uruguay - Observatory for Renewable Energy

Transcription

AUGUST 2011
Observatory of
Renewable Energy
in Latin America and The Caribbean
URUGUAY
Final Report
Product 3: Financial Mechanism
C www.purelysolarpower.com
This document was prepared by the following consultants:
JUAN MANUEL CALDAS
The opinions expressed in this document are those of the author and do not necessarily
reflect the views of the sponsoring organizations: the Latin American Energy Organization
(OLADE) and the United Nations Industrial Development Organization (UNIDO).
Accurate reproduction of information contained in this documentation is authorized, provided the source is acknowledged.
Uruguay- Producto III
CASE OF URUGUAY
Final Report
Product 3: Financial Mechanisms
1
Table of contents 1. INTRODUCTION ......................................................................................................4 2. METHODOLOGY......................................................................................................4 3. FINANCIAL MECHANISMS ...................................................................................5 a. Green Interest Rate Programme – Bandes Uruguay Bank .................................. 6 b. Green financing – HSBC..................................................................................... 8 c. Italy-Uruguay Loan ............................................................................................. 9 d. AFAP................................................................................................................. 11 e. IDB’s SCF ......................................................................................................... 14 f. Andean Development Corporation (CAF)......................................................... 16 g. ECA................................................................................................................... 17 h. Comparative analysis ........................................................................................ 18 i. Succesful experiences and barriers .................................................................... 23 4. SUPPORTING MECHANISMS ..............................................................................24 a. Energy Efficiency Trusteeship .......................................................................... 24 b. IDB’s MIF ......................................................................................................... 25 c. SECCI IDB Fund............................................................................................... 27 d. Global Environment Facility (GEF).................................................................. 29 e. GEF’s Small Grant’s Programme - Uruguay .................................................... 31 f. Clean Development Mechanism (CDM) ........................................................... 31 g. Succesful experiences and found barriers ......................................................... 32 5. CONCLUSIONS.......................................................................................................33 List of tables
Table 1: List of financial mechanisms. .................................................................................. 5 Table 2: Rates of Technical Assistance loans ........................................................................ 7 Table 3: Rates of loans for realization of project................................................................... 7 Table 4: Green Interest Programme sheet.............................................................................. 8 Table 5: Green Loan sheet. .................................................................................................... 9 2
Table 6: Criteria for the definition of small and medium enterprises (SMEs), for the ItalyUruguay Loan. ....................................................................................................................... 9 Table 7: Italy-Uruguay Loan sheet. ..................................................................................... 11 Table 8: Permitted investments for AFAPs and maximum limits ....................................... 12 Table 9: Maximum limits on investments per emitter, according to its risk (see text) and
AFAP. .................................................................................................................................. 13 Table 10: Information sheet for financing undertakings through AFAPs. .......................... 14 Table 11: SCF’s information sheet. ..................................................................................... 16 Table 12: Comparative analysis of financial mechanisms................................................... 22 Table 13: Comparative analysis of financial mechanisms (cont.). ...................................... 23 Table 14: List of supporting mechanisms. ........................................................................... 24 3
1. INTRODUCTION
Different financial and support mechanisms, aimed for investments in renewable energy
projects and provided by different local, regional and international organizations, are
described in this report.
The goal is to provide a sufficiently broad spectrum of existing possibilities for financing
renewable energy projects. In that sense, not only specific financing lines for renewables
are described, but also organizations and credit lines/mechanisms which due to their
profile, pursued goals, etc., may be suited for renewable energy projects. Such is the case
of the Pension Fund Administrators (AFAP), on a local plane, of the Andean Development
Corporation (CAF), on a regional plane, and of the Export Credit Agencies (ECA), on a
global plane.
The financial mechanisms are described in the first part of this report, following an order
determined by their geographical scope (national, regional and global). A comparative
analysis is included and synthezised in Table 12 and Table 13. In the second part, public
support mechanisms and national and international incentives are described.
In some cases, contact information is provided, in order to make it easier for the interested
to get more detailed information than the one included here, contributing in this way and as
much as possible, to the execution of more renewable energy projects, which is ultimately
the main goal of this report.
2. METHODOLOGY
The primary sources of information used for this report included:
• Personal or interviews by telephone or email with people linked directly or
indirectly to the addressed financial mechanisms.
• Consultations with personnel at the National Direction of Energy and Nuclear
Technology (DNETN).
The secondary sources of information used for this report were:
• The study “Financing opportunities for wind farms in Uruguay”, developed by the
Uruguayan Wind Energy Programme (DNETN), referenced to as PEEU (2009).
• CAF’s Annual Report-2009, referenced to as CAF (2009b).
• Several sources from Internet, detailed in the References.
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3. FINANCIAL MECHANISMS
Following table summarizes the financial mechanisms presented in this report.
Project
Type of
Geographical
Organization Programme/Mechanism
phase being
mechanism
scope
covered
Bandes Uruguay
Bank
Green
Interest
Programme
Rate
HSBC Bank
Green Financing
Loan
National
Corporation for
Development
Italy-Uruguay loan
Loan
AFAP
IDB
Structured and Corporate
Finance Department (SCF)
CAF
Latinamerican Carbon, Clean
and
Alternative
Energy
Programme (PLAC+e).
Banco do Brasil
Programme for the Finance of
Brazil’s Export (PROEX).
BNDES
Loan
Value
investing,
acquirement
of company’s
stock.
Corporative
and greenfield
projects
finance.
Project
Finance.
Advances of
future capital
flows due to
emission
reduction.
Loan.
Loan.
Feasibility
study.
Realization of
project.
Acquirement
of
solar
thermal energy
systems.
Acquirement
of
goods,
transference of
technology,
training.
Up to 100% of
Brazilian
export
of
goods
and
services.
Up to 100% of
the
export’s
value, in any
INCOTERM.
Website
National.
www.bandes.com.uy
National.
www.hsbc.com.uy
National.
www.cnd.org.uy
National.
www.rafap.com.uy
www.afinidadafap.com.uy
www.unioncapital.com.uy
www.integracionafap.com.uy
Regional.
www.iadb.org
Regional.
www.caf.com
Global.
www.bb.com.br
Global.
www.bndes.gov.br
Table 1: List of financial mechanisms.
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Below follows a more detailed description of these financial mechanisms, starting with the
national ones, continuing with the regional and ending with the global mechanisms.
a. Green Interest Rate Programme – Bandes Uruguay Bank
This programme includes two credit lines, one linked to the Energy Efficiency Programme,
and the other one called “Rate 0”, aimed exclusively for solar thermal energy, both for
persons and companies. The latter’s loan period is maximum 12 months, evethough it can
be considered to extend it to 24 months. Besides, the solar thermal energy systems being
installed must be provided by certain companies (Miakits, 2010).
The line linked to the Energy Efficiency Programme may be used for “projects that
represent benefits directly linked to energy efficiency and other additional ones, obtained
through the execution of the project. For instance: improvement of productivity,
reduction of maintenance costs, operative costs reduction, tariff improvement, etc., and all
projects that present a satisfactory cost-benefit ratio. The projects must imply saving of
grid electric energy or fossile fuel, by substituting it with another source” (Bandes 2010).
Among the accepted technologies are (Bandes, 2010):
•
•
•
•
•
Solar energy.
