Mexican delivery landscape relevant to SME energy efficiency

Report
A Transformational Energy Efficiency SME
Advice and Loans Program for Mexico
Carbon Trust participation in the workshop on Financial Instruments to
Promote Sustainability and Climate Change Mitigation-The Experience from
Financial Institutions in Latin America and the Caribbean
Morelia, Michoacán, México, 29 November 2012
Daniel Buira
Senior Manager, Innovation
[email protected]
+44 7801 817532
Agenda
Carbon Trust is an independent company that helps partners and clients find the
opportunities and face the challenges brought about from combating climate change
– We advise governments, businesses and public sectors
– We measure and certify products and organizations
– We help deploy and develop low carbon technologies
We
–
–
–
have stimulated and financed SME EE investment for over 10 years
Good project economics, but known barriers hold back investment
Our proven advice programmes have overcome these barriers to catalyse investment
Our loans programmes have lent over £120m, and our awareness campaigns have transformed the
UK market
This year we collaborated with INECC and the British Embassy on a study to identify the SME
EE opportunity in Mexico and design a programme to exploit it
– Large opportunity with human capital, information, and capital barriers holding back uptake
– Fragmented delivery picture, with sub-scale support for the opportunity
– However coordination, extended advice, national awareness, and additional capital can transform
the landscape
Setting up an SME programme in Mexico
– Identifying roles and partners
– Coordinating detailed design and planning rollout
– Launch, expansion, and ongoing delivery
We have developed a number of approaches to
overcome these barriers. For example our advice
programmes have catalysed UK SME investment
Carbon Trust advice and support activities of £32m in FY2009/10 helped our customers
save 5m tonnes of CO2 as well as create value for their companies, resulting in a “policy
cost” of under £7/t
716
432
in £m
(2009/10)
(32)
Catalysing
ratio >13:1
(252)
Policy cost
Annual policy cost
Capital investment
Investment required to
get the energy savings
Lifetime
energy savings
Present value of
total energy savings
Total cost savings
Lifetime project
cost savings
Carbon Trust has also run two separate loans
schemes, demonstrating that Energy Efficiency
loans work
0% loans for the UK Treasury, lending over £120m to 3,500 SMEs between 2003 and 2010
– All projects which received funds had a strong business case based on energy savings, with
paybacks of 4 years or less. In addition they had to meet a “carbon threshold” of CO2 emissions
reduction per £
– The risk profile of the companies that got a Carbon Trust low was, at a portfolio level, better than
that of the general population of companies
£550m commercial loans programme launched in 2011 in partnership with Siemens Financial
Services
– During 2010, Carbon Trust sought out a financial partner to leverage the operational know-how,
supplier networks, and strong brand already in place into a new scheme
– Partnership launched after discussions with a number of potential finace partners, including banks
– Carbon Trust provides the business case to ascertain cost, energy and carbon savings
Lessons learned
– Significant marketing effort, as well as advice, was needed to drive uptake
– Using equipment suppliers as main route to market greatly increased uptake and reduced costs
– As a group, SME applicants for energy efficiency financing have a lower credit risk than the
average population of SMEs
– The Carbon Trust assessment of project savings gave customers confidence that their monthly
energy savings would exceed loan repayments, ensuring positive cash flow impact from the start.
After the repayment period, projects yield significant cash benefits
And we have carried out national awareness raising
campaigns to stimulate interest and demand
Theo Paphitis, well-known businessman and member of the “Dragon’s Den” television
serial, fronted one of our print marketing campaigns
In Mexico, cost-effective SME energy efficiency
measures could save MXN$28 billion (12%) and
reduce emissions by 10MtCO2 (14%) per year
Sector
Total carbon
emissions
(ktCO2e)
Total energy
costs
(millions MXN)
Potential
carbon savings
(ktCO2e)
Potential cost
savings
(millions MXN)
Commerce / services
10,587
$71,237
1,669
$8,659
Industry
50,447
$107,588
6,488
$11,765
Other inc. agriculture
14,098
$46,432
2,618
$7,857
Total
75,131
$225,257
10,775 (14%)
$28,283 (12%)
Other benefits:
Strengthening competitiveness
Sales of ‘greener’ products
Employee motivation
Indirect job creation though the energy efficiency sector
Mitigation against the impact of future regulation
Source: GIZ (2012) “Recomendación estratégica sobre tecnologías y subsectors como orientación para sustentar acciones de eficiencia energética en el sector PyME”
BMZ for Ministerio Federal de Cooperacíon Económica y Desarrollo March 2012. Assumptions: average electricity saving of 19% for commerce/services, 11% for industry
and 30% for agriculture (average of 17% across all sectors), and thermal energy savings of 10% across all sectors.
Many EE projects pay back quickly, yet despite
the compelling project economics, a number of
barriers stop many companies from investing
Human capital
– Lack of awareness about the commercial benefits of energy efficiency
– Lack of knowledge and expertise to identify and quantify costs and benefits of
opportunities e.g. understanding energy consumption and knowing which
technologies are appropriate.
– Lack of time and resource to manage implementation e.g. select suppliers, run
feasibility studies etc.
