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ADB supports clean energy investments in China's Shaanxi Province

Published 29 November 2016

The Asian Development Bank (ADB) has approved a $150m loan to set up a financing platform to channel funds to clean energy investments in Shaanxi Province.

ADB Energy senior finance specialist Annika Seiler said: “Shaanxi Province a major producer of coal, oil, and natural gas relies heavily on fossil fuels for feedstock and energy. Although under the 12th Five-Year Plan (2011-2015) the province has managed to reduce the unit energy consumption in industrial sector, this has been achieved mainly by targeting large enterprises.

“Achieving further reduction in energy efficiency will require improving energy efficiency of small and medium enterprises [SMEs], which were not targeted under the 12th Five-year Plan.”  

Many SMEs in Shaanxi are engaged in industries requiring energy-intensive materials and processes involving coal-based chemicals, nonferrous metals, ceramic materials, building materials, and industrial waste recycling.

SMEs could reduce their energy use and accompanying air pollution by recovering waste heat from industrial processes and making use of industrial gases in production. But lack of knowledge of these technologies and difficulties in accessing commercial credit have kept them from seizing these opportunities.

Further, energy service companies, that can drive energy efficiency processes and technologies in SMEs are underdeveloped in Shaanxi and find it difficult to access credit. 

The project will offer three complementary financial products to meet the financing requirements of eligible clean energy investments. The first will offer debt financing to eligible borrowers for subprojects with high potential for energy savings and/or environmental improvement impacts.

There will also be a credit guarantee facility to provide credit enhancement and risk sharing facility to leverage additional cofinancing from commercial banks to complement the ADB loan funds. Third, lease financing will be offered through a financial leasing company for the purchase of energy efficient equipment.

Among the first batch of subprojects to be supported are industrial waste heat recovery for electricity generation and heating, solar photovoltaics, biogas and biofuel recovery for agricultural waste, use of industrial waste gases for power generation, and geothermal energy for heat supply to residential areas. 

The total cost of the first batch of subprojects is about $459m, of which domestic commercial banks will provide more than $167m and the subborrowers more than $136m.

Reflows from the first batch will be relent to finance about two additional batches of subprojects of a similar nature with an investment requirement of about $500m each. 

Source: Company Press Release