Geothermal energy.
Wind energy.
Biofuels usage.
Adequate electric energy.
To apply to this loan it is mandatory to have “a feasibility study for the implementation of
the project”. This study must be supported by an ESCO (Energy Service Company), as was
mentioned before.
Loans are given both for the Feasibility Study and the Investment Project itself. “The
CND, as the administrator of the Energy Efficiency Trusteeship (FEE), guarantees 100%
of loans plus interests for technical assistance (Author’s highlight), and up to 60 % of the
capital financed by Bandes (…) Bandes can ask for additional guarantees (…)” (Bandes,
2010).
Here follows a detailed description of the characteristics of the loans given for Technical
Assistance and Investment in Energy Efficiency (data from Bandes, 2010):
Technical Assistance Financing:
• Currency: US Dollars.
• Maximum amount: USD 5.000
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• Fixed term: 180 days.
• It finances up to 67% of the total cost of the technical assistance study.
Investment project:
•
•
•
•
Currency: US Dollars and Indexed Units.
Maximum amount: According to evaluation of credit rating.
Repayment: according to project’s feasibility.
It finances up to 80 % of the total investment.
The general requirements and documentation to be presented at the bank, are described in
Bandes (2010).
The fixed rates for these two lines are detailed in following tables:
Product
Dollars
Period
6-12
Fixed rate (%)
9,00
Table 2: Rates of Technical Assistance loans (Bandes, 2010).
Product
Dollars
UI
Period
12
13 - 36
12-36
Fixed rate (%)
9,00
9,50
9.50%
Table 3: Rates of loans for realization of project (Bandes, 2010).
1. Simulation of loan for Investment Project
Suppose that a Feasibility Study shows that it is convenient to carry out a certain project.
Suppose also that the amount of the investment is US$ 100.000, and that the loan requested
is for 80% of this amount, that is US$ 80.000, which is the maximum percentage of the
investment that can be required, as was mentioned before. The FEE guarantees 60% of the
requested amount, that is US$ 48.000. Suppose that the investor gets the remaining 40% of
the guarantees, by some other means.
Suppose that the loan period is 3 years (36 months). Then the loan’s monthly payment can
be of the order of the monthly saving involved in a renewable energy project. This saving
could even be greater than the payment, but one must keep in mind that 20% of the
investment is not financed.
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Parameter
Unit
Name of the mechanism
Organization
Type of technology
Period
Geographic area
Phase of project
Type of loan
Interest rate
%
Applying procedure
Date
Number
projects
of
favored
Information
Green Interest Programme
Bandes Uruguay Bank
The projects must imply saving of grid electric energy or
fossile fuels, by substituting it with other sources.
12-36 months
The whole country.
Technical Assistance and Realization of project.
This credit line is linked to the Energy Efficiency
Programme. It can be used for “projects that imply benefits
directly linked to energy efficiency and other additional
benefits obtained through the implementation of the
project. For instance: improvement of productivity,
reduction of maintenance costs, operative costs reduction,
tariff improvement, etc., and all projects that present a
satisfactory cost-benefit ratio”.
See Table 2 and Table 3.
The investor must contact an ESCO in order to design the
project, and present it firstly before the financial entity, and
secondly before the CND, in order to obtain the guarantee.
27/09/2010
2 for technical assistance.
1 for investment project.
Table 4: Green Interest Programme sheet.
b. Green financing – HSBC
HSBC bank has a credit line called “Green Loan”, aimed to finance solar thermal energy
systems, both for homes and companies, having following characteristics (HSBC, 2010):
•
•
Financing: Up to 100% of the value of the equipment.
Currency:
o US Dollars: 18 or 24 payments. AER: 11%.
o Indexed Units: Up to 24 payments. AER: 9%.
As was the case for BANDES’ Green Interest Programme, the equipment acquired must be
supplied by a certain company.
8
Parameter
Unit
Mechanism
Organization
Aimed for
Type of technology
Geographic area
Phase of project
Brief description
Type of loan
Interest rate
%
Applying procedure
Information
Green Loan
HSBC Bank
Persons or companies
Solar thermal energy
The whole country.
Acquiring of equipment.
The acquired systems must be supplied by a
certain company.
Loan aimed to finance the acquisition of
solar thermal energy systems both for
homes and companies.
US$: 11% AER
UI: 9% AER
Through any of HSBC’s offices or by phone
(Customer service: +598 2915 10 10)
Table 5: Green Loan sheet.
c. Italy-Uruguay Loan
The funding for this loan comes from a credit that the Government of the Republic of Italy
gave to the Government of the Oriental Republic of Uruguay, for a total amount of €
20.000.000 (twenty million euros). This credit line is aimed to finance small and medium
Italian-Uruguayan and Uruguayan enterprises that fulfill following requirements (CND,
2009):
Type of company
Small
Medium sized
Maximum number of Maximum annual sales, without VAT
employees
(I.U.)
19
10.000.0001
99
75.000.0002
Table 6: Criteria for the definition of small and medium enterprises (SMEs), for the ItalyUruguay Loan.
1
Aprox. US$ 1.029.024 (Considering a value of $U 2,1095 for the I.U., and 20,5 $U/US$, INE 2010).
2
Aprox. US$ 7.717.683 (Considering a value of $U 2,1095 for the I.U., and 20,5 $U/US$, INE 2010).
9
It is important to emphasize that “employees are all those employed at the company,
including the owners and/or venture partners to which effectives are done” (CND, 2009).
The Programme is administrated by the CND, and through “Uruguay Promotes” (division
for attention of entrepreneurs and bussinessmen), it informs and advices “those companies
interested in the credit line about requirements, conditions and documentation needed”.
The CND, as administrator of the Programme, is responsible for receiving and processing
the company’s credit request (CND, 2009).
The minimum amount that can be requested is € 15.000, and the maximum is € 500.000.
Up to 100% of the total investment may be financed excluding taxes, and as long as it isn’t
greater than 60% of the company’s annual turnover. The minimum period is 12 months,
the maximum 10 years, and the share and interest rate is adjusted to the company’s cash
flow (CND, 2009).
Investment projects for “acquisition of goods (excepting sumptuary ones), raw material
and inputs, technology transfer, training, technical and comercial assistance, industrial
licenses and patents” can be financed.
The credit’s general terms establish that “the goods and services financed through this loan
must be of Italian origin to a 50%, being admitted up to 50% of Uruguayan origin or from
other Latinamerican countries”.
In conclusion, this mechanism may be used by SMEs for investment in renewable energy
projects, related to:
• Acquisition of renewable energy equipment and inputs.
• Transfer of technology related to the area.
• Training and technical/commercial assistance.
The main requirement is that the financed goods and/or services are of Italian origin to a
50%.
Parameter
Mechanism
Organization
Aimed for
Type of technology
Geographical scope
Phase of the project
Unit
Information
Italy-Uruguay Loan
CND
Italian and Italian-Uruguayan SMEs.
Introduction of state-of-the-art or updated
technology.
The whole country.
Acquisition of equipment, transfer of technology,
training, technical and commercial assistance.
10
€
Available budget
Type of loan
Interest rate
Applying procedure
Date
%
20.000.000
Loan aimed for Italian or Italian-Uruguayan SMEs
that fulfill the stated requirements. Priority will be
given to those inititatives with a high social impact.