Information
– Lack of data about energy consumption for own business or poor visibility of energy
costs
– Lack of benchmarking data to understand relative performance
– No sharing of best-practice approaches to energy management
$
Finance
– High purchase costs for equipment (new or replacement) (in Mexico, partially due to
import tariffs)
– High financing costs, (in Mexico, FIDE loans incurring 14% interest rates)
– Limited access to finance due to risk-adverse commercial banks that don’t understand
energy efficiency projects (the nature of returns through energy savings)
While a number of effective programmes offering
advice and finance already exist, they are
fragmented and sub-scale
Gobierno Federal
CCE
PEMEX
CFE
CESPEDES
CONCANACO
SERVYTUR
SEMARNAT
SENER
SE
SHCP
CONCAMIN
FIDE
CRE
CONUEE
INECC
COMPITE
BANCOMEXT
NAFIN
Mexico GHG
Program
• GHG emissions
reporting &
sectorial analysis
Mi Tortilla
• $MN150k for tortilla
manufacturers
• Training & advice to
improve efficiency
• financial advisor (via
SE) to help access
funds
Eficiencia Energética
• Advice and technical
assistance – with or
CFEctiva Empresarial
without funding - to
• Funds for power factor
modernise facilities
correction (<90%) &
Programa de Ahorro y
and apply new
voltage optimisation (low to
technologies in
Eficiencia Energética
medium voltage)
productive sectors
Empresarial (PAEEEM)
• Energy efficiency education
• Financing to replace
for equipment operators,
obsolete equipment (with
obsolete equipment
Sello FIDE equipment)
replacement, & specialist
• Funding for refrigeration,
advice for process
AC and LEDs ($MN200k);
improvement
• 10% scrappage bonus
for other efficient
equipment such as
motors
Educación para el Uso
Racional y Ahorro de la
Energía Eléctrica
(EDUCAREE)
•
•
•
•
Dissemination activity
Awareness workshops
Training developers
Implementation support
(elements for an energy
assessment)
Programa Nacional
paral el
Aprovechamiento
Sustentables de la
Energia (PRONASE)
• Electrical substitution
(Motor replacement)
• Normas Oficiales
Mexicanas (NOM) /
Normas Mexicanas
(NMX)
Fondo PyMES
• Targets SMEs to improve
competitiveness through
business management and
access to finance:
• National Guarantee System
• Financial advisors network
• business centres (189)
• Technological Innovation
Fund (SE-CONACYT)
• Projects for innovative
products, processes,
services or materials
• Training & business
consulting
• SME Library
8
To be transformational, a co-ordinated Program is
proposed to raise awareness, deliver advice and
provide finance in a cost-effective manner
COORDINATION & PROMOTION
•Strategic coordination
•Program marketing
•Program management & Quality Assurance (QA)
ADVICE
FINANCE
• Website & publications
• Loans
• Advice centre (calls/emails)
• Investment support
• Training & events
• On-site energy audits
$2/tonne
Cost effectiveness of delivering service
$20/tonne
10 employees
SME size and therefore saving potential
250 employees
9
The Programme will reach at least 150,000 SMEs
over 5 years, delivering more direct support to
10,000 larger SMEs, lending $100m and reducing
emissions by 1MtCO2 at programme cost of $6.1/t
5-year
reach
Annual activities
All
SMEs
Access to website and
20-30 new
publications each year
150,00
0
30,000 calls and
emails handled each
year
4,000
100 events each year,
with 40 SMEs at each
10,000
2,000 audits for larger
SMEs each year
6,265
660 loans in year 1,
up to 1,900 by year 5
Service
Carbon
saving lifetime
(tCO2)
Energy
saving lifetime
(MWh)
Cost saving
Cost
- lifetime US$/tCO2 (US$m)
lifetime
Website &
publications
303,902
876,658
114
2.2
Advice
Centre
203,540
587,144
76
2.2
Training &
events
143,822
414,879
54
2.2
Site audits
266,950
732,499
95
10.4
99,262
159,530
21
20.4
Loans
Total
1,017 ktCO2 2,771 GWh
360
6.1
10
The total cost of the SME Programme, including
loans capital is ~US$134M over 5 years
Service element
Set-up cost
Operational cost (5-years)
Total cost
Local
($m)
Consultancy
($m)
Local
($m)
Consultancy
($m)
($m)
Co-ordination
0.57
1.03
5.41
3.63
10.65
Advice
0.30
0.17
7.08
7.89
15.44
Finance
0.23
0.07
7.17
-
7.48
Total
1.10
1.27
19.67
11.52
33.57
Capital for loans
100.00
Agenda
Carbon Trust is an independent company that helps partners and clients find the
opportunities and face the challenges brought about from combating climate change
– We advise governments, businesses and public sectors
– We measure and certify products and organizations
– We help deploy and develop low carbon technologies
We
–
–
–
have stimulated and financed SME EE investment for over 10 years
Good project economics, but known barriers hold back investment
Our proven advice programmes have overcome these barriers to catalyse investment
Our loans programmes have lent over £120m, and our awareness campaigns have transformed the
UK market
This year we collaborated with INECC and the British Embassy on a study to identify the SME
EE opportunity in Mexico and design a programme to exploit it
– Large opportunity with human capital, information, and capital barriers holding back uptake
– Fragmented delivery picture, with sub-scale support for the opportunity
– However coordination, extended advice, national awareness, and additional capital can transform
the landscape
Setting up an SME programme in Mexico
– Identifying roles and partners
– Coordinating detailed design and planning rollout
– Launch, expansion, and ongoing delivery
A Transformational Energy Efficiency SME
Program for Mexico
Carbon Trust presentation for the Financial Instruments to Promote
Sustainability and Climate Change Mitigation-The Experience from Financial
Institutions in Latin America and the Caribbean workshop
Morelia, Michoacán, México, 29 November 2012
Daniel Buira
Senior Manager, Innovation
[email protected]
+44 7801 817532

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