Fostering the growth of a supply chain cannot be achieved without access to finance. Each actor has different financing requirements and is facing different challenges as elaborated in the table below. RETs investments are also often exposed to a number of risks.
Technology Providers |
Prototyping and Up-Scaling the equipment so that it can become fully commercial |
• Grant
• Angel Investor
• Seed Capital
• Venture Capital |
Domestic financiers usually are not keen to finance the technology providers because at this stage it is difficult to demonstrate projected cash flow for loan repayment. |
Equipment Manufacturing |
Investment and working capital for plants to manufacture the equipment |
• Equity Financing
• Venture Capital
• Loan
• Technology Insurance |
RETs are deemed to involve technical risk (if there is no proven implementation within the country) and market risk, because the market is not yet developed. |
Distributor/
Dealer/
Retailer |
Investment and working capital to build distribution line and sales point |
• Equity Financing
• Venture Capital
• Loan
• Consumer Credit |
Difficulties in securing finance from domestic FI stems from the perceived market risk because the market is not yet developed. |
Service Providers |
Investment and working capital |
• Equity Financing
• Venture Capital
• Loan
• Connection Credit for Consumer |
Difficulties in securing finance from domestic FI stems from perceived risks, namely technical risks, market risks, and implementation and management risks (if the service providers does not have sufficient experience or capacity to run energy service business). |
Energy Consumer for Commercial Use |
Relating to Energy Provision:
• Connection fee
• procurement of equipment
• rental fee
Relating to income-generating use of Energy:
• Procurement of energy-intensive machine/processing unit
• working capital for such productive use |
• Credit for connection
• loan for purchasing the equipment
• pay upfront
• rental fee
• subsidy to pay consumption fee |
Difficulties to access finance stems from the infrequency of income and lack of capacity to meet the collateral requirements. |
Energy Consumer for Social Use |
The sources for financing social or community use are:
• Subscription by members of institutional users, or
• subsidy from government/donor,
Cross-subsidy from commercial use need to be explored if neither of the above options are available, especially for community-based energy service provision. This could be made possible upon the consent of all users - if the commercial users are also users at institutional level and household level. |
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Household Energy Consumer |
Equipment procurement for PV Solar Home System
Or
Connection to the Grid
Household appliances (these could also have dual use for income generation) |
Credit for purchasing equipment or for connecting to the grid
Subsidy to pay electricity consumption fee if the tariff is not affordable |
Difficulties for accessing the credit stems from two main issues, either because the household consumer is not qualifying for such credit, or there is no credit facility available in their areas.
In many cases subsidy is available only for on-grid consumers and not for the off-grid consumers. |