5,10 in €/US$/IU
The CND, through its division “Uruguay Promotes”
for attention of entrepreneurs/bussinessmen, will
inform and advise those companies interested in the
credit line on the requirements, procedures,
conditions and documentation needed, and will
receive and process the loan request presented by
the company.
20/09/2010
Table 7: Italy-Uruguay Loan sheet.
d. AFAP
The Pension Fund Administrators (AFAP) are the financial entities that adminstrate part of
the pension contributions of Uruguayan workers. These funds are distributed between four
AFAP. This distribution is, to 30th September 2010, following: República AFAP (56,53%),
Afinidad AFAP (18.12%), Unión Capital AFAP (16.70%), and Integración AFAP (8.65%)
(RAFAP, 2010c).
In RAFAP (2010a) it is stated that “investments that can be donde with the funds are
regulated by Article 123 of Law 16.713 of pension reform, and its modifications as well as
the Central Bank’s Circulars contained in the compilation of AFAP’s Control norms”.
According to these norms, the permitted investments and maximum limits are the ones
indicated in Table 8.
Literal
A
B
3
Description
Maximum limit
Values of the Uruguayan State and
Central Bank
Public
or
private
Uruguayan
company’s values; share certificates,
debt or mix titles of Uruguayan
90%3
50%
“Investments mentioned in literal A) may rise to 90% in 2010, 85% from 1st January 2011, and then they
will be lowered 2,5 percentage points from 1st January each year, until 75% is reached in 2015” (RAFAP,
2010).
11
C
D
E
F
financial trusteeships; unit shares of
Uruguayan investment funds.
Bank deposit certificates.
Fixed interest values emitted by
international credit organizations or
foreign governments of high credit
qualification.
Financial risk cover instruments
emitted by Uruguayan institutions.
Loans given to members and
beneficiaries of the social security
system guaranteed by public or private
institutions.
30%
15%
10%
15%
Table 8: Permitted investments for AFAPs and maximum limits (RAFAP, 2010a).
The forbidden investments are:
“
•
Values emitted by other AFAPs.
•
Values of insurance companies.
•
Values emitted by companies constitued outside Uruguay, with the exception of
financial intermediation companies, authorized to operate in the country and the
institutions mentioned in literal D).
•
Values emitted by Financial Investment Societies.
•
Values emitted by companies related to the AFAP” (RAFAP, 2010a).
In as much as financing specifically the productive sector is concerned, AFAPs cannot
give direct loans to the undertakings. Instead, following forms may be used:
“
•
Public limited company’s stock
•
PLC’s negotiable obligations
•
Values or unit shares of Closed Investemnt Funds
•
Debt titles or Participation Certificates on Financial Trusteeships” (RAFAP,
2010a).
Trusteeships are mentioned in RAFAP (2010a) as a vehicle for “channeling AFAP’s funds
towards financing the productive sector. The Law (of Trusteeships, A/N) presents tax
benefits for certain types of trusteeships and in particular for those being acquired by the
AFAPs, which strengthens even more this legal figure”.
The legal or regulatory requirements that must be fulfilled by instruments being used by
the AFAP for investing in the productive sector are:
12
“
•
Risk qualification emitted by a qualifier registered in the Central Bank greater or
equal to BBB- or its equivalent.
•
Public offer.
•
Quotation in a formal market” (RAFAP, 2010a).
By 30th november 2009, funds deposited in the AFAPs reached 100.135 million
Uruguayan pesos (somewhat more than US$ 5.000 million, PEEU, 2009), while these
funds reached US$ 6.500 million by 30th september 2010 (RAFAP, 2010b).
Taking this last value, and the established percentage in Table 8 for literal B (which is the
relevant for our case), the amount of available funds for financing productive undertakings
is approximately US$ 3.250 million.
However, besides of the already mentioned restrictions, there are further. For instance,
each AFAP “can’t invest more than 5% of its Pension Saving’s Fund (FAP) in instruments
of one single emitter if it has a qualification greater or equal to AA-“, or 3% if this
qualification is equal or greater to BBB- and less or equal to A+. It must be pointed out that
Investment Funds or Financial Trusteeships are not considered “emitters” RAFAP, 2010a).
Furthermore, each AFAP can’t acquire “more than 10% of the stock emitted by a single
PLC”, nor it can invest “more than 10% of its FAP in representative instruments of
financial trusteeships administrated by a single fiduciary or fiduciaries members of the
same private economic group” (RAFAP, 2010a).
Considering these constraints, the total amount of the system’s FAP and the distribution of
this fund between the different AFAPs, following table can be constructed, where the
available amount for using in the productive sector is shown, by AFAP and according to
the emitter’s risk (3 o 5%):
AFAP
% over the
system’s total
FAP
República
Afinidad
Unión Capital
Integración
56,53
18,12
16,70
8,65
Maximum investment
per emitter (5% of the
FAP)
MUS$
184
58,9
54,3
28,1
Maximum investment
per emitter (3% of the
FAP)
MUS$
110
35,3
32,6
16,9
Table 9: Maximum limits on investments per emitter, according to its risk (see text) and
AFAP. The total FAP of the system is approximately US$ 6.500 million, corresponding to
30th september 2010 (see text).
13
Parameter
Unit
Mechanism
Organization
Aimed for
Type of technology
Geographic scope
Phase of project
Available budget
MUS$
Brief description
Type of loans
Applying procedure
Date
Information
AFAP
Pension Fund Administrators (AFAP)
Public or private companies.
None in particular. Electric generation Projects involving electric
generation from non conventional renewable energy sources have the
advantage of a guarantee represented by the electricity buying and
selling contract signed with UTE.
The whole country.
Any.
Approx. 3.250
(50% of the system’s total FAP by 30/09/2010).
According to Article 123 of Law 16.713, are authorized to invest in:
• Public limited company’s stock
• PLC’s negotiable obligations
• Values or unit shares of Closed Investemnt Funds
• Debt titles or Participation Certificates on Financial
Trusteeships.
AFAP’s are not authorized to loan capital directly to the investor.
They can participate in up to 10% of the stock of a single emitter,
and they can’t assign more than 5 or 3% of the FAP to a single
emitter.
Contact the Investment Department of one of the AFAPs.
28/10/2010
Table 10: Information sheet for financing undertakings through AFAPs.
e. IDB’s SCF
The Structured and Corporate Finance Department (SCF) of the IDB Group gives financial
support to large banks and private investments “that operate in almost every economic
sector in Latin America and the Caribbean”. Besides, the SCF “supports the development
of international trade through the implementation of the Trade Finance Facilitation
Program (TFFP)” (PEEU, 2009).
Through “A” loans, the SCF uses resources of its own, while “B” loans are cofinanced by
banks and institutional investors, together with the SCF (PEEU, 2009).
Other products offered by the SCF are “partial credit guarantees and against political risk”,
besides of “non refundable resources for preparing projects for financing”. The SCF
14
focuses its products on “large banks, companies, as well as public companies and of mixed
capital, which operate in all sectors of economy” (PEEU, 2009).
When it comes to select projects, the SCF considers following general criteria:
“
• The project must contribute to the development of the member country borrower of
the IDB Group.
• It must be located in a member country of the IDB Group.
• The majority holding of the company must belong to a national of a member
country of the IDB Group.
