47619 Energizing Climate-Friendly Development: World Bank Group Progress on Renewable Energy and Energy Efficiency in Fiscal 2008 THE WORLD BANK Energizing Climate-Friendly Development World Bank Group Progress on Renewable Energy and Energy Efficiency in Fiscal 2008 February 2009 A L I N E R V E T A S L T T I M E N T M U L • • G Y U C THE WORLD BANK A R N A E N T G E E A Copyright © 2009 The International Bank for Reconstruction and Development / The World Bank Group 1818 H Street, NW Washington, D.C. 20433, USA All rights reserved Second printing: February 2009 Manufactured in the United States of America This document is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of the Board of Executive Directors of the World Bank Group or the governments they represent. ii Contents Acronyms and Abbreviations v Foreword vii Acknowledgments viii Executive Summary ix Clean Energy, Development, and the Climate Change Challenge 1 Case One: Promoting Clean Energy Through Carbon Markets— 6 Mainstreaming the Clean Development Mechanism in WBG Projects Case Two: IFC Investments in the Solar PV Supply Chain 8 Energy Efficiency: Maximizing the Win-Win Opportunities 11 Case Three: China—Improving the Energy Efficiency of Medium-Size 16 and Large Industrial Enterprises Case Four: CDM Benefits for Energy Efficiency—An Illustration of 17 the WBG’s Recent Initiatives Renewable Energy in Scaling Up Access in Africa 19 Case Five: Solar PV Showing the Light in Rural Mali 23 Case Six: What’s Cooking? Projects in Support of Improved Cookstoves 24 Case Seven: Power to the People—Community Forestry for Sustainable Energy 26 in Senegal and Benin Supporting Innovations in Renewable Energy and Energy Efficiency Technology 29 Case Eight: Structuring for Private Sector Advanced Technology Initiatives 36 Case Nine: Improving Tools for Planning Power Systems in an Increasingly 38 Volatile Economic Environment Renewable Energy and Energy Efficiency Portfolio Review 41 Annex 1: Institutional Support for Renewable Energy and Energy Efficiency 53 Annex 2. Annual Renewable Energy and Energy Efficiency Portfolio Review 57 Annex 3: FY08 Renewable Energy and Energy Efficiency Projects (millions of U.S. dollars) 61 List of Boxes Box 1: Climate Investment Funds 3 Box 2: Investment Climate Assessment for Renewable Energy in India 4 Box 3: IFC’s Energy Efficiency Interventions through the Financial Sector 13 Box 4: Developing Financial Intermediation Mechanisms for Energy Efficiency 14 for Brazil, China, and India—World Bank Technical Assistance Activities iii Box 5: The Bulgaria Energy Efficiency Fund 15 Box 6: Off-Grid Electrification Guidance 22 Box 7: Advanced Energy Technologies Reduce the Economic Vulnerability of 31 Poorer Countries to Fossil Fuel Prices Box 8: Technology Improvement Support to Boost Innovation in Photovoltaics in China— 35 Helping Technologies Bridge the “Valley of Death” Box 9: Mainstreaming Sustainable Energy at the International Finance Corporation 44 Box 10: Mainstreaming Large-Scale Solar Energy 47 List of Figures Figure 1: Share of Renewable Energy and Energy Efficiency x Figure 2: WBG Renewable Energy and Energy Efficiency Commitments, Fiscal 1990–2008 xi Figure 3: Share of Renewable Energy and Energy Efficiency Projects by Outcome, Fiscal 2008 xi Figure 4: Distribution of World Climate Risks 1 Figure 5: Primary CDM Projects and Carbon Sellers, 2007 7 Figure 6: Emerging Market Opportunities 8 Figure 7: Marginal Emission Reduction Costs for the Global Energy System, 2050 11 Figure 8: Growth Potential for Renewable Power Generation, 2000–50 29 Figure 9: Grid Power Supply Cost Trends over the Next 20 Years 30 Figure 10: WBG Renewable Energy and Energy Efficiency Commitments, Fiscal 1990–08 43 Figure 11: Share of Renewable Energy and Energy Efficiency Relative to the WBG’s 43 Total Energy Commitment Figure 12: WBG Renewable Energy and Energy Efficiency Commitments by Region, 45 Fiscal 2008 Figure 13: World Map with Distribution of Renewable Energy and Energy Efficiency Projects 45 Figure 14: Commitments by Region, Fiscal 2008 46 Figure 15: Share of Projects by Outcome, Fiscal 2008 47 Figure 16: AAAs with Focus on Renewable Energy and Energy Efficiency, Fiscal 2000–08 48 List of Tables Table 1: WBG Commitments for Renewable Energy and Energy Efficiency in Fiscal 2008 x Table 2: Energy Efficiency Opportunities and Measures in Key Consuming Sectors 12 Table 3: WBG Commitments for Renewable Energy and Energy Efficiency, Fiscal 2008 42 Table 4: Measuring Progress in New Renewable Energy and Energy Efficiency 43 Lending against the Bonn Commitment(millions of U.S. dollars) Table 5: Projects by Region, Fiscal 2008 45 iv Acronyms and Abbreviations AAA Analytical and advisory GEF Global Environment Facility activity GHG Greenhouse gas AFR Africa Region IBRD International Bank for ASTAE Asia Sustainable and Reconstruction and Alternative Energy Program Development BEEF Bulgaria Energy Efficiency IDA International Development Fund Agency BISCO Baotou Iron and Steel IEA International Energy Agency Company IFC International Finance CDM Clean Development Corporation Mechanism IGCC Integrated Gasification CFL Compact fluorescent lamp Combined Cycle CFU Carbon Finance Unit IPCC Intergovernmental Panel on CG Competitive Grant Climate Change CPF Carbon Partnership Facility LCR Latin America and Caribbean CSP Concentrating Solar Power Region DCCSF Development and Climate LED Light-emitting diode Change: A Strategic LPG Liquefied petroleum gas Framework for the World M&E Monitoring and evaluation Bank Group MIGA Multilateral Investment DG Distributed Generation Guarantee Agency DSM Demand-side management MNA Middle East and North Africa EAP East Asia and Pacific Region Region ECA Europe and Central Asia NEA Nepal Electricity Authority Region NGO Nongovernmental EDTIP Electricity Distribution and organization Transmission Improvement O&M Operations and maintenance Project (Pakistan) OECD Organization for Economic EE Energy efficiency Co-operation and EFCC Externally Fired Combined Development Cycle PEM Proton Exchange Membrane ESCO Energy service company PPP Public-private partnership ESMAP Energy Sector Management PROGEDE Sustainable and Participatory Assistance Program Energy Management Project FCFI Fuel Cell Financing Initiative (Senegal) Project FINESSE Financing Energy Services PV Photovoltaic(s) for Small-Scale Energy Users QR Quick response Project RD&D Research, development, and FY Fiscal Year—July 1 to June 30 deployment GDP Gross domestic product RE Renewable energy v REDP Renewable Energy TF Trust Fund Development Project (China) UNFCCC U.N. Framework Convention RERED Rural Electrification on Climate Change and Renewable Energy VBNRM Village-Based Natural Development Project Resource Management RSEEP Russia Sustainable Energy WASP Wien Automatic System Efficiency Program Planning Package SAR South Asia Region WBG World Bank Group SDN Sustainable Development Network Units of Measure SIAP Sustainable Infrastructure kW Kilowatt Action Plan kWh Kilowatt-hour SIDA Swedish International MW Megawatt Development Agency Mtce Million tons of coal equivalent vi Foreword Renewable energy and energy efficiency offer vital solutions in the face of global climate change and pressing energy needs for development. Climate changes and energy price shocks can wreak havoc on the lives of the poorest in developing countries, strike at the foundations of energy security and economic growth, and put years of hard-earned development at risk. The World Bank Group (WBG) addresses these various challenges by putting renewable energy and energy efficiency at the heart of its energy agenda. Since 1990, we have committed more than US$14 billion to renewable energy and energy efficiency, adding US$6.3 billion in the last four years to meet the increasing demand for these clean energy options. Millions across the world have gained a better quality of life through the WBG’s support of solar, wind, hydro, geothermal, biomass, and biogas energy, as well through greater efficiency in energy use. The number of beneficiaries who have made the switch from traditional forms of energy to renewable and efficient energy options through our projects continues to grow, which provides a strong indication of our progress. Going forward and building on the success of our projects, we will continue to leverage our techni- cal expertise, policy advice, and financing resources to foster transformative change in the use of renewable energy and energy efficiency by our partner countries. This annual report is the fourth in the series since the promise we made at the Bonn International Renewable Energies Conference in June 2004, to increase renewable energy and energy efficiency lending 20 percent per year, and to report on the progress toward that goal. The report highlights our achievements in fiscal 2008 and demonstrates how we are meeting our pledge to improve the lives of those who are most vulnerable and the least able to cope with climate change and energy price shocks. We would like to thank our partner countries, our development partners, and the WBG staff for their valuable contribution, hard work, and dedication toward expanding the use of renewable energy and energy efficiency. Greg Radford, Director Jamal Saghir, Director Environment and Social Development Energy, Transport and Water Department International Finance Corporation Chair, Energy and Mining Sector Board The World Bank vii Acknowledgments The report was prepared jointly by the Energy, Transport and Water Department in the World Bank’s Sustainable Development Vice Presidency and the Environment and Social Development Department of the International Finance Corporation (IFC). The work was directed by Anil Cabraal (World Bank) and Alan Miller (IFC) and was prepared under the overall guidance of Lucio Monari and Jamal Saghir. This report is issued under the auspices of the Energy and Mining Sector Board. Patrick Avato, Jonathan Coony, Michele Diez, Alan Miller, Fanny Missfeldt-Ringius, Ishani Mukherjee, and Ashok Sarkar are the principal authors of the chapters. Case studies and boxes were prepared by Reyaz Ahmad, Rogerio Carneiro de Miranda, Istvan Dobozi, Koffi Ekouevi, Liu Feng, Chandrashek- har Govindrajalu, Sandeep Kohli, Soren Krohn, Natalia Magradze, and Ashok Sarkar. Additional inputs were provided by Katherine Steel and Sudeshna Ghosh Banerjee. The portfolio analysis was conducted by Michele Diez and Varun Nangia with contributions from Sabin Basnyat. Photos are credited to Patrick Avato, Shreyans Bhansali, Mike Binder, Anil Cabraal, Zhuo Cheng, Mac Cosgrove-Davies, Alexandra le Courtois, Istvan Dobozi, Dimitar Doukov, Koffi Ekouevi, Jon Exel, Robert Robelus, Zubair K. M. Sadeque, Awa Seck, Nuyi Tao, Ernesto Terrado, Alok Kumar Singh, Lucia Spinelli, the Lighting Africa Media Kit, the World Bank Photo Library, Philippines Department of Energy/CEPALCO, and the Energy Sector Management Assistance Program (ESMAP). Printing, photograph coordination, and organization support was provided by Ishani Mukherjee and Eileen Fredriksen. Rebecca Kary, Katia Theriault and Anna Rosa Hidalgo provided editing support, and The Word Express, Inc. was responsible for the typesetting. Please address questions or comments to Alan Miller (amiller2@ifc.org) or Anil Cabraal (acabraal@ worldbank.org). viii Executive Summary Meeting the energy needs for development and addressing climate change are two of today’s de- Climate change policies cannot be the frost- fining global issues. In addressing both, renew- ing on the cake of development; they must able energy (RE) and energy efficiency (EE) offer be baked into the recipe of growth and social development. The World Bank has tangible solutions for reducing greenhouse gas already been building on synergies between (GHG) emissions and concomitantly providing climate action and development—working on energy security and efficiency, encour- energy needed to usher billions of people onto aging renewable energy, protecting urban the path of economic development and towards air quality, helping with the management a better life. of arid lands, and assisting with adaptation of agriculture. In developing countries, the progress of large —Robert B. Zoellick, President populations is held up because of a lack of World Bank Group access to the energy required for long-term Opening Plenary Session Statement to the 13th Conference of the Parties to the economic and social development. This past UNFCCC year has seen dramatic volatility in oil prices. Bali, Indonesia Volatile energy prices are impacting energy December 12, 2007 security, balance of payments, inflation, and economic growth. Because of their potential to provide energy that is low-carbon, clean, safe, reliable, and close to costs. As a result, demand for such solutions consumers, renewable energy and energy ef- has grown significantly in client countries in ficiency technologies play an important role in recent years. addressing these challenges. In response, the World Bank Group (WBG)— In fact, volatile fossil fuel prices and energy comprising the World Bank, International security concerns have increased their attrac- Finance Corporation (IFC), and Multilateral tiveness in a large number of diverse applica- Investment Guarantee Agency (MIGA), as well tions. Energy efficiency measures, for example, as co-financing from the Global Environment Fa- through energy-efficient lighting, are a highly cility (GEF) and Carbon Finance—has in recent effective tool not only in reducing energy costs, years considerably increased its investment and but also in quickly reducing peak loads and advisory services to help its partner countries therefore power generation requirements to exploit renewable energy and energy efficiency address the acute power crises many devel- opportunities. oping countries are currently experiencing. Renewable energy technologies are least-cost This report summarizes the progress that has energy alternatives in many rural, sparsely been made in renewable energy and energy populated areas where grid electricity connec- efficiency projects at the WBG during fiscal tions remain elusive and the economics of diesel 2008 (July 2007–June 2008), and presents case generators—the most widespread distributed studies and analyses from several noteworthy electricity technology—are affected by high fuel projects. ix Table 1: WBG Commitments for Renewable Energy and Energy Efficiency in Fiscal 2008 Commitments in fiscal 2008 (millions of US$) Source of funds New RE Hydro > 10 MW EE Total World Bank 272 625 719 1,616 IBRD/IDA 117 601 624 1,343 GEF 90 — 55 145 Carbon Finance 65 24 40 128 IFC 115 361 473 949 Own Funds 72 361 473 906 Carbon Finance 39 — — 39 GEF 4 — — 4 MIGA 88 21 — 110 Total 476 1,007 1,192 2,675 Note: Some columns may not add up exactly because of rounding. Source: WBG data. World Bank Group Financial Support for as two cross-border projects, were supported in Renewable Energy and Energy Efficiency fiscal 2008, which accounted for 35 percent of the total WBG energy lending commitments in In fiscal 2008, total WBG financial commitments fiscal 2008 (see Figure 1).1 This represents an 87 for renewable energy, including hydropower of percent rise in financing for renewable energy all sizes, and energy efficiency rose to US$2.7 bil- and energy efficiency from US$1.4 billion in lion (Table 1). Ninety-five renewable energy and fiscal 2007. energy efficiency projects in 54 countries, as well As shown in Table 1, in fiscal 2008 commit- ments for new renewable energy and energy efficiency were US$1.7 billion, and an addi- Figure 1: Share of Renewable Energy and Energy E ciency (percent of total WBG energy lending) tional US$1 billion was committed for hydro- 40% power projects greater than 10 MW per facility. 35% Cumulative WBG financial commitments for 31% renewable energy and energy efficiency from 30% fiscal 1990 to fiscal 2008 now exceed US$14 billion (Figure 2). 20% 20% 18% 13% In fiscal 2008, out of 95 renewable energy 10% and energy efficiency projects, 34 provided improved energy efficiency on the demand 0% 1990–1994 1995–1999 2000–2004 2005–2008 2008 1 In addition to renewable energy and energy efficiency, total WBG energy lending includes thermal electricity generation; Year oil, gas, and coal production and transport; electricity trans- Source: WBG data. mission and distribution; and policy reform projects. x side to households and industry, thereby re- Figure 2: WBG Renewable Energy and Energy E ciency ducing energy costs (Figure 3). Moreover, by Commitments, Fiscal 1990–2008 3,000 15,000 reducing electricity loads, these projects play Energy e ciency an important role in mitigating acute power New renewable energy 2,500 Hydro > 10 MW crises and reducing the need for investments Cumulative commitment 12,000 in additional electricity generation capacity. Annual US$ millions 2,000 Cumulative US$ millions 28 projects employed renewable energy solu- 9,000 tions to improve access to rural communi- 1,500 ties, thereby allowing people to benefit from 6,000 improved living standards and productivity 1,000 through modern lighting, irrigation, and other productive uses of modern energy. 19 projects 500 3,000 employed renewable energy technologies to generate power for electricity grids, while the 0 0 remaining 14 improved energy efficiency on the 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 supply side, for example, through power plant Source: WBG data. rehabilitation and reductions in transmission and distribution losses. At the Bonn International Conference on Re- proved capacitors, automated meter reading newable Energies in 2004, the WBG made a systems, and efficient lighting measures—are commitment to accelerate its support for new being implemented in a number of countries, renewable energy and energy efficiency.2 It including Argentina, Burundi, China, Pakistan, pledged to increase its financial commitments Ukraine, and Zambia. for new renewable energy and energy effi- ciency at a rate of 20 percent per year between fiscal 2005 and 2009, compared to a baseline Figure 3: Share of Renewable Energy and Energy E ciency commitment of US$209 million (equal to the Projects by Outcome, Fiscal 2008 average of the previous three years). This baseline methodology was selected to allow a meaningful interpretation of investment Rural Energy Access Grid supply trends that would balance the lumpy nature 20% 29% of investments in the energy sector. As in pre- vious years, the WBG has outperformed its Bonn commitment. From fiscal 2005 to 2008, the WBG committed close to US$3.8 billion for EE (supply-side) 15% EE (demand-side) new renewable energy and energy efficiency 36% compared to the Bonn commitment goal of US$1.3 billion for the same period. Source: WBG data. High energy prices and acute power shortages have led to an increased demand for energy ef- ficiency projects. Projects that comprehensively increase energy efficiency on both the supply 2 New renewable energy comprises energy from solar, wind, biomass, and geothermal, as well as hydropower from facili- and demand sides—for example, through im- ties with capacities up to 10 MW. xi Solar lighting helps Fakhruddin, a beneficiary of the RERED project in Bangladesh, keep his tailoring business open after dark. As examples of the innovative projects being for clean energy across all sectors. In fiscal 2008, supported by the WBG, the Kureimat Solar- IFC’s Financial Markets Group had nine clean Thermal Hybrid project in Egypt will dem- energy financing investments in five countries, onstrate the operational viability of hybrid including some of the largest and most rapidly solar-thermal power generation technology and growing emitters of GHGs—Brazil, China, Rus- contribute to the replication of integrated solar sia, Turkey, and Ukraine. These projects will combined cycle power generation technology in provide commercial lenders with more than Egypt and elsewhere. In Bangladesh, the World US$280 million for dedicated credit lines for Bank approved carbon emissions reduction clean energy activities, an approach originally agreements with Grameen Shakti, a renewable developed with donor funds more than a decade energy company, and IDCOL Ltd., an infrastruc- ago. The projects will also help address the di- ture financing organization, to purchase carbon verse, profitable, but smaller-scale investment emissions reductions from more than 1 million opportunities otherwise difficult to capture. solar home systems that will displace kerosene lighting. Going Forward The growth in IFC’s clean energy portfolio in Renewable energy and energy efficiency feature fiscal 2008 was indicative of a shift from small, very prominently in the WBG strategy going donor-supported, niche-market investments to forward—most prominently in the Sustain- an increasingly diversified and global market able Infrastructure Action Plan (SIAP) that was xii Beneficiaries of the EAREP II mini-hydro and solar project in Ethiopia launched in July 20083 and in the comprehensive sector approach, to respond to the emerging Development and Climate Change: A Strategic trends in energy security and climate change Framework for the World Bank Group (DCCSF) and to close the energy access gap. Renewable that was endorsed by the WBG Development energy and energy efficiency will be important Committee in October, 2008.4 components of the SIAP for improving access to and affordability of modern energy services; Sustainable Infrastructure Action Plan. The action improving macroeconomic and fiscal balances; plan will significantly scale up infrastructure promoting good governance and private sector investment in developing countries to support development; and protecting the environment. their growth and poverty reduction efforts. The SIAP, to be implemented over the next three years, will help countries improve the reach and quality of infrastructure investments through 3 See the SIAP website: http://go.worldbank.org/ZSB- 5KSBU30 increased financial and analytical support. The 4 See the DCCSF website: http://go.worldbank.org/HZ- SIAP calls for a renewal of the WBG core energy 77KYCI90. xiii Development and Climate Change: A Strategic countries that contribute to the demonstra- Framework for the World Bank Group. The DCCSF tion, deployment, and transfer of low-carbon is based on the recognition that an effective technologies. The projects or programs must response to climate change must combine both have significant potential for long-term mitigation, to avoid the