Uganda: Energy Finance Expert

PROJECT DESCRIPTION:

Mercy Corps Uganda is designing a small 12-month pilot project to demonstrate an effective donor strategy and role for Mercy Corps for development investments focused on access to energy for productive use and rural electrification in post conflict and fragile environments.

The pilot will be embedded within the BRACED program, a 3-year DFID funded initiative designed to build absorptive, adaptive, and transformative capacity for over 530,000 vulnerable individuals in Kenya and Uganda. The proposed pilot approach is to support Energy Service Companies (ESCO) to test 'energy for productive use' business models for frontier markets (i.e. higher risk communities). This consultancy will help Mercy Corps understand how a blended finance facility might be structured in order to appeal to ESCOs and finance providers. The consultant will gather on the ground data, provide program design recommendations, and help design a facility.
Objectives:

1. To test and refine an approach to blended financing that can catalyze investment in rural electrification models for higher risk communities and markets through pilot sites.
2. To measure and quantify development benefits from productive use of electrification as part of economic development strategies.
3. To develop a detailed program and partnership strategy, including an analysis of appropriate financial sector partners, possible models, and what percentage mix of donor and private capital is necessary for phase 2 investments.

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Consultant Scope of Work**

The consultant will be expected to perform the following tasks:
Financial Structures and Partner Assessment

• Conduct a quick field investigation in Mercy Corps Karamoja office locations to understand Mercy Corps program current activities and interests; scale of need for energy services; and potential synergies with our programs.
• Work with Mercy Corps Uganda to develop an exhaustive list of ESCOs operating in off-grid energy sector in Uganda, particularly those working on pico/nano/minigrids and/or focused on providing modern energy services for productive use (solar irrigation system providers, for example).
• Work with the Mercy Corps HQ and country offices to develop an exhaustive list of banks/financial institutions/impact investors/finance facilities that have invested in or are interested in investing in the off-grid energy sector in Uganda, particularly those interested in investing in pico/nano/minigrid ESCOs in more fragile regions of pilot countries.
• Collect detailed information about each of the identified financial institutions/investors, develop an evaluation criteria, (such as business models, access to capital, implementation track record etc.) and assess each of them against these criteria to identify the most ideally suited ones for potential partnership for pilots
• Collect detailed information about each of the identified ESCOs, develop evaluation criteria and assess each of these ESCOs in order to identify the ones most ideally suited for potential partnership for pilots, taking financial partner preferences into consideration.
• Develop program recommendations, (and design bidding/RFP process if deemed necessary), for final selection of financing and ESCO partners

Facility Development

• The consultant will assess all possible financing options for the pilots

  • Financing options should consider both commercial and patient sources of capital available from the ESCO and the financing partner (equity, debt, convertible instruments)
  • Financing options should consider, but not limited to, sources of grant capital as partial credit guarantees or first loss guarantees, Viability Gap Funding (VGF) for capex subsidies, opex/tariff subsidies and so on.
  • A detailed assessment of each of these options needs to be conducted by the consultant, before making a final recommendation on financing structure for each pilot site. Assessment should consider aspects such as transaction costs, fees, ease of structuring and potential for scale.
  • Different financing mechanisms and structures can be designed for each pilot site, if found suitable and if found to be adding value in terms of evaluation and learning.

• There is a small amount of funding for applied learning and collection of market data via a productive use pilot installation in a BRACED target community. The consultant will help Mercy Corps identify knowledge gaps and develop a data collection plan to collect any additional market information needed for Convergence application.

• Write proposal for Convergence funding for proof of concept

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DELIVERABLES**:

• Energy finance and partner assessment report
• List of potential partners and terms of partnership
• Assessment of financing options for blended finance facility
• Recommendations for additional data collection to fill in knowledge gaps
• Program design recommendations & learning objectives
• Synthesize findings into an application for funding for the Convergence Platform

TOTAL DURATION OF CONSULTANCY: 15-20 days from July 15^th 2016-July 15^th2017

PROFILE OF THE CONSULTANT

The ideal candidate will have at least 5 years' experience in developing and structuring financing structures, including credit guarantees, viability gap funding and so on, for off-grid/rural energy access and/or minigrid programs in developing countries. Experience in developing and structuring financing for off-grid energy and rural infrastructure projects/programs in developing countries of Africa will be an added advantage. Any prior experience of working on such financing structures for bilateral or multilateral development agencies such as UN agencies, USAID, African Development Bank, IFC, World Bank or impact investors or Foundations/NGOs in developing countries is an added advantage.

The consultant should hold a minimum of a master's degree in business, finance, economics, law or a related field applicable to this position.

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