• The private partner must show solvency, have experience in similar projects and
high standards of corporate governance.
• Fulfill the social and environmental requirements of the IDB Group.
• Satisfy the norms of acquisition of the IDB Group” (PEEU, 2009).
The available amounts for beneficiaries without sovereign guarantee (in general, privates)
are limited: “In Uruguay, the Bank participates in up to 40% of the costs of the projects
(Phase A) and finances no more than US$ 200 million, with some exceptions. The
mentioned 40% can be complemented with B loans coming from commercial foreign
banks, or by cofinancing it with other local institutions, or by export agencies, until an
optimum financial structure is reached for the project” (PEEU, 2009).
Bank sources indicated that, for operations without sovereign guarantee, there is interest in
financing both corporate projects (that is, already established), as well as greenfield
projects. For the recent tender of 150 MW of wind energy (see for instance the report on
State of the Art of Renewables in Uruguay), several consultations were made and interest
was shown in IDB’s financing products.
The contact person in Uruguay is Martín Duhart ([email protected], tel. 915-4330,
internal 274107).
Parameter
Unit
Mechanism
Organization
Aimed for
Geographic scope
Project phase
Available budget
Brief description
US$
Information
Structured and Corporate Finance Department
Interamerican Development Bank (IDB).
Large banks and private investments.
Public and mixed capital companies.
The whole country.
Technical assistance and project realization.
200 million per project (for “A” loans without
sovereign guarantee).
The SCF offers its products to large banks and
corporations, as well as public and mixed
capital companies, that operate in all economic
15
sectors.
Both “A” and “B” type loans are given. The
latter may be an option if the requested amount
is greater than US$ 200 million for borrowers
without sovereign guarantee.
Contact
Mr.
Martín
Duhart
([email protected], tel. 915-4330, internal
274107).
28/10/2010
Type of loans
Applying procedure
Date
Table 11: SCF’s information sheet.
f. Andean Development Corporation (CAF)
The Andean Development Corporation (CAF) is “a development bank formed in 1970 and
constituted nowadays by 18 countries from Latin America, the Caribbean and Europe, as
well as 14 private banks from the Andean region”. CAF offers “credit operations, non
refundable resources and support in the financial and technical structure of projects for the
public and private sector in Latin America” (CAF, 2010a).
By 30th December 2009, Uruguay participated with 4,9% of CAF’s portfolio (CAF,
2009a), while it had only 2% in 2008 (PEEU, 2009).
The sector “electricity, gas and water supply” went from less than 20% of the portfolio in
2008, to 25% in 2009. “Approvals for the non sovereign sector (that is, private sector,
A/N) represented 32% of the total (US$ 3.580 million)” in 2009 (CAF, 2009b). In PEEU
(2009), it is stated that “its limitation may respond to the needs of the member countries to
finance public projects”.
The products offered by CAF include “corporate loans, structured loans with resource
limited to the stockholders (Project Finance), partial guarantees, investment in patrimony,
financial consultancy, etc.” (PEEU, 2009).
“Under the form of Project Finance, CAF can finance up to 50% of the project’s costs,
including construction and required additional finance costs. Loans are given in US
dollars, at variable interest (Libor plus margin) with periods, in the long term, between 12
and 15 years and repayment adapted to the project’s cash flow” (PEEU, 2009).
Through the Latinamerican Carbon, Clean and Alternative Energy Programme (PLAC+e),
CAF offers three financing areas (CAF, 2010b):
• Existing financial schemes
16
• Advance in future income due to emission reductions
• Energy Efficiency and Alternative Energies Programme
CAF’s available financing schemes are focused on infrastructure, social and environmental
development and private sector. As an additional factor specifically for renewable energy
projects, “the coordination with PLAC+e permits to include as a guarantee the cash flow
due to the selling of emission reduction certificates (both in regulated markets as well as
volunteer ones), and generating a solid Carbon Finance component for the projects” (CAF,
2010b, Author’s highlight).
Regarding the advances in future inflow due to emission reduction, “the PLAC+e makes
advances in the expected income due to the selling of Certified Emission Reductions
(CERs) (…) In many cases, these advances enable the project’s financial feasibility. When
evaluating these advances a minimum of 150.000 tCO2e generated before 31st December
2012 is required. The PLAC+e carries out a financial, technical and legal analysis of the
project’s carbon component” (CAF, 2010b, Author’s highlight).
The Programme for Energy Efficiency and Alternative Energies was developed by the
German bank KfW together with CAF. On PLAC+e’s website (see CAF, 2010b), it is
mentioned that “the Programme’s disbursement will be done until 31/12/2009”, and so it is
out of date.
CAF’s contact information in Montevideo is:
Adress: Plaza Independencia 710 - Torre Ejecutiva, 9th floor, Montevideo.
Tel.: +598 (2) 917-8211
Fax: +598 (2) 917-8201
Email: [email protected]
g. ECA
Export Credit Agencies (ECAs) are “institutions that facilitate a countrie’s export of goods
and services“ (PEEU, 2009).
Some of the ECA are (PEEU, 2009):
• US ExIm Bank (USA)
• CESCE (Spain)
• Japan Bank for International Cooperation and Nippon Import and Investment
Insurance (Japan)
• Eksport Kredit Fonden (EKF, Denmark)
The US ExIm Bank has a Congressional mandate to support renewable energy by
assigning 10% of its authorizations to this area. From 1994, it has increased its investment
portfolio in the environment area through the Environmental Exports Programme (EEP). In
17
2007 the “Renewable Energy and Environmental Exports Office” was created. “Further in
2010, the Division was expanded to include dedicated credit officers to process renewable
energy and environmental transactions. As of June 30, 2010, Environmentally Beneficial
authorizations reached approximately $323 million” (US ExIm, 2010).
Regarding Danish EKF, “it is an institution that counts with Danish gonvernment’s full
faith & credit and has supported several wind farm projects implemented by Vestas.
Recently, EKF guaranteed 100% of a US$ 262 million investment by Petrobras in Brazil”
(PEEU, 2009).
On a regional level, Banco do Brasil (BB) and Banco Nacional de Desenvolvimento
Econômico e Social (BNDES) are the most prominent.
BB permits to acces its Brazilian Exports Financing Programme (PROEX), through which
“up to 100% of goods and services exports from Brazil can be financed at a low interest
(fixed or variable Libor) and at long periods (up to 10 years). The payment is made each
six months and it includes capital repayment and interests”. As one would expect, it is
mandatory that the project involves “equipment and services of Brazilian origin. On the
other hand, the financial support doesn’t cover expenses outside Brazil”. However, “the
bank may offer financial structuring for the bussiness, that is, to obtain financing for the
items not covered by the PROEX, guarantees, fund administration, support in value
emission for public auction, etc.” (PEEU, 2009, Author’s highlight).
BNDES administrates funds which mostly come from “contributions made by Brazilian
companies in areas associated to their payrolls”. For this reason, BNDES “must invest in
projects that promote the growth of emplyment in Brazil” (PEEU, 2009).
BNDES’ products are aimed for trading companies “of any size, constitued under Brazilian
laws and having their headquarters and administration in Brazil”. BNDES can finance “up
to 100% of the export’s value, in any INCOTERM”, at interest rates determined by the
sum of the financial cost, the Bank’s remuneration and guarantee cost (PEEU, 2009).
