“We often hear talk of routes, pathways and roadmaps toward a low carbon future,” began Martin Hiller, Director General of the Renewable Energy and Energy Efficiency Partnership (REEEP), in his introduction to a panel discussion on the role of the private sector in renewable energy development. “But we are here now to talk about the entrepreneurs – the ones traveling this road.”
The Vienna Energy Forum, a biennial global conference addressing development in the context of sustainable energy, is packed with representatives of governments, international organisations and multilateral banks and other agencies. Entrepreneurs are fewer and farther between. But the engagement of entrepreneurs – and the private sector as a whole – will be necessary for an adequate global response to the climate and development challenges of the coming decades.
Together with SNV, the Dutch development agency, REEEP put together a side event to take a closer look at the private sector’s role in pursuing green growth using renewable energy, and brought together a unique panel representing key players from government (Sally Gear, Team Leader of Sustainable Energy at the UK Department for International Development); business at the multinational (Hary Verhaar, Head of Global Public & Government Affairs at Philips) and small and medium-sized (Samir Ibrahim, CEO and Co-Founder of SunCulture) levels; finance (Jeroen Blüm of BIX Fund and Mark Fogarty of First Energy Asia); and the non-profit sector (Andy Wehkamp of SNV and Eva Oberender of REEEP).
The event looked at the challenges of bringing together governments, who are tasked with setting the parameters of efforts to combat climate change and promote economic development, and the private sector, which in general moves far more quickly but is often hamstrung by a lack of clear signals from governments. “All roads lead to innovative policy,” said Mr Fogarty, when asked how markets can be “de-risked” to the point they are attractive to a wide array of private investment.
Positively, there seems to be convergence as the clean energy solutions that once required significant public subsidies to be viable become increasingly cost-effective even without subsidies. “We are in an exciting time,” said Ms Gear, “in that we are now at a point where clean energy has become the logical solution for development needs.” But despite the technological advancements that have led to renewable energy, particularly solar PV, being competitive in terms of dollar per kilowatt of capacity in many regions, markets are slow to take off.
Mr Ibrahim of SunCulture added that investors often do not know enough about the businesses to make investment decisions. “A LP (limited partner) will have a bunch of boxes he needs to check off that aren’t always relevant to the business or the market,” said Ibrahim, responding to a question on the level of understanding among local lenders of his business, an enterprise that provides full-spectrum solutions employing solar powered irrigation for a specific segment of agricultural production in Kenya.
The market “needs organisations like REEEP,” added Mr Ibrahim, “who have years of experience on the ground and understand the technologies and the business models,” and who can direct patient financing toward high potential projects.
It also needs better information on the true impact of the investments. Jeroen Blüm of BIX Fund noted that many investors are seeking to enhance the value of carbon mitigation investments by pursuing other types of development-related impacts. But there is still a ways to go in understanding the nature of that impact, and in creating metrics to quantify and measure impact in a way that allows it to be analysed and evaluated in the context of diverse portfolios.