What are we?
Milken Institute is a financial innovation think tank that uses appropriate financial technologies and translates smart practices into scalable, market-oriented (pull) solutions that democratize capital.
Some more answers… Milken Institute
Who are clients?
Government
Non-profits
When started?
• Since 2002, in Israel
How much have we done?
• 94 Fellows
• 5 Books
• 30 Labs
• 54 Reports
• Not including results
Who supports?
• Philanthropy
• Private mission investors
• Government
By the numbers…
$20 Billion Sovereign Wealth Fund
$4 Billion Trade Protocol with China
$100 Million Waste Treatment Facility
$120 Million Solid Waste Treatment Program
$150 Million Small Business Guarantee Program
$230 Million Biotech Fund
$50 Million Social Investment Fund
$100 Million Regional Development Fund
$200 Million Fuel Substitutes Program
$1 Million Fuel Pioneers Prime Minister’s Prize
0.9 1.2
1.4
2011 2012 2013
Program Operating Budget (Millions)
Think tank market
What
Why How How to finance? How to build? How to organize? How to manage?
What is the impact of poverty? What is benefit from education? What is cost of income inequality?
Why should the government be involved in solving social and economic problems?
Formula & approach
Applied Research
Fellows Program
Financial Innovations
Labs®
Policy Results
Relevance Skills
Smart
practices
Readiness Global reach Networks
Delivery
Milken Institute in Israel
Milken Institute in Israel
Environment
Solid Waste
River Basins Financing
Ecosystem services
Fuel alternatives
Social
Investing
Affordable housing
Financial inclusion
Social capital market
Social impact bonds
Regional
development
Regional financing
Infrastructure
Brownfield reuse
Development finance
Global
Competitiveness
Technology Development
Human capital
Capital Markets
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Environmental Workshop:
Biodiversity – Polasky and Moore
(Jan 26-27)
Financial Inclusion Workshop/ Citi (Feb 26)
Global Conference Panels & Briefings (April 29-May 3)
Financial Innovations Lab: Capital Markets
(May 4)
Financial Innovations Lab: Heritage Asset District Financing
(July 28)
Globes Business Conference Life
Sciences, Frontier Markets, Fellows (Dec
7-8)
Environment Workshop: Stability Economics/ Watershed
Conservation ( Batker/ Costanza/ Kubiszewski)
(Nov 3-5)
Financial Innovations Lab: Affordable Housing (Oct 16-17)
Environment Workshop: Eco-systems Services Valuation
(Ghermandi) (July)
Fellows Orientation (Oct 1-7)
Fellows Selection (June 16)
Negev & Galilee Fund Report Publication (Ministry of Economy) (Nov)
Financial Inclusion Report
Guy Rolnick/The Marker/Harel Locker-PMO Strategic Issues
Workshop (April)
Kidron River Financing Strategy Report Publication
(April)
Environment Workshop:
Ecological Economics
(Perrings)
(Nov 20-23)
Financial Innovations Course Launch
(June-Oct)
EU Workshop on Kidron River Financing with Minister Martinus
(Nov 1-5)
Helmsley Trust Investment Committee Briefing
(Oct 14)
Social Investing JFN Webinar (Nov)
Capital Market Lab
Report Release
(Dec)
Fellows Research & Production (June-Sept)
Kidron River Financing –
Quartet Briefing
(July)
Social Investing Workshop/ Seminar –
Jewish Agency & JFN (March) President’s
Conference
Milken Institute Israel Center – 2013
Fellows Recruitment (Mar – May)
Milken Institute Fellows, 2012-13
Milken Institute Fellows, 2013-14
Impact investing training workshop
Financing Israel: The innovation nation
Environmental finance workshops
Briefings for Quartet and Kerry Plan teams Transboundary river/watershed basins
Affordable housing labs
Globes Israel Business Conference Milken Institute Fellows panel, December, 2013
California-Israel Innovation Agreement March 6, 2014
Facing global threats through innovation
Water
Fuel Alternatives/Energy
Food/Agritech
Health
Cybersecurity
Next steps: linking the two promised lands with other start-up
nations
Organize intergovernmental, economic development, and technology/training teams for each action area (water, health, energy, food, cyber).
