STIMULATING PRIVATE

SECTOR INVESTMENTS

IN SUSTAINABLE

ENERGY

Development Bank of Jamaica

About Development Bank of

Jamaica

The Development Bank of Jamaica Limited is a corporation that is wholly owned by

the Government of Jamaica and is mandated to foster economic growth and

development of strategic sectors of the Jamaican economy

Vision Statement

• In 2020 the Development Bank of Jamaica, an inclusive, innovative, accountable, customer-centric and strategy-focused employer of choice in Jamaica; has facilitated the creation of over 250,000 new jobs over the past 7 years while being a major contributor to the country’s Economic Growth and Social Transformation.

Mission Statement

• The Development Bank of Jamaica provides opportunities to all Jamaicans to improve their quality of life through development financing, capacity building, public private partnership and privatization solutions in keeping with Government policy.

OUR CORE VALUES

• Professionalism

• Integrity

• Accountability

• Innovation

Current Energy Situation

Due to high costs of energy is stifling growth in the private sector:

Forced to shut down their operations while some

Struggle without any clear strategy of reducing this cost.

Energy Source

• Jamaica is dependent upon the importation of fuel. We are vulnerable to volatility in the price of fuel commodities

Energy Prices

• At US$0.42 per kWh, the highest energy cost in the LAC region, the industrial competitiveness of the country has been affected

As a national directive the DBJ stepped in……

DBJ’s Energy History

20

08

/20

09

Established an Energy Fund for SMEs

20

09

/20

10

Formed an Energy committee (PCJ, UTECH)

20

10

/20

11

Received IDB TA to promote EE and RE

20

11

/20

12

Implemented IDB Energy Project:

-Demand Study

Training to Auditors

20

12

/20

13

Developed 7 Projects

Marketing Campaign

Energy Audit Grant

20

13

/21

04

Technical Assistance Projects

Energy Audit Grant

J$68M J$58MJ$174M

J$658M

2009 2010 2011 2012 2013 2014

J$605M

Road & Rail

Transportation

28%

Electricity

31%

Bauxite/alumin

a processing

18%

Aviation

9%

Residential

4%

Electricity

Supply

Electricity

Demand

Existing

fossil fuel

power

plants

Improved

generation

technology

Renewable

energy

power plants

New

construction

Private

Sector

Public

Sector

Energy

Efficienc

y

Renewable

Energy

Efficient

equipment and

Renewable

Energy

Household

Energy

EfficiencyDBJ INVOLVEMENT IN

ENERGY

Reduction of oil imports to Jamaica

Energy Strategy

Attract Funding• Loans

• Technical Assistance Programmes

Financing Solutions• Create appropriate

financing solutions

• Form key partnerships to promote financial solutions

• Provide grant funding for energy audits

Technical Assistance/Capacity Building Programmes• To assist private

businesses to adopt EE projects through umbrella organizations

• Projects with stakeholders to execute projects in key sectors (e.g. tourism)

Energy Ecosystem

• Use ISO Standards as a guide

• Required for sustainability

• Embedded in Law

• Demonstration Projects

• Marketing Presence

• Capacity Building with Banks, SMEs, Supplier

• Attractive loan funding

• Collateral Guarantees

• Grants

• Certified Energy Manager Training for Energy Auditors

• Project Recommendations and Cost Benefits

Energy Audits

Financing Mechanisms

Energy Managemen

t

Public Education

There were seven demonstration projects done in 4 sectors:

Agriculture

Tourism

Services

Agro-Processing

10 year Estimated Project Performance Cumulative Net Cash Flow

Capital Cost 33,746,665

Equity (spend in year zero) 3,374,667

Cost of Investment over project life 48,637,901

Estimated Savings over project life 201,236,653

Net Present Value (NPV) 133,691,741

Internal Rate of Return (IRR) on equity 287%

Payback period 0.4

All costs in JMD adjusted to 2011 base year

-50,000,000

-

50,000,000

100,000,000

150,000,000

200,000,000

0 1 2 3 4 5 6 7 8 9 10

Investments in Private Sector

- Consists of loan and grant funding.

- Analysis done assume DBJ loan terms

Tourism Demonstration Project

An energy project was done at

The project consisted of:

An Energy Audit

Air Conditioning Retro-fits

Solar Water Heater System

12 KW Solar PV System

Measurement & Verification Report

Agro-Processing Demonstration

Project

An energy project was done at .

The project consisted of:

An Energy Audit

Air Conditioning Retro-fits

A Tariff Change

Power Factor Correction

Boiler Maintenance

Measurement & Verification Report

10 year Estimated Project Performance Net Cash Flow

Capital Cost 1,934,995

Equity ( in year zero) 193,499

Cost of Investment over project life 4,530,336

Estimated Savings over project life 28,372,475

Net Present Value (NPV) 22,510,178

Internal Rate of Return (IRR) on equity 887%

Payback period 0.1

All costs in JMD adjusted to 2011 base year

-5,000,000

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

0 1 2 3 4 5 6 7 8 9 10

Financial Analysis done based on DBJ Loan Terms: 8% per annum | 10 years | 10% equity

requirements

Investments in Public Sector

We are creating the structure to support private sector investments in the

public sector through the development of an ESCO Industry.

ESCO – Energy Services Company :- A commercial entity providing

a broad range of energy solutions including designs and

implementation and financing of energy

savings projects. In ESCO arrangements the ESCOs make the capital

investments and are repaid from the project savings

Vehicle: Public Private Partnerships (PPP)

Target: Public Buildings e.g. Schools, Hospitals, Ministries (also in the

private sector)

Create specific

Loan product

Strengthen the

Financial Institution

s

Building Capacity of ESCO

Create Legislativ

e & Regulator

y Framewo

rk

Key

Activities

- Partnership between the GOJ and private entities that provide benefits to

both parties

Energy

Project

GOJ

- Provide assets, land, buildings

- Make small investment (windows,

building envelope)

- Provide collateral guarantees

Private Entity

- Investment in high capital

technology

- Investment in O&M

- Owners of project

GOJ

- Savings realized by GOJ

- Reduced investment risk to GOJ

Private Entity

- Profits to private entity

- Develop track record of

implementing projects

Role

Benef

it

Energy PPPs using the ESCO

Model

DBJ Energy Fund

Guarantee Fund

Concessionary Loans

Grant Programm

es

• The DBJ has funded energy efficiency

and renewable projects in the amount

JA$1.5B .

• The energy portfolio has impacted

businesses in agriculture, tourism,

services and manufacturing.

• Rate: 8% per annum up to 10 years

• Collateral Guarantee covers up to

50% of the loan amount or a max. of

JA$10M

• Provide grants to cover the cost of

energy audits

• Although our portfolio has grown

exponentially over the past 3 years,

there is huge opportunity for an

Key Points

National Energy Efficiency Policy or Energy Efficiency Law

Energy Projects should include energy efficiency – not just

renewable energy technologies

Energy Management is an integral part of any sustainable energy

project

ESCOs can reduce the risk to Governments on public sector energy

projects

Technical Assistance/Grant programmes through Umbrella

Organizations can be used to stimulate growth within the private

sector

Avg. Payback Period : EE projects within 3 yrs | RE projects within

7 yrs

THANK YOU

c/o Development Bank of Jamaica Limited Telephone : (876) 929-4000

Website : www.dbankjm.com/dbjgreenbizEmail : dbjgreenbiz@dbankjm.com