unmanageable, and GHG savings. adaptation, to manage the unavoidable. The • The Strategic Climate Fund (SCF) will be DCCSF is designed to make effective climate broader and more flexible in scope, and will action a part of core development efforts that serve as an overarching fund for various are mainstreamed into all WBG operations. In programs to test innovative approaches to an effort to reduce the resource gap in address- climate change. The first such program is ing these issues, the DCCSF includes funding aimed at increasing climate resilience in sources in the Climate Investment Funds (CIF). developing countries. These funds, which were approved by the World Bank board on July 1, 2008, are intended to The funds, to be disbursed as grants, highly catalyze GHG emission reductions by helping concessional loans, and/or risk mitigation developing countries finance the costs of deploy- instruments, will be administered through ing clean technologies. the multilateral development banks and the WBG for quick and flexible implementation Specifically, the CIF will include two trust funds of country-led programs and investments. designed to help developing countries in their Developing countries will have an equal voice efforts to mitigate GHG and adapt to climate in the governance structures of the funds, and change. decisions on the use of funds will be made by consensus. On September, 27, 2008, 10 donor • The Clean Technology Fund (CTF) will provide countries pledged to fund the CIF with a total new, large-scale financial resources to invest of US$6.1 billion. in projects and programs in developing xiv Clean Energy, Development, and the Climate Change Challenge The past year has brought unprecedented focus the progress toward meeting the Millennium to the climate change issue. The latest report of Development Goals for reducing poverty. the Intergovernmental Panel on Climate Change (IPCC), recognition of IPCC by the Nobel Peace Accelerating the use of clean energy technologies Prize Committee, along with new evidence of is one of the best responses to climate change. accelerated Arctic melting and other signs of As studies by the International Energy Agency warming, brought about general agreement that (IEA), IPCC, McKinsey, and other authoritative climate change as the result of human activity is sources document, a wide range of commercially real, increasingly urgent, and a critical threat to available, clean energy technologies could be addressing poverty and advancing development. deployed that would be consistent with their Although our understanding of the risks and full economic value and would substantially re- likely impacts of climate change is still evolving, duce the global growth of GHG emissions. Such there is a consensus that the poorest countries opportunities exist in virtually all economies, and communities are the most vulnerable and can often be deployed in a relatively short time will suffer the earliest and to the greatest degree period, and continue to improve with new and (Figure 4). Consequently, if unchecked, climate advanced technology. The scope of opportuni- change may slow or even reverse the substantial ties is diverse and includes improving energy development gains made in recent decades and efficiency in buildings and transport, improving Figure 4: Distribution of World Climate Risks AGRICULTURE COASTAL IMPACTS IDA & BLEND COUNTRIES DROUGHT DEVELOPED AND IBRD COUNTRIES FLOODING SEPTEMBER 2007 This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information IBRD 35724 shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any STORM endorsement or acceptance of such boundaries. Source: World Bank, IDA and Climate Change: Making Climate Action Work for Development (Washington D.C.: World Bank, 2007) 1 the efficiency of power generation, fuel switch- the World Bank Group’ to guide its response to ing when cleaner fuels are available for power climate change in response to a request of the generation, and the use of hydro, wind, solar, Development Committee during the 2007 An- and other renewable fuels. These technologies nual Meetings. This Framework was approved would also promote economic development by the Development Committee in October by reducing oil imports and total energy costs, 2008 and includes several major initiatives to helping avoid or reduce power shortages, and expand the WBG’s role in promoting clean en- improving economic competitiveness. However, ergy.5 Building on the WBG’s record of growing the adoption of these technologies continues to its clean energy portfolio, a more ambitious goal be slower than economic and environmental has been announced to increase financing for goals would justify because of a number of energy efficiency and new renewable energy barriers. Thus, WBG clean energy initiatives by an average of 30 percent per year from a are central to linking development and climate baseline of US$600 million in average annual change. commitments during fiscal 2005–07. In addi- tion, the WBG will increase lending to hydro- A further basis for WBG engagement in climate power. Overall, the WBG aims to increase the change is the need for unprecedented global co- share of low-carbon projects from total energy operation. Developed countries have historically lending from 40 percent in fiscal 2006–08 to 50 been the dominant source of cumulative GHG percent in fiscal 2011.6 Some important new emissions and, accordingly, have accepted the analytical tools are being developed, including initial obligation to reduce emissions under the carbon “footprinting” (a means of measuring Kyoto Protocol. Although gross domestic prod- carbon emissions from investments) and, at uct (GDP) and energy use per capita remain in IFC, a pilot program to test the impact of using general much lower in developing countries than a “shadow price” for carbon (attaching a price in the industrial countries, emissions from the to carbon to test its impact on project financial former have been growing much more rapidly— analysis). The Framework includes several in “business as usual” scenarios prepared by the action areas closely related to its clean energy International Energy Agency (IEA), more than goals, including mobilizing additional conces- two-thirds of global GHG emissions in 2050 are sional resources. expected to come from developing countries. Consequently, keeping global emissions within As the Framework documents, unprecedented the levels recommended by the IPCC cannot be additional resources amounting to many billions achieved by reducing emissions from developed of dollars will be needed for both mitigating countries alone. Even if all GHG emissions from and adapting to climate change. As most of this industrial countries were to cease immediately, investment will necessarily come from the pri- cumulative emissions from developing countries vate sector; one objective will be to use financial would exceed those from the industrial countries instruments more creatively to channel private in about 20 years, which would result in danger- ous concentration levels soon thereafter. To avoid 5 See the DCCSF website: http://go.worldbank.org/HZ77K this worrisome future, developing countries will YCI90. need technology, financing, appropriate policy 6 It should be noted that the share of projects that are not environments, and human capacity. counted as low-carbon are by no means all thermal power generation or oil and gas projects, but rather include to an increasing degree transmission and distribution projects, as The WBG has prepared ‘Development and well as development policy loans. See Annex 1 for definitions Climate Change: A Strategic Framework for used to guide the categorizing of projects. 2 investment in a more climate-friendly direction Other objectives of the Strategic Framework (see the paragraph on Leveraging Private Sector include the following: Resources below). However, in order to mitigate the cost of using climate friendly technologies in • Facilitating development of market-based financ- developing countries, increased donor funds for ing mechanisms. The WBG has more than a climate funds will also be essential. In July 2008, decade’s extensive experience in promoting the WBG board approved a program for hosting the carbon market and other market-based a new program of donor-supported Climate In- instruments with the potential to increase cli- vestment Funds (see Box 1). At an initial pledging mate-friendly investments (see Case One). meeting in September 2008, 10 donors collectively • Leveraging private sector resources. The U.N. announced pledges of US$6.1 billion dollars for Framework Convention on Climate Change Climate Investment Funds programs. (UNFCCC) estimates that 86 percent of the Box 1: Climate Investment Funds The Climate Investment Funds (CIF) aim at reducing the cost of climate actions for developing countries and catalyzing transformational technologies and project approaches for climate change mitigation and adaptation. Approved by the WBG board in July 2008 and supported by US$6.1 billion in donor funds, the (CIF) is an interim instrument with specific sunset clauses linked to agreements on the future of the climate change regime. Funding and governance. By combining significant concessional financing with international financial institutions, public and private sector flows, and other climate financing (such as carbon finance and GEF), the CIF will demonstrate how multilateral development banks can help developing countries combine poverty reduction and growth objectives with climate action. Key features include Trust Fund Committees with a balanced representation of recipient and donor countries and project ap- proval by multilateral development banks boards. A Partnership Forum—a broad-based meeting of stakeholders—would be convened annually to provide a forum for dialogue on the strategic directions, results, and impacts of the CIF. Clean Technology Fund. The Clean Technology Fund (CTF) would provide scaled-up financing on a country-specific basis to contribute to demonstration, deployment, and transfer of low-carbon technolo- gies with a significant potential for long-term GHG emissions savings. In order to maximize impact, the CTF would work with both the private and public sectors to bring sufficient technological know- how and capital to dramatically scale up clean technology deployment, while remaining technology neutral. It would provide grant elements and utilize a range of concessional financing instruments, such as grants and concessional loans, as well as risk mitigation instruments, such as guarantees and equity, to make projects economically viable. Strategic Climate Fund. The Strategic Climate Fund (SCF) would provide financing to pilot new devel- opment approaches or to scale up activities aimed at a specific climate change challenge or sectoral response through targeted programs. The first program in the SCF would be pilot national level ac- tions for climate resilience in a few highly vulnerable countries. Other programs under consideration would support renewable energy technologies to increase energy access in low-income countries, and investment to reduce deforestation and forest degradation and to promote improved sustainable forest management. The World Bank’s role. Together with other multilateral development banks, the WBG will be respon- sible for implementing programs and projects financed by the CIF, following the normal programming and implementation procedures of its constituent entities. 3 additional resources required to respond als, manufacturing, component suppliers, to climate change will come from private financing, and other parts of the renewable sources. The WBG contributes to this need energy business in addition to provision of through its core role in improving the energy services (see Case Two). overall investment climate in developing • Supporting accelerated development and deploy- countries (see Box 2). Clean energy financing ment of new technologies. The development projects engage local financial institutions and deployment of new technologies will be in identifying clean energy lending oppor- an essential part of the response to climate tunities and, with rising energy prices, are change, even allowing for greater success in attracting much more client interest (see promoting existing commercial clean energy Case Three). As clean energy technologies options. The Strategic Framework describes have increasingly become a global product, the WBG’s contribution to the technology IFC has found increasing opportunities cycle. The issues involved with this topic for “supply-chain” investments in materi- are reviewed in Chapter 4. Box 2: Investment Climate Assessment for Renewable Energy in India The WBG is working with the government of India to improve the investment climate for renewable energy by undertaking a comprehensive review and mapping exercise of the existing regulatory and policy frameworks, as well as of market interventions. It will provide recommendations for designing coherent policies, regulations, and guidelines for scaling up renewable energy development in India. India has a history of promoting renewable energy, but progress has been uneven in recent years. The Ministry of New and Renewable Energy (MNRE) set a guideline tariff for purchase of power by utilities from renewable generators that lapsed in 2004. State regulators then began to set purchase prices, as well as renewable quotas. As a consequence, the incentives for renewables came to depend on the accuracy of the regulators’ estimation of the costs. The future energy market within which renewables will have to compete has become more uncertain. The National Electricity Act 2003 provides a frame- work for the introduction of wholesale competition and open access, and makes it mandatory for the state energy regulatory commissions to promote renewable energy-based generation. In addition, in 2008 the Government of India introduced the National Action Plan for Climate Change (NAPCC) which encourages the development of renewable energy based supply; MNRE has introduced output-based incentives for renewable energy (starting initially with grid-connected solar energy) and also plans to issue guidelines for tradable renewable energy certificates; and some states have introduced renewable energy-based surcharge funds and/or have issued competitive bidding for renewable energy sources. Although these actions are positive initiatives to encourage the uptake of renewables, the details of the design of the market structures and valuation of renewable energy-based generation are not clearly defined. However, they remain critical for the viability of the renewable energy projects, and in ensuring incubation and development of future renewable energy technologies (RETs) in India. Given the considerable variation in policy and regulations across states, investments may not neces- sarily be taking place in the most economically viable technologies and locations. Furthermore, with the introduction of competition, existing mechanisms for encouraging renewables, such as quotas and regulation of purchase prices, may require modification of their scope or may become less applicable. Accordingly, the study seeks to allow policy makers to take full account of the considerable informa- tion available on costs, performance, and other aspects of renewable energy technologies to deliver coherent policy in this area, while facilitating involvement from a wide set of important stakeholders in the process. The understanding of the existing regulatory and policy framework, the mapping of market interventions and the determination of an indicative economic valuation of the elements in the renewable energy framework will be important for consistent design of policies that address gaps and inconsistencies and further strengthen incentives for the most viable investments. 4 Climate change poses significant risk in developing nations like Bangladesh where the impacts from gradual temperature and sea level rises will lead to more intense floods, droughts, and storms. The chapters that follow describe several dif- significant source of global GHG emissions, ferent ways in which the WBG is working to but it is at great risk from climate change. De- promote clean energy, each of which relates to velopment and poverty alleviation will require climate change. Chapter 2 focuses on the WBG’s substantial increases in energy services; done increasing commitment to promote energy ef- with clean energy technologies, the increase in ficiency, including financing, policy reform, and emissions and environmental cost will be mod- capacity building. The link to climate change est. Chapter 4 reviews the critical importance of is to find scale-up strategies, such as leveraged new technologies in addressing climate change financing and sector approaches that can make and evolving WBG approaches to accelerate an impact on the scale required to make a mean- their development and deployment in develop- ingful difference in GHG emissions. Chapter ing countries. And Chapter 5 is a summary of 3 looks at WBG efforts to promote renewable WBG support of renewable energy and energy energy in Africa. Sub-Saharan Africa is not a efficiency. 5 Case One Promoting Clean Energy Through Carbon Markets—Mainstreaming the Clean Development Mechanism in WBG Projects Carbon markets have been gaining momentum by been engaged directly with the carbon market since leaps and bounds over the last few years. Globally, 2002. Initially starting with intermediation efforts on emissions reductions valued at US$64 billion were behalf of the Dutch government, it has evolved to traded in 2007 in carbon markets which embodies take long-term project and credit risk in emerging an increasing focus on clean energy and is by far the markets and to take carbon-related exposure for its most visible result of early regulatory efforts to miti- own account. gate climate change (Figure 5). The primary buyers of the Clean Development Mechanism (CDM) and Joint The World Bank’s new Carbon Partnership Facility Implementation (JI) till now have been from the EU, (CPF), approved in 2007, will promote GHG emission with Japan continuing to develop as another major reductions on a large scale through long-term invest- player.1 China remains the largest carbon seller with ments (such as power sector development, energy effi- 72 percent of the projects in 2007.2 ciency, gas flaring, transport, and urban development, including integrated waste management systems), Despite its strong momentum, the project-based car- help create an enabling environment for mitigation bon market faces challenges, including the absence programs, and scale up the delivery of carbon finance of market continuity beyond 2012, which put at risk through programmatic and sectoral initiatives that this additional source of financing for clean energy help catalyze a change in the way Bank client countries and other low-carbon investments in developing approach GHG mitigation. The CPF also addresses mar- countries. Complex rules, capacity constraints, regu- ket continuity issues as the purchase of carbon credits latory bottlenecks, and procedural inefficiencies have might extend up to 2022. During fiscal 2009–11, 12–16 strained the ability of the CDM infrastructure to de- emissions reduction programs are expected to be de- liver certified emissions reductions (CERs) on sched- veloped under the CPF. ule to many projects. Several of the WBG’s existing and upcoming CDM activities aim to directly address In fiscal 2007, the World Bank submitted new CDM these issues. methodologies for demand-side energy efficiency projects using “deemed savings”—related approaches Through its family of carbon funds, the WBG has to reduce unnecessary monitoring complexity. In addi- been a major player in the market for promoting GHG tion, the Bank helped develop programmatic CDM ap- emission reductions. The World Bank launched its proaches that could effectively enable aggregation of first public-private partnership, the Prototype Carbon Fund, in April 2000 (years before the Kyoto Protocol entered into force). Since then, carbon finance activi- 1 CDM and JI are mechanisms under the Kyoto Protocol that ties have grown to US$2.1 billion, through 10 funds, feed into the carbon market. Definitions are available through pooling stakes from 16 governments and 66 private UNFCC at http://unfccc.int/kyoto_protocol/mechanisms/ companies. Carbon finance, with its significant le- items/1673.php. veraging, has become a major channel to support 2 Further trends and details can be found in the WBG report, low-carbon investment. IFC’s carbon finance unit has “State and Trends of the Carbon Market 2008” (May 2008). 6 Figure 5: Primary CDM Projects and Carbon Sellers, 2007 Other Fugitive N2O 1% 3% 9% HFC Hydro 8% 12% CMM 5% Wind 7% Waste Management Biomass 4% 5% LFG Other 5% Renewables 0% Agro-forestry EE+Fuel switching World Bank provided support in FY08 to the Rwanda 0,1% 40% electricity utility, to procure 400,000 CFLs that help 2007 address power shortages. The utility aims to bring efficient (as a share of volumes supplied) lighting to 250,000 new consumers by 2012. India R. of Asia 8% small, dispersed, activities covering renewable energy 5% and demand-side energy efficiency in larger numbers. Africa 5% In parallel, the World Bank’s Carbon Finance Assist pro- China 73% gram continued to provide capacity building support ECA in areas of carbon finance and CDM to multiple stake- 1% holders in various countries, with a particular focus on Brazil Africa, which has, to date, had a very low global share 8% of CDM projects (see Figure 5).3 R. of Latin America On the financing side, new carbon instruments are 5% also emerging. IFC Carbon Delivery Guarantee has 2007 helped maximize the price of carbon credits to project (as a share of volumes supplied) developers through back-to-back forward contracts. Source: World Bank, State and Trends of the Carbon Market 2008 (Washington, D.C.: IFC provides credit enhancement and guarantees the World Bank, 2008). certified emission reduction (CER) delivery obligation of compliance market projects to secondary market buyers, and the premium in pricing obtained by the At the same time, institutions like MIGA insure against investment grade sellers in the secondary market investor loss in the event that political events in the is passed on to the projects net of guarantee fees. host country result in any breach of a CDM contract, During FY08, IFC signed innovative carbon delivery which increases the confidence of potential carbon guarantee agreements with two chemical compa- asset buyers and potential investors. A showcase nies: Rain CII Carbon in India, the largest producer of of WBG involvement in aggregating CDM benefits calcined coke in the world, and South Africa’s Omnia, through its energy efficiency projects is presented in one of the country’s leading fertilizer producers. The Case Four. investments underlying these transactions will re- duce greenhouse gas emissions equivalent to 12.5 million tons of carbon dioxide over the estimated life 3 The Carbon Finance Assist program is implemented by the of the assets. World Bank Institute (WBI). 