Database / Climate Finance Database / FP009 / risk_structure
risk_structure
Energy Savings Insurance (ESI) for private energy efficiency investments by Small and Medium-Sized Enterprises (SMEs)
| risk_id | canonical_project_id | financing_component_id | risk_type | risk_bearer | risk_severity | mitigation_mechanism | mitigation_instrument_id | residual_risk_level |
|---|---|---|---|---|---|---|---|---|
| GCF_FP009_RISK_001 | GCF_FP009 | — | Technical and operational | BANDESAL, IDB (project implementing entities); energy users, ESTPs, LFIs, and insurance companies in El Salvador | High impact (>20% of project value), Low probability | Extensive stakeholder engagement and market analysis to confirm interest; socialisation of each mechanism with relevant actors for feedback; standardization and simplification of documentation/procedures to minimize transaction costs; seed finance for pilot projects to demonstrate viability of the ESI concept; leveraging experience from similar projects in Mexico and Colombia. | — | Low |
| GCF_FP009_RISK_002 | GCF_FP009 | — | Technical and operational | Local Financial Institutions (LFIs); BANDESAL (project) | High impact (>20% of project value), Low probability | LFIs gain direct experience with EE investments using loan resources and risk-sharing mechanisms (performance contract, ESI insurance, independent validator) to experience actual risks; outsourcing of technical due diligence to independent validator replaces lack of internal LFI capacity; concessional financing provides temporary incentive for LFIs to maintain lending rates at same level as traditional investments; demonstration effect expected to lead LFIs to finance EE from own resources after project end. | — | Low |
| GCF_FP009_RISK_003 | GCF_FP009 | — | Technical and operational | Investing firms (SMEs) and Local Financial Institutions (LFIs) | High impact (>20% of project value), Medium probability | Three project mechanisms work together: (1) outsourcing of technical due diligence to an independent validator who assesses ESTP capacity, project quality, and verifies energy savings; (2) capacity building for BANDESAL and LFIs to assess real credit risks of EE technologies under the project mechanisms; (3) awareness-raising and marketing events for investing firms on technologies, risk mitigation value of standard contract, validation, and insurance. | — | Low |
| GCF_FP009_RISK_004 | GCF_FP009 | — | Implementation | BANDESAL (implementing partner) | High impact (>20% of project value), Medium probability | Package of technical assistance including continuous support for overall coordination and integration of the Project into BANDESAL operations; continued engagement between IDB and the executing entity to ensure ownership at management and technical levels; establishment of a focal point within BANDESAL with a decision-making mandate. | — | Low |
| GCF_FP009_RISK_005 | GCF_FP009 | — | Political | Government of El Salvador; BANDESAL | High impact (>20% of project value), Low probability | Continuous and constructive engagement with government authorities; BANDESAL with IDB support engages key government stakeholders to ensure intervention is aligned with government priorities and demand-driven; high energy costs for the private sector in El Salvador are expected to keep energy savings a national priority. | — | Low |
Field Evidence
Technical and operational
BANDESAL, IDB (project implementing entities); energy users, ESTPs, LFIs, and insurance companies in El Salvador
High impact (>20% of project value), Low probability
Extensive stakeholder engagement and market analysis to confirm interest; socialisation of each mechanism with relevant actors for feedback; standardization and simplification of documentation/procedures to minimize transaction costs; seed finance for pilot projects to demonstrate viability of the ESI concept; leveraging experience from similar projects in Mexico and Colombia.
Low
Technical and operational
Local Financial Institutions (LFIs); BANDESAL (project)
High impact (>20% of project value), Low probability
LFIs gain direct experience with EE investments using loan resources and risk-sharing mechanisms (performance contract, ESI insurance, independent validator) to experience actual risks; outsourcing of technical due diligence to independent validator replaces lack of internal LFI capacity; concessional financing provides temporary incentive for LFIs to maintain lending rates at same level as traditional investments; demonstration effect expected to lead LFIs to finance EE from own resources after project end.
Low
Technical and operational
Investing firms (SMEs) and Local Financial Institutions (LFIs)
High impact (>20% of project value), Medium probability
Three project mechanisms work together: (1) outsourcing of technical due diligence to an independent validator who assesses ESTP capacity, project quality, and verifies energy savings; (2) capacity building for BANDESAL and LFIs to assess real credit risks of EE technologies under the project mechanisms; (3) awareness-raising and marketing events for investing firms on technologies, risk mitigation value of standard contract, validation, and insurance.
Low
Implementation
BANDESAL (implementing partner)
High impact (>20% of project value), Medium probability
Package of technical assistance including continuous support for overall coordination and integration of the Project into BANDESAL operations; continued engagement between IDB and the executing entity to ensure ownership at management and technical levels; establishment of a focal point within BANDESAL with a decision-making mandate.
Low
Political
Government of El Salvador; BANDESAL
High impact (>20% of project value), Low probability
Continuous and constructive engagement with government authorities; BANDESAL with IDB support engages key government stakeholders to ensure intervention is aligned with government priorities and demand-driven; high energy costs for the private sector in El Salvador are expected to keep energy savings a national priority.
Low