2020/104 Supported by K NKONW A A WELDEGDEG E OL N ONTOET E S ESREI R E ISE S F OFRO R P R&A C T HTEH E NEENREGRYG Y ETX ITCREA C T I V E S G L O B A L P R A C T I C E THE BOTTOM LINE Increasing Human Capital by Electrifying Health Centers The electrification of health centers, schools, and other public and Schools through Off-Grid Solar Solutions institutions has been limited by the slow expansion of national grids, which has staggering How is electrification related to human capital linked to SDG7: to “ensure access to affordable, reliable, sustainable and modern energy for all.” consequences for economic development and poverty reduction? World Bank experience reveals a correlation between access growth, poverty reduction, and the Access to electricity is essential to the delivery of to electricity and the productivity of public institutions. Under the accumulation of human capital. Off- grid solar solutions have enormous education and health care Mozambique Energy Development and Access Project, for example, increased access to electricity by health centers was associated potential to address the problem, Limited access to electricity imposes significant constraints on with an increase in the number of patients, the quality of services, both in Sub-Saharan Africa and the provision of essential public services, such as health care and and the number of services provided. Electricity allowed clinics to across the world, but simply education, hindering human capital development. Because access to test for malaria and human immunodeficiency virus. Electricity in purchasing and installing the units electricity affects productivity and inclusive economic growth, it is a schools was associated with an increase in the number of students, without providing for adequate critical stepping stone to ending extreme poverty. Sub-Saharan Africa thanks largely to more class sessions, including sessions at night. maintenance is not effective. has the largest energy access deficit, with only 43 percent of the The introduction of audio-visual equipment increased interest among Installing stand-alone solar units region’s population electrified (IRENA 2019). Not surprisingly, it also students. Villagers also benefited from public street lighting, which and servicing them through long- scores low on the Human Capital Index.1 Of the 30 countries at the extended the hours of economic activities after sunset and increased term performance-based contracts bottom of the index, 25 are in Sub-Saharan Africa. the sense of security (World Bank Implementation Completion and can give public institutions the According to the 2018 Human Capital Index, nearly 60 percent Results Report, 2017). electricity service they need at a of children born today will be at best half as productive as they cost governments can afford. could be with access to adequate education and health care. Given that electricity is essential to delivering health care 24 hours a day Why do 1.75 million health centers and schools Raihan Elahi is a and ensuring that education of good quality is delivered in this era in Sub-Saharan Africa lack access to electricity— lead energy specialist at the World Bank. of digital learning, it is urgent that efforts to increase access to and with what consequences? electricity at health centers and schools be intensified. Ultimately, the achievement of the third and fourth Sustainable Development Goals The cost of extending the grid to reach remote Rahul Srinivasan is a embraced by the member states of the United Nations in 2015—to locations is high—but, ultimately, the cost of consulting energy specialist “ensure healthy lives and promote well-being for all at all ages” continued lack of access to electricity is even higher at the World Bank. (SDG3) and to “ensure inclusive and equitable quality education and Critical public institutions such as health centers, schools, and promote lifelong learning opportunities for all” (SDG4)—are closely government offices are at the heart of socioeconomic development Tendai Mukurazhizha is 1 The index is a summary measure of the amount of human capital that a child born today in any community. But limited or no access to electricity hampers the chief economist at the Zimbabwean Ministry of can expect to acquire by age 18, given the risks of poor health and poor education that prevail the efficacy of such institutions, making it difficult for communities in the country where he or she lives. Finance and Economic Increasing Human Capital by Electrifying Health Centers and Schools Development. 