B-REED (Brazil Rural Energy Enterprise Development program), with funding from the United Nations Foundation, has been initiated as a partnership between the United Nations Environment Programme (UNEP), in partnership with its UNEP Risoe Centre on Energy, Climate and Sustainable Development (URC) and energy investment company E+Co. B-REED seeks to develop new sustainable energy enterprises that use clean, efficient and/or sustainable energy technologies to meet the energy needs of populations under-served by traditional means, thereby reducing the environmental and health consequences of existing energy use patterns, while stimulating local economic growth.
The B-REED approach will offer rural energy entrepreneurs, or existing companies looking to enter or expand into the sustainable energy business, a combination of enterprise development services and start-up financing in the form of debt or equity. This enables them to transform their business plans into early stage companies capable of accessing mainstream financing. B-REED will provide this assistance by helping build successful businesses that can promote clean energy technologies to rural Brazilian customers. B-REED’s services will include training, hands-on business development services and, for the most promising businesses, early-stage investment and assistance in securing later stage commercial financing.
B-REED will work with local NGOs and development organisations to promote clean energy enterprise development. The objective is to build capacity within these organisations to identify potential energy projects and to provide follow-up business support services to these entrepreneurs. To facilitate this training, resource tools such as business plan development, management structuring and financial planning for the rural energy sector will be prepared and disseminated.
B-REED will also work closely with financial institutions to enhance their capacity to integrate clean energy enterprises into their investment portfolios. This will be accomplished through workshops and specific hands-on tools centered on rural energy markets and sustainable energy enterprises, appropriate project finance models, financial analysis and risk management issues. Opportunities for co-financing will be explored.
|What B-REED has to offer:|
|Training and tools to help entrepreneurs start and develop energy businesses||Enterprise start-up support in areas such as business planning, structuring and financing.|
|Seed capital for early stage|
|Partnerships with banks and NGOs involved in rural energy development.|
Rural Energy Enterprise Development (REED) Approach
B-REED Enterprise Development Approach
B-REED applies a particular hands-on approach of enterprise development, similar to venture capital on a smaller scale and with social / environmental ends. The approach is best explained by example.
The first B-REED support to an entrepreneur might be a modest loan (e.g. $15,000) to support preparation of a business plan. If this looks promising, a second financing could assist in the company’s start-up; this transaction might involve an additional loan or the purchase of an equity stake in the company.
In this initial period, significant in-kind support is provided including a B-REED representative working closely with the company’s management. The support increases the probability that a more “bankable” project can eventually be presented to financial investors and partners.
Total B-REED support to a company typically ranges from $50,000 to $100,000, although it can reach $250,000. The approach is already being applied in five countries in Africa under the UNF supported African Rural Energy Enterprise Development Initiative (see www.areed.org). The AREED project has expanded the model to also address the three principal stakeholders – entrepreneurs, financial institutions and governments – that need to collaborate if replication on a larger scale is to occur.
If you are an entrepreneur or existing business considering a business using clean energy technology in Brazil, an NGO or financial institution interested in learning more about how to work with B-REED, please contact us.
E+Co is a non-profit energy investment company created by the Rockefeller Foundation. With more than 85 enterprise investments in 36 countries, E+Co has demonstrated that sustainable and profitable enterprises are an effective vehicle for expanding the provision of clean energy services to rural populations.