7 Case Two IFC Investments in the Solar PV Supply Chain As the private sector arm of the WBG, IFC has been caused a short-term increase in prices despite im- involved in financing solar photovoltaic (PV) tech- proving production and product quality. However, nology since 1989. Most of this investment has been even at current prices, solar PV is well suited as a dedicated to household, off-grid applications to pro- niche, grid-connected source for fast-growing elec- vide lighting and cater to small household needs in tricity markets in developing countries (Figure 6), rural areas. However, in recent years the global PV many of which also benefit from high levels of solar market has had rapid growth as a result of energy irradiance. Associated with the growth of demand, a and environmental policies in the developed coun- vibrant supply chain is expected to emerge, mostly in tries leading to improving technologies, but also developing countries with competitive engineering supply shortages and opportunities for new invest- and labor costs. ments in manufacturing, materials, and components. PV production has been doubling every two years, IFC has already made investments in PV materials increasing by an average of 48 percent each year and manufacturing and is evaluating numerous ad- since 2002, making it the world’s fastest-growing en- ditional opportunities in this sector. The opportunity ergy technology.1 Total installations reached a record for IFC is to support the industry’s shift to emerging high of 2,826 MW in 2007. Financing this growth has markets. This will contribute to an acceleration in in turn become a significant global business with 84 cost reduction and to the achievement of grid par- identified financial transactions amounting to US$7.5 billion in 2007.2 1 Earth Policy Institute (www.earth-policy.org, 2007). Solar Cell PV continues to be a relatively expensive albeit clean Production Jumps 50 percent in 2007. source of electricity, and recent demand growth has 2 www.Solarbuzz.com. Figure 6: Emerging Market Opportunities Additional PV installation (GW) total in % CAGR 2015 07–15 2010 PV 40 installations 35.3 35.3 100% 38% 3.2 9% 38% China, India, Brazil, 30.5 Turkey, RoW 30 9.3 26% 56% ~15% 25.1 0.1 0% 101% 0.3 1% 167% 19.8 2.3 7% 59% 20 2.2 6% 31% 16.6 2.3 6% 49% 2010 PV 1.4 4% 54% 0.2 1% 59% cell/module production 12.7 5.4 15% 20% 10 1.5 4% 55% China, India, Brazil, 7.4 5.2 1.6 5% 25% Turkey, RoW 3.3 9% 73% 1.8 2.6 0.5 1% 57% 0.3 1% 63% ~35% 0 1.2 3% 72% 06 07E 08E 09E 10E 11E 12E 13E 14E 15E Source: Good Energies, Emerging Markets in Emerging Markets: Financing Opportunities for Clean Technologies in Emerging Markets, presentation given at Financing for Climate Innovative Solutions and New Market, 11-12 September, 2008. (Rüschlikon, Switzerland: Swiss Re Center for Global Dialogue, 2008) 8 Polysilicon for solar PV manufacturing from NITOL, Russia ity, thereby helping the solar PV industry achieve its by supporting the scaling of the supply chain in cost- potential as a competitive source of renewable en- competitive manufacturing locations. ergy. A closely related opportunity is to support solar power projects in countries or situations where solar Some examples of recent IFC investments in the PV PV is already a competitive solution. supply chain include a polysilicon (key material for solar cell) manufacturer in Russia, a solar PV manu- IFC is developing a solar strategy and emphasizes facturing facility in India, and a solar thin film maker supply chain investments in mainstream technolo- in China. gies to help drive the cost of solar PV energy down Upstream Manufacturing supply chain Downstream Materials, Cells and BOS and Power Polysilicon Equipment Wafering Modules Installation generation Solar Value Chain (crystalline Silicon) 9 Windmills, La Venta II in Oaxaca, Mexico 10 Energy Efficiency: Maximizing the Win-Win Opportunities Enhanced energy efficiency is considered to in buildings, industry, and transport could lower be the single largest win-win opportunity to energy use in 2050 by up to 33 percent.8 The reduce global GHG emissions. Much energy is potential for energy efficiency improvements is simply wasted, and energy savings options are particularly great in the most energy-intensive available throughout our client countries—big industries in the industrial and developing and small—and across their different sectors— countries, such as iron and steel. ranging from agriculture to households to indus- try. And, in fact, it offers a unique opportunity Though these appear to be win-win solutions to address multiple challenges facing the world on the surface, energy efficiency is a complex today: the challenge of pursuing sustainable eco- business. Even more so than in high-income nomic development; the challenge of addressing countries, energy efficiency investments in de- rising energy prices; the challenge of enhancing veloping countries are subject to market failures energy security; and the challenge of mitigating and they face technical, financial, institutional, global climate change. and policy barriers. The classic barriers to energy Many of our client countries, supported by en- ergy efficiency policies, projects, and programs, Figure 7: Marginal Emission Reduction Costs for the Global Energy have begun exhibiting trends of reduced energy System, 2050 intensities and decoupling of energy consump- 1,000 Transport tion from economic growth. These cost-effective alternative fuels Technology pessimism energy efficiency improvements can achieve sig- 800 Marginal cost (USD/t CO2 nificant GHG emissions reductions, as recognized 600 Industry Fuel switching and CCS in recent assessments by the IEA, IPCC, and other 500 Blue Map authoritative sources’ projections (see Figure 7). 400 Technology Power sector optimism 200 200 Energy Efficiency opportunities exist across End-use E ciency 100 ACT Map the entire chain of modern energy production, 0 50 distribution and consumption. Disparities in energy intensities between the developing and –200 0 5 10 15 20 25 30 35 40 45 50 industrialized countries are observed in both 2050 CO2 emissions reduction relative to Baseline (Gt CO2/yr) the supply and demand side and across various sectors and subsectors. Source: IEA, Energy Technology Perspectives 2008 (Paris: IEA, 2008). As illustrated in Table 2, considerable unex- ploited potential for energy efficiency improve- 7 For example, existing coal-fired thermal power stations in ments exists particularly along the delivery and China or India on average use 10–20 percent more fuel per end-use chains across various sectors of major kilowatt-hour than a comparable plant in the United States or Germany. energy-consuming countries.7 For example, the 8 IEA, Energy Technology Perspectives 2006 (Paris: IEA, IEA estimates that improved energy efficiency 2006). 11 Table 2: Energy Efficiency Opportunities and Measures in Key Consuming Sectors Sector Energy Efficiency Improvement Opportunities Buildings Integrated building design and measures such as better insulation, advanced windows, energy-efficient lighting, space conditioning, water heating, and refrigeration technologies. Industry Industrial processes, cogeneration, waste heat recovery, preheating, efficient drives (motor, pump, compressors). Cities and District heating systems, combined heat and power, efficient street lighting, efficient water supply, Municipalities pumping, and sewage removal systems. Agriculture Efficient irrigation pumping and efficient water use, such as drip irrigation. Power Supply New thermal power plants: Combined cycle, supercritical boilers, integrated gasification combined cycle (IGCC), and so forth. Existing generation facilities: Refurbishment and repowering (including hydro), improved operation and maintenance practices, and better resource utilization (higher plant load factors and availability). Reduced transmission and distribution losses: High-voltage lines, better insulated conductors, capacitors, efficient and low-loss transformers, and improved metering systems and instrumentation. Transport Efficient gasoline or diesel engines, urban mass transport systems, modal shifts to inter- and intra-city rail and water transport, improved fleet usage, CNG vehicles. Households Lighting, appliance efficiency, improved cookstoves. efficiency scale-up arise from non-economic pric- cal assistance, and analytical advisory activi- ing of energy and the greater emphasis given ties. These support the development of many by many consumers and investors to upfront well-tested energy efficiency technologies and (first) costs compared to recurring costs, such as approaches, including the following: fuel. Furthermore, a focus on return on invest- ment often leads to greater investment in new • Policy reforms (rational pricing or time- production capacity rather than cost reduction of-use pricing), often accompanied by the opportunities, such as energy efficiency improve- introduction of better metering systems; ments. This is especially so where energy costs energy efficiency standards and labeling are a small proportion of production costs. There for appliances and building codes which is also a generally higher-risk perception associ- lead to energy efficiency market transfor- ated with demand-side energy efficiency projects mation; vehicle fuel efficiency standards. (compared to supply-side projects) because of the For instance, the China Development of lack of awareness and experience among inves- Pro-Poor National Heat Pricing and Bill- tors and financiers. Finally, since these projects ing Policy project piloted and developed a depend on revenues generated through energy national policy framework in 2007 for heat savings, they also require robust systems of mea- pricing and billing adopted by the Ministry surement, monitoring, and verification of energy of Construction. It gave special attention to savings, which can be a challenge. preserving access to quality heating services for low-income households. This project The World Bank’s contribution to scaling up resulted in Tianjin becoming the first city to both supply-side and demand-side energy pilot the system of shifting from flat heating comes through a variety of investment, techni- tariffs to usage-based tariffs. 12 • Utility incentive programs that promote investments in demand-side management interventions (efficient lightbulbs, such as compact fluorescent lamps [CFLs] to replace inefficient incandescent lamps in numerous countries, such as Argentina, Ethiopia, and Pakistan). • Procurement based on life-cycle costing procedures for supply- and demand-side equipment; tariff policies and incentive mechanisms for efficient generation (such as supercritical, IGCC, and gas combined cycle); high-voltage transmission; distribu- tion networks; and metering. • Regulatory, legislative, and institutional Advertisement for CFLs in Buenos Aires, Argentina. The Argentina Energy Efficiency Fund, approved by the Board in development that creates an enabling envi- June 2008 aims to distribute 20 million CFLs and to replace ronment for energy service providers and incandescent bulbs currently in use. Box 3: IFC’s Energy Efficiency Interventions through the equipment manufacturers to finance more Financial Sector energy efficiency investments (see Boxes 3, 4, and 5). While energy efficiency opportunities exist as embedded components of larger projects • Information programs for creating awareness across the entire spectrum of IFC’s core in- about energy efficiency in various sectors. dustry sector investment business, perhaps the greatest opportunities exist as smaller discrete projects, including cogeneration WBG energy efficiency scale-up efforts have systems, lighting renovations, motor retro- led to the quadrupling of its energy efficiency fits, and control systems. These projects are investments—covering both the supply and de- typically too small for direct IFC investments. Since 1998, IFC has addressed this market mand side—to US$1.2 billion in fiscal 2008. The opportunity by partnering with financial in- portfolio includes diverse approaches consistent termediaries to develop specialized financial with the diverse needs and opportunities in our products for promoting energy efficiency as a profitable, sustainable banking business—for client countries. For example, the Electricity Dis- example, the Russia Sustainable Energy Ef- tribution and Transmission Improvement Project ficiency Program (RSEEP), which worked with (EDTIP) in Pakistan responds to severe power eight financial institutions to introduce energy efficiency finance in the Russian market, with a shortage problems and includes a demand-side collective target of US$60 million of energy ef- energy efficiency component of US$15 million. ficiency lending. The efforts of one such bank, These funds will be used for bulk procurement Center-Invest Bank, which disbursed a US$4 million credit line within the first three months and distribution of energy-efficient lightbulbs of the project’s launch in 2005, was recognized (CFLs), end-use capacitors, and advanced con- at the 2007 Financial Times–IFC Sustainable Banking Awards. Similar initiatives are ongoing sumer metering systems by four participating in China, the Philippines, and Peru. electricity distribution companies. The CFL pro- gram will build on the success of similar, Bank- Source: IFC, IFC Smart Lessons in Energy supported practices in other countries, such as Efficiency (Washington, D.C.: IFC, 2008). Uganda in 2006—where the program has helped 13 Box 4: Developing Financial Intermediation Mechanisms for Energy Efficiency for Brazil, China, and India—World Bank Technical Assistance Activities The objective of this technical assistance activity was to stimulate interest among local financial institutions in Brazil, China, and India to extend loans to commercial borrowers wishing to make energy efficiency investments in the commercial and industrial sectors. The activities included cross- exchange workshops, and market assessments, as well as aids for energy efficiency project appraisal and financial structuring. Largely as a result of this work, there was strong support from stakeholders in China, Brazil, and India to enhance the role of commercial banks in energy efficiency. In China, a US$593 million Bank/ GEF energy efficiency operation was recently approved by the Board (see Case Three). The focus of the project is to promote bank financing of medium-size and large energy efficiency projects, and its chief goal will be to establish sustainable energy efficiency lending businesses in Chinese banks. In India, five banks—State Bank of India, Canara Bank, Union Bank, Bank of Baroda, and Bank of India—have launched new schemes for energy efficiency lending, and a Bank/GEF project is under preparation to facilitate increased use of commercial bank financing, particularly for financing energy efficiency projects in small and medium enterprises. The technical assistance effort helped the Brazilian development Bank BNDES to launch a new Guar- antee Fund (PROESCO) with its own resources with the participation of several local banks. This scheme is helping overcome some of the key barriers preventing financing of energy service company (ESCO) operations in Brazil through provision of increased comfort to the local lenders and easing of collateral requirements. address power shortages in the short term—and will be facilitated by creating project teams with in Rwanda in 2007 (see Case Four)—where it is the breadth of skills needed to support cross- also bringing additional revenues through the fertilization. For instance, the World Bank team sale of carbon credits. is currently working with the Ministry of Water Resources and Irrigation in Egypt to prepare the The design of WBG energy efficiency projects Irrigation and Drainage Pumping Stations Mod- also responds to the influence of high and ernization Project, which will help (a) improve volatile fossil fuel prices, and energy security the energy efficiency of the pumping stations concerns in recent years have increased the and reliability of delivery of irrigation water attractiveness of energy efficiency for a large and evacuation of drainage water to prevent number of diverse applications. In many devel- the losses in crop yields resulting from aging oping countries, power shortages are another stations; (b) increase the efficiency of operations compelling justification for energy efficiency and maintenance (O&M) of the pumping sta- measures (see Cases Three and Four). tions and thereby save public expenditures on O&M; and (c) implement pilot public-private One of the focal areas of increased importance partnerships ( PPPs) in O&M services in con- within the World Bank will be to use cross- junction with carbon finance opportunities. At sectoral thematic groups to help break down the IFC, a Community of Practice on Energy Effi- problem of “stovepipes” to mainstreaming en- ciency and Water has been established, which ergy efficiency projects across various sectors. brings together a cross-section of practitioners The application of cross-sectoral perspectives from different parts of the organization. 14 Box 5: The Bulgaria Energy Efficiency Fund The Bulgarian economy has long suffered from extreme energy inefficiency. In response to the gov- ernment’s request to support the establishment of a dedicated PPP-based energy efficiency finance facility, in 2005 the GEF, through the World Bank, approved a US$10 million grant to provide the bulk of initial capitalization for Bulgaria Energy Efficiency Fund (BEEF). The strictly commercially oriented revolving fund became operational in early 2006 with seed capital of US$16 million, including contri- butions from the Austrian and Bulgarian governments and from private Bulgarian firms. Drawing on experiences with energy efficiency funds worldwide, BEEF has incorporated several innovative design features, including (a) flexible combination of financial products (primarily loans and credit guaran- tees) allowing market-driven financing; (b) public-private partnership both in the capitalization and management of the fund; (c) strong country ownership through significant upfront government cash contribution; (d) appointment of a fund manager with strong financial skills and local knowledge; and (e) building a strong pipeline of finance-ready projects earlier in the process. BEEF has gotten off to a strong start, approving 67 projects so far for funding and becoming a high- profile player in the emerging energy efficiency finance market of Bulgaria. In the municipal sector, BEEF is the preeminent energy efficiency financier in the country. The BEEF project brings efficient lighting and heating for an apparel factory in Pleven, Bulgaria 15 Case Three China—Improving the Energy Efficiency of Medium-Size and Large Industrial Enterprises In its 11th Five-Year Plan for Economic and Social Fiscal 2008 also saw another breakthrough in the Development, the Government of China pledged Bank’s energy efficiency financing business in Chi- to reduce the energy intensity of the country’s GDP na: the first ever district heating loan to China— by 20 percent from 2005 to 2010. A substantial the Liaoning Third Medium Cities Infrastructure amount of this avoided energy supply capacity is Project. The US$191 million IBRD loan will improve expected to come from technical improvements the energy efficiency and environmental perfor- (as opposed to structural adjustments) in energy- mance of heating and gas services in selected consuming activities, especially in industrial sec- areas of participating cities in Liaoning Province. tors, which accounts for about two-thirds of China’s In the cold climate regions of China, develop- total energy use. To compel the industrial sectors ment of modern demand-driven district heating to achieve their share of the energy intensity re- systems is another priority in the government’s duction, the Government of China launched the energy efficiency agenda. There is large potential “1,000 Enterprises Energy Conservation Program” in for increased Bank support in expanding energy- 2006, targeting the 1,008 largest industrial energy efficient modern district heating services in China. consumers. The goal is to realize about 100 Mtce energy savings among these industrial enterprises through technical innovations and energy efficien- cy investments. The China Energy Efficiency Financing Project, ap- proved by the World Bank Board in May 2008, was designed to enhance the financing of energy ef- ficiency investments in China’s medium-size and large industrial enterprises and support the Gov- ernment of China’s energy efficiency efforts in the 11th Five-Year Plan. It is by far the largest WBG project dedicated to scaling up energy efficiency in China with a US$200 million IBRD loan and a US$13.5 million GEF grant. The project is expect- ed to leverage at least another US$200 million of funds for energy efficiency investment from par- ticipating domestic banks, as well as an additional US$170 million from beneficiary enterprises. This project builds on and expands the energy efficien- cy market development efforts of several previous and ongoing WBG and GEF energy efficiency proj- The development of energy-efficient district heating ects in China. systems is particularly important in the cold climate regions of China 16 Case Four CDM Benefits for Energy Efficiency— An Illustration of the WBG’s Recent Initiatives Baotou Iron and Steel Energy Efficiency Project As part of its efforts to reduce air pollution, conges- China is the world leader in iron and steel produc- tion, and CO2 emissions, China is studying the po- tion, and in 2006 it produced 422 million tons of tential for a viable carbon market