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About the course
This e-learning course is developed and implemented jointly with the Frankfurt School - UNEP Collaborating Cente.
The Paris Agreement marks the beginning of a new era with the focus shifting from finding a consensus on the common goals to realising jointly agreed goals. “Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development” (Article 2 c of the Paris Agreement) will require a significant increase in funding – with new instruments and approaches required to mobilize a broad range of investors and to achieve scalability in financing climate action. Financing the global energy transition will be one key building block.
Decreasing prices for renewables combined with increasing regulatory risk for traditional fossil fuels make Renewable Energy (RE) more competitive and attractive for commercial investors.
What Do We Offer?
- An interactive e-learning course including video lectures, PDF scripts, practical exercises, online tests and case studies.
- A discussion forum for course related issues as well as for exchange of opinions and experiences with your classmates and tutors.
- Personalized support from your e-Campus Team.
- The option to a Frankfurt School certificate after passing the final exam or a confirmation of course completion after completing the course.
- An international network of institutions hosting our final exam all over the world.
Climate Change is high on the agenda of governments across the world. The structural change of the global energy system is already under way with annual investment in power generation based on renewables at almost the same level as investment in power based on fossil fuels.
This course will help you to understand two different perspectives on financing climate and RE projects: firstly, why markets alone might fundamentally not be able to trigger investment in a way that environmental issues are appropriately taken into account and which policy instruments are available to correct these so-called “market failures”. Secondly, the project perspective of investors or financiers confronted with the specifics of RE and EE financing including but not limited to dealing with the specific risk profile of capital intense business models in an often policy and regulation driven market.
Understanding both perspectives and the interlinkage is key to policy design and investment decisions in the years to come.
Suggestions & Recommendations
This course gives you the flexibility to decide on timing and pace of your learning experience. However, we will provide you with recommendations for you to take as much as possible from this course.
Your Schedule: We will provide yu a course schedule including voluntary and mandatory deadlines. The course schedule serves as guideline for your personal learning schedule and will help you to complete the programme within the given time frame.
Exercises: Even though the exercises in the script are not mandatory we strongly advise that you use them as an opportunity to check your knowledge and to prepare yourself for the final exam.
Networking opportunities: Use the forum to introduce yourself to your peer participants and start interesting discussions.
Unit 1: Introduction
Unit 2: Climate Finance
The term “Climate Finance” has not been clearly defined so far and there is no common understanding about the financing flows which should be included or not. The term has been used in a narrow sense to refer to transfers of public resources from developed to developing countries, in light of their UN Climate Convention obligations to provide "new and additional financial resources," and in a wider sense to refer to all financial flows relating to climate mitigation and adaptation.
Financing renewable energy projects is a crucial but not the only element of climate finance. Unit 2 focuses on a description of financing needs in climate change mitigation and adaptation. We will also discuss the role of climate risk assessment in the mainstream business.
Unit 3: Environmental Economics
We will discuss why markets alone are fundamentally not able to trigger investment in a way that environmental issues are appropriately taken into account and which policy instruments are available to correct these so-called “market failures”. The unit will help you understanding the specific challenges in the context of common pool resources. Unit 3 will also familiarize you with difference between economic and financial viability and the importance of the two indicators for public and private sector stakeholders. Finally, the role of carbon markets will be discussed.
Unit 4: International Climate Politics
Unit 4 will help you to gain a better understanding of the “big picture” and presents the history and status quo of international climate policy as well as climate diplomacy and negotiations. We explain the acting parties, the institutional set-up of the UNFCCC and the progress made since the Earth Summit 1992 in Rio, including the establishment of the GCF. We will also focus on the expected steps towards a new agreement in Paris 2015 and will take into account the UN Sustainable Energy for All Initiative.
Unit 5: Sources of Financing and Available Instruments
Different investors and intermediaries have very different investment strategies, level of risk appetite, return expectations and investment horizon. Crowding in the right investor for a project is essential to ensure their long term involvement and the required scale up of investment volumes. Unit 5 will familiarize you with different types of investors and financial intermediaries and improve your understanding of their decision making criteria and process. We will also discuss financing instruments and their characteristics. Given the importance of financing solutions for the bottom of the pyramid we will also discuss the role of microfinance in climate change mitigation and adaptation.
