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Terms of reference for the feasibility studies

By Annie Burns,2014-05-17 12:06
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Through this RFP, UNEP is seeking a proposal to assess the feasibility and sustainability of financial mechanisms to support the development of the solar

DIVISION ON TECHNOLOGY INDUSTRY AND ECONOMICS

    Energy Branch Renewable Energy and Finance Unit

    THE BALKAN RENEWABLE ENERGY PROGRAMME (BALREP)

    Call for Proposals

Evaluation of Concepts for the Implementation of Financial Mechanisms for the

    Development of the Solar Water Heating Market in Montenegro

    UNEP DTIE Renewable Energy and Finance Unit

    TORs for SWH Market Evaluation - Montenegro

    Table of Contents

    Table of Contents 2 Acronyms 3 PURPOSE OF DOCUMENT 4 BACKGROUND 4 BUILDING ON THE EXPERIENCE OF THE MEDITERRANEAN

    RENEWABLE ENERGY PROGRAMME (MEDREP) 5 PROPOSAL 6 Proposal Selection 6

    Scope of work 6

    Preparation of the market evaluation study 7

    INSTRUCTIONS TO BIDDERS 7 Evaluation criteria 7

    Study plan 8

    Inputs required from UNEP 8

    Bidders background 8

    Budget 8

    Terms and conditions 8

    Submission of Proposals 8

    For additional information 9

    ANNEX 1: ILLUSTRATION OF THE FINANCIAL SCHEME IMPLEMENTED

    IN THE PROSOL PROGRAMME IN TUNISIA 10

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    UNEP DTIE Renewable Energy and Finance Unit

    TORs for SWH Market Evaluation - Montenegro

    Acronyms

ANME National Agency for Energy Conservation of Tunisia (Agence

    Nationale de Maîtrise de l’energie) BALREP Balkan Renewable Energy Programme

    CDM Clean Development Mechanism

    DTIE Division of Technology, Industry and Economics

    Italian Ministry for the Environment, Land and Sea IMELS

    MEDREP Mediterranean Renewable Energy Programme

    MMTE Montenegrin Ministry of Tourism and Environment

    RE Renewable Energy

    RFP Request for Proposals

    PROSOL Programme Solaire Tunisien SWH Solar Water Heating

    UNEP United Nations Environment Programme

     Page 3 of 13

    UNEP DTIE Renewable Energy and Finance Unit

    TORs for SWH Market Evaluation - Montenegro

    PURPOSE OF DOCUMENT

    This document is a request for proposals (RFP) within the framework of the Balkan Renewable Energy Programme (BALREP) implemented by the United Nations Environment Programme

    (UNEP) and supported by the Italian Ministry for the Environment, Land and Sea (IMELS).

    This RFP is issued by the Renewable Energy and Finance Unit of the Division of Technology, Industry and Economics (DTIE) of UNEP.

    Proposals are sought for the evaluation of concepts for the implementation of financial mechanisms for the development of the residential and/or collective solar water heating systems

    market in Montenegro.

The primary target audiences of this RFP are:

    - Renewable energy and finance experts;

    - Renewable energy agencies;

    - Finance consulting firms;

    - Renewable energy finance consulting services.

    Bidders are expected to have experience in the financing of renewable energy products and services, banking and/or public project finance in Montenegro, the Balkan region or other emerging and developing countries.

    The study will prepare the ground for the implementation of one or more financial schemes in partnership with identified Montenegrin partners.

BACKGROUND

Programme Objective

    The BALREP programme, together with the Mediterranean Renewable Energy Programme

    (MEDREP), falls within the scope of the World Summit for Sustainable Development Type II “Promotion of Renewable Energy in the Mediterranean Basin” initiative led by the IMELS. The

    programme aims at developing a vibrant, sustainable renewable energy market system in the greater Mediterranean and Balkan regions, removing project, policy and trade barriers and strengthening the market system, thereby contributing to climate change mitigation and to poverty alleviation through the provision of modern energy services to populations. The BALREP programme has three components: tailoring financial instruments and mechanisms to support projects; strengthening policy frameworks, and building a stronger private sector infrastructure.

    Montenegro and the Republic of Albania are the first Balkan countries to benefit from BALREP. It is envisaged that in the future other countries will be included.

    The objective of BALREP in Montenegro is to accelerate and sustain the renewable energy market through the adoption of residential and/or collective Solar Water Heating (SWH) systems. Support for the BALREP Finance component comes from IMELS.