Establish joint innovation funds for scale-up PPP projects in California, Israel, or in frontier demonstration markets.
Start.
Translational valley of death
*Includes $21B/yr from NIH academic grants (2011) and $1.3B/yr from medical research foundations (2009). **Includes $584M/yr from NIH SBIR (2011), $400M/yr from angel investors (2011), and $6B from VCs (2011). Sources: Research America, National Institutes of Health, CB Insights, National Ventura Capital Association, Center for Venture Research.
Life sciences fund(s)
Standard Venture Capital structure
LP’s will be the Israeli government and the private sector
Government commitment as a core LP
Minimal capital to be raised by private sector investors - LP’s
Experienced managers
Sustainable life sciences industry
NEXT
PPPP Bio-Fund ?!
Public Private Philanthropy Partnership
P4
Different types of capital fill different needs
Note: The capital investment associated with adoption is depicted to indicate that it may well exceed $175 milion/year. Sources Mohr Davidow Ventures.
The water- energy nexus
Source: Dr. Yoram Cohen (UCLA WaTeR Center).
Energy production and generation require water
Water pumping, treatment and distribution require energy
Reduced water conveyance and increased water recycling
Decreased energy consumption and smaller carbon footprint
Investment opportunities along the water cycle
Source: Calvert Global Water Fund.
Israeli government goal Promotion of eco-innovation
Establishment of sustainable
knowledge-based eco-innovative
industry
Taking part in solving global sustainability
problems
Israeli case study The ICT sector
Leading academic abilities
Industrial capabilities & entrepreneurial culture
Human capital
International cooperation
Supporting government programs
3 decade - long global demand for information
and communication technologies
Security & military needs drive long term, wide scope research and development
Geographical isolation requires independent
capabilities
Need Supply Demand
Israel’s climate challenges Climate & rainfall
Within Israel’s small area there are 4 distinct climate zones
The average rainfall decreased over the last decade
Source: insectour.blogspot.com.
Extreme Desert
Mediterranean
Desert
Saharan
The next Israeli case study? Global sustainability challenges & Israeli agro-technological innovation
Israeli Agro-Technological Innovation
Energy
Water Food
Global Sustainability Challenges
Global leader in agro-technology (especially arid areas) and water systems
Ranked first in the world in use of
recycled water One of the highest rankings in
agricultural yields, in a variety of climates
The next Israeli case study? Agro-technology
Leading academic abilities
Long term basis of innovative agro-tech and water solutions
Human capital
International cooperation
Supportive government programs
Geography:
scarcity of arable land
Climate:
scarcity of water resources
Growing world population and limited land & water supply demand advanced water &
agriculture technologies for food (and fuel) supply
“Island” Need Supply Demand
Israeli government initiatives Goals and desired Outcomes
32
Efficient, Stable and Competitive Energy
Sector
Reduction of Greenhouse Gas Emissions by 20%
(compared to business as usual scenario)
Development of a Competitive Advantage of
the Israeli Market
Energy Policy in a natural gas based market Competitiveness, energy security & stable supply
10% Renewable Energy From initiation to grid parity
20% Energy Efficiency Economic feasibility and wide range of solutions
Transportation: green tax, global demonstration site Decrease dependency on oil
Encouragement of innovation and R&D in Cleantech Technology as engine for growth and efficiency
Israeli government initiatives Designated programs
Oil-free initiative Natural gas
policy
Greenhouse gas emission reduction program
Solar energy tariff scheme
Agro-tech initiative
National water initiative
Chemicals Water Agritech Printing/ Equipment
ERP/ Billing
Chips/ Systems
Algorithm/ Controls
Energy Storage
Optics
Clusters of technology expertise
Power Electronics
Major systemic challenges: Fostering robust, viable, supply chains Bridging the readiness gap: research, derisking, deployment Generating market pull Funding joint beta sites—California-Israel-Third Countries Cross-cutting support: Capital investments Government policies
