REpower Haiti

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REpower Haiti

Haiti
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

In rebuilding Haiti's electricity infrastructure SME's are offered long-term fixed price contracts to deliver renewable energy to Haiti's grid. SME market entrants are supported with grants for feasibility studies and in some cases loan guarantees. Contract tariff rates are differentiated by technology and designed to provide fair rates of return. Hundreds of new local businesses will result.

About Project

Solution: What is the proposed solution? Please be specific!

REpower Haiti leverages public interventions in a way that richly enhances economic, environmental and social return by enabling community based SME's to play a pivotal role in rebuilding shattered energy infrastructure. Renewable energy projects (wind, solar, hydro) are well matched with SME capacity as the technology is mature, reliable, and modular so that it can be deployed in community scale installations as demonstrated in other jurisdictions. REpower Haiti describes a Feed-in-Tariff (FIT) program for grid tied renewable energy installations. Unique support mechanisms are built in to address extraordinary challenges facing Haiti as it rebuilds electricity infrastructure. FIT programs, though not yet widely applied, have proven dramatically effective in unlocking large-scale private financing for business in several developed economies. Transformation is accomplished through an open process offering state backed power purchase agreements to project proponents for the procurement of renewable energy delivered to a states electric grid. For REpower Haiti, FIT contracts are offered by the state utility to local SME's. The power purchase agreements provide revenue security so local businesses can attract partners and raise private financing to complete projects. Additional innovations are required including a granting program to provide financial assistance for soft costs such as feasibility studies and a skills training program to support the emergent green economy. Research demonstrates that maintaining a high degree of local SME ownership is important to success. To support this objective qualifying SME's will be supported with project loan guarantees up to 75% of the SME's equity in an eligible project.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

Every social system is inextricably tied to the energy source it uses...therefore the choices made in developing an energy system will define a country's limitations and opportunities. During the 19th and 20th centuries access to affordable fossil energy was the primary driver of wealth creation. For the 21st century diminishing fossil reserves and global environmental imperatives demand a renewable energy path to wealth creation. A country like Haiti, lacking domestic fossil reserves, has limited options to insulate itself from the fossil fuel price and supply volatility that will ultimately deny the country a stable and affordable foundation upon which to build a prosperous society. Since Haiti's energy infrastructure must now be rebuilt, doing so in a way that maximizes renewable energy capacity and community engagement and participation through local enterprise offers an alternate and hopeful future. At the micro level local SME participation in renewable energy generation coupled with community investment opportunity provides the key to change the social behaviour in Haiti that heretofore has undermined electricity system sustainability...that is, stealing electricity from the state grid. Residents are not as likely to steal electricity from a neighbour or a community co-op, or the small business that they themselves have invested even modestly in. Intuitively comparable social phenomena have been documented in developed countries that have successfully encouraged community enterprises and small/medium business to build grid tied renewable energy generation systems to meet community needs. Most notable is the fact that NIMBY (Not-In-My-back-Yard)planning objections to energy generating projects brought by local residents tend to melt away when the community is directly involved in the ownership and operation of the asset.
About You
Organization:
Windfall Centre
Visit website
About You
First Name

Brent

Last Name

Kopperson

Your Organization

Windfall Centre

Country

, ON

About Your Organization
Organization Name

Windfall Centre

Organization Phone

01.905.727.0491

Organization Address

93A Industiral Parkway S., Aurora

Organization Country

, ON

Organization Type

Non-profit/NGO/Citizen-sector Organization

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Your solution
Country your work focuses on
If multiple countries, please list them here. If your solution targets an entire region, please select it below

This suite of policy instruments could be implemented in many jurisdictions

Region(s) your solution focuses on:

Latin America and the Caribbean.

Range of turnover in your target firms, in USD

Less than $1 Million, $1-5 Million, $6-10 Million.

Average turnover in USD of your target firm

$308,000

Number of employees in your target firms

Fewer than 5, 5-24.

