OECD Clean Energy Finance and Investment Roadmap for India virtual workshop III, 25 August 2022

1. CEFI Roadmap
Workshop III
1
25 August 2022
Joseph Cordonnier,
OECD
&
Poonam Sandhu,
NRDC

2. 16:00 – 16:10 Welcome and opening remarks OECD
Keynote address MNRE
16:10 – 16:30 CEFI Roadmap key recommendations OECD / NRDC
16:30 – 17:10 Focus Group Discussion I: All participants
Energy Efficiency
Energy Savings Insurance
17:10 – 17:50 Focus Group Discussion II: All participants
Offshore Wind / Green Hydrogen
Blended finance facility/platform
17:50 – 18:00 Concluding remarks & next steps OECD
2
Agenda

3. The Roadmap aims to:
• bring together stakeholders to assess
opportunities and highlight barriers hindering
clean energy progress
• identify innovative solutions and effective
investment vehicles to deepen capital flows and
engage investors
• agree upon practical recommendations to
operationalise solutions and attract capital at
suitable scales
3
CEFI Roadmap: process to date
March May July August
Workshop I Workshop II First draft
Workshop III
(Final)

4. 4
Summary of recommendations
Energy Efficiency
Key takeaway from
Workshop II
CEFI Roadmap recommendations Key elements/challenges
Demand for energy efficiency and
appetite for investment are key
bottlenecks
- Policy signals and financial incentives to promote energy efficiency.
E.g., PAT-like schemes for small and medium companies; Tagging and
reporting of EE loans by FIs.
- Well designed incentives by BEE (e.g. PAT-like scheme) to
promote energy efficiency in small and medium companies
- RBI to direct lenders to tag and report EE loans
Potential for EEFP and BEE’s new
facilitation centre to address concerns
about lack of data and boost confidence
in energy efficiency projects
- Consolidation of existing data and information tools under EEFP
digital platform;
- Coordinate new and existing training & capacity building initiatives,
potentially under the EEFP
- Protocol to be developed for sharing of data by multiple
institutions with BEE platform
- Donor support to partially offset the training and capacity
building costs
Need to better design financial support
and financing schemes to address risks
- Direct interest subsidies to MSMEs for energy-efficient technology
upgradation;
- Lowering cost of credit guarantees (using data of previous schemes)
- Budget provision (e.g., BEE new subsidy scheme).
- Compile and analyse data of previous guarantee schemes
Access to finance key challenge for
MSMEs due to highly-leveraged profiles
and poor credit ratings.
- Energy Savings Insurance model & ESCO market development (see
FGD I).
- Assess any regulatory barriers for ESI
- Raise awareness and capacities of all stakeholders
- Insurance companies to pilot ESI
- Identify credible verification entities
- Develop mutually agreeable standard documentation
Need for simple, replicable models (both
for documentation and project
evaluation) to scale-up lending and
lower costs of financing.
- Simplified process and guidance on availing of support schemes;
- Simplified and flexible credit guarantee mechanisms, including
efficient process for prompt payout in case guarantees are invoked.
- Create a simplified training module in regional languages
to help beneficiaries avail support schemes for the EEFP
digital platform
- Donors to design new guarantee schemes with more
efficient processes for invoking the guarantees
EEFP: Energy Efficiency Financing Platform

5. 5
Summary of recommendations
Renewable Energy (Offshore Wind and Green Hydrogen)
Key takeaway from
Workshop II
CEFI Roadmap recommendations Key elements/challenges
Long-term planning with clear policies,
related infrastructure development and
measures to reduce counterparty risk are
prerequisites for early market development
and to engage investors.
- Green hydrogen and Offshore Wind infrastructures
under the Harmonized Master List of Infrastructure Sub-
sectors; and in the National Infrastructure Pipeline.
- Renewable Energy is mentioned as a sub-sector, but Wind Electricity
appears as a single item (not onshore/offshore).
- Green hydrogen is not included in the List, although it will require
significant infrastructure deployment.
Array of solutions needed to address risks
across ecosystems
- Design, dimension and set up Viability Gap Fund (VGF)
for first few projects;
- Mechanism to reduce offtake and revenue risks
- Extend PLI or suitable subsidy support for domestic
electrolyser manufacturing and investment
- Current strategy paper could clarify the VGF beyond the first 3 GW,
and the rationale to not provide seabed exclusivity rights for areas
eligible to VGF.
- Green mandates in certain industries (e.g., fertilisers) coupled with
CfD could address the green hydrogen producers’ volume risk,
revenue risk and the risk to lose competitiveness.
- Breakdown of electrolyser parts and identification of the most critical
ones for the Indian industry to define priorities for PLI eligibility
Need for coordinated international donor
support to build upon on-going technical
co-operation, joint ventures and
technology collaborations
- Set up a country platform to facilitate/co-ordinate
investment, in particular facilitating exchanges to explore
blended finance solutions (see FGD II).
Need to draw upon lessons from global
experience to prepare offshore wind and
green hydrogen for capital markets
- Define green hydrogen standards and implement a
certification and tracking scheme
- Compare mass-balance and book-and-claim (example: Guarantees
of Origins for electricity in the EU) tracking systems1).
- Ensure interoperability with future other schemes.
1) A taskforce has been set up lately to define a certification and tracking mechanism for green hydrogen

