The Challenge of Low-Carbon Development - World Bank Internet ...

goal of promoting wind turbine improvements, under theChina Renewable Energy Scale-Up Project.IFC support for technology transfer and deploymentOver the past 15 years, IFC has mounted a number of initiativesto invest equity, technical assistance, or both in start-upor early-stage clean technology ventures. Mostly funded bythe GEF, these initiatives have targeted both precommercialand commercial technologies. These high-risk ventures havefit uneasily within IFC’s generally conservative, risk-averseculture and indeed many have had a disappointing record.A sequence of mostly unsuccessful projects,financed by GEF and implemented byIFC, has supported high-risk, small-scalerenewable energy enterprises.A sequence of mostly unsuccessful GEF-financed projectshas supported small-scale renewable energy enterprises.These include the following:• The IFC-GEF Small and Medium Enterprise Program.In 1995, a $20 million initiative funded by GEF to increasethe markets of SMEs in the areas of climate changemitigation. The program provided loans of $500,000 to$1 million to various intermediaries and private companiesfor on-lending to SMEs. Though the program wasnot designed specifically to target the solar photovoltaicsector, it included six solar photovoltaic-related investments.Although solar photovoltaic proved to be too riskyfor most financial intermediaries, the SME program wasable to place funds in other technologies and sectors.• Renewable Energy and Energy Efficiency Fund. In 1997, thisfund was designed to place equity and debt investmentsin projects using renewable energy and energy efficiencytechnologies. But it had difficulty developing a projectpipeline, failing to meet modest targets. Developed as aconsortium, the division of responsibility among participantcompanies was unclear. Having made only one investment,the project was restructured in 2006 and foldedinto the Sustainable Energy Facility (see below).• Photovoltaic Market Transformation Initiative. In1998, IFC launched the $30 million PhotovoltaicMarket Transformation Initiative to provide concessionalfinance and grants. The program was designedto accelerate the sustainable commercialization andfinancial viability of solar photovoltaic technologyin India, Kenya, and Morocco. Early Initiative effortstook too long to materialize and required extensivedocumentation that proved to be too burdensome forsmall investments. In addition, the photovoltaic SMEswere operating with thin margins. The project wasrestructured in 2004 and aimed at industry-level ratherthan project-level capacity building. Results have beenpoor in Kenya and Morocco (IFC 2007). In India, theemphasis has shifted from SHSs to support for manufacturingof solar modules.• In 2001, IFC loaned $1 million to a private companyto invest in sustainable energy SMEs, especially thosethat offered electricity to unelectrified households, providedback-up energy sources to companies, or lackedaccess to financing and technical advice. The companyfully disbursed the $1 million loan to eight sustainableenergy SMEs in Latin America and Africa to finance investmentsin fixed assets and working capital. Projectsfunded include solar water heaters, photovoltaic power,natural gas power, hydropower, and energy efficiencyimprovements.• The Solar Development Group, a $41 million initiativefunded by IFC and GEF, was initiated in 1999 with thegoal of increasing the delivery of SHS to rural householdsin developing countries. The group was comprisedof two separate entities: Solar Development Capital, aprivate equity fund for private solar photovoltaic andsolar photovoltaic-related businesses, and the Solar DevelopmentFoundation, a nonprofit entity that providedgrants for business development assistance. The Foundationraised $12 million and disbursed $2.2 million intechnical assistance to 63 projects. Solar DevelopmentCapital disbursed only $660,000 and was liquidated(IFC 2007). Overall, the project did little to meet theobjective of accelerating the growth of solar photovoltaicinstallations and closed in 2004.• Environmental Opportunities Facility. In 2002, IFC establishedthis facility to provide catalytic funding forinnovative ventures with the potential to increaseenvironmental sustainability and the need to overcomePhoto by Trevor Samson, courtesy of the World Bank Photo Library.Special Topics | 69