2 I n c r e asi n g H u m a n Ca p ita l b y E l e c t r i f y i n g H e a l th C e n t e r s a n d S c hoo l s to develop. Many health centers and schools, particularly in Sub- because they have no electricity at home or at school. In South Saharan Africa, have been waiting for grid electricity for years. But Africa, almost 80,000 young children each year unintentionally ingest there is no certainty about when—if ever—the grid will be extended, kerosene (spilled from lamps) to the point where they must be admit- because the cost of extending it to remote locations is high. Cash- ted to the hospital; even with treatment, 60 percent of them develop crunched governments and utilities find it difficult to justify grid chemically induced pneumonia. In Uganda, children often study in About 1.75 million public extension in remote areas, where returns are low and the cost of bed with a candle on the edge of their headboards, causing fires and health centers and schools building and maintaining the infrastructure high. In 2013, for example, thousands of burn-related accidents, some of which lead to death or a health clinic with fans, electric lights, and microscopes was built lifelong disfigurement (UN DESA 2014). Health workers help women in Sub-Saharan Africa lack in Gudupe, Nigeria, in the hope that the grid would be extended. The give birth by candlelight, but health-care workers cannot handle reliable electricity supply. site still does not have electricity and is not likely to be connected emergencies because they lack life-saving machines that require in the next eight years. The health clinic staff use rechargeable and electricity. Governments and other stakeholders must recognize the battery-powered flashlights. urgency and consequences of this challenge and devise innovative According to data gathered by World Bank teams working on solutions to electrify 100 percent of health centers and schools. Sub-Saharan Africa, about 1.75 million public health centers and schools lack reliable electricity supply. In Ethiopia, for example, only Are there better ways to electrify public institutions in 10 percent of health-care facilities (hospitals, health centers, and health posts) and 28 percent of primary and secondary schools have poor and remote areas? access to electricity, based on information gathered from Ethiopia’s Off-grid solar is a relatively low-cost energy solution Federal Ministry of Education in 2016 and Federal Ministry of Health that can be deployed quickly in 2018. Similarly, only 26 percent of schools in Senegal and 22 percent of health facilities in Madagascar have access to electricity, Technological advancements in stand-alone solar systems have according to World Bank teams working in these countries. paved the way for electrification of public institutions in remote Most of these facilities are far from the grid network. The areas. Thanks to these systems, patients are receiving better health estimated average cost to connect each of them to the national care and students are accessing better education and becoming grid is $2,000–$5,000. Connecting all unconnected facilities across computer literate. Strong evidence from Kenya, for example, shows Sub-Saharan Africa would thus cost more than $5 billion. that off-grid solar can improve the operations of remote health Many Sub-Saharan African countries have launched national clinics (Chen, Mwachandi, and Sanyal 2019). electrification strategies that aim for universal access to electricity in But more resources are needed to install, operate, and maintain 10–15 years. Accomplishing this goal is far from certain, however, in stand-alone solar systems. A concerted effort will be required by no small part because of the high costs of extending the grid. Even if Sub-Saharan African governments and development partners to universal energy access goals could be met in the next 10–15 years, ensure access to reliable electricity to health-care facilities and an entire generation of students would be deprived of the health schools. But public agencies alone cannot meet this enormous care and education they need today for economic and social mobility challenge. Communities need to be made aware of the benefits of tomorrow. Addressing their needs now means that solutions other electrifying public institutions, so that they value the systems by than grid extension must be implemented. Electricity is as critical for paying for them to the extent possible and protecting them from van- holistic outcomes as are medicines and doctors for health facilities dalism and theft. The private sector, too, must invest in and provide and learning materials and teachers for schools. need-based energy solutions. The World Bank has an important role to In Guinea, hundreds of children study at night under streetlights, play in providing data and tools to leverage such investments, to pool ignoring car engine exhausts, honking taxis, and rumbling buses. financing for off-grid and mini-grid technologies, and, where feasible, Children gather in publicly illuminated areas to do their homework to facilitate grid connections to health care facilities and schools. 