Derisking Renewable Energy Investment
Derisking Renewable Energy Investment (DREI) introduces an innovative framework to assist policymakers in developing countries to cost-effectively promote investment in renewable energy.
The DREI framework systematically identifies the barriers and associated risks which can hold back private sector investment in renewable energy. It then assists policymakers to put in place packages of targeted public interventions to address these risks. Each public intervention acts in one of three ways: either reducing, transferring or compensating for risk. The overall aim is to cost-effectively achieve a risk-return profile that catalyses private sector investment at scale. The end objective is reliable and affordable renewable energy solutions in developing countries.
THE ORIGINAL DREI REPORT & FINANCIAL TOOL
The DREI framework was launched in 2013 with the publication of the original DREI report. The original DREI report sets out the methodology’s theory of change, identifying the need to reduce the high financing costs for renewable energy in developing countries as a key task for policymakers acting today. The report then describes the framework’s four stages: (i) risk environment, (ii) public instruments, (iii) levelised cost and (iv) evaluation. To illustrate how the framework can support decision-making in practice, the report presents findings from illustrative case studies for large scale wind energy in four developing countries. It then draws on these results to discuss possible directions for enhancing public interventions to scale-up renewable energy investment.
The framework is accompanied by an LCOE financial tool for policymakers in Microsoft Excel.
The original DREI report and financial tool are available for download on this page (top right hand corner). The following materials are available:
· Full Report (PDF)
· Executive Summary (PDF)
· Key Concepts Note (PDF) (English, French, Spanish)
· LCOE Financial Tool (Excel) (Version 1.3, October 2014)
The DREI report builds on two earlier publications: Transforming On-Grid Renewable Energy Markets, which synthesises UNDP’s experiences with renewable energy market transformation projects, and GET FiT Plus, a research partnership with Deutsche Bank on feed-in tariffs.
FURTHER DREI RESOURCES
Since its launch in 2013, UNDP has been collaborating with its partners to further develop, refine and apply the DREI framework.
The following resources and materials are currently available:
· DREI Tunisia: UNDP has applied the DREI framework to support the design of Tunisia’s NAMA for the
Tunisian Solar Plan. More on DREI Tunisia here.
· Guidance Materials & Tools: UNDP has developed a suite of additional guidance notes and tools on applying
the DREI framework. More on guidance materials here.
· Case study exercise: UNDP has developed a case study exercise using the financial tool. More on the
OTHER UNDP RESOURCES IN SUSTAINABLE ENERGY
UNDP has published two recent reports in the broader area of sustainable energy: Modernising Building Energy Codes, a joint publication between the International Energy Agency (IEA) and UNDP, which sets out lessons learned on planning, implementing and enforcing green building codes, and the EnergyPlus Guidelines, a toolkit drawing from UNDP's experience in promoting the productive use of energy for livelihoods improvement.
UNDP welcomes enquiries and suggestions regarding the DREI framework and financial tool. For further information, please contact DREI@undp.org