in transport with crude steel, about 34 percent of the world’s share. support from the World Bank. A transport method- The iron and steel industry, one of the country’s ology developed with Bank financing in Nanchang most energy-intensive sectors and largest GHG is currently under review. Field work is also under emitters, consumes about 16 percent of the coun- way to test the viability of fuel efficiency measures try’s primary energy supply and emits more than 10 that have proved successful elsewhere (notably Ja- percent of the country’s total GHG emissions. Ener- pan) as CDM pilot projects in China. gy efficiency of China’s iron and steel industry is on average around 20 percent lower than the world’s best practice benchmark and a major cause of con- cern among policy makers. Without significant im- provements in energy efficiency, China’s iron and steel industry will continue to be a fast-growing major contributor to global GHG emissions associ- ated with climate change. The US$12.9 million carbon finance project ap- proved by the World Bank in fiscal 2008, Baotou Iron and Steel Energy Efficiency Project at the Bao- tou Iron and Steel Company (BISCO) located in the Inner Mongolia Autonomous region in China, is expected to generate captive electricity, which will replace the equivalent amount of electricity and thereby reduce the GHG emissions from the coal- dominated North China Power Grid. Sustainable Transport in China In China, the urban transport sector is a large, fast- growing source of GHG emissions. The most power- ful driver of the fast growth in transport CO2 emis- sions is rapid motorization, particularly in urban areas. Dramatically increasing rates of motorization are also causing severe traffic congestion and wors- ening air pollution. Controlling these risk factors would also provide ancillary benefits by improving mobility and oil security. Baotou Iron and Steel Company plant, Inner Mongolia (Case study continues to next page) 17 Case Four CDM Benefits for Energy Efficiency— An Illustration of the WBG’s Recent Initiatives (continued) Promoting Clean Energy Technologies, and Lighting Lives in Africa through Carbon Fi- nance Synergies Standardized technical specifications of energy- efficient lighting products, such as CFLs through the Efficient Lighting Initiative (set up by IFC) have helped replicate its successes in the 1990s to large- scale energy-efficient lighting programs in Ethio- pia, Rwanda, and Uganda in recent years. Based on the lessons learned, the World Bank is developing operational toolkits and standardized approaches to further scale up energy efficiency lighting proj- ects. Based on the successes in Uganda, the World Bank provided support in fiscal 2008 to the Rwanda electricity utility and the Ministry of Infrastructure to help design a large scale energy-efficient light- ing program. From September 2007 to the end of 2008, 400,000 CFLs have been distributed to con- sumers either free of charge or at a subsidized cost in exchange for inefficient, conventional incandes- cent lamps used in their households. The project is also expected to benefit from a proposed WBG New lamps for old: consumers discard conventional carbon finance transaction through the CDM in bulbs used in their households, for free CFLs. the future. In a similar effort for promoting clean, affordable, and efficient off-grid lighting applications using able mainstreaming of carbon finance into the light-emitting diode (LED) technologies for replac- implementation of large-scale, off-grid lighting ing conventional fuel-based (kerosene) lighting programs. measures in Sub-Saharan Africa, under the joint IFC–World Bank Lighting Africa initiative, innova- Sources: UERP Project Supervision documents, www.ef- tive CDM methodologies using programmatic ficientlighting.net, www.lightingafrica.org; ESMAP Energy approaches are being prepared that would en- Efficiency Lighting Toolkit Activity Concept documents. 18 Renewable Energy in Scaling Up Access in Africa The lack of electricity in much of the developing (including power systems) and displacement world deprives people of basic necessities, such of peoples within countries and across regions. as lighting, refrigeration, and communication. As a result, targets to reduce poverty are much In response, the World Bank has articulated more difficult to achieve. In the developing an Africa Energy Access Plan to provide for a world, 1.6 billion people (24 percent of the new and credible way to expand access in Sub- world’s population) lack access to electricity Saharan Africa. With an aim to increase access or other modern energy services. Only 26 per- in SSA to 47 percent by 2030, this plan is based cent of the population of Sub-Saharan Africa on three overarching principles: (a) providing and 54 percent in South Asia have access to electricity for growth by increasing coverage electricity. for enterprises and households; (b) fulfilling the Millennium Development Goals to reduce Although Asia is the continent with the largest poverty by connecting public facilities, such as absolute number of people without access to clinics, community centers, and schools, while electricity, the relative share of electricity access using a least-cost mix of grid extensions and within the population is high (about 73 percent). decentralized solutions; and (c) meeting basic This relative progress compared to Sub-Saharan needs by equipping households with afford- Africa reflects the targeted efforts that many able, modern lighting and boosting the use of countries in Asia have pursued to achieve access improved stoves, increasing access to cleaner to electricity. In 2005, the Government of India, fuels, and making biomass fuels sustainable. where the majority of the country’s households have no electricity, began an aggressive five-year The Africa Energy Access Plan is a partnership program—the Rajiv Gandhi Grameen Vidyu- between the countries and the donor commu- tikaran Yojana Rural Electrification Program—to nity. The commitment of the client countries electrify the whole population within several is reflected in their development of realistic years.9 In Asia, the World Bank has been support- scale-up plans and self-financing instruments. ing renewable energy-based rural electrification These embody a strategic approach that enables programs in China, Bangladesh, Laos, the Pacific a range of outcomes, promotes robust regula- Islands, Papua New Guinea, Philippines and Sri tion and allows for multiple forms of access, Lanka, among others. with an appropriate private-public mix. On the donor side, a programmatic, sectorwide strategy In Sub-Saharan Africa the challenges are great- is being sought that is in contrast to the tradi- est.10 The challenge is magnified by features tional project-by-project and donor-by-donor specific to the region that render electrification approach. Donors need to commit to scaling-up more difficult than elsewhere. The population of Sub-Saharan Africa is highly dispersed across a 9 Rajiv Gandhi Grameen Vidyutikaran Yojana Rural Electri- huge continent, many countries are landlocked, fication Program: http://www.rggvy.gov.in. and numerous countries have been subject to 10 The 2005 data came from IEA, World Energy Outlook 2006 civil strife leading to damage to infrastructure (Paris: IEA, 2006). 19 ing electricity to people who live far away from the urban centers. More- over, renewable energy sources, such as solar home systems, are often the least-cost source of modern energy. A World Bank technical and eco- nomic assessment of pos- sible off-grid, minigrid, and grid electrification technologies compiled in December 2007 con- firmed that renewable energy is more economi- cal than conventional energy for small off-grid applications (less than 5 kW). Pico-hydro (very small systems to gener- ate power from moving water), can deliver elec- tricity for US$0.10–0.20/ kWh, less than one quar- ter of the US$0.40–0.60/ kWh for gasoline and diesel engine generators of comparable size. Sev- eral renewable energy technologies, such as bio- mass, geothermal, wind, A health-care center powered by solar PV lighting in Uganda and hydropower, may be the most economical choice for minigrids or and making funding more predictable. It is es- grids, assuming that sufficient renewable energy timated that an increase of funding in the order resources are available.11 of US$2–4 billion per year is needed to have a significant impact on the availability of modern Building on the lessons learnt from experience, energy services in Sub-Saharan Africa. the promotion of renewable energy plays an important role in the WBG strategy to provide Renewable energy sources, which lend them- selves more readily to decentralized installations 11 ESMAP, Technical and Economic Assessment of Off-Grid, Mini- than do conventional sources of energy, can Grid and Grid Electrification Technologies (ESMAP Technical play a particularly important role in provid- Paper 121/07, Washington, D.C.: World Bank, 2007). 20 Granary operated using micro-hydro power in Andoya, Tanzania access to modern energy services in Sub-Saharan air pollution from biomass and other solid fuel Africa. For example, a new guidance note for best- cookstoves is responsible for 1.3 million deaths practice, off-grid electrification gives hands-on annually, mostly among small children and advice on how off-grid activities are best fostered women, and is also associated with deforestation (see Box 6). Case Five shows the example of an on- from unsustainable biomass energy use. going rural electrification project in Mali, where renewable energy is being used through solar PV. In Sub-Saharan Africa alone, more than 575 mil- Another WBG approach is to catalyze markets for lion people—or 75 percent of the population— modern off-grid lighting products and services rely on biomass fuels for daily cooking. With through the “Lighting Africa” initiative, which the growing urbanization of countries in Sub- is market testing the use of high-efficiency LEDS Saharan Africa, fuelwood for cooking is being and other products for use in rural Africa.12 increasingly replaced by charcoal, a cleaner and more convenient option. The majority of World Bank support for the provision of modern the people in Sub-Saharan Africa—even those energy is not limited to electricity. Worldwide, supplied with electricity—are highly reliant 2.5 billion people still rely on biomass stoves on biomass for cooking and other household for cooking, mostly on primitive cookstoves, a uses. Given the slow progress of electrifica- number expected to rise to nearly 3.0 billion by tion and the introduction of other modern 2030 if the levels of investments in new, cleaner cookstove technologies, fuels, and cooking methods are not ramped up substantially. Indoor 12 See http://www.lightingafrica.org. 21 Box 6: Off-Grid Electrification Guidance A significant portion of the population of the developing world lacking access resides in small or dis- persed communities often far from national grids. Over the past 15 years, the WBG has supported a number of energy projects aimed at providing electricity to such communities using approaches that are independent of a national or regional grid. To maximize the chances of sustaining operation of off-grid electrification projects over the long term, their design must ensure that all key actors along the “value chain”—consumers, service and technology providers, financiers, and government—benefit. The following basic design principles and sound practices for efficient decision making have emerged out of the experience from these projects: Government Ownership: To increase the likelihood that project outcomes will be sustainable, off- grid electrification projects must be consistent with a country’s rural electrification plans. Off-grid electrification must complement grid expansion. The government’s recognition of the role of off- grid options is important; its support, including subsidies, and use of well-designed regulation, is essential. If the government is to have a significant implementation role, the implementing agency should appoint competent and dedicated project management. If financing is necessary, but dif- ficult to obtain, such options as partial guarantees or access to longer-term credit lines should be supported. Technology Choices: Project design must not be technology driven. A cost-benefit analysis of alter- natives (including grid extension) must be carried out to determine the least-cost solution. The final choice must be left up to the service provider. Delivery Mechanism and Consumer Service: For off-grid projects that rely on private sector participa- tion, the simplest delivery mechanism or business model in line with local realities should be applied. Whatever business model is chosen, care must be taken to ensure that users have access to quality products and services at affordable prices and access to qualified repair service and spare parts over the long term. Community Awareness: Maximizing the awareness and involvement of the beneficiary community early in the assessment phase is vital to the success of off-grid project implementation. Productive and Institutional Applications: Applications that improve lives and livelihood opportunities help those who cannot afford individual systems. Such applications increase the economic attractive- ness of the total business package for the community. International Co-financing: Opportunities for international co-financing should be explored, given the need for specialized demand studies, training of service providers, and other vital preparatory activi- ties. The government’s commitment to provide needed subsidies when external grant co-financing ends should be obtained to ensure that implementation momentum is not lost. Source: Energy and Mining Sector Board, Designing Sustainable Off-Grid Rural Electrification Projects: Principles and Practices (Discussion Paper, Washington, D.C.: World Bank, November 2008). energy options, it will take a very long time Case Six gives an overview of a number of for modern energy to be ready to substitute for ongoing projects in Sub-Saharan Africa, which traditional biomass energy uses in urban, peri- promote the use of higher-efficiency stoves and urban and rural areas. Therefore, a combination better cooking fuels in Benin, Burkina Faso, of supply- and demand-side management of Ethiopia, Mali, and Senegal. Case Seven illus- biomass energy is expected to have the most trates how biomass supplies can be enhanced, immediate and significant impact to improve through examples in Benin and Senegal. livelihoods. 22 Case Five Solar PV Showing the Light in Rural Mali In Mali, only about 7 percent of the rural population additional financing of US$35 million was approved has access to electricity. Most rural households meet by the World Bank to further support the project. their lighting and small energy needs with wood and charcoal, kerosene, dry cells, and car batteries. Local private operators are the driving force of the Most villages in Mali with a school or health center project. They benefit from technical assistance from are without any form of energy for lighting or for AMADER, the rural energy agency, and from financ- operating equipment. To improve living standards ing through a rural electrification fund set up by the and enhance productivity, a spectrum of innovative project. Increasingly, renewable energy subprojects service delivery mechanisms is needed with the ac- are being developed in addition to more conven- tive participation of communities, nongovernmen- tional energy subprojects. This is facilitated by the tal organizations (NGOs), and the private sector, in use of GEF funds to support the removal of barriers partnership with the public sector. to the use of renewable energy technologies. The World Bank–financed Mali Household Energy Solar PV initiatives are being implemented in remote and Universal Rural Access Project presented to the rural communities far from the main grid. Solar PV Board in October, 2003 is the main energy access initiatives have been implemented in about 40 com- expansion project in the country. Capitalizing on munities, and about 2,350 solar home systems have past experiences, it was designed to increase access been installed. In these regions, about 636 public in- of isolated low-income populations to basic energy stitutions—such as city halls, administrative offices, services and to accelerate the use of modern ener- and community centers, including 40 schools and gies in rural areas in order to increase the productivi- 48 health centers—are also powered by solar. ty of small and medium enterprises, and to enhance the quality and efficiency of health and education The availability of energy services in rural commu- centers. Overall IDA financing is US$35.65 million, nities is an important catalyst to the Government with a US$3.5 million GEF grant, and US$5.25 million of Mali’s administrative decentralization initiatives. from the Government of Mali. In September 2008, Beneficiary communities are beginning to be em- powered to improve their living conditions as they are becoming more and more connected to the rest of the world. Through the additional World Bank financing to the project and support from other donors, the Government of Mali intends to scale Solar PV initiatives have brought up not only solar PV sub- lighting solutions to critical public projects, but also the use institutions such as schools in remote of other renewable ener- areas of rural Mali that are far from gy technologies (biofuels, the main grid. wind, and minihydro). 23 Case Six What’s Cooking? Projects in Support of Improved Cookstoves In order to provide African families with more ener- To counter this, the World Bank Energy Access Project gy-efficient and less polluting options for cooking, supports demand-side energy efficiency manage- the World Bank has been promoting the dissemina- ment through the promotion of improved efficiency tion and commercialization of improved biomass cookstoves, reducing fuelwood consumption while (wood and charcoal) stoves as part of many of its reducing emissions. To date, approximately 580 pri- energy projects. Ongoing experiences include Be- vate stove producers—generally women—have nin, Burkina Faso, Ethiopia, Mali, and Senegal. been trained throughout the country, in urban and peri-urban areas, with sales of nearly 1 million units. In Ethiopia, the limited availability of modern forms Customer surveys indicate that the stoves have been of energy for cooking and the high costs of these rel- well accepted because of their functionality and af- ative to both the cost of traditional firewood fuel and fordability. The conversion efficiency of the new to the low average per capita income (US$100) has stoves is about 50 percent higher than the traditional reinforced the dependence of over 90 percent of the models, and they have significantly reduced indoor population on traditional biomass energy options. air pollution. New enhanced efficiency stove models This has led to increasing deforestation and degra- are being tested and produced, and stove producers dation of rural ecosystems, shortages of fuelwood, are being trained in their production and commer- and continued exposure to indoor air pollution, cialization by various organizations, to broaden the particularly for women and young children. Without market base. substantial mitigation measures, major fuelwood deficits are likely to accelerate and extend further In Senegal, the Sustainable and Participatory En- throughout the country, eventually leading to wide- ergy Management Project (PROGEDE) includes sev- spread “energy poverty” with rural users moving to eral initiatives such as the dissemination of improved poor quality fuels, such as agricultural residues and biomass stoves by the private sector and NGOs; dung, directly impacting rural women’s health and the establishment of urban and peri-urban “energy potentially their workload. boutiques” or energy shops; the provision of support for the con- tinuation of interfuel substitution options, such as the execution of specific technical and market feasibility studies to support the promotion of liquefied petroleum gas (LPG) and kerosene as substi- tute cooking fuels; and the sup- port for several research and pilot testing initiatives on renewable household cooking fuels, such as The Energy Access Project in Ethiopia has trained close to 600 private rice husks briquettes, liquid and producers of improved biomass cookstoves in Ethiopia. Most of these gelfuel ethanol, jatropha oil, and producers are women and close to 1 million units have been sold to date. solar cookers. 