3 I n c r e asi n g H u m a n Ca p ita l b y E l e c t r i f y i n g H e a l th C e n t e r s a n d S c hoo l s What’s wrong with the conventional “equipment provided finance for the first year of the contract, on the condition that the remaining four years be financed by the implementing ownership” model for off-grid electrification? agencies. The five-year contract included maintenance visits twice a Too often, the model ignores maintenance year (three visits the first year). Each visit entailed cleaning the solar In the equipment ownership model, a government agency makes panels, inspecting the batteries and inverters, replacing electric bulbs Technological the up-front investment needed to purchase and install an off-grid and fuses, and providing a written maintenance report. The contract advancements in stand- system using its own or donor funds; operations and maintenance also covered several other maintenance requests. The warranty (O&M) is then either managed by the government agency or out- periods for equipment such as inverters and batteries were about alone solar systems sourced through contracts for a certain period of time. Unfortunately, three years. have paved the way for Extension of O&M contracts after the five-year period depended this approach often fails—as discussed in the three cases below. electrification of public In Mozambique, under the Energy Development and largely on adequate budget allocations. Regrettably, some public institutions in remote areas. Access Project, O&M for health centers and schools was conducted institutions treated O&M on an ad hoc basis rather than as a neces- by the implementing agency, FUNAE, the national rural electrification sity. Some used annual framework contracts after the expiration agency. Discussions with FUNAE indicated that the sustainability of of the five-year O&M contract. Under the framework contract, the such O&M is contingent largely on the receipt of available funding public institutions asked contractors to bid on the cost of providing and the deployment of technicians with the right skills and training. transportation (per kilometer), supplying/replacing batteries, and Providing O&M is particularly cumbersome in remote areas, which performing other maintenance services. Typically, the least-cost in most cases are hard to reach because of bad road networks. bidder was awarded the contract. The scope and value of the Sometimes an entire day is needed to reach a remote site, delaying contract were dependent on the budget available for maintenance. repairs and depleting manpower. Technological innovations such as But health centers in Uganda are offered limited budgets, 20 percent remote monitoring of system performance using cellular network of which are allocated to maintenance of infrastructure, including coverage could make O&M less cumbersome. roads and buildings in addition to energy equipment. Very often the During a field visit to Niger, a World Bank team learned that, in health centers do not receive even this limited budget, limiting the one location, the government raised funds from several donors to scope of the framework contract. procure three stand-alone solar systems for the same facility over For the ERT-II project, about 13 percent of solar installations a period of eight years. None of these systems is operational today, are not functional for health centers and about 30 percent are not because no budgetary allocation was made for O&M. This finding functional for schools.2 Discussions with authorities revealed that the corroborates World Bank data for Sub-Saharan Africa that show that systems performed well until the five-year O&M contracts expired. despite sizable capital investment to install solar systems at health Since then, ad hoc framework contracts have been used and clinics and schools, electricity delivery is sometimes nonexistent or securing funding has been difficult, because of the limited budget substandard. offered for O&M. These public institutions stated their preference for For the World Bank–funded Uganda Energy for Rural long-term service contracts, to ensure satisfactory performance over Transformation (ERT-I and ERT-II) projects, five-year O&M contracts the lifespan of the solar equipment. were signed by the contractor and the government (in the form of the ministries of health, education, and water). The World Bank 2 ERT-II electrified 560 schools and 665 health centers between 2010 and 2016. The schools and health centers that were served first have been receiving electricity from solar systems for the past eight years. 4 I n c r e asi n g H u m a n Ca p ita l b y E l e c t r i f y i n g H e a l th C e n t e r s a n d S c hoo l s Why are long-term performance-based service serving public institutions because of the payment risks and adminis- trative hurdles associated with serving government agencies. models needed? The World Bank Group’s proposed solution for mitigating the In the absence of an O&M contract, once the warranty payment risk of government agencies draws on its experience period expires and the system stops functioning, promoting private sector investment in large power plants.3 Since In one location in NIger, the institutions just stop using it, squandering assets the late 1990s, independent power producers (IPPs) have helped government raised funds governments reduce their budgetary allocations to fund public Governments have owned and installed stand-alone solar systems to power plants, releasing significant public resources for other from several donors to electrify public institutions for decades. The scale of these initiatives purposes for which financing from the private sector is not available. procure three stand-alone has been determined by the level of funding governments could IPPs enter into long-term power purchase agreements with public solar