Unit 6: Basics of Renewable Energy Technologies and their Role in the Overall Energy Mix
Understanding the specifics of the technologies is crucial to identify the right financing structure, including the right instruments and investors. Therefore, you are taught the technological basics of the various renewable energy technologies/ approaches, in particular Solar PV and CSP, Hydro, Wind, Biomass and Geothermal generation assets but also transmission and storage approaches.
Unit 7: Renewable Energy Finance and the Role of Project Finance
Unit 7 presents renewable energy “business models” and their respective financing needs. We will in particular explain captive installations for industrial users and installations by independent power producers feeding into an existing grid. The unit familiarizes you with the private sector investors’ and commercial lenders’ perspective on risk and other barriers.
Also, you will get to know when project finance transactions are appropriate and what the key differences between project and corporate finance are. Focusing on project finance, you will learn how to structure a project from a financial perspective.
Unit 8: Financing Energy Efficiency Projects
Energy efficiency plays a crucial role in climate change mitigation. Massive energy efficiency potential exists in the residential sector but also in the commercial/industrial sector and transportation. Often, required investments are relatively small and are paid back in relatively short timeframes. Therefore, energy efficiency projects are often characterized as the “low hanging fruits”. This unit will introduce existing and innovative financing structures for the dominating energy efficiency opportunities.
Unit 9: Public Support Instruments to Facilitate Climate Friendly Investments
While levelized costs of electricity from many renewable energy technologies have decreased significantly over the past years, financial viability still requires some level of public sector intervention in many applications. Unit 9 explains how supportive regulatory frameworks impact the financial viability of renewable energy projects and which further instruments can be used to facilitate private sector investments.
Facilitating climate finance in the Global South has become a key pillar of international development cooperation. Public support mechanisms aim to overcome the dominating financial barriers of high perceived risk and limited availability of long-term financing. The unit will also familiarize you with the most established instruments, the way they work and how they impact the financial viability. We will also introduce concepts and key performance indicators used by public sector institutions to evaluate programs.
Unit 10: Financial Modeling and Business Plan Preparation
Building on your knowledge gained in the previous units unit 10 will teach you how to build a simple financial model for a renewable energy project in EXCEL. With the help of our experts you will project operating and investing cash flows and derive a possible financing structure. Once we have built this model you will also learn how to calculate key ratios and how to perform a sensitivity analysis.
Creating a financial model is only the first step. More importantly you will learn how to use a financial model to assess the financial viability of investment under various regulatory frameworks and depending on the availability of public support mechanisms. The unit will also explain how to prepare a decent business plan to present your projects to lenders and investors.
Unit 11: Bringing it All Together-Applying Finance Knowledge in Different Contexts
A set of real life case studies of sustainable energy projects and/or policy and donor interventions will be presented and will provide you with more “food for thought”. You can choose two out of the following topics:
- Seed Capital investments in project development
- GET FiT
- 2013 Global Trends in RE Investment
- The business case for mini-grids
Who should attend
This course has a clear focus on finance and is suitable for both public and private sector practitioners, including entrepreneurs, project developers, private investors, initiator/fund houses, international development finance consultants and managers, plant operators and manufacturers, engineers and advisory professionals (e.g. law firms, business and tax consultants). Other interested parties, such as academics in relevant fields, are of course also welcome to register to the course.
The course aims to explain the specifics of climate and renewable energy finance. Pre-experience in (mainstream) banking and finance is therefore helpful but not required. Participants without basic knowledge in finance should accommodate for additional study time.
Trust the experts
Silvia Kreibiehl is Head of the Frankfurt School - UNEP Collaborating Centre for Climate & Sustainable Energy Finance (the Centre) at Frankfurt School of Finance & Management. In her role as Head of the Centre Ms. Kreibiehl has overall responsibility for all international Frankfurt Schoo...
Prof. Dr. Ulf Moslener arbeitet zu den Themen Ökonomik des Klimawandels und Finanzierung klimafreundlicher Energiesysteme. Er ist Wissenschaftlicher Leiter des UNEP Collaborating Centre for Climate and Sustainable Energy Finance. Geboren 1972 in Dortmund und aufgewachsen in Düsseldorf studierte ...