The financial cost is the LIBOR Rate corresponding to the period, while the Bank’s
remunerations is established case by case. The maximum period is 12 years (PEEU, 2009).
h. Comparative analysis
This section synthesizes the information relative to each mechanism. In particular, the
geographic scope is indicated (whether it is national, regional or global), who it is intended
for, what kind of projects/phase of projects it finances, the maximum amount assignable
(in case there is such a limit), and the organization that emits it. It is also indicated whether
the mechanisms has been used for renewable energy projects and if so the total amount
assigned.
18
1. BANDES Green Interest Rate Programme
• Geographic scope: National
• Aimed for: Companies (through the FEE, and “Rate 0”) and persons (through “Rate
0”).
• Phase of Project being financed: Feasibility study; project realization; buying of
solar thermal energy equipment.
• Maximum assignable amount per project: Technical assistance: US$ 5000;
Investment project: according to borrower’s credit evaluation.
• Organization: BANDES Uruguay Bank.
2. Green finance – HSBC
•
•
•
•
Geographic scope: National.
Aimed for: Companies and persons.
Phase of Project being financed: buying of solar thermal energy equipment.
Organization: HSBC Uruguay Bank.
3. Italy-Uruguay Loan
• Geographic scope: National.
• Aimed for: Italian-Uruguayan and Uruguayan SMEs.
• Financeable : acquisition of goods (except for sumptuary goods), raw materials and
supplies, transfer of technology, training, technical and commercial assistance,
industrial patents and licenses.
• Maximum assignable amount per project: € 500.000 (minimum € 15.000).
• Organization: CND.
• Comments: This may be an option for Uruguayan SMEs that want, for instance, to
acquire renewable energy equipment or training in this area. One of the
requirements is that 50% of the financed goods and services are of Italian origin.
4. AFAP
• Geographic scope: National.
• Aimed for: Companies that emit title values.
• Financing mechanisms:
o Public limited company’s stock
o PLC’s negotiable obligations
o Values or unit shares of Closed Investment Funds
o Debt titles or Participation Certificates on Financial Trusteeships
• Maximum assignable amount per project: Depends on the AFAP. Between US$ 17
million and US$ 184 million (see Table 9).
19
• Organization: Pension Fund Administrators (AFAP).
5. IDB’s SCF
• Geographic scope: Regional.
• Aimed for: Large banks and private investments. Public and mixed capital
companies.
• Phase of Project being financed: Technical assistance and project realization.
• Maximum assignable amount per project: US$ 200 million per project.
• Organization: IDB.
6. CAF
• Geographic scope: Regional.
• Aimed for: Sector público y privado.
• Type of mechanism: “Credit operations, non refundable resources and support in the
financial and technical structure of projects for the public and private sector in
Latin America” (CAF, 2010a). Besides, CAF offers specifically for renewable
energy projects, advances in income generated by future emission reductions.
• Organization: CAF.
• Assigned budget: For the sector “electricity, gas and water supply” more than US$
2.900 million were assigned in 2009 (CAF, 2009b).
7. ECA
•
•
•
•
•
Geographic scope: International.
Aimed for: Companies that import goods and/or services from countries with ECAs.
Phase of Project being financed: Acquirement of goods and services.
Organization: ECAs.
Comments: When it comes to import goods and/or services for renewable energy
undertakings it may be convenient to consider the ECA of the good’s country of
origin as a possible financing agent, particularly Danish EKF, due to its experience
with wind farm projects having Vestas wind generators, as well as Banco do Brasil
(BB) and Banco Nacional de Desenvolvimento Econômico e Social (BNDES).
Following tables show all financing mechanisms covered in this report, in order to make it
easier to compare them.
20
Organization
Mechanism
Public or
Private
Geographic
scope
Phase of Project being
financed
Interest rate
Bandes
Uruguay
Bank
Green interest
rate
programme
Private
National
Feasibility study.
realization.
Project
9-9,5%
HSBC Bank
Green
financing
Italy-Uruguay
loan
Private
National
9-11%
Public
National
Acquisition of solar thermal
energy equipment.
Acquisition
of
goods,
transfer of technology,
training.
Public
(República
AFAP) and
private
(remaining
AFAPs)
National
Public
Regional
Public
Regional
National
Corporation
for
Development
(CND)
AFAP
IDB
CAF
Banco
Brasil
do
Structured
and
Corporate
Finance
Department
(SCF)
Latinamerica
n
Carbon,
Clean
and
Alternative
Energy
Programme
(PLAC+e).
Project
Finance.
Brazilian
Exports
Financing
Programme
(PROEX).
Mixed
Global
Guarantee
Energy
Efficiency
Trusteeship
(FEE).
Adjusted
companie’s
flow.
to
cash
Up to 50% of project’s
costs, including construction
costs.
Advances in income due to
emission reductions.
Variable
(Libor
margin)
repayment
adjusted
project’s
flow.
rate
plus
and
Brazilian exports of goods
and services.
Low interest rates
(variable or fixed
Libor).
Participation in:
• Public
limited
company’s stock
• PLC’s
negotiable
obligations
• Values or unit shares of
Closed
Investemnt
Funds
• Debt
titles
or
Participation
Certificates
on
Financial Trusteeships
Financing of both corporate
and greenfield projects.
to
cash
Guarantee,
bails, letter
of credit of
first
line
financial
institutions,
exports
21
credit
insurance.
BNDES
Public
Global
Up to 100% of the export’s
value, in any INCOTERM.
Financial
cost:
corresponding
LIBOR
rate.
BNDES
remuneration:
established case
by case.
Table 12: Comparative analysis of financial mechanisms.
Repayment
period
Organization
Mechanism
Bandes
Uruguay Bank
Green interest rate
programme
6-36 months
HSBC Bank
Green financing
18 or 24 months
National
Corporation
for
Development
(CND)
Italy-Uruguay
loan
1-10 years
AFAP
Minimum
amount
being
financed
Maximumamount
being financed
Up to US$ 5.000
for
Technical
Assistance loans.
€ 15.000
€ 500.000
Between US$ 28:
and 184: (see
Table 9).
IDB
Structured
and
Corporate Finance
Department (SCF)
CAF
Latinamerican
Carbon, Clean and
Alternative
Energy
US$ 200:
For long term
loans, 12 to 15
years
Requirements
The general requirements
and documentation needed
are described in Bandes
(2010).
The equipment must be
provided
by
certain
company.
The
financeable
goods
and/or services must be to a
50% of Italian origin,
although up to 50% may be
of Uruguayan origin or from
other
Latin
American
country. Borrowers must be
SMEs (see Table 6).
Risk qualification emitted by
a qualifier registered in the
Central Bank (BCU) greater
or equal to BBB- or its
equivalent, among others.
The project must be located
in a member country of the
IDB
Group,
and
the
company must be major
property of a national of a
member country of the IDB
Group,
among
other
requirements.
For advances in selling of
CER’s, a minimum of
150.000 tCO2e avoided
before 31st December 2012
22
Banco
Brasil
do
BNDES
Programme
(PLAC+e).
Project Finance.
Brazilian Exports
Financing
Programme
(PROEX).
is required.
Up to 10 years.
Up to 100% of the
export.
Up to 12 years.
