceptance. (Eberhard 2004) In parallel, most GEF projects support awareness- raising activities, such as distribution of promotional material and production of audiovisual tools that help build community trust in RETs. The GEF also helps recipient countries build technical and institutional capacity by organizing workshops and training government officials, local engineers, and other technical staff. Finance for investments The availability of affordable finance remains a key barrier for RE investments, especially in developing countries. GEF projects focus on understanding the nature of financial barriers so that effective barrier- removal efforts can be targeted—whether to financial intermediaries (banks, development finance institutions, and microlenders), suppliers, dealers, service companies, end-users or a combination of several or all. A common GEF practice is to test the use of innovative approaches to increase access to local sources of financing. These differ according to the status of the local financial sector, the type of financial barriers to be overcome, and the type of business model employed. Sales-based models may require a degree of financing for suppliers and dealers, but the main need is microfinance for consumers. Over the past 18 years, the GEF, through its agencies, has:

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