Average number of employees of your target firm

5

Specify the size, average and range of expected loans or investments in each target firm

Soft Cost Grants: $5k to $300 k depending on technology and size of project.

Equity Loan Guarantees: $100k to $3 million depending on size of project

Skills Training Grants to service providers: up to $50k

What stage is your solution in?

Operating for 1‐5 years

Innovation
How does your proposed innovation leverage public intervention in catalyzing private SME finance?

The government of the Republic of Haiti in its March 2010 Action Plan for National Recovery and Development recognized that 'access to electricity is a major constraint for economic development and the quality of life of the Haitian population.' The Action Plan also points to the importance of the SME sector in creating new jobs and the need to favour local labour and businesses in meeting growth objectives. Even as the state-owned utility, Electricité d’Haiti (“EdH”), works urgently to restore electricity services the government is cognisant that even before the earthquake on 12 January the country's electricity infrastructure was unable to support any 21st century pathways to sustainable prosperity. The Action Plan points to 'illegal connections' and 'significant repercussion on the national budget, which must accommodate a large proportion of petroleum costs required to generate energy.' A US Department of Energy reports points out that, 'once those (energy) dollars have been used to import energy into the community or state, they are unlikely to return, and they can't be used to foster additional economic activity. The report points to US studies that show up to 90% of energy dollars can leave a state which does not possess domestic fossil energy sources.

A 2010 report by Hullspeed Energy estimates that only 12.5% of Haiti's 10 million population had metered access to the electricity grid. This compares to a Caribbean region average of 92%. Another 12.5 had un-metered access, stealing electricity from the grid. These losses were among the highest in the world and undermined the viability of the system. The unconnected portion of the population (7.5 million people) relied on even more expensive, inefficient, and polluting small diesel generators, if they had access to electricity at all.

Since Haiti must now rebuild its energy generating capacity from scratch it has an opportunity to leap frog 20th century energy paradigms and lay a foundation for prosperity that embraces 21st century imperatives of energy security and global warming.

REpower offers an innovative market approach that catalyses and accelerates the development of a renewable energy sector lead by motivated local SME's with new access to private financing and public sector supports driven by a thoughtfully designed Feed-in-Tariff for community scale renewable energy projects.

The transition means a shift from imported fossil fuels to free sources of primary energy (wind, solar, and hydro), the creation of many hundreds of community scale power stations distributed where needed, a shift from highly concentrated ownership structures to diverse ones, and a shift from energies that produce emissions to those that are emission free...leaving capital that would otherwise leave the country free to recirculate creating high multiplier effects in community economic development.

Notes to Section:

1) It should be noted that 'community scale' does not necessarily mean small energy output. As an example, in Canada, Windfall Centre is currently building a 20 mega watt (MW) wind park in partnership with an aboriginal community. For reference, 20MW is enough electricity to power 7500 Canadian homes. See www.pukwis.ca

2) The author understands that fossil fired power plants will be required for some time to provide dispatchable base load supply in support of renewable energy projects and that there may be potential for pumped storage utilising existing hydro power assets.

3)REpower Haiti is not an off-grid solar lighting initiative

What barriers does your proposed solution address?

Lack of collateral, Lack of financial capacity, Lack of SME access to skills / knowledge / markets, Unavailability of financial products tailored to SME needs, General barriers to SME development related to investment climate, Specific barriers to fragile and weak states.

If you checked any of these barriers, describe how your solution addresses them

Lack of Collateral, Lack of financial capacity:

Fixed asset collateral and financial capacity in Haiti is much diminished as a result of the recent quake. The equity loan guarantee component of REpower Haiti addresses this barrier.

