Mobilizing Finance and Investment

Updates from December 2020

In December, USAID Clean Power Asia investment mobilization staff co-hosted a webinar on Evaluating Rooftop Solar Opportunities at Commercial and Industrial Facilities in Southeast Asia with the Clean Energy Investment Accelerator (CEIA). At the webinar, program staff launched the financial model for rooftop solar at commercial and industrial facilities developed by USAID and CEIA, which enables companies to assess the financial feasibility of rooftop solar at their facilities. Webinar participants discussed market opportunities for commercial and industrial rooftop solar in Southeast Asia and the need for tools to assess project opportunities, and then concluded with a live demonstration of the rooftop solar financial model. Post-event, USAID Clean Power Asia investment mobilization staff are following up with a number of participants on potential support on a rooftop solar bidding process; answering questions on the financing landscape for rooftop solar in Southeast Asia; and fielding comments on the financial model for rooftop solar launched during the webinar.

This month, USAID Clean Power Asia investment mobilization staff completed the reference price report for the Laos solar pilot auction. During the auction, the reference price will serve as the ceiling price for each of the two sites, so any bidders who propose a bid price higher than the reference price would be disqualified. The reference price takes into account the cost of equity and debt, technical factors, the risk of developing and operating a solar project in Laos, and the availability of risk mitigation mechanisms. After receiving feedback from USAID/RDMA, USAID Clean Power Asia will submit the report to the Working Committee overseeing the auction design.

 

How we mobilize finance and investment

Although renewable energy investments offer a range of promising new business opportunities, project developers have faced formidable financial and regulatory challenges. In the Lower Mekong region in particular, renewable energy projects receive less interest than traditional capital investments and barriers exist for banks and financial institutions to effectively engage and invest in renewable energy.

USAID supports financial institutions, developers, and other relevant stakeholders to secure and reduce the cost of finance for renewable energy projects by helping to develop innovative business models; promoting standardized documentation and evaluation practices and approval processes for financing renewable energy projects; and providing other advisory services. A broad range of models, strategic adoption of cost-efficient technologies, and comprehensive policies and regulations are key to structuring bankable projects that appeal to commercial developers. Renewable energy offers control of energy costs and margins, while tools and business models under development will improve the risk/reward profile of new projects.