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    UNEP DTIE Renewable Energy and Finance Unit

    TORs for SWH Market Evaluation - Montenegro

    “The Solar Water Heating Programme for Montenegro” will be jointly implemented by IMELS,

    the Montenegrin Ministry of Tourism and Environment (MMTE), the UNEP DTIE Energy

    Branch and the UNEP Regional Office for Europe (ROE).

Expected outcomes of BALREP in Montenegro:

    ? Enhanced clean energy consumption habits in selected regions for households and/or services; ? Increased demand for SWH systems thanks to the availability of attractive financing mechanisms for end-users;

    ? Increase in total installed SWH capacity and annual sales in Montenegro; ? Enhanced capacity of the supply chain to offer equipment and services which promote sustainable SWH market;

    ? Supply side entities adopting the proposed quality control schemes; ? High level of customer satisfaction with the SWH systems installed; ? Substantial amount of financing leveraged through new financing models specifically tailored for SWH market needs.

Lines of activities for BALREP in Montenegro

    ? Partnerships with local financial and public institutions;

    ? Technical assistance to develop financial incentives to remove the investment barriers and improve cost effectiveness;

    ? Capacity building activities to ensure the quality of equipment and installations; ? A certification and quality control scheme for SWH systems;

    ? Awareness raising campaigns;

    ? Development of a CDM project.

BUILDING ON THE EXPERIENCE OF THE MEDITERRANEAN

    RENEWABLE ENERGY PROGRAMME

BALREP shall focus and seek to replicate the combinations of measures tested and implemented

    by the Mediterranean Renewable Energy Programme (MEDREP) to promote the deployment of

    solar energy in Morocco, Tunisia and Egypt.

Launched in 2004 and supported by the IMELS, MEDREP was designed to develop the region’s

    renewable energy potential. Its finance component, the MEDREP Finance Initiative, implemented

    by UNEP, has been developing and testing different options to increase financing to clean energy

    projects in southern Mediterranean countries and to create sustainable markets for clean energy.

    MEDREP is primarily providing technical assistance to local financial institutions to build new

    portfolios of loans for the purchase and installation of renewable energy systems and understand

    the risks and benefits associated with the technologies.

MEDREP activities have included:

    ? Providing technical assistance in tailoring financial instruments and mechanisms to support renewable energy projects;

    ? Identifying the appropriate financial schemes in partnership with local financial institutions;

    ? Strengthening policy frameworks and overcoming barriers to renewable energy deployment; ? Building stronger private sector infrastructure; ? Developing carbon credits under the Clean Development Mechanism (CDM) established under the Kyoto Protocol.

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    UNEP DTIE Renewable Energy and Finance Unit

    TORs for SWH Market Evaluation - Montenegro

For illustration purposes, the PROSOL project in Tunisia, part of the MEDREP Finance initiative,

    is detailed in Annex 1. The MEDREP country reports can be accessed at

    http://www.unep.fr/energy .

The reasons behind the success of MEDREP which BALREP intends to replicate include:

    ? The support of the national authorities and the involvement of national public institutions, such as the Tunisian Ministry of Industry, Energy and Small and Middle Size Enterprises and the

    National Agency for Energy Conservation of Tunisia (ANME);

    ? The involvement of state power utilities such as STEG in Tunisia which enhances financial institutions trust as loan repayments are made through electricity bills (default in payments results

    in power cuts);

    ? The engagement of all stakeholders to the development of the SWH market: financial institutions, manufacturers, importers and installers of SWH, and national institutions;

    ? An attractive financial scheme for end-users (longer loan repayment periods at advantageous interest rates)

    ? The significant awareness raising, communication and training effort carried out.

PROPOSAL

    Proposal Selection

    Through this RFP, UNEP is seeking a proposal to assess the feasibility and sustainability of

    financial mechanisms to support the development of the solar water heating systems market for

    Montenegro

Examples of financing mechanisms under consideration are:

    ? An interest rate subsidy to facilitate the access to commercial loans for the purchase of SWH systems;

    ? A guarantee facility;

    ? Risk mitigation schemes such as the implication of the electricity utility company (see Prosol programme described in Annex 1);

    ? Mechanisms for buying-down transaction or/and capital costs e.g. subsidy of cost of equipment to lower purchase price.

