$18m investment potential in clean, efficient energy in industry: IFC
REPUBLICA
KATHMANDU, May 30: The investment potential in energy efficient and renewable energy projects in the country´s industrial sector stands at US$17.92 million (Rs 1.6 billion), according to the latest report published by the International Finance Corporation, an investment arm of the World Bank.
The projection comes at a time when Nepal Rastra Bank, the central bank, has directed all banks and financial institutions to extend at least 10 percent of their total lending to the energy and agriculture sectors.
The report -- Sustainable Energy Finance Market Study for Finance Sector in Nepal -- which incorporated surveys of 51 industrial units, says that tea processing units, which consume both thermal and electrical energy, have the highest investment potential of $8.06 million. This was followed by brick kilns, which have the potential of immediately absorbing loans of at least $2.51 million to imbed energy efficient and renewable energy technologies. Cement factories, also energy guzzlers, on the other hand, are in need of at least $1.76 million in financing to acquire green credentials.
If these investments are made, together with energy efficient and renewable energy interventions, large industries can save at least $6.26 million, while small and medium industries can save $2.75 million, says the report, which was launched in Kathmandu on Wednesday.
Yet not many are eager to tap these opportunities due to limited awareness about ways to reduce energy consumption and poor knowledge about renewable energy technologies.
For instance, not many people know that diesel plants that industries have installed use only 35 percent of the fossil fuel as energy, while the rest is ejected into the environment in the form of smoke, which causes pollution, Alan Dale Gonzalez, executive director of Full Advantage, said at an event organized to launch the report.
“But if the steam that is emitted is captured and converted into energy using a heat exchanger we can use it to, say, boil water. This can reduce energy cost by as much as 10 times and we will be doing the environment a lot of favor as well,” he said, urging industries to be more proactive in exploring energy efficient options to reduce operating costs.
But even if the industries were proactive, as Gonzalez pointed out, many may not be able to introduce energy saving solutions in their units due to lack of access to credit from banks and financial institutions.
Currently, only a few banks are financing industries that want to imbed energy efficient and renewable energy technologies as they are “not aware of the wide range of sustainable energy technologies as potential financing options”.
Of the eight commercial banks that were interviewed, says the report, only two explicitly understood the concept of modernization in industries that helps in maximizing output and lowering waste generation. “Besides, banks focus on large borrowers and prefer to finance existing clients rather than new ones, thus limiting the expansion of credit facilities to possible new clients,” the report says.
To facilitate such industries, Clean Energy Development Bank, on Wednesday, introduced a new product that not only provides loans to industries that want to become energy efficient and promote clean energy, but also supports clients in “different aspects and stages of project development, financing and implementation”.
“We can conduct the energy audit for industries that are interested in getting access to such loans,” said Manoj Goyal, CEO of the bank. Although he didn´t discuss interest rates on such credit, he said loan repayment terms are flexible and can be based on savings made from transfer to energy efficient or clean energy sources. “This is a proactive approach the bank is taking to bring awareness and solutions to customers,” Goyal said.
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$18m Investment Potential In Clean, Efficient Energy In Industry: IFC
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