Lack of SME access to skills/knowledge:

The skill training component of REpower Haiti addresses this barrier

Unavailability of financial products tailored to SME needs:

The soft cost granting program of REpower Haiti addresses the lack of financial products required in the feasibility stage of a renewable energy business/project

General barriers to SME development, Specific barriers to fragile and weak states:

The comprehensive Feed-in-Tariff program uses innovative renewable energy procurement policy to mitigate SME, state, and financier risks in building modern energy infrastructure.

Impact
Provide empirical evidence of your proposed solution's success/impact at present. If your project is in the idea phase, please provide evidence that speaks to its potential impact

A Feed-in-Tariff is a renewable energy procurement mechanism that has been applied with dramatic effect in several developed countries including, Germany, Spain, and France creating 280000, 188000 and 7000 jobs respectively.* Germany's FiT program has catalysed the creation of 16,000 renewable energy businesses.** FiT programs have common characteristics. These include defined eligible technologies, tariff pricing differentiated by technology, a long term contract that guarantees payment for renewable energy delivered, and a guaranteed grid interconnection for eligible generators. The power purchase contracts are usually utility or state backed so provide revenue security which enables project proponents to access equity and debt financing through private sector channels. Compensation rates (Tariffs) are determined by scientific study and designed to yield a moderate rate of return when managed effectively utilizing state-of-the-art commercialized technology in conjunction with the renewable energy sources available locally.

Despite the increasing adoption of FiT programs around the world over the last few years, not all FiT programs are equally effective at stimulating the development of local enterprise...a key requirement in addressing the needs of less developed countries and essential in the case of a country like Haiti that must now build a resilient economy in the wake of natural disaster.

In May of 2009 the Canadian province of Ontario passed new legislation, The Green Energy and Economy Act, which changed the electricity procurement system in Ontario by introducing Feed-in-Tariffs for renewable energy. Desiring to specifically catalyse the development of local community enterprise the government introduced specific public support mechanisms to address the needs of the nascent SME sector. Additional public interventions have been tailored to overcome the barriers to participation faced by Ontario's Aboriginal peoples.

Ontario's renewable energy FiT procurement policy bolstered by targeted public sector supports to the local SME sector has triggered record breaking private investment. By December 1, 2009, the Ontario Power Authority (OPA) received more than 1,000 FiT applications. On March 10, 2010 the OPA announced 510 contracts for mid-scale FiT projects (10kW to 500kW) with a total generating capacity of 112 MW. Among these was a contract with Windfall Centre for a 2.1 kw solar system. On April 8, 2010, the OPA awarded 184 contracts under the FiT program for large-scale projects (those exceeding 500 kilowatts.) In total they will generate almost 2,500 MW of green energy. Of these 120 qualified as community projects and 16 were Aboriginal including the 20 MW Pukwis Community Wind Park.

REpower Haiti author, Brent Kopperson, through his leadership roles with Windfall Centre, the Ontario Sustainable Energy Association, the Community Power Fund, the Green Energy Act Alliance, and Pukwis Community Wind Park, has been at the centre of community power policy and project development in Ontario since 2001.

*Deutsche Bank Group
**sourceguides.com

How many firms do you expect to reach?

500 Firms

What is the volume of private SME finance you aim to catalyze?

Haiti needs to build 550 MW of new generation now. REpower Haiti calls for 30 percent of that to be from renewable sources (165 MW).

Wind: 132 MW @ $2.5 million/megawatt = $330 million
Solar: 33 MW @ $4 million/megawatt = $132 million

Total SME finance catalysed: $462 million

What time frame will be required to reach these targets?

3-5 years depending on program design elements.

Does your solution seek to have an impact on public policy?

Yes

What would prevent your solution from being a success?

Lack of political will to pursue a renewable energy future with broad SME participation.

Sustainability
List all the funding sources that are required for the sustainability of this solution

- the FiT renewable energy procurement program would be funded by the state/utility.

- a Haitian Community Energy Fund (HCEF) could be endowed and given responsibility to design and deliver the soft cost granting program. HCEF could also make grants to organizations providing capacity building programs. ie: skills training to the new SME sector.

