How to insure long-term activities in short-term funding? A Guarantee Mechanism in Humanitarian Energy Contracts

Date and Time: 27 April 2021; 11:00-12:00 CEST

Abstract

Humanitarian agencies are recognizing the need to shift their dependence from fossil fuels and transition to more sustainable approaches to generating and consuming electricity. However, systemic barriers are preventing them from doing so, which results in the continued purchase of diesel generators as their primary source of power even in locations that are favorable for solar solutions.

Recognizing this, a series of workshops were convened  under The Global Platform for Action on Sustainable Energy in Displacement Settings (GPA) which is the global hub to achieve SDG 7 in displacement settings, led by humanitarian and development actors. The goal was to identify modern and viable alternative business models,  where the humanitarian partner could outsource the electricity supply to private partners. This can lead to a decarbonization of the operations, reduced energy costs and creating employment and other livelihood opportunities. Two priority topics were identified by the workshop participants in order to facilitate the large-scale uptake of these alternative delivery models:

• A conducive legal framework, in line with relevant UN procurement and finance rules and
• A de-risking mechanism that would provide an insurance for the commercial entity’s, as well as for the humanitarian partner in case the contract needs to be terminated early.
• Both products/concepts have been developed and the legal framework can be downloaded from Energypedia here and the concept for the guarantee mechanism here).

This technical session will provide an overview on how existing fossil fuel powered infrastructure could be replaced through a third-party delivery model and will highlight the role of a Guarantee Mechanism in Humanitarian Energy Contracts through examples of ongoing interventions.

 

Targeted Audience

Personnel working in Energy, Environment, Procurement, Logistics, Administration, Finance, Program Management, etc.

 

Expected Outcome

• Understanding of a third-party energy supply model
• Awareness of the need for a guarantee mechanisms for private sector engagement in greening humanitarian operations and refugee settlements
• Knowledge of innovative finance mechanisms to address internal sustainability and carbon emission reduction
• Increased collaboration among UN, NGOs and energy services provider companies in adopting such mechanisms and gain mutual benefits while implementing green initiative

This session contributes to the goals and vision of the GPA Framework, aiming to achieve universal sustainable energy access for displaced people and their host communities by 2030. The GPA is a multi-stakeholder platform for actions to systematically improve sustainable energy access in displacement settings.

 

Further readings:

• Fossil Fuel Powered Generators in Humanitarian Operations Produce High CO2 Emissions
• Helping the UN cut down on fossil fuels by de-risking energy service contracts
• Helping the UN cut down on fossil fuels through standard energy service contract clauses
• Four ways to accelerate solar-powered electrification in humanitarian settings