24 In contrast with some past failures, PROGEDE improved charcoal and wood stoves through small sought to support the establishment of viable local enterprises and NGOs. The approach has fo- stove production systems through the following: cused on training these partners in the manufac- ture of cleaner cooking technologies and their sale • The training of new stove producers to increase through energy boutiques. The work being done in-country stove production capacity. in Mali also includes encouraging the private sec- • Consumer awareness and marketing support tor in the production and distribution of alternative to help stove dissemination. cleaner fuels, such as LPG and kerosene, although • A sustainable financial intermediation system these have not received an enthusiastic response (stove producers revolving fund), which should from users because of their higher costs. enable certified new stove producers to set up production facilities and operate until they are In Burkina Faso, the household energy demand able to capitalize themselves and qualify for component of the Energy Access Project is financing regular banking loans. the establishment of private sector and NGO-based local production facilities for the production of im- To date the stove program has directly benefited proved stoves, as well as commercial distribution 250,000 families in the principal urban and peri-ur- channels and marketing systems capable of selling ban areas of the country, allowing access to afford- about 250,000 improved stoves within five years. able, cleaner, improved charcoal stoves, and about 4,000 families with kerosene stoves. This is about In Madagascar, biomass stoves with an “eco” or 30 percent of the urban and peri-urban families of “environment” label are sold by locally trained stove the country. producers and are being used by at least 250,000 households, while in Benin, the Energy Service In Mali, the Household Energy and Universal Ac- Delivery project aims to disseminate through the cess project has disseminated more than 420,000 private sector and NGOs 3,000 improved fuelwood stoves and 1,000 LPG stoves. Fruit and vegetable production for alternate income generation for rural women is being promoted through the PROGEDE program in Senegal 25 Case Seven Power to the People—Community Forestry for Sustainable Energy in Senegal and Benin Sustainable management of the natural forests for Energy Service Delivery Project in Benin. Here, the the production of fuelwood has traditionally been cases of Benin and Senegal are highlighted. neglected in Sub-Saharan Africa because of unre- alistic expectations from government authorities In Senegal, the World Bank–funded Sustainable and about users’ rights, and because of taxation and for- Participatory Energy Management Project (PROGEDE) estry methods. In general, control by governments of has, since 1998, been organizing and promoting the the ownership of the forest resources,leaves the lo- sustainable management of more than 675,000 hect- cal rural communities without any benefit, although ares of forests in the Tambacounda and Kolda regions, harvest rights are assigned to urban based traders which is one of the most important sources of com- of fuelwood and charcoal. Furthermore, the govern- mercial wood energy in Senegal. First of all, PROGEDE ments’ revenues are not reinvested in sustainable has induced substantial policy changes, including management of these forest resources, which leads transferring harvest rights for fuelwood to more than to the deforestation of thousands of hectares per 345 rural villages surrounding the energy forests, and year. Considering that in most countries in Sub-Saha- transformed the forest service from being a “para- ran Africa, biomass-based energy is the main energy military law enforcer agency” with extremely limited source, such biomass energy policies jeopardize the transparency and accountability to a technical assis- future supply of this important energy source, while tance and rural capacity development agency, with neglecting the contribution that a sustainable supply a now recognized participatory vocation and signifi- could make on poverty alleviation at the rural com- cantly improved governance. Furthermore, the forest munities surrounding these forest areas. service has institutionalized a dual taxation system for charcoal production, penalizing charcoal produced in To reverse this perverse biomass energy policy, the areas without proof of sustainable management. The World Bank has been promoting a new biomass en- forest service also were provided with a powerful tool ergy policy approach that attempts to correct the to monitor and evaluate forest interventions, state-of- economical injustices to the local rural communities the-art forestry, and vegetation cover maps in Geo- and induces sustainable management of the natural graphic Information System (GIS) formats. forests, in which most of the energy needs for those countries are extracted from. This approach is called The new approach also trained local entrepreneurs Village-Based Natural Resources Management (VB- in more efficient charcoal production, so that the ru- NRM). ral people would also sell their wood energy trans- formed into high-value energy products, such as VBNRM has found application in many countries in charcoal to the urban traders, adding more value to Sub-Saharan Africa through different projects, such the local economy. as the Sustainable Energy Management Project in Burkina Faso; the Energy Sector Project in Mada- PROGEDE’s interventions have benefited nearly gascar; and the Household Energy Projects in Chad, 250,000 people (21 percent of the population of Mali, and Niger; the Sustainable and Participatory Tambacounda and Kolda regions) with an additional Energy Management Project in Senegal; and the gross income of US$18.0 million per year (2007 data), 26 while preventing the deforestation of nearly 40,000 Given that charcoal is the most important final prod- hectares per year and contributing to a net reduc- uct from these regions forests, the project is in the tion of 1.8 million tons per year of CO2 emissions process of introducing a higher-efficiency charcoal from previously unsustainable charcoal production. kiln than the traditional one used, by training 300 rural workers in the production of commercial char- In Benin, the World Bank recently launched the En- coal through a more efficient “meule Casamance” or ergy Service Delivery Project, with a similar approach “Casamance kiln”, and supporting the establishment of that of Senegal with the aim of putting 300,000 of a minimum of 50 village-based charcoal producer hectares of natural forests under sustainable manage- groups. ment. This would supply the biomass energy market with 675,000 tons of fuelwood per year (equivalent to 135,000 tons of charcoal). The outcome of this ini- tiative should alleviate poverty in 180 rural villages, benefiting 400,000 people. FPO (left to right) Jatropha cultivation by project beneficiaries at the village level. Bags of charcoal ready for market. 27 Supporting Innovations in Renewable Energy and Energy Efficiency Technology The Need for Enhanced Research combined contribution (57 percent of total emis- Development and Deployment for sions reduction) shows that renewable energy Renewable Energy and Energy Efficiency and energy efficiency will be absolutely essential in a sustainable energy future. Figure 8 shows The rapid growth of renewable energy and the potential for expansion of renewable energy energy efficiency allows them to make in- for power generation. creasingly important contributions to meeting national and global energy goals. Renewable The scale of both the incremental energy demand energy is the fastest growing source of en- in the coming years and the needed massive emis- ergy supply worldwide. Renewable capacity sion reduction will require more advanced renew- (excluding large hydro) grew 32 percent from able energy and energy efficiency technologies. 2005 to 2007, with annual investment in new These new, improved technologies must have renewable energy capacity reaching US$71 more operating history, the ability to be scaled billion in 200713. The largest component of re- up and integrated into energy systems, and lower newable energy generation, wind power, had costs than today’s technology options. a 28 percent increase in global capacity from 2006 to 2007. Solar PV had 50 percent annual increases in cumulative installed capacity in both 2006 and 2007. Energy efficiency is also Figure 8: Growth Potential for Renewable Power Generation, 2000–50 playing an increasingly large role in national 20,000 and international energy sectors. 18,000 Renewable power generation (TWh/yr) 16,000 Despite the very high rates of annual percent- 14,000 age growth, renewables remain a modest share 12,000 of total global energy production. In 2006, new 10,000 renewables provided 2.4 percent of global final 8,000 energy consumption and 3.4 percent of the 6,000 global electricity consumption. However, both 4,000 renewable energy and energy efficiency have 2,000 the potential to become major players in the 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 energy sector, matching and then surpassing the contributions from fossil fuel technologies. Hydro Wind Solar PV Solar CSP For example, the IEA has projected a number Biomass, waste Geothermal Tidal Other of scenarios for achieving a sustainable energy Source: IEA, Energy Technology Perspectives 2008 (Paris: IEA, 2008). future. In one such scenario, where global CO2 emissions are reduced 50 percent from today’s levels, renewable energy contributes 21 percent 13 REN 21, Renewables 2007 Global Status Report (Paris: REN21 of total emissions reductions and end-use ef- Secretariat and Washington , DC: Worldwatch Institute, ficiency contributes 36 percent. The size of this 2008) 29 A major concerted effort in research, develop- in developing country energy sectors and overall ment, and deployment (RD&D) will be needed economic development. Developing countries will to commercialize a new generation of renewable add an immense amount of energy infrastructure energy and energy efficiency technologies. A in the coming decade. As developing countries consensus is forming that the world requires a grow, their energy demand increases and an enor- paradigm shift in the way energy is produced, mous amount of energy supply, transmission and transformed, and consumed. This will require consumption infrastructure must be put in place. new technology options that in turn will re- Between 2006 and 2030, developing countries quire greatly expanded global RD&D efforts will require US$7.9 trillion of investment for the in the public and the private sectors. All of the power sector alone, increasing their electricity potential cited by the IEA and others assumes infrastructure by an amount equal to 120 percent an accelerated pace of commercialization, without of current installed capacity of all OECD countries which these cleaner technologies will not be combined.14 Developing countries will add nearly deployed in the scale or the time required for two times the amount of power infrastructure that effective climate change mitigation. Figure 9 OECD countries will add. shows projected supply cost reductions that can be realized with RD&D efforts, for major power Improvements in renewable energy and energy technologies over the next 20 years (until 2030), efficiency technologies from the current state of as estimated by the IEA. the art will greatly increase their deployment, allowing them to better meet the coming en- Importance of Renewable Energy and Energy ergy infrastructure boom. Existing renewable Efficiency Technology Improvements for energy and energy efficiency technologies can Developing Countries and should be deployed to the greatest extent possible and thus confer their many benefits Advanced renewable energy and energy effi- ciency technologies with lower costs and higher operational reliability will play an important role 14 IEA, World Energy Outlook 2008, (Paris: IEA, 2008). Figure 9: Grid Power Supply Cost Trends over the Next 20 Years 400 350 300 2007 $ per MWh 250 200 150 100 50 0 2015 2030 2015 2030 2015 2030 2015 2030 2015 2030 2015 2030 2015 2030 2015 2030 2015 2030 2015 2030 2015 2030 Hydro Geothermal Wind Wind Biomass CSP Solar PV Slow Speed Coal Gas Nuclear Onshore O shore Diesel Technology Source: Compiled from tables in IEA, World Energy Outlook 2008 (Paris: IEA, 2008). World Bank sta estimate for slow speed diesel based on IEA crude oil price forecast. 30 in the short to medium term. Improvements in or no concern for emissions. However, this cost and performance of these technologies will paradigm may not be optimal for developing inevitably lead to their meeting a greater share countries going forward, because of concerns of the coming energy infrastructure boom in about CO2 emissions, volatile fossil fuel prices, developing countries. and the particular conditions in developing countries (for example, off-grid demand). Widespread deployment of renewable energy Widespread embrace and deployment of these and energy efficiency technologies will allow technologies would allow developing countries developing countries to meet their key energy to meet their energy objectives better with the objectives. The model of energy supply and following results: consumption used by the OECD economies throughout the 20th century has been remark- • Energy supply security through supply di- ably successful in promoting economic growth. versity and demand response (see Box 7 for This model was (a) designed with centralized importance of supply diversity). production and generation, (b) based on fossil • Low-carbon growth. fuel use, (c) supply-side driven, and had little • Expanded energy access. Box 7: Advanced Energy Technologies Reduce the Economic Vulnerability of Poorer Countries to Fossil Fuel Prices Advanced energy technologies can increase diversity of supply beyond reliance on fossil fuels. Depen- dence on fossil fuels leaves countries at the mercy of fuel price fluctuations, which disproportionately harms the poorest countries. Increasing the share of clean energy technologies will provide an im- portant co-benefit to protect poor countries from volatile fuel markets. The figures below show recent fuel price trends and the harm that price increases of one fuel (oil) can have. Global Major Energy Price Index (Base = Jan. 2004) % Decrease in GDP Due to a $10/BBL Oil Price Increase 500 1.6 450 Crude oil (avg. spot) Coal 400 Gas (Europe) 1.2 350 % Decrease in GDP 300 250 0.8 200 150 0.4 100 50 0 0 04 05 06 07 08 08 >9,000 900–9,000 300–900 <300 Jan Jan Jan Jan Jan Oct Per capita income (1999–2001 US$) Source: WBG data. 31 Developing countries participating in the de- challenging. Some of these, listed below, relate di- velopment and manufacture of new advanced rectly to renewable energy and energy efficiency energy technologies can also realize economic technologies, while others are more general: growth and job creation. • Public energy R&D funding. Government Barriers to Renewable Energy and Energy funding for energy R&D is substantially Efficiency Innovation for Developing lower in developing countries than in OECD Countries countries. The combined spending of the “Plus Five” countries in 2006 was just 13 Many market failures and other barriers can deter percent of the OECD countries with the the needed RD&D and innovation for renewable largest such budgets.16 energy and energy efficiency technologies, par- • Fewer support schemes for Renewable En- ticularly in developing countries. Development of ergy and Energy Efficiency technologies. Many new and advanced technologies is an inherently OECD countries have schemes to support risky process for any industry with numerous existing Renewable Energy and Energy Ef- market failures that deter timely and effective ficiency technologies (such as feed-in tariffs) commercialization of new products. However, while developing countries tend not to have clean energy technologies (including renewable such support schemes in place. energy and energy efficiency ) face additional bar- • Subsidies for conventional energy products. riers specific to the sector that make it particularly Many developing countries have subsidies difficult to produce innovation.15 These include: supporting conventional, more polluting energy products. • The uncertain future value of GHG emissions • Intellectual property rights. Many companies abatement. The absence of a reliable, long-term are concerned about protecting the intellec- CO2 price decreases clean energy RD&D. tual property rights of their newer technolo- • The “valley of death”, where new technologies gies in many developing counties. languish between public and private sector • Support networks. To service them, new en- RD&D efforts. ergy technologies require operations and • Centralization of energy sector. Energy is tra- maintenance (O&M) networks, which are ditionally run by major players who enjoy less mature in developing countries. dominant positions using conventional • Access to financing. Venture capital, on which technologies and have little incentive for entrepreneurs who would develop renew- change. able energy and energy efficiency rely, is • Management short-termism. Managers will much more predominant in OECD countries support programs most likely to produce than in developing countries. technical advances within a timeframe that benefits their careers and departments. 15 For a discussion of these barriers, see Patrick Avato and • The energy sector’s low share of turnover to Jonathan Coony, Accelerating Clean Energy Technology Re- RD&D (that is, R&D intensity). By some ac- search, Development, and Deployment. Lessons from Non-Energy Sectors (World Bank Working Paper No. 138, Washington, counts, this is equal to 0.15 percent of turn- D.C.: World Bank, 2008). over, compared to an average for all sectors 16 This comparison is based on market foreign currency ex- of just above 2 percent. change rates. Using purchasing power parity, the combined budgets of the “Plus Five” countries (Brazil, China, India, Mexico and South Africa) are 28 percent of their OECD However, additional barriers make development counterparts (Canada, France, Germany, Japan, and the and transfer for developing countries especially United States). 32 • Technical capacity. The base of technical energy efficiency sector by addressing some of capacity among individuals and firms in the aforementioned market failures and other developing countries has yet to match that barriers to commercialization. These projects in OECD countries. have addressed different aspects of the inno- • Market entry. OECD companies—still the vation chain and different barriers to each. In source of much renewable energy and en- every case, the project was able to substantially ergy efficiency innovation—can be reluctant advance an innovative technology or concept at to enter developing country markets. a time when both the private sector and govern- • Consumer base. OECD country consumers ments were not in a position to do so. are wealthier, with more demonstrated will- ingness to pay price premiums for “green” The strategies employed by the WBG differ for products. “newer” technologies that have scarce cost and operating history and whose resulting risk pro- Current and Planned WBG Support for file make them inappropriate for conventional Innovation in Renewable Energy and Energy investment vehicles. A phased approach is be- Efficiency ing adopted and donor funds are more critical. However, greater buy-in and active participa- A variety of WBG projects have supported tion on the part of investment departments is needed innovation in the renewable energy and sought, and a more robust supervision and monitoring and evaluation (M&E) framework is evolving. There is also an emphasis on follow-on projects, possibly through IFC investments, and a lowering of the concessional or grant element. A view is taken that early WBG intervention (often with donor funds) is taking initial steps to commercialize these technologies. Thereafter, either at a more mature stage of the project, or in a follow-on project, WBG investments would work alongside those of the donor and private sector sponsor. The specific hurdles and maturity of each technology will dictate how early the WBG investment can be made. The strategy is to support not pure research projects, but rather those technologies languishing between research and full commercial viability. The role of donor funds, such as the GEF, is critical to putting together a Productive industry flourishing under Imaoyathenna micro-hydro private sector partnership. The WBG mini-grid of Sri Lanka RERED project can play the role of an honest broker, 33 and lead the charge in structuring and bringing policy and regulatory advice with IFC’s experi- together different market participants with dif- ence with structuring private sector incentives ferent appetites for risk. to mitigate market barriers to the development of new technologies for developing countries Innovation in support of renewable energy and to technology transfer. and energy efficiency technologies must also include new ways of looking at government The WBG is currently investigating ways in policies and regulations that play a key role in which it can develop its activities to expand whether and how different technologies enter innovation for renewable energy and energy the market. Most policies and regulations were efficiency technologies. Through these activities, developed in an energy paradigm dominated the WBG recognizes the important role of the by large, centralized projects driven by fossil private sector in driving technical innovation, fuel. Supply-side considerations drove policy but it also understands and seeks to mitigate development, often at the expense of proper the many barriers that deter the commercializa- consideration of attractive demand-side op- tion process. The new activities would build on tions. The WBG works with governments to successful WBG technology innovation projects develop policies that create a “level playing in the past (such as the ones described here), as field” for renewable energy and energy ef- well as successful models of technical innovation ficiency technologies. Such policies require drawn from other sectors, such as agriculture creative thinking and innovative approaches and computer software. to policies and regulations to get beyond con- ventional policy frameworks. In line with this approach, a study is being conducted in India to address the need for Highlights of innovative projects include the augmenting electricity generation and ensuring China Renewable Energy Development Proj- better quality of supply in rural areas through ect (REDP) (Box 8), and those featured in Case distributed generation (DG) and supply of Eight, Structuring Private Sector Advanced power under a public-private partnership (PPP) Technology Initiatives, and Case Nine, Improv- model. The study is examining the interest of all ing Tools for Planning Power Systems in an the stakeholders to identify the scope for devel- Increasingly Volatile Economic Environment. oping viable business models where interested Going forward, the WBG is envisioning a more renewable energy generation companies and comprehensive approach to accelerating tech- potential electricity distribution franchisees nology commercialization. The WBG recognizes may take up rural service delivery with suitable the need for improved and more cost-compet- subsidy support (if needed) from the utility, itive renewable energy and energy efficiency state government, or central government. The technologies for client countries, as well as the various barriers and ways to address them are barriers to developing such technologies. As being investigated and recommendations for the such, it is enhancing and expanding the scope necessary policy, regulatory, subsidy delivery of its efforts in this area, focusing on leverag- and institutional arrangements will be provided ing the relative strengths of the World Bank in as outputs of the study. 