- the loan guarantee program could be administered by HCEF though due diligence might better be managed by a third party on behalf of the state or underwriter.

Demonstrate how your proposed solution has the capacity to graduate from dependence on public finance. What is the time frame?

Numerous reports including the World Bank's March 2010, 'Caribbean Regional Electricity Generation, Interconnection and Fuels Supply Study', have concluded that relying on diesel and heavy fuel oil for electricity generation is the most costly electricity supply option and that well sited wind projects are the least cost option. Most agree that there are no silver bullets but that an integrated approach to electricity supply mix is essential and that renewable energy should play a much more prominent role in future. The aforementioned World Bank study notes that the speed of renewables development will influence future demand for fossil fuel requirements.

REpower Haiti addresses the need for speed in rebuilding the countries energy infrastructure by engaging the SME community directly in the rebuilding in such a way that mitigates business risks for the state, SME's, and private investors, thereby increasing private investment and levering public investment with demonstrated higher than average community economic development multiplier effects.

The REpower program is underpinned by implementing a comprehensive FiT program with demonstrated potential for rapid systemic and transformational outcomes for the SME sector. The FiT program itself is not a public subsidy...it is an alternative energy procurement mechanism for electricity that will have to be purchased in any event. The bonus is that, according to the 2009 UNEP report, 'Why Clean Energy Public Investment Makes Economic Sense', investment in green programs facilitate economic growth and job creation and create more jobs than other types of economic stimulus programs per dollar of spending.

REpower Haiti public subsidies come into play with the support mechanisms designed specifically to support the growth of Haiti's local SME sector in the wake of the devastating earthquake on January 12. These supports include:

1) a non repayable grant program to assist local SME's to complete feasibility studies, environmental studies, business plans and other soft costs associated with developing a renewable energy project.

2) loan guarantees of up to 75% of the local owners equity component of SME renewable energy project financing.

3) a training program to meet the skills training gap in the emergent renewable energy sector.

In other jurisdictions where FiT programs have been successful Tariffs rates along with other program supports have been weaned back through a process of regular review as the sector strengthens. The FiT procurement program itself is for the long term as ever higher levels of renewable energy integration with grid systems becomes possible and necessary. For instance, Germany expects to exceed it's goal to achieve 30 percent renewable power generation by 2020.
While Haiti's public supports to the SME sector will need to be in place for a least 5 years there are effective ways to manage supports for longevity. Establishing an endowed revolving fund is one such way. The surest way to buttress the equity loan guarantee program is by making sure that the FiT tariff schedule is robust and that expert due diligence is applied in the application process along with a commitment to training supports.

Demonstrate how your proposed solution will survive a potential loss of its largest private funding source

The REpower Haiti program supports described in this document are essential to the development of a resilient domestic SME sector. A FiT program without such supports would quickly revert to an industry characterized by concentrated ownership and significant loss of economic and social potential...it is also likely that the culture of electricity theft would continue unabated.

The supports require a 5 year commitment.

Please tell us what kind of partnerships, if any, could be critical to the greater success and sustainability of your innovation

Essential partnerships include those with:

- The Republic of Haiti
- The state-owned utility, Electricité d’Haiti
- industry associations
- schools and training organizations
- community organizations
- renewable technology suppliers

Are there non-financial issues that could threaten the sustainability of your proposed solution?

REpower Haiti is dependant upon the state choosing to pursue a renewable energy future and choosing to mobilise its communities and SME sector in achieving the goal by implementing a comprehensive and robust Feed-in-Tariff for Community Power.

Please tell us if your proposed solution aims to scale up through a high growth sector, expand immediately to multiple sectors, and/or scale up geographically

REpower Haiti is designed specifically to build the SME renewable energy sector in Haiti. The green energy industry is one of the fastest growing on the plant. As an example, in 2009 wind power showed a growth rate of 31.7 percent.*

*world wind energy association