Up to 100% of the
export.
The project must involve
equipment and/or services of
Brazilian origin. It doesn´t
cover expenses out of Brazil.
Aimed for export companies
of any size, constitued under
Brazilian laws and having
headquarters in Brazil.
Table 13: Comparative analysis of financial mechanisms (cont.).
i. Succesful experiences and barriers
Regarding the usage of the Green Interest Rate Programme, one succesful experience was
the installation of a solar thermal energy system at CAMEC’s Hospital in Rosario at the
end of 2008. The total collector area is 96 m2, and the system supplies 68% of the
hospital’s hot water demand (CAMEC, 2010).
The project was finances through this credit line, for which, as was stated before, the
Energy Efficiency Trusteeship (FEE) guarantees a part of the requested loan. However,
many companies already have some credit line at their bank, and usually these lines are
more favorable than the ones obtained through the FEE.
As was pointed out before in this report, the IDB’s SCF received multiple consultations
during the tender of 150 MW wind energy, and eventhough it is too soon to evaluate its
impact, it may be an option to consider for large scale projects. For this type of projects,
the participation of the AFAP may be an option, eventhough it is mandatory that the
company emits private titles, and it is quite small the number of Uruguayan companies that
fullfil this requirement.
23
4. SUPPORTING MECHANISMS
Following table summarizes the supporting mechanisms presented in this report.
Organization
Mechanism
Type of
mechanism
CND
Energy
Efficiency
Trusteeship (FEE)
Trusteeship
IDB
MIF
IDB
SECCI IDB Fund
World
Bank,
UN,
among
others
World
Bank,
UN,
among
others
CDM’s
Designated
National
Authority
in
Uruguay
GEF
Non
refundable
funds
Non
refundable
funds
Non
refundable
funds
Non
refundable
funds
GEF’s SGP
CDM
Phase of
project
being
supported
Geographic
scope
Website
National
http://www.eficienciaenergetica.gub.uy/fee.htm
Regional
http://www.iadb.org/mif/home/index.cfm?lang=es
Previous
studies
Regional
http://www.iadb.org/es/temas/cambio-climaticoy-energia-renovable/iniciativa-de-energiasostenible-y-cambio-climatico,1483.html
The
whole
project.
Global
www.gef.org.uy
The
whole
project.
Global
www.ppduruguay.undp.org.uy
The
whole
project.
Global
www.cambioclimatico.gub.uy
Feasibility
study.
Realization.
Table 14: List of supporting mechanisms.
a. Energy Efficiency Trusteeship
The energy Efficiency Trusteeship (FEE) is a “guarantee fund created to encourage
companies and other energy users, to develop energy efficiency projects” (PEE,
2010a).
Investments in renewable energy are clearly among the kind of investments that
the FEE intends to promote. The FEE “operates as a guarantee fund administrated
by the National Corporation for Development (CND) within the National
Guarantee System (SNG) in accordance with local Institutions of Financial
Intermediation (IFIs), interested in developing these credit lines” (PEE, 2010a).
24
The funds that constitute the FEE come from “a GEF donation received by the
Ministery of Industry, Energy and Mining (MIEM) through the World Bank. The
FEE’s capital is US$ 2.475.000” (PEE, 2010a).
The guarantee that is given is for 60% of the total amount being financed, and up to
80% of the total investment may be financed (PEEa, 2010).
There are to date4 two IFIs with credit lines that accept the FEE as a guarantee,
Bandes Uruguay Bank and Bank of the Oriental Republic of Uruguay (BROU).
The payment and interest rates depend on the loan and on each bank, but since 60%
of the guarantees are given by a fund administrated by the State, the rates are
relatively low, since the risk involved is also low.
The FEE guarantees Loans for Technical Assistance, that is, loans to finance
“feasibility studies and other studies required for the preparation of projects”, as
well as loans to carry out these projects. Both stages or just one of them may be
financed.
The guarantees both for Technical Assistance and Investment Project Loans must
be required by an ESCO registered at the National Direction of Energy and Nuclear
Technology (DNETN). The documentation presented by the ESCO is “a letter
guaranteeing technically that the Energy Efficiency project being presented fullfils
the requirements established by the DNETN”. The requirements are basically the
fullfilment of the Energy Efficiency condition and environmental requirements
(PEE, 2010a).
An Executive Project must also be presented and it must contain following
information (PEE, 2010a):
•
•
•
Forecasted emission reduction in the period (in tCO2e)
Rate of Investment (in US$) / Emission reduction (in tCO2e)
Rate of Saving due to efficiency (in US$) / Total energy saving
b. IDB’s MIF
IDB’s Multilateral Investment Fund (MIF), created in 1993, has as one of its general goals
to “promote economic growth with inclusion through the development of the private
sector, particularly SME’s”. The MIF makes donations and investments for the realization
of projects having certain characteristics. “MIF’s projects intend to become autosustainable
4
September, 2010.
25
and potentially reach a scale capable of changing the lives of millions of people in latin
America and the Caribbean ” (FOMIN, 2010).
The MIF administrates non refundable resources “for technical asistance for the
development of SMEs in Latin America and the Caribbean”. The idea is also to create a
community between the beneficiaries of the assistance (governments, civil societie’s
organizations, private sector) that share the learned lessons during the execution of the
projects, which is considered a “central part of the MIF’s work” (FOMIN, 2010).
The three areas in which the MIF operates are “business frame, or the environment in
which the private sector develops (…) business development, or the labor capacity of the
workers and the company (…) financial democracy, or the broadest access to the financial
system” (FOMIN, 2010, Author’s highlights).
In March 2007 MIF II was initiated, with the corresponding resource replacement which
enables the MIF to “continue financing innovative projects up to 2015”.
On MIF’s website it can be read: “The most basic strategy of MIF is to finance innovative
pilot projects and to develop new projects based on experiencesthat had obtained
promising results and have potential to be replied at a greater scale” (FOMIN, 2010,
Author’s highlights).
The projects presented at the MIF must have following characteristics (FOMIN, 2010):

“Innovation: The projects must introduce new and effective approaches to
promote the development of the private sector and reduction of poverty.

Demonstration effects: The projects must be capable of being replied in other
sectors and/or other countries.

Sustainability: Projects must have convincing operational plans and a great
potencial of financial sustainability once the MIF’s resources have been payed out.

Alliances: MIF’s projects are carried out together with local partners who
contribute with 30-50% of the project’s total costs.

Additional elements: MIF’s resources must be critical for the result of the project
and must be the most adequate choice to finance a specific initiative”.
Clearly, a renewable energy project satisfies the first three criteria. On MIF’s website one
first evaluation can be done online in order to check whether the project and the
organization that presents it fulfills the requirements or not. In this way, for instance, one
can easily verify that projects for more than US$ 2 million are not accepted, nor are
investment projects in “buying of equipment, vehicles, lands, offices or construction”
(FOMIN, 2010).
It must be pointed out that between 2007 to date, 6 projects cathegorized as “Clean energy
markets”, in Mexico, Dominican Republic, Colombia, Perú and Paraguay have been
26
approved. Particularly distinguishable are the projects implemented in Perú and Colombia,
both intitled “Promotion of Clean Energy and Energy Efficiency Market Opportunities”. In
Colombia, this projects is being executed by the Chamber of Commerce of Bogotá, while
in Perú it’s being carried out by the National Environmental Fund (“private institution,
without lucrative purpose responsible for promoting public and private investment in the
development of environmental projects in Perú”, FONAM, 2010).
