Promoting workforce development in the energy transition sector - Instiglio

Promoting workforce development in the energy transition sector

Promoting workforce development in the energy transition sector

Overview

Type of Project

Results-Based Financing mechanism

Strategic Pillar

Government Partnerships

Sector

Workforce Development

Region

Latin America and the Caribbean

Country

Colombia

Abstract

Instiglio designed and will potentially accompany the implementation of a Social Impact Bond (SIB) focused on promoting workforce development in the energy transition sector in Bogota. The SIB will potentially be having the Grupo Energía Bogotá (GEB), one of the largest energy companies in Colombia, the District Agency for Higher Education, Science, and Technology (ATENEA), and other government entities, incentivizing outcome payments for training, job placement, and job retention results. 

 

The SIB will potentially be implemented in 2024 and will have ~USD 1.2 million to train 1,775 people, place 1,243 people in formal jobs related to energy transition, and retain 932 of them in their employment for three months. It will be focused on short trainings to help close the talent gaps in Bogota’s energy transition sector. Additionally, it will have specific incentives for women, aiming to promote their participation in sectors traditionally dominated by men. 

 

This pilot seeks to be the first iteration of many Results-Based Financing (RBF) programs led by GEB until 2030. Ultimately, the SIB seeks to support a sustainable energy transition in Colombia, transform how public and private actors fund regional workforce development programs, and continue generating best practices of how RBF can enhance workforce development in Latin America. 

Project
Partners

The issue

Currently, the world is immersed in an energy transition process in response to the need to address climate change, reduce dependence on fossil fuels, close social gaps, and contribute to the planet’s sustainability. This transformation towards more sustainable and clean energy sources is generating a significant impact on the labor market. As we move towards a more sustainable energy model, talent gaps emerge due to the diminishing relevance of specific roles and the demand for qualified workers for new tasks. 

In Colombia, the growth of solar and wind energy, the emergence of green hydrogen, and the implementation of initiatives such as the circular economy have the potential to create around 120,000 jobs. However, to meet this demand, efforts are needed to strengthen skills (up-skilling) and provide training in new skills (re-skilling) in various regions of the country, including Bogota.   

The response

To support the energy transition and address the challenge of talent gaps, Bogotá’s Energy Group (GEB) is advancing the “Fabio Chaparro Education for Energy Transition Program (2022 – 2030).” This program aims to ensure the availability of qualified personnel for the energy transition in Bogotá and contribute as part of the solution to the climate emergency. The program has a budget allocation of approximately USD 13 million and seeks to benefit 24,561 people. The GEB strives to make the most effective use of its resources to achieve the desired impact.  

To achieve this objective, the GEB has sought the assistance of Instiglio in crafting the technical and strategic design for the inaugural tool originating from the educational program. This tool, a Results-Based Financing (RBF) instrument, incentivizes favorable outcomes in addressing talent shortages within the energy transition sector. Additionally, it has the potential to generate insights to enhance the effectiveness of GEB’s resource utilization in the future through subsequent iterations of the designed instrument.  

To achieve this, Instiglio designed a Social Impact Bond (SIB) focusing on closing talent gaps in energy transition for individuals with a minimum level of education corresponding to technical training in Bogota. The SIB will pay for trainings, job placements, and three-month retention outcomes, prioritizing the participation of women.  

Under this structure, the GEB decided to be the instrument’s investor and involve ATENEA as a potential payer for training outcomes. Furthermore, ongoing discussions are in progress with another entity within the local government to assess the viability of their involvement as an additional outcome payer. Having previously collaborated on various employment programs, the GEB and ATENEA have opted to spearhead the development of this SIB collaboratively. Instiglio provided technical assistance to both parties in the technical design and structuring of the SIB, which is expected to be replicable in multiple iterations until 2030. 

The impact

The SIB will potentially be implemented in 2024, aiming to train 1,775 people, place 1,243 people in formal jobs related to energy transition, and have 932 retain their employment for three months. Additionally, the goal is for 372 of these individuals to be women, aiming to promote women’s participation in traditionally male-dominated sectors.  

Furthermore, this pilot is intended to be: 

(i) simple, ensuring a high probability of success and generating relevant insights for future iterations; 

(ii) replicable, establishing a sustainable mechanism through 2030; and 

(iii) catalytic, to reshape the internal dynamics of the entities involved and contribute to revitalizing the employment ecosystem in Bogota. 

As a result, it aspires to be the pioneer among numerous Results-Based Financing (RBF) mechanisms dedicated to fostering a sustainable energy transition in Bogota and Colombia. 

Additionally, this program continues to strengthen Instiglio’s workforce development practice in Latin America. What sets it apart is its distinctive collaboration with government entities, such as ATENEA from the Mayor’s Office of Bogota, alongside the inclusion of new employment service providers. It also marks the involvement, for the first time, of public-private actors like GEB, expanding the Results-Based Financing (RBF) ecosystem in Bogota and catalyzing a transformative shift in the allocation of social resources within the region. 

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