Project's aim

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.

Location

Cambodia

Partners involved

Nexus for Development
nexusfordevelopment.org/

Exchange: Affordable Finance for Sustainable Energy: Sharing Successful Models in South East Asia

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.

The event and workshop was held in Phnom Penh, Cambodia in December 2017. It was an opportunity to address the current challenges faced by entrepreneurs who try to access finance in Southeast Asia.
The main insights and lessons learned during the event are as follows:

  • 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.

Following the event success, Nexus for development will continue to create opportunities for dialogue to foster mutual understanding and improved collaboration among like-minded entrepreneurs and financiers. In cooperatioin with WISIONS initiative, Nexus will continue mapping and monitoring financing schemes for clean energy in the region Exchange: Demand-Side Solutions to Financing Sustainable Energy in Southeast Asia (SEPS16). Thereby it hopes to inspire innovation and, ultimately, to increase investment levels for the benefit of energy entrepreneurs working for the sustainable development of Southeast Asia.