    Scope of work

    Proposals are expected to cover the following:

    ? Market study for the SWH market (for both residential and collective installations) in Montenegro;

    ? Overview of the SWH sector finance in Montenegro;

    ? Design of financial mechanisms to support the development of the residential and services SWH markets;

    ? Identification of relevant partners and the articulation among them and suggestion of relevant financial contribution for each one of them;

    ? Stakeholder consultation and finalisation of financial mechanisms strategies based on the UNEP allocated budget for the financial mechanism;

    ? Recommendation regarding the most relevant approaches to use UNEP/MEDREP resources and the implementation of the recommended mechanisms in partnership with consulted stakeholders.

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    UNEP DTIE Renewable Energy and Finance Unit

    TORs for SWH Market Evaluation - Montenegro

    Preparation of the market evaluation study

    The following are suggested stages for the preparation of the market evaluation study. Bidders are

    expected to propose detailed action plans.

1. Stage I. Collect market information on the finance and renewable energy sectors in

    Montenegro.

    a) an overview of the banking system e.g. main banks, range of interest rates,

    existing public interest rate subsidies for households and services etc;

    b) a review of lenders and lending instruments for renewable energy, including an

    overview of debt instruments applied;

    c) review of governmental/bilateral/multilateral renewable energy financing

    programmes and of any other financial incentives promoting the use of

    renewable energy technologies;

    d) potential of any developing CDM activity in the country that could be packaged

    with renewable energy financing;

    e) an assessment of market failures and market barriers associated with renewable

    energy financing in Montenegro, if any.

     *2. Stage 2. Conduct a market study for residential SWH systems in Montenegro .

    a) A review of small scale renewable energy projects/companies;

    b) Assess the demand for SWH systems and the most promising markets in the

    country based on income/revenues levels and energy consumption for both the

    residential and services markets;

    c) Evaluate the local supply of SHW systems and recommend the most appropriate

    distribution channels. Equipment providers can have an active role in the

    financial mechanism (see the PROSOL programme in Annex 1);

    d) Evaluate capacity building needs by the various SWH market stakeholders.

    3. Stage 3. Scan the feasibility of recommended financial mechanisms. Following a stakeholder consultation, a working brief will be prepared to provide a synthesis of

    the findings of the two previous stages and a detailed report on the potential project partners,

    possible financing mechanisms and associated activities, including a CDM project, which can be

    launched by UNEP. This report will form the basis of stakeholders’ consultations to be conducted by UNEP following the study.

INSTRUCTIONS TO BIDDERS

    Evaluation criteria

    Proposals will be evaluated on the following criteria:

    ? Ability to conduct key consultations and work with UNEP to recommend financial schemes;

    ? Capacity to assist UNEP during a second project phase which would consist of consultations

    with stakeholders and following the progress of the project in the country during the

    implementation phase (under a new contract and TORs);

    ? Expertise in financial mechanisms and risk management for renewable energy products and

    services in the Balkan countries;

     * A reference document “Renewable Energy Resource Assessment for the Republic of Montenegro”

    prepared in 2007 by the Italian Ministry for the Environment, Land and Sea, will be provided by

    UNEP.

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? Representation/presence in Montenegro;

    ? Price;

    ? Timeframe. UNEP DTIE Renewable Energy and Finance Unit

    TORs for SWH Market Evaluation - Montenegro

    The proposals will be evaluated by a review committee composed of representatives from the

    United Nations Environment Programme, the Italian Ministry for the Environment, Land and Sea

    and the Montenegrin Ministry of Tourism and Environment.

    Study plan

    The proposal should submit a study timeframe showing the key work activities and in accordance

    with the dates specified below:

    Event Date Deadline for submission of proposals 16 January 2009 Proposal decision January 2009 Contract awarded February 2009 Progress report February 2009 Final study report and recommendations March 2009 Inputs required from UNEP

    Should the bidder require any further input from UNEP to allow the work to be completed by the

    dates shown above, then any such input must be identified clearly in the proposal.

    Bidders background

    Bidders are kindly requested to include a short summary of past relevant work, achievements and

    references.

    Budget

    UNEP’s budget for the study ranges from USD 5,000 to USD 8,000. This price only covers the

    above described tasks and does not comprise the consultancy services to be provided during the

    implementation of the financial mechanism and related project activities. Terms and conditions

    ? There are no specific format and headings for the submission of proposals.

    ? Proposals and subsequent study reports should be drafted using the English language;

    ? Proposals shall indicate an appropriate price schedule and all prices shall be quoted in US

    dollars.

    ? UNEP will make no payment and no reimbursement of expenses related to the preparation of

    proposals.