34 Box 8: Technology Improvement Support to Boost Innovation in Photovoltaics in China—Helping Technologies Bridge the “Valley of Death” The World Bank- and GEF-assisted China Renewable Energy Development Project (REDP) employs an innovative approach to technical innovation for PV technology. The approach has catalyzed small and medium enterprise investments in PV development, led to significant improvements in quality, and helped reduce PV costs. The Technology Improvement component of the REDP offers Chinese PV companies assistance in research, development, demonstration, and innovation through a Competitive Grant (CG) Facility, a Quick Response (QR) Facility, and Technology Improvement Program Support. The CG and QR Fa- cilities enable enterprises to submit proposals for research and development of PV components and systems. Competitively selected proposals can receive a grant to cost share up to 50 percent of the total project cost. Under the CG Facility, annual tender rounds are organized with proposals evaluated and ranked. Bid- ding companies can provide cost-sharing in the form of staff labor cost, consultants, travel, testing, certification, training, materials, software, and R&D equipment. Four CG Facility rounds of bidding have been conducted (2002–05) with 144 CG Facility projects contracted valued at US$10.2 million for which a total CG Facility grant of US$2.85 million was provided. Fifty-seven QR Facility projects were contracted between 2002 and 2006 with a total value of US$1.39 million for which a total QG Facility grant of US$460,000 was provided. Many supported projects have directly introduced high-quality and innovative PV products into the Chinese and international markets. Surveys have found that these two facilities contributed directly to the improvement of the quality and reduction of cost of PV components and systems. Beneficiaries of the REDP Project in Gansu province, China 35 Case Eight Structuring for Private Sector Advanced Technology Initiatives The International Finance Corporation (IFC), the pri- uses a US$3 million cost buy-down subsidy to promote vate sector arm of the WBG, has nearly a decade of early market entry experience with the technology. experience with the promotion of new technolo- Fuel cells offer high-quality, modular power and in- gies using donor funds. Early initiatives used donor clude a range of technologies with differing combined funds for technology demonstrations that had mini- heat and power efficiencies that can go as high as 90 mal participation from IFC’s own investment depart- percent. FCFI in South Africa focuses on 5 kW Proton Ex- ments. More recently, IFC has successfully sought to change Membrane (PEM) fuel cells in backup (and later “mainstream” GHG reduction projects by combining baseload) applications. The cost buy-down element is IFC investment with donor funds. ratcheted down, thus forcing the company toward a lower-cost trajectory as more units are deployed. The The following sections describe three initiatives PEM cells are manufactured by Plug Power, a U.S. com- where funds were used to promote advanced green pany, and deployed by IST, a South African company power generation technologies, and where a wide that procures, sells, deploys, and services fuel cells. gamut of risks has been addressed. While all three More than 40 such fuel cells have now been deployed projects are funded under the same operational under the initiative, and the company is seeking to ex- program of GEF that promotes new low GHG energy pand manufacturing to low-cost centers. Besides Plug- technologies that are not yet cost-effective (Opera- IST, FCFI has also completed detailed due diligence of tional Program 7, OP7), the development cycle, risks, two other companies, and is seeking new proposals scale, and structuring of each technology project are for two additional grants. The initiative, which is cur- tailored to suit each unique set of circumstances. rently in its fourth year, has played an important role in understanding the fuel cell market, its range, and the 1. CEPALCO Grid Connected Photovoltaic Proj- technical and commercial risks associated with it. ect in the Philippines where a 1 MW greenfield PV facility was constructed to demonstrate conjunctive use of PV and hydro plants within a grid. This proj- ect, constructed by Sumitomo Corporation, with equipment supplied by Sharp, was inaugurated by President Arroyo and has been in operation since December 2004. It has been instrumental in raising the profile of the sponsor company, CEPALCO, and the application of PV in the context of the develop- ing world. It has also been a significant feature in en- couraging IFC to undertake upstream investments in the PV manufacturing sector through investments in companies, such as Moser Baer (see Case Two in Chapter 1). 2. Fuel Cell Financing Initiative for Distributed Sta- GenCore Fuel Cell installation at the Vodacom Skinner tionary Power Applications in South Africa (FCFI), Street site inSouth Africa 36 3. Externally Fired Combined Cycle Technology nanced 50–50 by the project sponsor. Tranche II will in Brazil (EFCC) represents a true scaling-up of a provide the bulk of the funds, structured in order to disruptive cogeneration technology that promises provide appropriate comfort on the technical and to increase power production from a given amount commercial risks in order to attain financial close. of bagasse by over 70 percent. The project is an am- This project has been in the structuring phase since bitious US$187 million project financing of a “first- 2005, when the GEF Council approved the project. of-its-kind” 100 MW power plant, to be assisted by Implementation activities are expected to com- US$44 million of GEF funding in two tranches. The mence in 2009, with Tranche II submission in 2010. project sponsor is a well established Brazilian power If successful, this technology will have huge poten- company with more than 1,000 MW of generation tial within Brazil, and will be able to be replicated in capacity, and the “new technology components” other sugarcane-producing countries, such as India, have been developed by a U.S. firm. The structuring Jamaica, and Peru. In Brazil alone, EFCC has the po- of project risks and the testing of technical design tential to add more than 2,600 MW of new genera- elements are to be funded under Tranche I, co-fi- tion to the grid. 1 MW solar PV panels at CEPALCO in the Philippines 37 Case Nine Improving Tools for Planning Power Systems in an Increasingly Volatile Economic Environment The volatile and generally rising fuel prices during ity, which also meets electricity demand. Uncertain recent years have demonstrated the economic aspects, such as future fuel prices, have to be dealt vulnerability of countries whose electricity supply with, for example, by rerunning the model using dif- costs depend on conventional thermal power gen- ferent price forecasts. eration. In contrast, countries that have power sup- plies largely based on the fixed costs of “free-fuel” A basic shortcoming of this type of least cost–based renewable power generation technologies, such power planning is that in its basic form it is essentially as hydro, wind, or geothermal power, have a more the mirror image of an investor who only looks at the stable cost environment for electricity. Regardless expected yield of a financial investment, disregard- of whether power generation is centrally planned ing the volatility and risk associated with the yields or investment in new generating capacity is market of various assets. In the case of free-fuel renewables, based, the choice of generation portfolio (technol- virtually all future costs of electricity may be known ogy) and the choice of contract structure for power with certainty once the plant is built and financed purchasing (fixed price– versus fuel cost–based) (the electricity can be traded on a largely fixed-price have important consequences for the parties that contract). On the other hand, electricity from conven- ultimately bear fuel price costs and risks. tional thermal technologies may have two-thirds or more of its cost determined by volatile and uncertain This is analogous to the situation in financial markets: Investors who pri- marily hold high-yielding securities are usually facing much greater vola- tility in returns than those who have primarily invested in lower-yielding, fixed-income securities. Sophisticated and prudent financial investors, such as pension funds, will diversify their fi- nancial portfolio in order to maximize their return at an acceptable level of risk. World Bank client countries conven- tionally plan their choice of future power generation plant using com- puter-based power systems plan- ning models such as WASP (Wien Automatic System Planning Package). WASP calculates the least-cost ex- pansion path for generation capac- Run-of-river hydropower, Andoya, Tanzania 38 future fuel prices. Some of the risks related to future gram for users of this cost and risk modeling tool. electricity costs, such as prices of different grades of fuel, tend to be highly correlated over time. The first phase of this project deals with modeling fuel price risk, but the modeling framework will have A simple “expected least-cost” analysis will conse- flexibility for future upgrading to deal with other quently neither reveal nor quantify the higher costs types of risks, for example, in relation to the construc- and risks inherent in owning a fossil fuel–dominated tion phase and in relation to the non-dispatchability power supply portfolio (either in the form of own- of free-fuel renewables, such as run-of- river hydro- ing thermal power plant or fuel cost–based power and wind power. purchasing agreements) versus owning a free-fuel, power-dominated portfolio (for example, a wind or The model will be applicable to power systems plan- hydro plant with fixed price–based power purchas- ning in general, and it is expected that the methodol- ing agreements). Current analysis of power systems ogy will have a substantial impact on the valuation planning in most countries does not treat this issue of free-fuel renewables, such as hydro, wind, and quantitatively, with a few exceptions, such as a re- geothermal power. The concept will likewise be ap- cent major World Bank study on Mexico.1 plicable to quantitative assessment of the tradeoff between risk and cost in implementing various types ESMAP is in the process of developing an im- of electrical energy efficiency. proved standard modeling framework and an ac- companying methodology to deal with the issue of adequately accounting for risk in power systems planning. The model is based on modern financial portfolio theory, and its output will be compatible with the WASP framework. In conjunction with the 1 Antonius Andrés, Shimon Awerbuch, Martin Berger, Donald model, the modeling team will develop a historical Hertzmark, Jorge M. Huacuz, and Gustavo Merino, Mexico: database of regional fuel prices to allow for simpli- Technical Assistance for Long-Term Program of Renewable fied calculation procedures and to estimate histori- Energy Development, ESMAP Technical Paper 093/06 (Wash- cal fuel price volatility. In addition to model and da- ington, D.C.: World Bank, 2006). ESMAP held a seminar on this issue in June 2006, the proceedings of which have recently tabase development, the work will involve testing been published in the ESMAP publication Risk Assessment the model on two client countries, a workshop with Methods for Power Utility Planning: http://esmap.org/filez/ power systems planners and task managers, presen- pubs/4252007115319_Risk_Assessment_Method.pdf. tation seminars, and an outline for a training pro- 39 Renewable Energy and Energy Efficiency Portfolio Review In fiscal 2008, the WBG committed US$2.7 bil- efficiency, the WBG outperformed its Bonn lion to the promotion of renewable energy and Commitment by a wide margin, as in previ- energy efficiency in developing countries.17 ous years. Cumulatively, between fiscal 2005 This corresponds to an increase of 87 percent and fiscal 2008, the WBG has exceeded its from the previous year and underlines the Bonn Commitment target almost threefold— WBG’s role as one of the largest financiers committing US$3.7 billion against the cumu- of sustainable energy in the world. Through lative target of US$1.3 billion over the same piloting new approaches, overcoming market timeframe (Table 4). barriers, and providing technical assistance, the WBG has been able to act as a catalyst for Since 1990, the WBG has committed about the development of renewable energy and en- US$14.5 billion toward renewable energy ergy efficiency in client countries and thereby and energy efficiency (see Figure 10). Of this leverage large additional investments by both amount, US$4.4 billion was for energy efficien- public and private sectors. cy and US$3.8 billion was for new renewable energy. Another US$6.2 billion went to hydro- Financial Commitments power projects with capacities greater than 10 MW per facility. During the same period, the Volatile fossil fuel prices and energy security share of total WBG energy lending devoted to concerns, along with environmental consider- renewable energy and energy efficiency has ations, have further increased the attractive- been steadily increasing. The average share of ness of clean energy solutions and validated renewable energy and energy efficiency of total the increased focus on renewable energy and energy commitments has more than doubled energy efficiency of the WBG in recent years. since 1990–94 to 31 percent in fiscal 2005–08 and This is reflected in the increased demand for renewable energy and energy efficiency by our client countries. In fiscal 2008 the WBG 17 The World Bank Group periodically reviews projects from previous fiscal years to ensure that our projects conform to supported 95 renewable energy and energy the definitions of energy efficiency and renewable energy efficiency projects in 54 countries with a total used by the World Bank Group, available in Annex 1. This commitment of US$2.7 billion.18 This represents review revealed that World Bank Group commitments towards energy efficiency and renewable energy were an 87 percent scale-up in commitments from underreported in FY2004, FY2005 and FY2006, and the fiscal 2007. The WBG support can be broken associated Progress Reports for those years. Additionally, down into US$476 million for new renewables, pumped storage projects are no longer considered large hydro projects; this definitional change means the Group US$1 billion for hydropower greater than 10 overreported its FY2003 large hydro commitment amount in MW, and US$1.2 billion for energy efficiency earlier Progress Reports. Tables in this edition of the report (Table 3). correctly convey these changes and supersede any prior reporting. A complete list of projects affected by the review is available on request. Thus, with combined commitments of US$1.7 18 Details of these projects are provided in Annexes 1, 2, billion for new renewable energy and energy and 3. 41 Table 3: WBG Commitments for Renewable Energy and Energy Efficiency, Fiscal 2008 Commitments in fiscal 2008 (millions of US$) Source of funds New RE Hydro > 10 MW EE Total World Bank 272 625 719 1,616 IBRD/IDA 117 601 624 1,343 GEF 90 — 55 145 Carbon Finance 65 24 40 128 IFC 115 361 473 949 Own Funds 72 361 473 906 Carbon Finance 39 — — 39 GEF 4 — — 4 MIGA 88 21 — 110 Total 476 1,007 1,192 2,675 Note: Some columns may not add up exactly because of rounding. Source: WBG data. reached 35 percent in fiscal 2008 (Figure 11).19 forts to help countries benefit from this resource It should be noted that, in addition to renew- while at the same time continuing to maintain able energy and energy efficiency, total WBG and refine its stringent and comprehensive en- energy commitments include not only thermal vironmental and social safeguard policies. The power generation, as well as oil, gas, and coal Rampur Hydropower project in India by the production and transport, but also transmis- IBRD and the Enerjisa project in Turkey by IFC sion and distribution projects and development policy loans. The latter two project categories are an integral part of the WBG energy practice 19 IBRD-IDA energy sector investments include oil, gas, and coal (including coal mine closing or rehabilitation; trans- and highly complementary to investments mission and distribution of oil, gas, and electricity; power in renewable energy and energy efficiency generation and associated environmental controls and plant investments. Leaving out these essential and rehabilitation; district heating and plant rehabilitation; re- newable energy; and energy efficiency and conservation). technology neutral energy categories, renew- IFC investments in the energy sector include investments able energy and energy efficiency actually from IFC’s own account; MIGA investments refer to gross represent 57 percent of energy commitments liability exposure. IFC and MIGA investments in the energy in fiscal 2008. sector consist of investments in the power sector, oil, gas, and coal mining, as well as electricity and gas services. Previous IFC assessments referenced only “stand-alone” Clean energy has experienced substantial in- projects whose sole focus was energy efficiency or renew- creases in commitments in recent years across able energy, thus missing the full scope of investment in sustainable energy undertaken as a component of larger the board. As in recent years, commitments for investments in various sectors. Subsequently, IFC has iden- large hydropower projects have been prominent, tified additional renewable energy and energy efficiency reflecting the still vastly underexploited hydro- investments in commitments IFC had made in other sec- tors, such as agriculture, water supply, and industry, and in power resources that offer large potential as a corporate loans to financial intermediaries. For more details, low-carbon solution to increasing energy access see Choices Matter: 2005 Sustainability Report at www.ifc.org/ in many countries. The WBG has renewed its ef- SustainabilityReport. 42 Table 4: Measuring Progress in New Renewable Energy and Energy Efficiency Lending against the Bonn Commitment (millions of U.S. dollars) FY02 FY03 FY04 Average FY05 FY06 FY07 FY08 FY05–08 Actual 204 178 245 209* 490 928 683 1,668 3,769 Bonn Commitment 251 301 361 434 1,347 Target * The baseline of US$209 million was set as the average annual lending commitment for new renewable energy and energy efficiency made by the IBRD and IDA, CFB-IBRD, and the GEF (IBRD and IDA) in FY02, FY03, and FY04. This baseline methodology was selected to allow a meaningful interpretation of investment trends that would balance the lumpy nature of investments in the energy sector. It comprises exclusively new renewable energy and energy efficiency. Source: WBG data. Figure 10: WBG Renewable Energy and Energy E ciency accounted for the majority of large hydropower Commitments, Fiscal 1990–08 commitments in fiscal 2008. 3,000 15,000 Energy e ciency New renewable energy Energy efficiency has been the category marking 2,500 Hydro > 10 MW 12,000 Cumulative commitment the single largest increase in funding on a year- to-year basis. In fact, rising energy prices, acute Annual US$ millions 2,000 Cumulative US$ millions 9,000 power crises in a number of client countries, and climate change concerns, have increased 1,500 demand for energy efficiency programs. The 6,000 WBG responded to these demands through a 1,000 considerable scale-up in its efforts, leading to 3,000 a quadrupling of its energy efficiency invest- 500 ments—covering both supply and demand 0 0 side—to almost US$1.2 billion in the last fiscal 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 year. The largest project this year was the IBRD’s China Energy Efficiency Financing project. In ad- dition to investments, the World Bank has made significant strides in helping client countries Figure 11: Share of Renewable Energy and Energy E ciency in areas ranging from institutional develop- Relative to the WBG’s Total Energy Commitment 40% ment to the formulation of policy reforms and 35% regulations, such as rationalization of tariffs 31% and preparation of building energy conserva- 30% tion codes, which have helped create enabling environment for the private sector to ramp up 20% 20% energy efficiency investments. 