The World Bank Group has recently initiated two major projects aimed at increasing the pace of PV commercialisation in a number of key markets worldwide.

The Photovoltaic Market Transformation Initiative and the Solar Development Corporation represent the latest efforts to overcome the barriers still preventing PV from competing in the global energy market place.

The Photovoltaic Market Transformation Initiative (PVMTI) administered by the International Finance Corporation (IFC) will use USD 25 million of Global Environment Facility (GEF) funds to support private sector, competitively solicited solar PV market development projects in India, Kenya and Morocco. It is anticipated that, with leverage, around USD 100 million will be invested in total. These investments are expected to serve as a stimulus for the formation of joint venture, as well as pioneering innovative financing schemes, and promoting public-private partnerships.

IFC has recently engaged a consortium of firms from the UK to act as External Management Agent (EMA) for the project. The appraisal phase to assess the business case for the PVMTI in each country, and investigate the likely deal flows is now nearing completion. The EMA, supported by local partner firms in each country, undertook an appraisal of the market trends, orientation and interest in PVMTI through dialogue with the PV industry, financiers and prospective investors.

The result of these discussions and the deal-flow analysis in each of the selected countries are now being consolidated into a strategy for progressing to the implementation phase. Subject to final approval by IFC management and the GEF, PVMTI implementation will commence in late 1997. The aims of the Implementation Phase will be:

• To stimulate a stream of investment and grant proposals that offer the most promise for transforming the PV market
• To commit USD 25 million of GEF funds to the companies and projects that can both transform the market and leverage the funds at the target ratio of 3:1, and
• To supervise the recipient companies to ensure that receivables from investments are realised.

The EMA is expected to issue a Request for Proposals (RFP) detailing the implementation framework, including the time-scale of decision making, the evaluation criteria for investment, and the support available through the EMA by the end of 1997. Potentially suitable projects will be assessed by the IFC PVMTI investment Panel. The EMA will aim to disburse all PVMTI funds as rapidly as possible, and certainly before the end of 1999.

The concept of SDC, a joint initiative of the World Bank, and a number of prominent US Foundation, is to form a stand-alone company to provide market and business development services, that will accelerate the growth of private firms and deepen the penetration of Solar Home Systems (SHS) and other rural PV applications. The SDC would also provide access to pre-commercial an parallel financing for private firms to expand their capability in PV distribution businesses and strengthen their ability to provide credit to end users. SDC itself will not engage in direct financing of the final consumer, but will work with local financial institutions and distribution in develop tailored schemes aimed at accelerating electrification for rural families. This local flexibility means that SDC will be able to work in parallel with other initiatives supporting PV, including those emanating from multilateral and bilateral institutions.

The SDC concept has been jointly developed by a team from the World Bank Group with E&Co, a non-profit energy investment service representing the US Foundations. A multinational consortium of business advisors was appointed in June 1997 to provide independent evaluation of the rationale for the establishment of the SDC. Preliminary desk research identified six countries as potential prime targets for involvement in the SDC concept. As with PVMTI, field missions to the key markets - Brazil, Dominican Republic, Indonesia, Philippines, Vietnam and South Africa - were undertaken to meet with the potential stakeholders and identify the market development requirements and, where applicable, possible investment projects. The detailed country reports are being used to assess the viability of the SDC Concept, and to develop a business plan for the establishment and operation of the SDC. It is intended that after a start-up period SDC should become financially self-sustaining. It is currently assumed that SDC's initial capitalization will be around USD 50 million for an initial three year period of operations, but that once self sustainability is demonstrated, it could handle up to USD 100 m/year of PV financing. The initial evaluation will be finalized at the end of 1997.

Information
Further information on both these initiatives can be obtained from IT Power, United Kingdom, Telephone: +44 118 973 0073.

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