The goal of these projects is to “increase market oportunities for SMEs and improve their
competitiveness. The purpose is to promote the usage of renewable energy and energy
efficiency by making it easier to access economic incentives that support the uasage of
clean technologies” (FOMIN, 2010).
c. SECCI IDB Fund
IDB created in 2007 a Special Programme on Sustainable Energy and Climate Change,
called SECCI Funds, for “the financing of activities that will support the implementation
of the Sustainable Energy and Climate Change Initiative (SECCI)”. These activities are
related to following areas (IDB, 2007):
•
•
•
•
Renewable energy and energy efficiency.
Development of biofuels.
Carbon finance.
Climate change adaptation.
The funds are non refundable, except for the cases in which they are used for “technical
assistance to the private sector for project preparation and the financing of the project is
provided by a party other than the IDB or the Inter-American Investment Corporation”
(IDB, 2007).
In the field of renewable energy following activities are financed:
•
•
•
•
Preparation, review and development of sectoral studies required for Project
development such as mapping of solar radiation, wind velocity, geotermal
potential, etc.
Required studies (pre-feasibility, feasibility, environmental and social studies,
etc) to develop projects of renewable energy projects (such as small hydros,
wind, solar, geothermal, wave energy, and methane recovery form landfills,
among others), and energy efficiency activities.
Energy audits for priority sectors (industry and manufacturing, housing, wáter
and sanitation, public lighting), sub-national governments (states and
municipalities), and public and private entities (…)
Studies to carry out regulatory and institutional analysis as an input for
improvements of current national and/or local regulatory and institutional
27
•
frameworks to remove barriers for investments in renewable energy and energy
efficiency.
• Studies for technology development and adaptation, pilot projects, and
technology cooperation.
• Preparatory studies in support of loan/guarantee operations for non-sovereign
operations in renewable energy and energy efficiency.
Training and dissemination activities” (IDB, 2007).
All financed activities deal with studies of some kind. Regarding specifically biofuels, the
choosable studies are detailed in IDB (2007). Some of them are related to the legal
framework and to economic feasibility studies. Since Uruguay has advanced much in this
matter (see for instance the report “Information on the technological line and state of the
art of renewable energies in Uruguay”), these activities are not explained here any further,
except for the “preparatory studies in support of loan/guarantee operations for nonsovereign operations in biofuels” (BID, 2007).
In as much as carbon market is concerned, following activities are financed:
“
• Support IDB operation teams in evaluation of investment projects in priority sectors
(energy, transport, water and sanitation, rural development-avoiding deforestation)
and their eligibility for CDM.
• Assist Ministries, designated national authorities, and public/private Project
developers in the identification of potential projects for carbon finance in priority
sectors (…)
• For projects where upon request buyers are identified, the fund will also finance the
development of the terms for the Emission Reductions Purchase Agreement
(ERPA).
• Support carbon finance project cycle activities and conduct the Project
development (pre-feasibility, feasibility and final designs). Financial structuring
can also be included (...)
• Development of methane capture projects.
• Development of baseline studies and new methodologies in priority areas that can
provide replication throughout the LAC region (...)
• Development of capacity building programs for academic institutions and private
associations in the carbon finance and adaptation to climate change area.
• Development of projects that contribute to the development of approaches and
methodologies related to accessing carbon finance for avoided or reduced
deforestation.
• Development of training and dissemination activities (...)
• Complementary activities involving regulatory and institutional analysis as an input
for technical assistance loans, policy and investment lending under a programmatic
CDM approach“ (IDB, 2007).
28
In general, it is clear that the Fund’s resources must be used to “hire consulting services,
buy the goods needed to carry out the studies” (however, the total amount for acquiring
goods cannot be greater than 30% of the project’s total amount), “complementary training
activities (such as workshops, technical sessions, seminars, etc.)” Besides, “the Fund may
finance equipment and services needed to increase investment opportunities, including
pilot projects in technology development and adaptation (IDB, 2007, Author’s highlight).
The institutions that can apply to the Fund are (IDB, 2007):
• Government ministries and climate change designated national authorities
• Planning agencies
• Public and private corporations
• Sub-national governments (regional, provincial, state and municipal)
• Private project developers
• NGOs
• Academic and research institutions.
No more than US$ 1.000.000 may be assigned to a single project. Furthermore, “no
country can execute more than 30% of the accumulated allocation of resources allocated to
the SECCI IDB Fund (…) The beneficiary entity or entities will share the financial costs of
each operation by an amount to be decided on a case-by-case basis, and which shall not be
lower than 20% of the total cost. The total in kind contribution can be no more than 20% of
the total cost of the project” (IDB, 2007).
d. Global Environment Facility (GEF)
The Global Environment Facility (GEF), “is an international association whose focus is
set on environmental issues and in initiatives of sustainable development on a global scale.
It is an association formes by 178 countries, international organizations, NGOs and the
private sector. Created in 1991, the GEF is today the main financer of sustainable
development projacts in the whole world, especially in developing countries or in countries
with transition economies (...) Around 15 projects, for a total amount of approximately
US$ 130 million, have been executed (in Uruguay, Author’s Note) since that year (1992,
Author’s Note) and many have reached an important development and permanency,
showing the pertinency of its implementation. Around 15 projects have been approved, are
being executed or are about to be implemented today” (FMAM, 2010).
The GEF’s fund replenishment is made every four years, having being approved this year
(2010) the fifth fund replenishment, in a new resource assignment frame known as STAR
(System for Transparent Allocation of Resources). For this quadrennium, Uruguay will be
assigned around US$ 6.000.000. For the past quadrennium, US$ 3.100.000 were assigned
to the Climate Change area (Elissalde, 2010).
29
Regarding renewable energy, US$ 950.000 were used for the Wind energy Programme in
the past quadrennium. The project initiated in June 2007 and has a duration of 4 years. The
Programme is being executed by the MIEM, through the DNETN.
The goals defined in the project pursue, among other things, to develop “a political and
regulatory framework for wind energy in Uruguay”, to “increase business capacities in
order to prepare and implement wind energy technologies at a public and private level”,
and to remove “technological barriers through a set of actions, including the installation of
a 5 MW wind farm” (PNUD, 2010).
As it is clear from the section of the State of the Art Report referred to the wind farm at
Sierra de los Caracoles, the goals and objectives of this Programme were reached and even
exceeded, as it is the case of the wind farm’s installed power capacity.
In the past quadrennium, the Energy Efficiency Programme was also financed through the
GEF. This Programme “planifies and develops several actions oriented towards the
generation of a conciusness on the benefits of the efficient use of energy, as well as the
promotion of the incorporation into the market of a growing demand for equipment
energitcally efficient”. The Programme is financed through “a donation of the GEF
through the World Bank, which contributes with US$ 6.875.000 and with MIEM and
UTE’s (public electriciy company, A/N) funds, that contribute with US$ 8.200.000”. As
was stated before, it is in the framework of this Programme that the FEE was created (see
a). Recall that the FEE guarantees part of loans for energy efficiency projects, in which
renewable energy projects are included (PEE, 2010b).