18% 13% From an organizational perspective, the IBRD 10% and IDA provided the largest funding for re- newable energy and energy efficiency of all 0% the WBG institutions with US$1.3 billion of 1990–1994 1995–1999 2000–2004 2005–2008 2008 combined commitments. These commitments Year focused on energy efficiency and large hydro- Source: WBG data. 43 power projects, which received US$621 million Bank Carbon Finance activities contributed an and US$601 million, respectively, followed by additional US$128 million and MIGA contrib- US$109 million for new renewable energy. In uted US$110 million. addition, the GEF has been an important partner by contributing US$145 million in co-financing East Asia and the Pacific received the largest for World Bank projects. IFC committed a total share of total renewable energy and energy of US$949 million, with US$115 million going efficiency commitments in fiscal 2008, account- to new renewable energy, US$473 million to ing for US$783 million or 29 percent of total energy efficiency, and US$361 million to large commitments (Figure 12). These commitments hydropower projects. IFC’s largest growth was are largely dominated by energy efficiency in clean energy financing projects (Box 9). World projects (84 percent), followed by large hy- dropower projects (13 percent). Sub-Saharan Africa received US$447 million in renewable energy and energy efficiency commitments for Box 9: Mainstreaming Sustainable 22 projects, which accounted for 17 percent of Energy at the International Finance total renewable energy and energy efficiency Corporation commitments. The majority of these commit- ments were devoted to new renewable energy The growth in IFC’s clean energy portfolio in fiscal 2008 is indicative of a shift from projects, reflecting their great potential in off- donor-supported and small, niche market and mini-grid applications. Europe and Cen- investments to an increasingly diversified and global market for clean energy across tral Asia accounted for 24 percent of the total all sectors. The largest growth was in clean number of projects with renewable energy and energy financing projects. In fiscal 2008, IFC’s energy efficiency components. In South Asia, Financial Markets Group had nine such invest- ments in five countries, including some of the most of the commitments were in hydropower, largest and most rapidly growing emitters which accounted for 84 percent of the total of GHGs—Brazil, China, Russia, Turkey, and new renewable energy and energy efficiency Ukraine. These projects will provide commer- cial lenders with more than US$280 million commitments in the region. In Latin America for dedicated credit lines for clean energy and the Caribbean, there were similar shares activities, an approach originally developed of renewable energy and energy efficiency with donor funds more than a decade ago. The projects help address the diverse, profitable, commitments, while in the Middle East and but smaller-scale investment opportunities North Africa region, WBG activities were fo- otherwise difficult to capture. cused mainly on new renewable energy—most prominently solar thermal power generation. A second feature of IFC fiscal 2008 portfolio is the mainstreaming of renewable energy For further breakdowns of commitments and lending across sectors and regions. Exclud- project numbers by region and sector, see Table ing financing projects which encompass both 5 and Figures 12, 13, and 14. energy efficiency and renewable energy, IFC made investments of over US$500 million in 13 renewable energy investments in 11 A total of 34 projects with new renewable energy countries with a total value in excess of US$3 billion. These included biomass cogeneration projects or components of projects were ap- and ethanol projects at sugar mills in Brazil proved in fiscal 2008. For example, solar thermal and Nicaragua, quasi-equity investments in power generation received two large commit- geothermal generation in Djibouti and Indo- nesia, and rehabilitating biomass plants in ments from GEF in Egypt and Morocco, with China and India. Originating sectors included a combined value of US$55 million. The World agribusiness, infrastructure, global financial Bank is scaling up support for large-scale, solar markets, and sub-national finance. thermal, and PV systems (Box 10). Geothermal 44 Table 5: Projects by Region, Fiscal 2008 Figure 12: WBG Renewable Energy and Energy E ciency Commitments by Region, Fiscal 2008 Hydro 900 Region EE > 10 MW New RE Total EE 800 AFR 4 5 13 22 Large Hydro 700 New RE EAP 13 1 5 19 600 ECA 17 5 1 23 500 LCR 7 1 7 15 400 MNA 2 0 2 4 300 SAR 4 2 6 12 200 Grand 47 14 34 95 100 total 0 AFR EAP ECA LCR MNA SAR Note: Projects that contain both a new RE and an EE compo- Source: WBG data. nent have been divided and counted as 0.5 to avoid double counting. These projects include the Burkina Faso Energy Access Sector Investment Loan, the Multisectoral Water and Energy Infrastructure Project in Burundi, the joint Redevelop- ment of Tana Hydro and Optimization of Kiambere Hydro ect in Kenya and a series of other projects (IFC, Project in Kenya, and the Increased Efficiency and Access to Carbon Finance, and GEF) in Djibouti, Indone- Electricity Sector Investment Loan in Zambia. sia, and Poland. Wind power was supported Source: WBG data. by a GEF project in Jordan with US$6 million, and biomass energy received over US$70 mil- power generation received more than US$100 lion in commitments. In addition, the portfolio million in commitments with a large MIGA proj- consisted of a variety of different new renewable Figure 13: World Map with Distribution of Renewable Energy and Energy Efficiency Projects IBRD 34980R1 SEPTEMBER 2008 Source: WBG data. 45 Figure 14: Commitments by Region, Fiscal 2008 Energy E ciency Spending by Region Energy E ciency commitments scaled up, Total: $1192 million with a total of US$1,192 million in scal 2008. The EAP Region received the highest AFR US$41 million energy e ciency commitments—US$655 million, representing 55 percent of all EAP commitments. The ECA Region similarly US$655 million performed well with US$340 million. The ECA majority of projects improved e ciency in US$340 million the power transmission and distribution sector, followed by industry and demand- LCR US$123 million side approaches in the residential and commercial sectors. MNA US$11 million SAR US$21 million Hydro > 10MW Spending by Region Major increase in large hydropower Total: $1007 million commitments, with a total of US$1,007 million in scal 2008. SAR approved the AFR largest share of commitments, with a total US$153 million of US$464 million. ECA was the second EAP largest contributor of commitments, with US$105 million US$202 million. ECA US$202 million LCR US$83 million MNA US$0 million SAR US$464 million New Renewable Energy Spending by Region Commitments for new Renewable energy Total: $476 million totaled US$476 million in scal 2008. AFR AFR made the largest contribution to the new US$252 million renewable portfolio, with a total of US$252 million, accounting for 53 percent of the EAP US$23 million total investments. LCR and SAR followed, with commitments of US$77 million and ECA US$65 million respectively. Solar thermal, US$3 million geothermal, wind, and biomass power LCR projects received the bulk of these US$77 million commitments. MNA US$56 million SAR US$65 million Source: WBG data. 46 improve the cost-effectiveness of their energy Box 10: Mainstreaming Large-Scale services. Solar Energy In fiscal 2008, out of a total of 95 renewable en- The World Bank is scaling up support for large-scale solar thermal and PV systems ergy and energy efficiency projects, 34 projects in a number of countries. The promotion of (36 percent) provided improved energy effi- solar thermal power generation in Egypt and ciency on the demand side (Figure 15). Projects, Morocco is an example. for example, in Belarus, China, India, Mexico, Egypt’s Kureimat solar-thermal hybrid Morocco, and Turkey, have contributed to reduc- project will increase the share of renewable ing energy needs in households and industry, power in the Egyptian generation mix and thereby reducing energy costs and mitigating the thereby contribute to the government’s aim of diversifying electric power production. impact of energy price fluctuations. Moreover, Similarly, the Ain Beni Mahtar Integrated by reducing electricity loads, these projects play Solar Combined Cycle project in Morocco will an important role in mitigating acute power cri- integrate a solar thermal component into a traditional combined cycle plant to sustain ses and reducing the need for costly investments the growth in Morocco’s energy demand and in additional electricity generation capacity. increase the share of renewable energy in its energy mix. Twenty-eight projects (29 percent) employed Both projects are expected to demonstrate renewable energy solutions to improve access to the operational viability of hybrid solar- rural communities. Distributed energy genera- thermal power generation technology and contribute to the replication of integrated tion technologies, such as solar home systems, solar combined cycle power generation tech- minihydro, biomass, and wind, increasingly nology in Egypt and Morocco and elsewhere. compete with conventional technologies on costs. The World Bank is also mainstreaming the deployment of PV systems for off-grid rural The WBG has employed them to bring power to electrification. For example, in fiscal 2008 a previously unelectrified communities in coun- carbon finance operation was implemented tries as diverse as Bangladesh, Bolivia, Burkina that consists of deploying solar home systems in rural areas of Bangladesh in cooperation Faso, Cameroon, and Sri Lanka, thereby allowing with rural-based renewable energy company people to benefit from improved living standards Grameen Shakti and IDCOL Ltd, an infrastruc- and productivity through modern lighting, irri- ture financing agency. Under this project, more than 1 million solar home systems are gation, and other productive uses of energy. expected to be installed over the next four years, reducing carbon emissions by roughly half a million tons. Figure 15: Share of Projects by Outcome, Fiscal 2008 Rural Energy Access energy technologies, including solar homes sys- Grid supply 29% tems, bioenergy, and small hydropower. 20% The WBG’s investments in renewable energy and energy efficiency are essential to reach EE (supply-side) its development objectives and to transform 15% EE (demand-side) 36% people’s lives. In fact, the outcomes of the WBG’s renewable energy and energy efficiency projects directly impact the ability of households and businesses to access modern energy and Source: WBG data. 47 Nineteen projects in fiscal 2008 employed re- pleted. Activities performed in the past year newable energy technologies to generate power include studies, reports, and policy notes on for electricity grids. They include a biomass renewable energy policy in Brazil, Mexico, and electricity generation project in Mauritius, the Sri Lanka. The majority of the Analytical and promotion of wind energy in Jordan, solar ther- Advisory Activities in renewable energy were in mal technology in Egypt, and hydro projects the form of non-lending technical assistance. As in the Kenya, the Philippines, and Turkey. By for energy efficiency, there were nine activities diversifying the energy mix and exploiting local completed, out of which two were economic resources, these projects mitigate fossil fuel price sector work in Mexico and Russia. These figures fluctuations and contribute to energy security. show increasing interest in activities related to renewable energy and energy efficiency on the Supply-side energy efficiency was supported in part of client countries and pave the way for 14 projects. These projects reduce transmission strong operational and lending activities in the and distribution losses and improve operat- coming years. ing efficiencies of power plants, for example, through plant rehabilitation in such countries as Energy Sector Management Assistance Brazil, China, Moldova, and Pakistan. Program Technical Assistance and Sector Studies The Energy Sector Man- agement Assistance Pro- In addition to operational activities, the WBG gram is a global knowl- engages in a variety of economic sector work edge and technical assis- and technical assistance focused on renewable tance partnership administered by the World energy and energy efficiency. This work is an Bank and sponsored by bilateral official donors integral part of WBG activities, which paves since 1983. ESMAP’s mission is to assist clients the way for additional investments by public from low-income, emerging, and transition and private sectors. As shown in Figure 16, economies to secure energy requirements for Analytical and Advisory Activities in renew- equitable economic growth and poverty reduc- able energy and energy efficiency remained tion in an environmentally sustainable way. strong in fiscal 2008, with 19 activities com- ESMAP follows a three-pronged approach to achieve its mission: think tank or horizon- Figure 16: AAAs with Focus on Renewable Energy and Energy E ciency, Fiscal 2000–08 scanning, operational leveraging, and knowl- 25 edge clearinghouse (knowledge generation and TA dissemination, training and learning events, ESW 20 workshops and seminars, conferences and roundtables, website, newsletter, and publica- 15 tions) functions. ESMAP activities are executed by its clients and/or by World Bank staff. 10 ESMAP’s work focuses on three global thematic 5 energy challenges: 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 1. Expanding energy access for poverty reduc- Source: WBG data. tion. 48 2. Enhancing energy efficiency for energy se- difficult problem in energy efficiency delivery cure economic growth. is attributed to a “packaging problem”—and 3. Deploying renewable energy systems for a that is where efforts should focus. The book low carbon global economy. also suggests a three-part model for “projec- tizing” and financing energy efficiency proj- ESMAP supports regional activities that pro- ects, and presents 13 case studies to illustrate vide better service to individual developing the issues and principles involved.21 countries, and cutting-edge research and global • Unlocking Potential, Reducing Risk: Renewable projects. The program also supports collabora- Energy Policies for Nicaragua. This ESMAP tion across the energy sector and shares ideas, report examined the potential of renewable good practices, and project experiences across energy in Nicaragua by making recommen- regions. dations based on case study analyses of geo- thermal, wind energy, and small to medium In 2007, ESMAP provided US$1.6 million for hydropower generation in the country. By the 11 new energy efficiency activities and US$1.7 end of 2005, Nicaragua’s renewable energy million for 11 new renewable energy activities. policy and regulatory framework had many Overall, as of June 30, 2008, ESMAP’s energy essential components in place. However, the efficiency portfolio comprised 37 activities to- country lacked quantified targets for renew- taling US$5.8 million, while the renewable able energy penetration, adequate natural energy portfolio comprised 32 projects activities resource laws, and appropriate power rules totaling US$4.4 million. Additionally, ESMAP for tendering new generation. This report’s is also helping prepare strategies to promote recommendations have played an important low-carbon energy economies through eight role in showing the way forward for renew- activities totaling US$1.8 million. able energy in Nicaragua.22 ESMAP is a major funder of the Lighting Africa Highlights of non-lending operations that are program and its 2008 conference and develop- currently underway include three studies in ment marketplace competition in Accra, Ghana. Nepal: ESMAP also funded a variety of groundbreaking reports and studies in renewable energy and • Removing barriers to hydropower development. energy efficiency in 2007–08: The objective of the study is to identify bar- riers to hydropower development in Nepal • Women’s Role in Renewable Energy in Ban- and to propose recommendations to remove gladesh, launched in March 2008, is a video or reduce the impact of these barriers, as a documentary about an ESMAP-funded contribution to the efforts of the Government project in Char Montaz, a coastal island in of Nepal to facilitate the development of the Bangladesh.20 country’s untapped hydropower potential. • Financing Energy Efficiency: Lessons from Brazil, The study will consider the different issues China, India, and Beyond, launched on Febru- ary 27, in conjunction with SDN Week 2008. 20 This report is available at http://www.esmap.org/news/news. The book notes that without significant gains asp?id=46 from energy efficiency efforts, Brazil, China, 21 This book is available at http://www.esmap.org/filez/ and India will more than double their en- pubs/211200830655_financing_energy_efficiency.pdf 22 This report is available at http://www.esmap.org/filez/ ergy use and GHG emissions within a single pubs/10292007102111_Nicaragua_Enhanced_Report4-10-07. generation. Another finding is that the most pdf. 49 with respect to hydropower development the implementation and effectiveness of large projects for domestic supply (>10 MW), World Bank investment projects and GEF grants. export supply and combined domestic/ These combined operations have had significant export. quantitative impacts. During the past 16 years, • Nepal Electricity Authority (NEA) Energy Effi- close to 2 million households have gained ac- ciency. The aim of this study is to identify and cess to electricity, more than 1 GW of renewable assess opportunities to help NEA improve energy generation capacity has been installed in its efficiency and quality of service, reduce the region, energy efficiency gains have replaced peak capacity deficits, and to reduce the 1  GW of generating capacity equivalent, and costs of power supply through implemen- total carbon dioxide emissions were reduced by tation of demand-side management (DSM) more than 200 million tons. measures. • Assessing the social impacts of rural energy Experience from all three pillars of ASTAE services. The broad objective of this study is support—renewable energy, energy efficiency, to operationalize an M & E framework for and access to energy—show the consolidation micro-hydro schemes that utilize Nepal’s of three essential functions of ASTAE: vast hydro resources and can be executed in areas of the where the national grid is not 1. ASTAE helps introduce innovative invest- expected to reach in the foreseeable future. ment delivery mechanisms, as illustrated in China with ASTAE’s support to developing ESMAP and the World Bank continue to work onlending guidelines for energy efficiency together to find and strengthen energy solutions project financing by Chinese commercial that benefit developing countries. banks, or by the structuring of onlending funds for renewable energy development The Asia Sustainable and Alternative Energy in Vietnam. In the Pacific Islands, ASTAE is Program supporting the introduction of an original financing mechanism that provides risk The Asia Sustainable and Alter- guarantees; it is expected to leverage sub- native Energy Program (ASTAE) stantial private sector financing. grew out of the Financing Energy 2. ASTAE has over the years demonstrated Services for Small-Scale Energy its role in supporting the development Users (FINESSE) Project initiated of institutional and regulatory frameworks by ESMAP and bilateral donors in 1989. Follow- that provide the enabling environment for ing a joint request from Asian borrowers and the successful scaling-up of investment donor partners, the Bank acted to implement the projects. ASTAE’s early support to the FINESSE recommendations by creating ASTAE development of the Chinese Renewable in January 1992. Energy Law, ASTAE’s work in Thailand on the development of energy policies, on ASTAE’s current mandate rests on three pil- heat pricing policies in Northern China, or lars: improving energy efficiency, scaling up on electricity distribution regulations in the use of renewable energy, and increasing Mongolia provide further illustrations of access to energy to reduce poverty. In all three this role. Innovative governing and man- pillars ASTAE has developed a strong portfolio agement structures provided support to of activities in East Asian and Pacific countries, successful organization of the Philippines facilitating the development and supporting energy cooperatives and the Rural Energy 50 Services project in Vietnam. Improved pol- lands, and the Swedish International Develop- icy, financial, and regulatory frameworks ment Agency (SIDA). help attract capital from international fi- nancial institutions, export credit agencies, IFC and McKinsey Collaborate on Research and from the private sector. Project 3. The third emerging, cross-country, and cross-sector role of ASTAE is in training and IFC and McKinsey undertook a collaborative knowledge sharing. ASTAE has consolidated research project in 2008 designed to test the experiences gained in projects in Asia since business development opportunities implied 1992 and is able to draw from a pool of ex- by a widely circulated McKinsey analysis, “A pertise to provide just-in-time advice on the global cost curve for carbon abatements”. The design and implementation of projects across McKinsey analysis highlights the large technical the region. ASTAE has organized training opportunities for profitable investments associ- seminars for officials and policy makers— ated with reducing greenhouse gas emissions, notably in China, Indonesia, Thailand, and primarily through clean energy products and Vietnam—and it has conducted workshops services. This project looked at the potential for to share knowledge between countries of the investments consistent with IFC eligibility cri- region as in the case of exchanges between teria in one country (China) in one department Chinese and Vietnamese ESCOs. Over the (General Manufacturing). years ASTAE has developed a number of knowledge products, technical guides, and The approach followed an iterative process atlases made available to a wide audience. engaging McKinsey and IFC departmental and field staff to identify several sub-sectors In fiscal 2008, also, ASTAE extended its activities not already well known to IFC (e.g. cement) to the South Asia region with a project approved but thought to offer promising oppurtinities in India to support energy efficiency in small for GHG abatement and IFC investment. Four and medium enterprises. This restores ASTAE’s sub-sectors were chosen for detailed review: initial mandate to operate as an Asia-wide pro- wind machines, solar cells, insulating materials gram, while it had focused on the East Asia and for buildings and efficient lighting. A review of Pacific region only in recent years. More projects firms in these sectors and their financing needs are in the pipeline for fiscal 2009 in the South revealed a robust pipeline of $300 to $600 mil- Asia region, covering the same three thematic lion in potential IFC investment, with a large areas of renewable energy, energy efficiency, and projected GHG abatement impact. This analysis access to energy. was highly valued by regional and departmental staff and is being evaluated as a model for rep- ASTAE work is currently supported by the lication internally with continuing input from World Bank, the Government of the Nether- McKinsey staff on an informal basis. 