Building joint PPP funds for global solutions
Corn/Sugar Cane Food Sugars Ethanol/Biodiesel Vehicle Fuel Blends
Soybean/Palm Triglycerides/Oils Isobutanol Animal Feeds
Hetero/Algae Biomass Sugars Succinic Acid/BDO Jet Fuels
Corn Stover/Wheat Straw Pyrolysis/Bio-oil Green Diesel Plastics
Miscanthus/sorghum Terpenes/Alkanes Fibers
Switchgrass Syngas
Perennial grasses Gaseous substrates
Reverse beta-oxidation
Photo/Algae Electrofuels
Biomass Production
Key Intermediates Platform
Chemicals
New Genetics New Feedstock Intermediates
New Conversion Pathways
New Applications
Product Categories
MARKET
RE
AD
INE
SS L
EV
EL
Value/supply chain
Focus on scaling proven clean energy
Current CEDA proposals advocate three purposes for the bank:
Financing commercial projects with new/risky technology
Scaling proven clean energy
Funding manufacturing
“Scaling clean energy development” is the most efficient model
Low risk profile
Minimal equity requirements
Guarantee rather than actual funding
Requires the least amount of financial reserves-2%
Supports the greatest level of spending – $625B
Low risk profile is most appropriate for a government sponsored funding entity
Item New Technology
Projects Scaling Clean
Energy Manufacturing
Facility
Description
Financing to get the first commercial scale project built with new clean energy technology
Financing to quickly scale proven technologies
Financing for new US located manufacturing facilities
Risk Profile Medium – High Low High
Economic Outcomes
Cost overrun risk, and operational life risk – likely not zero, but significant impairment possible
Tight range over five year period – chief risk is resource risk (e.g. wind)
Outcomes can be binary – obsolete technologies with specialized equipment will be close to zero
Equity requirements
20% - 40% 20% 50%
Guarantee or Full funding
Mix US –Israel Guarantee Full Funding
Reserves required 20% 2% 30%
Supported Spending w/ $10B
$70B
$625B $66B
37
Evolution of infrastructure project public-private partnerships
(PPPs)
Financial Markets Perspective
Increased willingness to shift cost to users
New focus on optimizing revenue streams
Longer-term perspective on revenue generation
capability of infrastructure assets
Risk sharing and allocation key driver for governments
Government Perspective
Catalysts
New Paradigm for Infrastructure Investment
Through Public-Private Partnerships
Alternative Finance Methods: Public-Private Partnerships
Increase in global liquidity
Patient international equity investors
Private sponsor appetite for infrastructure investments
Established long-term international concession financing models
Established international credit and rating criteria
Fiscal challenges
Increasing capital needs
Lack of funding sources
Resistance to tax increases
Infrastructure maintenance/ development
needs
Management of non-core assets
Operational cost savings
Accelerated project requirements
How to find a substitute for oil? R&D process: fuel choice
Israeli Prime Minister declares a strategic national goal at the President’s Conference: To get the world off oil
Israeli Prime Minister convenes a special inter-ministerial committee chaired by the head of Israel’s National Economic Council (NEC). The task: To craft policy, within 90 days, that will lead to oil independence
The head of NEC requests a Financial Innovations Lab™ from the Milken Institute Israel Center. A Milken Institute Fellow is assigned to the project immediately
A day after Global Conference the Institute holds a Financial Innovations Lab.™ Interim report is submitted in a record 14 days and immediately impacts suggested policy and regulation
Prime Minister Netanyahu receives a full draft of policy recommendations from the head of the NEC. The draft is accompanied by the Israel Center’s lab report and by a Milken Institute Fellow’s research paper
10.2009 2.2010 3.2010 4.2010 7.2010 9.2010 12.2010 2.2011
Israel Center Senior Director Glenn Yago attends a cabinet meeting and explains the recommendations to all government ministers
The Israel Center holds a special round table with senior government and business leaders during Israel’s largest business conference
