x Abu Dhabi, UAETuesday 23 January 2018

From postwar reconstruction to environmental renewables

KfW helped kick-start the German economy after the Second World War. Half a century later, it has taken on a more modern task: dealing with climate change.

A lofty mission was given to KfW in 1948 when the German government launched the bank as part of the Marshall Plan.

By issuing long-term, low-interest loans, KfW - whose full German name can be translated as "Reconstruction Credit Institute" - helped kick-start the economy and put a defeated nation back on its feet.

Half a century later, the bank has taken on a more modern task - climate change.

KfW is the financial muscle behind plans to bring huge solar plants to Brazil, India and even Abu Dhabi. Last week it said it would provide €100 billion (Dh494bn) in loans to spur Germany's transition away from nuclear and coal and towards renewable energy.

One of its biggest success stories in green financing could provide lessons for Abu Dhabi, and it begins on the roofs of German homes.

In 1999 the German government embarked on an outlandish plan- to put solar panels on 100,000 rooftops.

Germany backed the programme partly through feed-in tariffs, where the government puts renewables in the same price bracket as fossil fuels by requiring the power companies to take it on to their grids. That enables homeowners to sell their excess power. The feed-in tariffs are well-known, and have been replicated as far as China and Algeria.

Lesser known were the low-interest loans from KfW for homeowners to buy and install the panels. They then had 10 years to pay back the loans.

The programme was so popular that one year in, Germany had a backlog of 10,000 applications and had to put it on hold for three months, according to Wired magazine.

The German financing mechanism could provide a model for Abu Dhabi, which hopes to cover its own rooftops with the blue-hued panels.

The plan for 500 megawatts of solar rooftop power is part of the emirate's plan to source 7 per cent of its electricity from renewables in the next nine years.

Plans floated last year by Masdar, the government-owned company unofficially charged with carrying out the emirate's clean energy goals, called for a feed-in tariff and a rebate for installation costs, rather than a loan.

The government has yet to announce its strategy for achieving its renewables target, including if it will offer a feed-in tariff.