51 Annex 1: Institutional Support for Renewable Energy and Energy Efficiency This annex describes the various WBG institu- IDA tions and units and the role that each plays in contributing to renewable energy and energy ef- Contributions to IDA (International Develop- ficiency. It also provides definitions of renewable ment Association) enable the World Bank to energy and energy efficiency. Last, it discusses provide approximately US$6–9 billion a year in the methodology used to compute the data in highly concessional financing to the world’s 80 this report. poorest countries (home to 2.5 billion people). IDA’s interest-free credits and grants are vital Roles of the Institutions because these countries have little or no capac- ity to borrow on market terms (http://www. The World Bank Group worldbank.org/ida). In this report, the WBG (World Bank Group) IFC refers to four closely associated World Bank institutions that directly support renewable IFC’s (International Finance Corporation’s) man- energy and energy efficiency activities. The date is to further economic development through four institutions are the IBRD, IDA, IFC, and the private sector. Working with business part- MIGA. There are six operational regions under ners, it invests in private enterprises in devel- the IBRD and IDA. The report disaggregates oping countries and provides long-term loans, the commitments made by these regions and guarantees, and risk management and advisory institutions. In addition, the WBG is an imple- services to its clients (http://www.ifc.org). menting agency for the GEF. This report pro- vides information on WBG-administered GEF MIGA projects. The WBG’s Carbon Finance Business (CFB-IBRD) is reported separately because it MIGA (Multilateral Investment Guarantee is a unique business line that purchases emis- Agency) provides political risk insurance sions reductions and does not directly invest against noncommercial risks to eligible foreign in projects. investors and commercial banks for qualified investments in developing member countries The IBRD (http://www.miga.org). The IBRD (International Bank for Reconstruc- Carbon Finance tion and Development) aims to reduce poverty in middle-income and creditworthy poorer Both the IBRD and IFC have Carbon Finance countries by promoting sustainable develop- Units (CFUs) that leverage public and private ment through loans and guarantees and, in investment for projects that generate GHG the nonlending area, analytical and advisory emission reductions. This helps to grow the activities (AAAs; http://www.worldbank.org/ market by extending carbon finance to both ibrd). developing and transition economies. The 53 funds are provided by private companies and grants to developing countries for projects that governments seeking to purchase emission re- benefit the global environment and promote ductions to learn how to originate transactions sustainable livelihoods in local communities. in this complex emerging market. The Carbon The GEF is the WBG’s largest partner in the Finance Business (CFB-IBRD) is divided into area of renewable energy and energy efficiency separate business lines—the IBRD CFU (http:// investments (http://www.thegef.org). carbonfinance.org/) and IFC CFU (http://www.ifc. org/carbonfinance). Definitions ESMAP Following are the definitions used for reporting on the WBG’s activities. Commitment amounts ESMAP (Energy Sector Management Assis- used in the report were prorated to include only tance Program) is a global technical assistance those project components that clearly fall into program and knowledge partnership spon- one of the following categories. sored by a group of donors, including Canada, Denmark, Finland, Germany, the Netherlands, New Renewable Energy Norway, Sweden, the United Kingdom, the United Nations Foundation, the United Nations Projects or project components were classi- Development Programme, and the World Bank. fied as new renewable energy if support was ESMAP is managed by the World Bank (http:// provided for: solar energy for heat and power, www.worldbank.org/esmap). wind energy for mechanical and electrical power generation, geothermal and biomass energy for ASTAE power generation and heat, hydropower of 10 MW or less per installation, and waste-to-energy, In 1992, the World Bank and donor partners if it generates electrical power or heat for pro- established ASTAE (Asia Alternative Energy ductive uses. Program) to support the transition to environ- mentally sustainable energy use in developing Energy Efficiency countries in Asia. ASTAE supports upstream economic and sector work, much like ESMAP, Energy efficiency covers both demand side and it also provides assistance in renewable efficiency and supply side efficiency compo- energy and energy efficiency project identifica- nents. tion, preparation, and supervision (http://www. worldbank.org/astae/). • Demand-side efficiency includes improve- ments in efficiency as a result of load man- The GEF agement, demand response programs, and direct load control; improvements in end-use The Global Environment Facility (GEF), estab- energy efficiency in residential, commercial, lished in 1991, helps developing countries fund industrial, public-municipal, agricultural and projects and programs that protect the global en- transport sectors; and energy conservation. vironment. GEF grants support projects related Also included are energy efficiency improve- to biodiversity, climate change, international ments through institutional development, waters, land degradation, the ozone layer, and regulatory reforms, and improvements in persistent organic pollutants. GEF is an inde- utility management performance, introduc- pendent financial organization that provides tion of improved building codes and appli- 54 ance energy efficiency standards and labeling be embedded within an agricultural, health, or systems, retrofits to meet new standards, power project. In such blended projects, some- energy audits, waste heat recovery, improved times it is not easy to specify precisely what the fuel-efficiency standards for automobiles, use size of each sectoral component is. In this report, of drip irrigation or irrigation pumping in as far as possible, great care has been taken to agricultural systems, municipal water pump- show only the commitment amount associated ing, energy efficiency financing through with new renewables, energy efficiency, or hy- financial intermediaries, and implementation dropower greater than10 MW. For example, in of consumer awareness programs. a particular project the total commitment made • Supply-side energy efficiency encompasses by the IBRD and IDA may be US$100 million. transport systems (including modal shifts This project may have three different sectoral from cars to mass transit systems); district components: agro-industry, 50 percent; health, heating enhancements; improved power 30 percent; and new renewables, 20 percent. transmission and distribution, including In such a case, only US$20 million has been enhanced metering systems, capacitors, included as the project’s contribution to renew- and substation rehabilitation; power sys- able energy. tem optimization; plant rehabilitation (including plants that offset conventional Different Reporting Styles fuels, installation of supercritical boilers); improved O&M; and combined heat and The various World Bank institutions have dif- power plants. fering styles of reporting their data because of their different kinds of business. For example, The projects or project components for energy MIGA provides guarantees to projects against efficiency include investments in rehabilitation various kinds of risks, whereas the IBRD and of transmission and/or distribution networks IDA provide project finance and guarantees. only when the share of energy efficiency im- Emissions reductions purchases by carbon provements in such projects can be clearly finance are a revenue stream. IFC provides disaggregated from other objectives, such as both equity and loan financing, as well as network expansion and load increase. Inter- guarantees. For the purposes of this report ventions in Development Policy Loan com- and to arrive at an estimate of the WBG’s total mitments are included only when the share commitments toward renewable energy and attributable to energy efficiency can be clearly energy efficiency, we have added commitments demarcated. made by each WBG institution. The following distinctions should be kept in mind when read- Hydropower Greater Than 10 MW ing this report. The World Bank considers hydropower, regard- The IBRD and IDA less of scale, to be renewable energy. However, for reporting purposes, hydropower projects in For IBRD- and IDA-assisted projects, commit- which the installed capacity at a single facility ment amounts toward renewable energy, energy exceeds 10 MW are reported separately. efficiency, or both for each project have been used to estimate the cumulative total for the The WBG supports projects that may be cross- WBG. Only those project components that could sectoral in nature. For example, renewable clearly be attributed to a renewable energy and energy and energy efficiency components may energy efficiency category were counted. 55 IFC MIGA The report shows IFC (International Finance MIGA (Multilateral Investment Guarantee Corporation) net investments from its own Agency) normally reports the maximum li- account for renewable energy and energy ef- ability of its guarantee and the foreign direct ficiency investment. Previous IFC assessments investment that the guarantee leveraged. For referred only to stand-alone projects whose the purposes of arriving at a cumulative total sole focus was energy efficiency or renewable for the WBG, this report added together only energy, thus missing the full scope of investment the MIGA maximum liability. in sustainable energy undertaken as a compo- nent of larger investments in various sectors. Carbon Finance IFC has since revised its methodology, so that it now identifies renewable energy and energy For purposes of this report, to compare carbon efficiency investments in commitments it has asset purchases and regular project financing, made in other sectors, such as agriculture, water this report considered signed Emission Reduc- supply, industry, and transport, and in corpo- tions Purchase Agreements to be the appropriate rate loans to financial intermediaries. The new measure and added those amounts to arrive at methodology assesses the percentage of IFC the total commitment—that is, the Carbon Fi- investment in proportion to the full project cost nance Business (CFB-IBRD) equivalent of board and applies that proportion to the full renewable approval for World Bank loans. energy or energy efficiency project value. This methodology has been used to update IFC’s fis- The GEF cal 2005 renewable energy and energy efficiency commitment amounts. For more details, see For approved GEF (Global Environment Facil- “Choices Matter: 2005 Sustainability Report” ity) projects, this report uses the commitment at www.ifc.org/SustainabilityReport. amounts for each project. 56 Annex 2. Annual Renewable Energy and Energy Efficiency Portfolio Review Annual Table 1: WBG Renewable Energy and Energy Efficiency Commitments (US$ millions) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Grand total New Renewables 53 2 56 227 300 59 47 336 15 239 444 26 169 206 138 246 344 421 476 3,804 Energy Efficiency   265 54 10 59 148 380 56 356 26 295 193 67 177 92 244 584 262 1,192 4,457 Hydropower (greater than 10 MW)   150 161 938 186 317 819 15 461   320   181 23 83 538 250 751 1,007 6,199 Grand total 53 417 271 1,174 545 524 1,245 407 832 264 1,059 219 416 406 313 1,028 1,178 1,434 2,675 14,459 Annual Table 2: WBG Renewable Energy and Energy Efficiency Commitments (US$ millions) by Institution or Unit 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Grand total GEF     3 36 56 35 10 78 28 56 111 14 37 55 46 100 51 128 145 990 GEF-IFC/TF             37 33   30 5   19 28 1 8 23   4 186 IBRD Carbon Finance                       2 8 10 21 39 35 144 128 388 IBRD/IDA 53 392 196 1,113 303 452 1,108 146 534 137 691 197 340 200 245 506 420 549 1,340 8,920 IFC   25 72 26 186 7 36 135 206 15 1 6 13 113 — 275 633 450 906 3,102 IFC Carbon Finance                           — — 10 13 7 39 69 MIGA           30 35 15 65 26 252     — — 91 2 155 110 780 Special Financing             20             — —       3 23 Total Commitment 53 417 271 1,174 545 524 1,245 407 832 264 1,059 219 416 406 313 1,028 1,178 1,433 2,675 14,459 Annual Table 3: WBG New Renewables Commitments (US$ millions) by Institution or Unit   1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Grand total GEF     3 26 30 10 7 39 6 56 66 9 36 6 14 47 48 121 90 614 GEF-IFC/TF             30 30   14       10 1 1 0 0 4 90 IBRD Carbon Finance                       2 4 10 10 8 19 68 65 186 IBRD/IDA 53 2 20 201 270 19 8 132 10 128 127 9 128 165 114 128 253 70 117 1,953 IFC     33         135   15   6 1 15 — 51 9 154 72 491 IFC Carbon Finance                           — — 10 13 7 39 69 MIGA           30 2     26 252     — — 0 2 0 88 401 Total Commitment 53 2 56 227 300 59 47 336 15 239 444 26 169 206 138 246 344 421 476 3,803 Annual Table 4: WBG Energy Efficiency Commitments (US$ millions) by Institution or Unit 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Grand total GEF    10 26 25 3 39 22 1 45 5 1 49 33 53 4 7 55 376 GEF-IFC/TF            7 3   16 5   19 18 — 7 23 0 0 96 IBRD Carbon Finance                          — 3 6 13 10 40 72 IBRD/IDA  265 54   33 123 350 14 328 9 244 188 35 34 56 3 97 49 621 2,505 IFC                6   1   12 75 — 175 446 156 473 1,343 IFC Carbon Finance                                     — MIGA                         — — 0 0 39.6 0 40 Special Financing           20             — — 0 0 0 3 23 Total Commitment 265 54 10 59 148 380 56 356 26 295 193 67 177 92 244 584 262 1,192 4,456 Annual Table 5: WBG Hydropower (> 10 MW) Commitments (US$ millions) by Institution or Unit   1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Grand total IBRD Carbon Finance                       4 — 8 25 3 66 24 129 IBRD/IDA 125 122 912   310 750   196   320   177 — 76 374 70 430 601 4,462 IFC 25 39 26 186 7 36   200         23 — 49 177 140 361 1,268 IFC Carbon Finance                                     — MIGA           33 15 65         — - 91 0 115 21 339 Total Commitment 150 161 938 186 317 819 15 461 — 320 — 181 23 83 538 250 751 1,007 6,199 Annual Table 6: WBG Renewable Energy and Energy Efficiency Commitments (US$ millions) by Region 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Grand total AFR   127 73 203   3 12 30 201 7 124   78 104 40 96 196 735 447 2,473 EAP 51   121 410 310 367 400 145 123 139 513 8 124 28 61 459 255 143 783 4,438 ECA   290     33 140 381 14 238 15 68 186 75 155 155 262 431 117 545 3,104 LCR 2   75 340 199 10 2 41 186 79 219 6 30 51 34 127 235 133 283 2,054 MNA         2 4                 0 10 12 121 67 216 OTH             32 148   25   12 1 10     4   231 SAR     2 222     419 29 85   135 7 108 58 22 75 46 183 550 1,942 Grand total 53 417 271 1,174 545 524 1,245 407 832 264 1,059 219 416 406 313 1,028 1,178 1,433 2,675 14,458 Annual Table 7: WBG New Renewables Commitments (US$ millions) by Region   1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Grand total AFR   2 18 3   3 8 30 5 6 124   16 104 33 41 27 20 252 691 EAP 51       300 49   112 2 139   3 18   56 127 144 93 23 1,118 ECA             7   9 6 6 2   3 44 10 9 12 3 112 LCR 2   37 2   3 2 20   78 204 6 26 31 5 53 135 100 77 781 MNA           4                   1 5 65 56 131 OTH             30 145   10   12 1 10         209 SAR     2 222       29     110 2 108 58   13 24 131 65 762 Grand total 53 2 56 227 300 59 47 336 15 239 444 26 169 206 138 246 344 421 476 3,803 Annual Table 8: WBG Energy Efficiency Commitments (US$ millions) by Region 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Grand total AFR           4   1 1         6 3 10 79 41 145 EAP   54 10 10 8   33 121   193 5 1 28 5 75 89 24 655 1,309 ECA 265     33 140 374 14 229 9 62 183 65 144 51 81 421 97 340 2,510 LCR       14     6   1 15   0 5 22 63 42 24 123 314 MNA       2                   0 9 6 16 11 45 OTH           2 3   15             4   23 SAR               6   25 5 1   7 13 11 21 21 111 Grand total 265 54 10 59 148 380 56 356 26 295 193 67 177 92 244 584 262 1,192 4,456 Annual Table 9: WBG Hydropower (> 10 MW) Commitments (US$ millions) by Region 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Grand total AFR 125 55 200         196       62     51 159 636 153 1,637 EAP   67 400   310 400       320   105     257 22 26 105 2,012 ECA 25                     10 8 61 170   7 202 483 LCR   39 338 186 7   15 186       4 15 8 11 58 10 83 959 MNA                                 40   40 SAR           419   79           15 49 11 32 464 1,069 Grand total 150 161 938 186 317 819 15 461 — 320 — 181 23 83 538 250 751 1,007 6,199 Annex 3: FY08 Renewable Energy and Energy Efficiency Projects (millions of U.S. dollars) No. Country Project name Energy type Financing RE or EE sources component financing Africa Region 1 Africa Niger Basin Water Resources Hydro > 10MW IDA 109.8 2 Africa Evolution One EE (demand side) IFC 10.0 3 Burkina Faso Energy Access Project Biomass IDA 18.7 4 Burundi Multisectoral Water and Electricity Infrastructure Project EE Small Hydro IDA 8.3 5 Cameroon Energy Sector Development Project Small Hydro, Solar IDA 48.8 6 Congo Emergency MS Rehabilitation and Recovery Hydro > 10MW IDA 0.3 7 Djibouti InfraV-REI Djibouti Geothermal IFC 4.0 8 Ethiopia Electricity Access (Rural) Expansion Project, Phase II Small Hydro, Solar IDA 5.2 9 Ghana Energy Development and Access Project Biomass, Small Hydro, Wind IDA 6.3 10 Ghana Rural Energy Access Solar IDA 5.5 11 Guinea Electricity Sector Efficiency Improvement EE (supply-side) GEF 3.6 12 Kenya Olkari II Geothermal Expansion Geothermal MIGA 88.3 13 Kenya Optimization of Kiambre Hydro Project Hydro > 10MW Carbon Finance 2.8 Redevelopment of Tana Hydro Project 3.0 14 Kenya Sondu Miriu Hydro Hydro > 10MW Carbon Finance 16.0 15 Madagascar Hydelec Sahanivotry Hydro > 10MW MIGA 21.4 16 Mauritius CTSAV Bagasse-Fueled Generation Project Biomass Carbon Finance 24.8 17 Nigeria Nigeria National Energy Development Project EE (supply-side) Carbon Finance 5.1 18 Tanzania Energy Development & Access Expansion Solar IDA 11.6 19 Tanzania Energy Development & Access Expansion Solar GEF 6.5 20 Uganda Kakira Bagasse Cogen Biomass Carbon Finance 5.2 21 Zambia Increased Access to Electricity Project Solar GEF 4.5 22 Zambia Increased Efficiency & Access to Electricity Project EE (supply-side) IDA 16.0 Small Hydro, Solar 11.9 East Asia and Pacific Region 23 China China Glass II EE (demand-side) IFC 28.6 24 China Hubei Eco-Farming Project Biogas Carbon Finance 5.2 25 China CHUEE II–Ind B EE (demand-side) IFC 103.0 26 China CHUEE II–SPBD EE (demand-side) IFC 69.0 27 China Energy Efficiency Financing EE (demand-side) IBRD 200.0 28 China Energy Efficiency Financing EE (demand-side) GEF 13.5 29 China World Bank Urban Transport Partnership EE (supply-side) GEF 13.0 (continued on next page) 61 (continued from previous page) 30 China Liaoning Third Medium Cities Infrastructure EE (supply-side) IBRD 185.3 31 China Baotou Iron & Steel Energy Efficiency Project EE (supply-side) Carbon Finance 12.9 32 China Shandong Manure Biogas Biogas Carbon Finance 5.9 33 China Meishan CDQ Project EE (supply-side) Carbon Finance 10.0 34 China Shanshui III EE (demand-side) IFC 5.6 35 China Tianrui Cement 07 EE (demand-side) IFC 2.5 36 China Weihui Tianrui EE (demand-side) IFC 1.8 37 Indonesia Geothermal Power Generation Development Geothermal GEF 3.0 38 Indonesia Lahendong Geothermal Geothermal Carbon Finance 4.9 39 Indonesia InfraV-REI Indonesia Geothermal IFC 4.0 40 Philippines Magat Hydro Hydro > 10MW IFC 105.0 41 Viet Nam Hanoi Urban Transport EE (supply-side) GEF 9.8 Europe and Central Asia Region 42 Albania ECSEE APL 5 for Albania Dam Safety Hydro > 10MW IDA 35.3 43 Azerbaijan Azerenerji Hydro Optimization Project Hydro > 10MW Carbon Finance 0.9 44 Belarus Social Infrastructure Retrofitting Project EE (demand-side) IBRD 14.1 45 Bulgaria Drujba CPLP EE (demand-side) IFC 3.1 46 Bulgaria Drujba Bucha EE (demand-side) IFC 8.5 Ukraine 47 Georgia Small Hydro Rehabilitation Project Hydro > 10MW Carbon Finance 1.20 48 Macedonia ESM Macedonia EE (supply-side) IFC 37.2 49 Moldova National Water Supply & Sanitation Project EE (supply-side) IDA 1.0 50 Montenegro ECSEE APL 3 (Montenegro Project) Hydro > 10MW IDA 0.8 51 Poland Walbrzyck Coke Oven Gas Geothermal Carbon Finance 2.8 52 Russia Housing & Communal Services Project EE (demand-side) IBRD 104.0 53 Russia NDB Bank EE (demand-side) IFC 8.0 54 Russia Ursa Bank EE (demand-side) IFC 8.0 55 Russia UVTB Energy Efficiency EE (demand-side) IFC 3.0 56 Tajikistan Energy Emergency EE (supply-side) IDA 2.4 57 Turkey Assan CPLP EE (demand-side) IFC 4.0 58 Turkey Enerjisa Hydro > 10MW IFC 163.5 59 Turkey Petlas EE (demand-side) IFC 29.3 60 Turkey YKLEE EE (demand-side) IFC 16.7 61 Ukraine Alchevsk Steel Mill Revamping and Modernisation EE (demand-side) Carbon Finance 12.0 62 Ukraine ISD II EE (demand-side) IFC 41.1 63 Ukraine ProCredit Ukraine EE EE (demand-side) IFC 20.0 64 Ukraine Urban Infrastructure Project EE (supply-side) IBRD 28.0 (continued on next page) 62 (continued from previous page) Latin America and Caribbean Region 65 Argentina Energy Efficiency Project EE (demand-side) GEF 15.2 66 Bolivia Decentralized Electricity for Universal Access Solar Recipient Executed 5.2 67 Brazil Banco ABN AMRO Real SA EE (demand-side) IFC 15.0 15.0 68 Brazil Cemar-Maranho EE (supply-side) IFC 18.0 69 Brazil Unibanco SCL EE (demand-side) IFC 12.5 12.5 70 Brazil USJ Biomass IFC 7.6 71 Chile La Confluencia Hydro > 10MW IFC 83.0 72 Dominican Rep. DO Electricity Distribution Rehabilitation EE (supply-side) IBRD 40.0 73 Ecuador Favorita Fruit Small Hydro IFC 2.5 74 Guatemala Pantaleon Sugar EE (demand-side) IFC 4.5 75 Guyana GY Bagasse Cogeneration Biomass Carbon Finance 3.0 76 Mexico Calidra III EE (demand-side) IFC 18.0 77 Mexico Integrated Energy Services Small Hydro IBRD 4.8 78 Mexico Integrated Energy Services Small Hydro GEF 15.0 79 Nicaragua Monte Rosa Sugar Biomass IFC 11.7 Middle East and North Africa Region 80 Egypt Kureimat Solar Thermal Hybrid Solar GEF 50.0 81 Jordan Promotion of a Wind Power Market Wind GEF 6.0 82 Morocco ONE Support Project EE (demand-side) IBRD 8.4 83 West Bank/Gaza Electric Utility Management EE (supply-side) Special Funds 3.0 South Asia Region 84 Bangladesh Grameen Shakti Solar Homes Project Solar Carbon Finance 4.7 85 Bangladesh IDCOL Solar Home Systems Project Solar Carbon Finance 2.5 86 India AllainDuhangan II Small Hydro IFC 9.3 87 India Aloe 2 EE (demand-side) IFC 4.8 4.8 88 India Himachal Pradesh Development Policy Loan Hydro > 10MW IDA 19.5 IBRD 40.5 89 India Owens Corning II EE (demand-side) IFC 1.0 90 India Rain (Carbon Del Guart) EE (demand-side) IFC-Carbon Finance 39.0 91 India Rampur Hydropower Project Hydro > 10MW IBRD 395.0 92 Nepal Nepal Biodigesters Biogas Recipient Executed 5.0 93 Pakistan AKRSP Renewable Energy Project Small Hydro Carbon Finance 6.0 94 Pakistan Electricity Distribution & Transmission Improvement Proj. EE (supply-side) IDA 5 IBRD 10.5 95 Sri Lanka PADGO Small Hydro IFC-GEF 4.3 63 This publication is printed on recycled paper. February 2009 The World Bank Group 1818 H Street, NW Washington, DC 20433 www.worldbank.org www.ifc.org www.miga.org THE WORLD BANK