Implementing sustainable solutions requires assessing feasibility in the local context and asset management plan, and identifying financing options

After having assessed your system using ECAM, areas of improvements or solutions appear to have a good potential to reduce energy cost and / or GHG emissions. Here are a few steps to move towards implementation:

1

Matching utilities objectives with the potential solutions

 

Utility objectives, priorities/drivers, and enablers for GHG reduction, are essential to drive future action. Therefore, before going to in-depth studies of improvements, it is recommended to assess how the proposed improvements align with the utiliy’s priorities. This exercise can really point the water utility in the right direction in terms of where to place focus for data collection, assessing GHG emissions, and investigating solutions for GHG reduction that can be integrated into the utilities current objectives and priorities.

2

In-depth assessment
of the potential solutions

Technical assessment requires data. A light technical assessment can be performed to assess the feasibility of the measures and assess the extent of the potential GHG reduction based on the additional data collected. The assessment of the measures with most potential often require a pre-design level study to enable the economic evaluation of the proposed measure and support the development of a bankable project funding proposal.

 

 

Once it is clear where the most promising opportunities are for GHG reduction, a review of planned capital improvements that can lead to GHG reductions and other co-benefits should be performed. This is important because there may be overlap between the opportunities identified through the baseline assessment and what is already planned, which means there may already be financing in place for measure that will result in GHG reduction. Similarly, a review of measures involving other urban stakeholders with co-benefits beyond GHG reductions should be performed because these can be bundled in a project that may qualify for external funding at either the national or international level.

3

Preparing a bankable project

A Bankable project is a project that can attract financial institutions for supporting its implementation. Additionally, a bankable project has to be sustainable and have an impact to transform the sector or eliminate existing barriers.

Characteristics of a bankable project:

  • Robust and sound idea. Present the objective of the project in a complete and clear form. The objectives of the project and the tasks to achieve them need to be coherent. Also it’s important the project ensures sustainability over time.
  • Financially attractive. The return of the investment usually shows if investing in the project is attractive from the economic point of view. Economic information needs to be detailed as much as possible, disaggregation of costs and expenses as well as sources of income and it is very important showing the own contribution and other sources of finance identified (like bilateral or multilateral organizations, banks, etc.)
  • Impact of the project. The implementation of the project produces changes towards increasing the sustainable development in the sector in a cost effective manner.
  • Credentials of the company (credit worthy). History of the company honoring previous commitments. Showing transparency and good administration trough plans and budget management

 

How to formulate a bankable project? A guideline of bankable projects in the water sector is currently under development. The purpose of the guideline is to provide useful information on how to prepare a bankable proposal that could fit the requirements from different funding institutions (e.g. donors, banks and multilateral organizations). The guideline is planned to be released in 2018.

4

Low Carbon Financing options

There are various financing mechanisms that are tailored specifically for climate change mitigation / adaptation, or are meant for other objectives that can also result in GHG reduction. For example, financing for expanding water infrastructure can result in GHG reduction through increased wastewater treatment coverage and reduced discharge of untreated wastewater. Having an understanding of how the water utility’s objectives can be linked to GHG reduction will help in identifying what financing mechanisms can be leveraged for achieving GHG reduction.

At the utility level, most utilities operate with operational budgets. These can be used for improving day-to-day operations and optimizing systems. Capital improvement budgets, can be used for financing infrastructure projects. As these budgets can typically include energy efficiency and water loss reduction budgets, GHG reduction can be indirectly financed through these types of projects. This then also reduces GHG emissions because of reduced energy consumption. Therefore, the financial strength of the utility can be a key enabler for GHG reduction. Examples of general types of financing mechanisms commonly found in countries and at the international level are provided below.
  • Various State, Regional, and National Funds for:
    • Water infrastructure
    • Energy efficiency
    • Climate change mitigation / adaptation
Assess your utility’s carbon footprint
X Close

Assess your utility’s energy performance and GHG emissions

Assess my system