Government decision to adopt the NEC plan including: •Channeling NIS 14 billion •Support R&D •Establish a one-stop-shop
Impact: fuel choice
• Goal: Accelerating Innovation for global oil alternatives
• Economic impact: NIS 14 billion over a decade
• Duration to government action: 11 months
Energy Governance Through Innovation: Reducing Global Oil Dependency in Transportation Through Innovation
Research to results: fuel choice
How to sustain river basins? R&D process: river basin financing
Kahn Family Foundation sponsors project financing study for waste
treatment facilities, 2012
Milken Institute: Project financing discussions with EU, Dutch, German, and
philanthropic delegations, 2012-2013
Kidron Valley/Wadi Nar Steering Committee Formed,
2007
Kidron Valley/Wadi Nar Steering Committee begins Master Plan,
2010
Milken Institute: Financial Innovations for Freshwater Revitalization: Transboundary Project
Finance in Israel, Jordan and the Palestinian Authority, 2009
Kidron Valley/Wadi Nar Masterplan completed, 2013
Milken Institute: Financing Kidron/Wadi El Nar Revitalization, Project Report, 2012-2013
Milken Institute: Project briefings with EU, Quartet representatives, and Kerry
team, 2013-2014
2007 2008 2009 2010 2011 2012 2013
Milken Institute: Heritage Asset District Financing Financial Innovations Lab featuring
regional financing plan for Kidron River District, 2013
EU grants to support Steering committee and community
planning work, 2010
Source: Milken Institute Israel Center, 2013
2014
JIIS: Policy for the Preservation and Development of the Upper Kidron Valley – the Visual Basin of the Old City of Jerusalem, 2009
Research to results: river financing
How to access capital in Israel’s regions? R&D process: regional economic development
2007 2008 2010 2011 2012 2013
Lab: Financial Innovations for Economic Recovery and Development in Northern Israel, 2007
Lab: Accelerating Medical Solutions in Israel: Building a Global Life Science Industry, 2008 Fellow: Financial Model for Leveraging
Philanthropy for Regional Development, Idan Richman, 2012
Fellow: Energy Governance through Innovation: Reducing Global Oil Dependency in Transportation, Zviya Baron, 2010
Research: Financing Microenterprises, Anat Arbel, 2010
Fellow: Economic Integration Process in SE Asia and the Pacific, Amit Einhorn, 2011
Fellow: Building National Competitiveness in International Tenders and Projects, Anat Lindenbaum, 2010
Fellow: Increasing Finance Supply for SMEs, Shir Kahanov, 2012
Fellow: Encouraging Multinational Corporations in Life Sciences to Conduct R&D in Israel, Carmit Avidan Shpalter, 2012
Joint Venture Project: Regional Development Financing Initiative, 2012-2013)
Roundtables: Regional and Economic Crisis Roundtables, 2011-2012
Fellow: Credit Information for SMEs, Naomi Himeyn Raisch, 2011
Fellow: Israel Employment Service, Noor Ferro Zaheraldeen, 2013
Fellow: OCS, Amos Shtibelman, 2013
Fellow: Productivity Gaps, Gilad Brand, 2014
Research: Regional Development Financing, 2014
Research to results: regional and economic developments
Development, Management and Capital
London Mumbai Tel Aviv New York
• Structured approach to operationalize country level interventions
• Profitable, Sustainable, Private sector driven
– Country level example: Rwanda 100% Clean Energy Plan
– Cross-border example: India-Israel Impact Innovation fund
COUNTRY LEVEL INTERVENTIONS – 2 OPERATIONAL EXAMPLES
• Country Need – Rwanda
• Acute need for power
• Scarce Resources Analysis
• Conventional and renewable resources
• Domain Partner
• Bloomberg New Energy Finance
• Gap
• Capital mechanisms to secure capital for energy access
• Scenario / Solution
• 100% Clean Access – Scenario and country level business model
• Verticals
• Solar , Hydro, Geothermal
• Operational plan
• Ignite – Connect 1 Million homes to Power
• Create Operational Partnership to execute
• Gov, utility , Pivot Access, Aghozo-Shalom
• Vestas, Azueri, Ecofys
COUNTRY LEVEL INTERVENTION – RWANDA
WHITE PAPER 11 November 2013
© Bloomberg Finance L.P.2013
No portion of this document may be reproduced, scanned into an electronic system, distributed, publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P. For more information on terms of use, please contact [email protected]. Copyright and Disclaimer notice on page 13 applies throughout. Page 4 of 13