6. • Based on the preliminary draft of the CEFI Roadmap, the project’s Steering Committee
has decided to deep dive into two recommendations for the Workshop III:
➢ Energy Savings Insurance, covering the focus area Energy Efficiency
➢ Blended finance facility/platform, covering the focus areas Offshore Wind and
Green Hydrogen
• Objectives of the Focus Group Discussions:
➢ Verify feasibility of selected recommendations
➢ Outline key elements for the design and implementation strategy
➢ Identify suitable/potential actors to engage in the implementation
6
Focus Group Discussions

7. 7
FGD I: Energy Savings Insurance (ESI)
Overview
• The Energy Savings Insurance (ESI) model was first developed by the Inter-American Development Bank (IDB) in
2014, with the support of Basel Agency for Sustainable Energy (BASE).
• It is a de-risking package consisting of both financial and non-financial elements designed to build investor
confidence in energy efficiency projects.
• ESI model has been implemented in seven Latin American countries for several sectors, notably healthcare,
hospitality, agriculture, and SMEs, supported by grants from international donors.
Source: IDB

8. • Does the design and structure of an ESI product appear suitable for
• MSMEs and mid-large companies in India?
• lenders, ESCOs, insurance companies in India?
• What would be the potential role of different actors in the ESI scheme? Which
organisations / stakeholders would be best-placed to engage?
• What are the potential barriers/challenges (technical, policy, regulatory, financial) for
an ESI pilot in India?
• How can international partners support the ESI pilot in India (blended finance, grants,
technical assistance, etc.)?
8
FGD I: Energy Savings Insurance (ESI)
Guiding questions

9. 9
FGD II: Blended finance facility/platform for OSW / GH2
Overview
1) In the case of offshore wind and green hydrogen in India, it could be linked to the National Infrastructure Pipeline
Source: Convergence (accessed in 2022)
• At the level of country governments, blended finance can be
integrated in development strategies and sector investment
plans as one financing mechanism for projects that cannot
mobilise commercial finance on their own.
• Offshore wind and green hydrogen are still considered as
high-risk investments.
• Goals: lower the levelized cost of clean energy and develop
self-sustaining private investment market.
Objectives Content / Output
To identify and promote projects Project pipeline1)
To bring domestic and international financial institutions together to
attract capital & facilitate the development of green finance
Co-investment, credit enhancement, green instruments, FX hedging.
To act as a knowledge center Knowledge and training resources; information tracker e.g. on asset
performance; design of innovative blended finance solutions

10. • Which actors and which steps of the value chain should be prioritised for the blended finance
facility/platform?
➢ For OSW: equipment manufacturing (e.g., wind turbines); purchase of equipment (project CAPEX); grid infrastructures?
➢ For GH2: equipment manufacturing (e.g. electrolyser assembly); purchase of equipment (project CAPEX); H2 pipelines; ports facilities; adaptation
of industrial sites
• Based on the barriers and financial instruments, what degree of concessionality is required in order to
attract commercial investment?
➢ Can/Should MDBs/DFIs, and in turn the BF facility, provide lower interest rates than commercial rates?
➢ Can the BF facility provide long-term tenure, e.g. extending beyond 10-15y for OSW and GH2 projects?
• What milestones can be used to determine commercial viability and exit of blended finance
interventions?
➢ Is it essential to design a revenue model to ensure sustainability? Or can we define exit rules to ensure that the facility will support the OSW and
GH2 market until they are mature enough to use commercial finance only?
• Which actors could/should engage in the blended finance facility/platform, and which actors could
participate in its governance?
• Which entity to co-ordinate the management of the facility?
• Which organisations can design and implement the blended finance instruments?
10
FGD II: Blended finance facility/platform for OSW / GH2
Guiding questions

11. 11
Concluding remarks and next steps
• October 2022: Release of the report, including inputs from Workshop III
discussions
• Q4’2022: Official launch in Delhi and dissemination events
• > Q4’2022: Support to the implementation of solutions, ad hoc case
studies, and contribution to international dialogues and events

12. CEFI Roadmap
Workshop III
12
25 August 2022
Joseph Cordonnier,
OECD
&
Poonam Sandhu,
NRDC