Barriers to private sector investment in the energy sector include poor or lacking enabling environments for investment, opaque and delayed project development and approvals procedures, high perceived risks regarding many markets in the region, doubts over bankability of investment frameworks, limited capacity of public stakeholders, and lack of credible investors in immature markets. The program is designed to address these barriers which exist across multiple countries and will take an integrated approach working both upstream on improving the investment climate and directly with clients to ensure investment in commercially viable projects.

Component 1: Firm Level Activity A: Scale up of Grid-Tied and Distributed Renewable Energy Supply Infrastructure:

The feasibility of various renewable technology solutions depends on the country-level context including energy pricing, energy resources and regulatory environment. Solar is expected to be the main focus for the region, followed by small-hydro and wind in selected markets. Focus of support will be on investors, developers, suppliers, and other relevant private sector players.

ACTIVITY B. SUPPORT IMPROVED AND EFFICIENT ENERGY SUPPPLY INFRASTRUCTURE Poor efficiency and high losses continue to hinder power reliability and accessibility for many countries in MENA. Privatized and sub-national utilities or suppliers to government owned utilities will be targeted to develop utility efficiency projects which will have large scale impact. This offer represents a narrow but important niche of potential clients, however markets are moving toward privatization and deregulation.

Component 2: Group of Firms and Market Development Work MENA market level work is designed to proactively improve the investment climate for the private sector in clean energy infrastructure, given that the energy sector is heavily regulated by governments and associated policies/regulations. Market level efforts in this sector must be done in partnership with the World Bank, C3P and CIN along with other relevant and important stakeholders. The market development work also serves to attract investors to a market or sector in which they are currently not active, or identify gaps in investment or suitable providers.

ACTIVITY A: SCALE UP OF GRID-TIED AND DISTRIBUTED GENERATION OF RENEWABLE ENERGY IFC will work upstream at the market level to ensure that key barriers preventing the entrance of qualified investors or other impediments to the scale up of clean energy solutions, both grid tied and large distributed generation are identified, and a program of activities implemented in order to reduce or eliminate those barriers. This includes improving investment climate improvments, improving awareness by investors, capacity building for relevant stakeholders etc.

ACTIVITY B: SUPPORT IMPROVED AND EFFICIENT ENERGY SUPPPLY INFRASTRUCTURE The program will selectively engage on investment climate frameworks where potential has been identified to scale up private sector investment into utility expansion and efficiency. Efforts will be made to collaborate with C3P where specific transactions could be supported. Other efforts may include supporting the adoption of BOOT models for solutions such as combined cycle conversion projects and performance based contracting for generation, transmission and distribution efficiency projects and raising awareness of the benefits and techniques of demand side management and demand response through capacity building efforts.