Figure 2: Energy demand and supply – pipeline (GWh)
Figure 3: Energy demand and supply – 100% Clean Access (GWh)
Source: Bloomberg New Energy Finance, MININFRA. Note: All demand scenarios designed for 100% electrification. Assumes all planned
capacity is built. The left chart shows generation from publicly announced power projects currently under development (planned, under
construction and operational); the same projects that are included in Figure 1. The right chart includes supply from the clean energy projects
shown in Figure 1 and additional generation needed for 100% clean access.
2. 100% CLEAN ACCESS PLAN
2.1. Future energy mix
Rwanda will need an additional 0.4–1.5TWh of clean energy by 2020 over and above the current
project pipeline to achieve 100% access to renewable energy. Analysis shows that the country’s
rich natural resources would be sufficient to meet this demand.
Rwanda is located on the western side of the East Africa rift system and has high potential for
geothermal power production, estimated at 700MW from four sites. There are 333 potential small
hydropower sites in the country. If each can produce at least 2MW, this amounts to a potential of
660MW. Rwanda has good solar resources with insolation at 5kWh/m2/day average. The
biomass in the country should easily be sufficient to support a 20MW plant – a small-scale facility.
We outline one scenario that meets the 100% Clean Access criteria in Figure 5. This includes the
58MW of operational hydropower in the country and the clean power part of the existing pipeline,
which equals 471MW (Figure 4; details in Appendix A). Adding a further 390MW by 2020 would
create enough generation to meet demand in the continued growth scenario with renewable
energy alone (Figure 6) – giving 919MW of power in total. The additional 390MW capacity is a
mix of hydropower (140MW), solar (130MW), geothermal (100MW) and biomass (20MW).
Figure 4: Capacity additions in pipeline (MW)
Figure 5: Capacity additions under 100% Clean Access (MW)
Source: Bloomberg New Energy Finance, MININFRA. Note: Both charts assume all clean power in the pipeline is built. The left chart shows
capacity additions from publically announced power projects currently under development (planned, financing secured or under construction); the
same projects that are included in Figure 1.
Geothermal and hydropower make up the backbone of the 100% Clean Access grid with 400MW
and 360MW, respectively. There is also a particular opportunity to expand the solar market in the
0
1,000
2,000
3,000
4,000
5,000
6,000
2012 2014 2016 2018 2020
Fossil energysupply
Clean energysupply
Continuedgrowth demand
High demand
Low demand
0
1,000
2,000
3,000
4,000
5,000
6,000
2012 2014 2016 2018 2020
Clean energysupply - additional
Clean energysupply - pipeline
Continued growthdemand
High demand
Low demand
0
100
200
300
400
2013 2014 2015 2016 2017 2018 2019 2020
Solar
Peat
Hydro
Methane gas
Geothermal
0
100
200
300
400
2013 2014 2015 2016 2017 2018 2019 2020
Biomass
Solar
Hydro
Geothermal
The 100% Clean Access
plan contains 919MW
from clean sources
WHITE PAPER 11 November 2013
© Bloomberg Finance L.P.2013
No portion of this document may be reproduced, scanned into an electronic system, distributed, publicly displayed or used as the basis of derivative works without the prior written consent of Bloomberg Finance L.P. For more information on terms of use, please contact [email protected]. Copyright and Disclaimer notice on page 13 applies throughout. Page 4 of 13
Figure 2: Energy demand and supply – pipeline (GWh)
Figure 3: Energy demand and supply – 100% Clean Access (GWh)
Source: Bloomberg New Energy Finance, MININFRA. Note: All demand scenarios designed for 100% electrification. Assumes all planned
capacity is built. The left chart shows generation from publicly announced power projects currently under development (planned, under
construction and operational); the same projects that are included in Figure 1. The right chart includes supply from the clean energy projects
shown in Figure 1 and additional generation needed for 100% clean access.
