This knowledge exchange activity aims to explore and share successful financial models, identifying the specific factors that make different models relevant and replicable in their context.
Energy entrepreneurs throughout Asia provide a range of technological solutions to address the growing demand for sustainable energy services in the region. These local entrepreneurs service low-income rural populations including farmers, small businesses and households with affordable energy access. However, these enterprises often face a serious constraint that limits their ability to grow: access to affordable capital. Investing in these small enterprises is perceived as being too risky for regular banks and they are considered too large for micro-finance institutions. The resulting finance gap is a serious limitation to energy entrepreneurs who want to expand and reach more customers. The objective of this knowledge exchange was to explore and share successful financial models, identifying the specific factors that make different models relevant and replicable in their context. To address this issue, Nexus for Development aimed to:
- Provide an overview of financial schemes for decentralised sustainable energy in South East Asia (via a finance landscape map); Financing Renewable Energy in South East Asia
- Share learning from successful and unsuccessful financial models;
- Connect energy entrepreneurs and financial service providers from across South East Asia at a stakeholder workshop.
- Renewable energy entrepreneurs and financiers greatly appreciated the workshop as it provided a unique opportunity to exchange insights and experiences with other stakeholders in the sector. The workshop was uniquely designed to cater to the attendees. The discussions and events specifically focused on identifying gaps in existing financial tools and specific barriers that limit access to finance in the region.
- Several region-wide trends were discussed during the conference. From the perspective of the entrepreneurs, challenges to accessing finance are often linked to the lack of flexibility of traditional financiers and the limited suitability of products offered. Entrepreneurs also identified a lack of awareness or understanding of existing financial options as an issue. From the investor perspective, the main barriers to providing finance to entrepreneurs include the entrepreneurs’ lack of financial literacy and a misalignment of risk and return expectations.
- Overall, the attendees were generally optimistic that financing options across the region would improve. Several successful and innovative financing schemes have been developed that can serve as models for replication in other locations and sectors. These schemes, and any new ones, would still have to be tailored to the specific geography and sector due to the inherent uncertainty in most developing regions. There is no doubt that additional capital is needed to continue supporting the work of energy entrepreneurs.
Building on the 2017 event, “Financing Renewable Energy in Southeast Asia”, Nexus aims to organise an even more valuable knowledge exchange and further support capacity building among sustainable and renewable energy entrepreneurs.
To leverage successful technologies and best practices from the region through (1) peer-to-peer exchanges and (2) a capitalisation conference. The conference will bring together all the supply chain stakeholders, including rice husk producers, garment factory owners and international brands who can play a role in adapting their purchasing specifications according to environmental considerations.