A group of the country’s banks has come together to fund sustainable projects amid a potential Dh10 billion financing gap.
The eight banks signed an agreement on Tuesday to expand sustainable financing over the next five years as banks pull back on lending across the wider economy.
National Bank of Abu Dhabi (NBAD), Commercial Bank of Dubai, Dunia Finance, Emirates NBD, HSBC, National Bank of Fujairah, RAKBank and Union National Bank signed the Dubai Declaration on Tuesday.
The deal, at the Unep Finance Initiative Global Roundtable, was struck in partnership with the UAE Government and Unep Finance Initiative.
This is in line with Vision 2021, a set of national targets to be achieved by the country’s 50th anniversary.
“We consider the transition to a global low-carbon economy to be an enduring influence on the business world of the future,” said Nathan Weatherstone, the head of sustainable business at NBAD.
The banks will “lend to, invest in, facilitate financing or provide insurance to the projects, businesses and customers with sustainable purposes as well as support the growth of a successful small and medium-sized enterprise [SME] sector”.
The criteria borrowers will need to meet to tap the funding was not disclosed.
Johann Schoeman, a partner at Dubai-based Oryx Solar, which specialises in the installation and maintenance of solar energy systems, said it was important banks create financial instruments that will provide funding for individual homeowners to install residential solar systems. “At current interest rates for personal loans, it’s feasible to create products that will allow for monthly savings on utility bills to be more than loan repayments,” he said.
Small-scale initiatives have been overshadowed by larger projects, says Enerwhere, based in Dubai. One example is the US$10 billion in clean energy financing that NBAD announced it would commit over the next decade.
The bank told The National earlier this year that the funding would be geared towards the wholesale side – meaning projects that are more than $100 million in value. For companies that focus on small to medium-scale deployment, funding options are limited.
Enerwhere provides solar-diesel hybrid generators, which can be offered on a short-term rental basis or through a power-purchasing agreement.
Daniel Zywietz, Enerwhere’s chief executive, said he was not aware of any distributed solar projects financed by local banks.
He said that with 1,000 megawatts of diesel generators running in the UAE, there is a financing requirement of Dh4bn for the solar equipment alone. That would increase to more than Dh10bn if batteries were added to provide power at night.
“That’s a big, profitable market that banks are currently missing out on,” he said.
lgraves@thenational.ae
Follow The National's Business section on Twitter