    ? UNEP may at its own discretion extend this deadline for the submission of proposals.

    ? UNEP may at its discretion accept only part of the proposal

    ? The final selection of proposals will be in accordance with the proposals evaluation

    procedures of UNEP and UNEP’s decision is final.

    ? Bidders are requested to complete a compliance statement with reference to the terms and

    conditions of contract.

    Submission of Proposals

    The deadline for submission of proposals is 16 January 2009. Five hard copies of the proposal should be sent to the following address:

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    UNEP DTIE Renewable Energy and Finance Unit

    TORs for SWH Market Evaluation - Montenegro

UNEP - Division of Technology, Industry and Economics

    Energy Branch - Renewable Energy Finance Unit

    Attention: Ms. Fatma Ben Fadhl

    Project Manager

    15 Rue de Milan

    75441 Paris Cedex 09

    France

    For additional information

    Should any problems of interpretation arise in the course of drawing up the proposal, bidders may

    submit a written request by email/ fax/mail or call for further information:

Ms. Fatma Ben Fadhl

    Project Manager

    Email: fbenfadhl@unep.fr

    Tel: +33 1 44 37 14 68; Fax: +33 1 44 37 14 74

    UNEP Division of Technology, Investment and Economics

    Energy Branch - Renewable Energy Finance Unit

    15 Rue de Milan, 75441 Paris Cedex 09, France

Requests should be made no later than 10 calendar days before the deadline for the submission of

    proposals.

An electronic copy of this RFP can be downloaded from the website of the Ministry of Tourism

    and Environment of Montenegro at http://www.gov.me/eng/mintur/ and from the website of the Ministry for Economic Development at http://www.gov.me/eng/minekon/ or from the UNEP website at http://www.unep.fr/energy.

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    UNEP DTIE Renewable Energy and Finance Unit

    TORs for SWH Market Evaluation - Montenegro

    ANNEX 1: ILLUSTRATION OF THE FINANCIAL SCHEME IMPLEMENTED

    IN THE PROSOL PROGRAMME IN TUNISIA

Overview

PROSOL is part of the umbrella MEDREP Finance Initiative that is developing and testing

    different options to increase renewable energy finance to companies and projects in the

    Mediterranean region. The MEDREP Finance Initiative is supported by the Italian Ministry for

    Environment, Land and Sea and is a component of the larger MEDREP Programme which

    promotes the deployment of renewable energies and climate change mitigation in the

    Mediterranean region.

The PROSOL (“PROgramme SOLaire”) Programme has been implemented from 2004 to 2007 in

    Tunisia to develop the residential solar water heater market. In addition to UNEP and the Italian

    Ministry, the Programme partners were the Tunisian Ministry of Industry, Energy and Small and

    Middle size Enterprises and the National Agency for Energy Conservation of Tunisia (ANME).

The development of the residential solar water heater market in Tunisia was articulated around

    several components:

    - a comprehensive communication and awareness raising campaign targeted at the general

    public,

    - capacity building for the benefit of solar water heater providers and installers, and

    deployment of a certification scheme,

    - a 3-tier financial scheme making the solar water heaters both cheaper and easier to

    purchase for retail end-users.

Financial Scheme

    UNEP’s approach was to find ways to turn the commercial finance sector into an ally to promote clean energy and offer technical support to design a financial mechanism which could address the

    front-end barrier that hinder the development of the solar market: the high cost of the solar water

    heaters.

The multi-stakeholder scheme designed by UNEP comprised 3 main features:

    - a loan mechanism over a 5-year term offered by commercial banks to end-users with

    loan repayments being made through the State electricity company bills. The electricity

    company can interrupt the electricity supply if the loan repayments are not made and the

    bill not paid. The scheme was constructed so that the reduction in the user’s electricity

    bill induced by the use of the solar water heater was equal to or higher than the loan

    repayments, actually providing end-users with the opportunity to save money even during

    the initial loan period;

    - a capital cost subsidy for each solar water heater provided by the Tunisian government

    representing 20% of the system cost or 75$ per square meter. What was initially a

    temporary measure funded by the Italian ministry aiming at priming the market was later

    made permanent by the Tunisian government , solar water heaters became eligible for the

     energy subsidy that previously was provided only to LPG (Liquefied Petroleum Gas);

    - discounted interest rates on the loans, resulting from on one hand the involvement of the

    State utility which, by reducing the risk of default for the commercial banks, helped them

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