Green Markets Initiative
Innovative Financing to Accelerate Solar Water Heating Initiative, coordinated by Green Markets International, worked to boost solar water heating applications in Brazil, the Caribbean, and elsewhere. The initiative was implemented as a collaboration among NGOs and sustainable energy stakeholders. In addition to Green Markets, project team members included the Vitae Civilis Institute of São Paulo, Brazil and Bill Guiney of Caribbean Solar Technologies Ltd. of Anguilla. The project?s sponsors included the Renewable Energy and Energy Efficiency Partnership (REEEP), Blue Moon Fund, and the Oak Foundation.The initiative aimed to advance the understanding and use of mechanisms to increase the adoption of solar water heating technologies, with an emphasis on financial and commercial innovations. In Brazil, the participants worked with Lumina Energia to produce model business plans for solar water heating fee-for-service operations, complementing Vitae Civilis's work with stakeholders to identify and remove barriers to broader solar water heating dissemination. In the Caribbean, Green Markets worked with Bill Guiney to produce detailed conceptual models for utility-operated solar water heating fee-for-service programs, and conducted outreach to build awareness about the benefits and logistics of obtaining carbon finance for solar water heating activities. The initiative has been completed.
The initiative evaluated, and built stakeholder knowledge about, a cluster of financial and commercial innovations to accelerate the adoption of solar water heating technology. These innovations included the solar water heating fee-for-service business model, which can encompass system rental or the metered sale of thermal energy solar water heating systems. This is an important innovation, compared with the sale of solar thermal systems to end-users. The fee-for-service approach addresses the first-cost barrier, often cited as a key barrier to broader solar water heater dissemination, and also places system maintenance responsibility in the hands of companies in the business. The initiative also focused on other financial innovations to help support solar thermal applications, including participation in carbon credit and renewable energy certificate markets. Each of the innovative mechanisms targeted in the initiative has proven successful in supporting solar thermal dissemination in some context (e.g., location, specific application), and appears to have substantial potential for expansion and replication, but these innovations have not yet become widespread. The initiative strived to make information about these innovations known to stakeholders, including utility companies, energy services companies, solar energy equipment manufacturers, people in government, multilateral institutions, and others, who could apply the innovations directly or play a role in helping to advance their use.
The initiative?s purpose is to build knowledge about and advance models for innovative financial mechanisms to boost the use of solar water heating. As the innovations promoted though the initiative are adopted, individuals will benefit energy cost savings. Social benefits will include increased access to hot water and expanded employment in solar energy equipment manufacturing, sales, system installation, and program administration. Economic benefits will also stem increased activity in the solar thermal industry, as well as enhanced economic efficiency the use of a technology with lower life-cycle costs than the conventional alternatives. Given that water heating contributes substantially to overall energy use, and that the baseline fuels for water heating (electricity, natural gas, LPG, fuel oil) have negative environmental ramifications locally (e.g., on ambient air quality) and globally (i.e., greenhouse gas emissions), the environmental benefits could be substantial.
The project was implemented as a collaboration among NGOs, industry participants, and industry associations. In the Caribbean region, the project participants coordinated with CARILEC, the Caribbean association of electric utility companies, to disseminate information. In Brazil, the project participants coordinated with Da Sol ABRAVA, the association of solar thermal equipment manufacturing companies in Brazil. As an initiative supported by the Renewable Energy and Energy Efficiency Partnership (REEEP), the project also benefiting communications through REEEP to a broad network of sustainable energy stakeholders. The scope and breadth of partners provided excellent venues and opportunities for the broad dissemination of information, findings, and resources that stemmed the initiative. The project has elevated awareness of financial innovations for solar water heating among stakeholders in Brazil, the Caribbean region, and beyond. The audience of stakeholders includes government and international institutions as well as NGOs, and private enterprises that are well positioned to implement the financial innovations. The project produced detailed reports on the potential for, and logistics of, solar water heating fee-for-service operations in the Caribbean and Brazil, which project participants distributed to stakeholders in those locations. For these and other materials on innovative financial mechanisms for solar water heating, including on fee-for-service and performance contracting arrangements, and carbon finance, the initiative created a webpage to make these resources available on the internet: www.green-markets.org/SWH.
The project worked to elevate knowledge about the business opportunity for solar water heating programs among utility companies and other mainstream energy sector stakeholders, such as established ESCO?s, based on a business model that has proven viable in many applications. The project focused largely on the metered sale of thermal energy solar water heating systems, at a price below the conventional alternatives (e.g., electricity, natural gas). Based on a favorable assessment of the business prospects, the initiative encouraged broader use of such arrangements, which can be profitable for businesses and financially attractive for energy consumers. (Please see above for more information regarding potential impact on individuals, society, the economy, and the environment.)
The initiative is expected to contribute to sustainability in two main respects: through the environmental sustainability of solar thermal technology; and through the financial and commercial sustainability of the business models and financing mechanisms that were the subject of the initiative.
While the practice of fee-for-service is not new, this project brings it one step closer to making this practice mainstream. This service makes it clearer what the full costs of energy services are, and in a transparent manner. Transparency helps to empower consumers, who pay only for what they use, giving both the consumer and energy provider an incentive to monitor what they consume and produce. This model can be used to make access to clean energy (solar thermal and solar photovoltaics) more affordable - particularly for the poor (in developing or industrial countries), and more lucrative/less risky for service providers. Many studies show that many times more people in developing countries could and would gain access to solar/clean energy if they had financing and/or a fee-for-service type option, since they already spend significant amounts of money each year for energy (in the forms of fuel wood, parafin, kerosene, etc.), but cannot afford to pay a lump sum up front.