The two examples mentioned above are succesful cases of GEF projects related directly or
indirectly to renewable energy.
Today, after the STAR has been adopted, countries like Uruguay do not have upper limits
on the focal areas, that is, the distribution of the global amount assigned to the country
among these areas is flexible (Elissalde, 2010).
According to the new executive direction of the GEF, the project cycle will not last more
than 22 months. This cycle starts with the elaboration of the PIF (Project Identification
Form). The project must be first approved by the GEF’s Focal Point in Uruguay, who, in
order to evaluate it, must consult the different state dependencies related to some of the
areas covered by the project, in order to confirm that the project is in accordance to the
government’s strategic goals in the area. The project cycle was revised in November 2010,
and the document titled “GEF Project and programmatic approach cycles” was approved.
This document establishes the procedures to be followed by the four different types of
projects: full sized projects, or FSPs, which are those requesting more than one million
USD in GEF resources; medium-sized projects, or MSPs, which require a funding less or
equal than one million USD; programmatic approaches, or PAs, which tend to achieve
larger scale impacts through medium- and long term strategies; and finally enabling
30
activities, or EAs. The cycle for each of these modalities are described in detail in the
above-mentioned document, which is available in the web (see GEF, 2010b).
e. GEF’s Small Grant’s Programme - Uruguay
The Small Grant’s Programme (SGP) is financed by the GEF and implemented by the
United Nations Development Programme (UNDP). It is aimed for organizations from the
civil society that wish to implement environmental projects in general, among which
projects on climate change adaption are included, in which, in turn, renewable energy
projects are included. “The Programme’s fundamental principles are participation,
democracy, flexibility and transparency. It promotes and supports community
participation, local inhabitants, NGOs, Base Community Organizations (BCO), and other
institutional actors involved in all aspects regarding planification, design and
implementation” (PPD, 2010a).
With the adoption of STAR, the SGP in Uruguay, which was previously funded only with
Uruguay’s GEF resources, can now access the resources that STAR assigns to the country
specifically for the SGP. The annual amount will be US$ 200.000 plus what the
Uruguayan government eventually assigns the SGP with resources from what STAR
determines for Uruguay (Sena, 2010b).
The amount available for each project is between US$ 5.000 and US$ 35.000, and a
monetary or in species counterpart equal to or greater than the solicited amount is required.
“A counterpart in species can be infrastructure, vehicles, lands, volonteer labor, etc., to be
used during the project’s development” (PPD, 2010b y 2010c).
The request process starts with the opening of calls for projects made once a year,
normally by the middle of the year, eventhough two calls have been made in one year,
since the SGP was put in practice in Uruguay in 2005 (Sena, 2010a).
From 2006 to date 59 proyects have been approved, for a total amount of US$ 1.167.519
(PPD, 2010d).
f. Clean Development Mechanism (CDM)
The Clean Development Mechanism (CDM) was created by the Kyoto Protocole in its 12th
Article. Since this Protocole establishes goals for emission reduction for developed
countries –and not for developing countries-, the CDM makes it possible for these
countries to reach part of their goals by buying Certified Emission Reductions (CERs).
These certificates can be obtained by projects located in developing countries. The
organizations that execute these projects and obtain CERs, may then sell them to
developed countries, and so making the project economically feasible (UNFCC, 2010a).
The CDM’s project cycle involves following phases (Kasprzyk, 2010):
31
1.
2.
3.
4.
5.
National approval.
Validation process.
Registry at the CDM’s Executive Board (EB).
Emission monitoring and calculation of baseline emissions.
Generation of CERs.
For the first point, the project must be presented at the CDM’s DNA, which in the case of
Uruguay is the Climate Change Unit of the Ministry of Housing, Territorial Order and
Environment (MVOTMA). The DNA approves the project or not depending on whether it
contributes to the countrie’s sustainable development or not. The validation process (phase
2) may be initiated paralell to the first phase. The latter implies that an external agent,
known as Designated Operational Entity (DOE), analyzes the Project Design Document
(PDD) and verifies that (Kasprzyk, 2010):
a) The project is additional: this means that if it wasn’t for the CDM, the
project wouldn’t be executed, that is the CDM improves the project’s
profitability to the point that it becomes economically feasible.
b) The baseline being used is correct.
c) The methodology and procedures used for monitoring the undertaking’s
emissions are correct.
A list of DOEs may be found in UNFCC (2010b). Once the DOE has verified that the
items a, b and c are fulfilled, a Validation Report is made, which is presented before the
CDM’s EB, in order to register the project. Once the EB approves the Final Report, phase
4 is initiated, and it must be executed by other DOE than the one that made the Validation
Report. The goal of this monitoring phase is to measure the undertaking’s emissions, to
calculate the baseline’s emissions and to obtain the avoided emissions by their subtraction.
Once the reductions have been effectively determined, CERs are emitted and are ready to
be commercialized. There are in Uruguay and to date (October 2010) 12 projects that have
national approval, but only one has obtained CERs. It must be kept in mind when
evaluating the inclusion of the CDM in a renewable energy project, that the hiring of a
DOE as well as the registry request at the CDM imply costs that must be taken into
account (Kasprzyk, 2010).
g. Succesful experiences and found barriers
Perhaps the most paradigmatic examples of the usage of international support mechanisms
are the Energy Efficiency Project and the Wind Energy Programme, financed through the
GEF.
The CDM implies a relatively slow process which involves costs associated with the
obtention of CERs, and this is why CDM is suitable in general only for large scale
32
projects. As it follows from the “Report on Information on the Technological Line and
State of the Art of Renewable Energies in Uruguay”, most of these large scale projects are
relatively recent (after 2005), and only one has been registered at the CDM. As it was
pointed out in 3.f, it is interesting to combine the advances in income due to emission
reduction contained in CAF’s PLAC+e with the CDM.
5. CONCLUSIONS
Many of the mechanisms mentioned in this report haven’t been used specifically for
renewable energy projects in Uruguay, and this is why it was of fundamental importance to
include them in this report, in order to contribute to their usage for these type of projects.
Eventhough the development of renewable energy is very recent in Uruguay, there are
already emerging financial products in the local market specifically aimed for this type of
investments, such as the “green lines” of Bandes Uruguay Bank and HSBC Bank, directed
both to corporations and persons.
As it follows from this report, there is a relatively broad spectrum of financial mechanisms,
aimed for different types of organizations, for different project phases and even for
different types of projects within the field of renewable energy, not only in the national
plane but also regionally and even globally.
Some of these mechanisms have been used succesfully in Uruguay for renewable energy
projects. The CDM, for instance, was successfully used to finance a biomass project (see
the report on the Technological Line and State of the Art), the GEF was used to finance the
Wind Energy Programme and the Energy Efficiency Programme, the former being of
fundamental importance to achieve the goals on wind energy contained in the Energy
Policy. Others mechanisms have also been used succesfully but in other areas (SGP,
CAF’s products, MIF), and there are even some that have not yet been used (SECCI Fund,
for instance). In these last two cases new possibilities and perspectives are open for the
development of renewable energy projects.
The knowledge of the involved actors on the financial mechanisms available for renewable
energy undertakings is of fundamental importance to overcome some of the barriers
encountered by the project developers.
33
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36

uruguay - Observatory for Renewable Energy

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