2. 100% CLEAN ACCESS PLAN
2.1. Future energy mix
Rwanda will need an additional 0.4–1.5TWh of clean energy by 2020 over and above the current
project pipeline to achieve 100% access to renewable energy. Analysis shows that the country’s
rich natural resources would be sufficient to meet this demand.
Rwanda is located on the western side of the East Africa rift system and has high potential for
geothermal power production, estimated at 700MW from four sites. There are 333 potential small
hydropower sites in the country. If each can produce at least 2MW, this amounts to a potential of
660MW. Rwanda has good solar resources with insolation at 5kWh/m2/day average. The
biomass in the country should easily be sufficient to support a 20MW plant – a small-scale facility.
We outline one scenario that meets the 100% Clean Access criteria in Figure 5. This includes the
58MW of operational hydropower in the country and the clean power part of the existing pipeline,
which equals 471MW (Figure 4; details in Appendix A). Adding a further 390MW by 2020 would
create enough generation to meet demand in the continued growth scenario with renewable
energy alone (Figure 6) – giving 919MW of power in total. The additional 390MW capacity is a
mix of hydropower (140MW), solar (130MW), geothermal (100MW) and biomass (20MW).
Figure 4: Capacity additions in pipeline (MW)
Figure 5: Capacity additions under 100% Clean Access (MW)
Source: Bloomberg New Energy Finance, MININFRA. Note: Both charts assume all clean power in the pipeline is built. The left chart shows
capacity additions from publically announced power projects currently under development (planned, financing secured or under construction); the
same projects that are included in Figure 1.
Geothermal and hydropower make up the backbone of the 100% Clean Access grid with 400MW
and 360MW, respectively. There is also a particular opportunity to expand the solar market in the
0
1,000
2,000
3,000
4,000
5,000
6,000
2012 2014 2016 2018 2020
Fossil energysupply
Clean energysupply
Continuedgrowth demand
High demand
Low demand
0
1,000
2,000
3,000
4,000
5,000
6,000
2012 2014 2016 2018 2020
Clean energysupply - additional
Clean energysupply - pipeline
Continued growthdemand
High demand
Low demand
0
100
200
300
400
2013 2014 2015 2016 2017 2018 2019 2020
Solar
Peat
Hydro
Methane gas
Geothermal
0
100
200
300
400
2013 2014 2015 2016 2017 2018 2019 2020
Biomass
Solar
Hydro
Geothermal
The 100% Clean Access
plan contains 919MW
from clean sources
• Country Need - Israel
• Increase trade between the most innovative economy to the one that needs it most
• Scarce Resources Analysis
• Access to Indian SME, Smart Local capital
• Domain Partner
• Small Industries Development Bank of India
• Gap
• Local capital, skill, culture, patience
• Scenario / Solution
• Provide BD / Operational / Financial envelope to Israeli companies entering India
• Verticals
• Mature innovative technologies that are needed in India
• Operational plan
• Israel India Impact Innovation Fund
• Operational Partners
• Kaenaat, SVCL, SIDBI, MoE
COUNTRY LEVEL INTERVENTION – ISRAEL-INDIA
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