systems for the same allocate. But demand for the electrification of public institutions in utilities, with governments providing payment guarantees in cases Sub-Saharan Africa is now so great that government and donor funds where the utilities lack the necessary creditworthiness. The World facility over a period of are woefully insufficient to address the challenge. Inadequate O&M Bank Group has used its derisking instruments to improve the credit eight years. None of these budgets put at risk the sustainability of those efforts that are funded. risk of public utilities, focusing particularly on payment and termi- systems is operational What is needed is a model that allows solar systems to be used for nation risks. Through the Multilateral Investment Guarantee Agency today, because no their full lifetime. (MIGA) or the World Bank Guarantee Instrument, the Bank Group can Long-term performance-based service models address these protect investors against governments’ failures to honor payment budgetary allocation was challenges and reduce sustainability risks significantly. Under obligations or implementation agreements. With these guarantees made for O&M. this model, the government selects a service provider to provide in place, the private sector has raised financing for investment and electricity services to public institutions over a 10- to 15-year period. O&M of power plants through long-term electricity service contracts, The service provider is responsible for raising investment capital with the government agencies making monthly payments to the IPPs and ensuring that key performance indicators are met during the under PPAs. contract period. The government pays the provider on a regular The key to successfully raising financing and derisking invest- basis. This mechanism removes the burden of raising investment ment depends on proper risk allocation and the bankability of the capital from the government, which still has to allocate an adequate documentation. For example, a $480 million guarantee from the and consistent budget to ensure that public institutions are able International Bank for Reconstruction and Development (IBRD) to make regular payments to service providers. Governments can helped Argentina unlock its renewable energy potential by creating a raise funds from the World Bank or other donors to help make these market and mobilizing about $3.2 billion, mostly from private sources. regular payments. Innovative project designs, such as results-based In Nigeria, power generation investors and lenders have traditionally financing and disbursement-linked indicators can support these been wary about nonpayment and political risk and hence reluctant interventions. Interviews with private sector developers in Niger and to invest in the power sector. To help break this logjam, the World Nigeria confirm that the private sector is enthusiastic about partici- Bank Group supported the Azura-Edo IPP Project, a gas-fired power pating in these types of business models, provided the payment risks plant intended to provide electricity to 14 million people. The 459 MW from the government agencies are adequately mitigated. project required about $900 million in funding, which was provided The service-based business model is not new. Between 2010 and by 20 equity providers and international banks. Azura was the first 2017, service-based models electrified about 73 million households containing some 360 million people, assuming an average of five 3 The World Bank Group is made up of the International Bank for Reconstruction and De- people per household (World Bank Group 2018). An estimated 1.9 velopment (IBRD), the International Development Association (IDA), the International Finance Corporation, the Multilateral Investment Guarantee Agency (MIGA), and the International Center million people have used stand-alone solar systems for income-gen- for the Settlement of Investment Disputes (ICSID). Together, IBRD and IDA are referred to as the erating productive uses. However, solar companies have avoided World Bank. 5 I n c r e asi n g H u m a n Ca p ita l b y E l e c t r i f y i n g H e a l th C e n t e r s a n d S c hoo l s Table 1. Measures to mitigate risks faced by off-grid solar operators (compared with risks faced by independent power producers) Circumstances surrounding the operations of … … independent power Locus of risk producers … off-grid solar operators Risk-mitigation measure for off-grid solar operators Long-term performance- Location Operations are sharply Solar systems for public Recent innovations in digital remote monitoring and mobile money can defined and ring-fenced. institutions are spread over large reduce this risk by providing real-time information on key performance based service models areas; there is no permanent indicators and maintenance requirements of the solar equipment. reduce sustainability risks staff to operate the systems. significantly. Under this Stakeholders Stakeholders are few and Many stakeholders are involved, Consultations and coordination among multiple stakeholders are critical clearly defined, usually including the public institution to make these contractual service agreements successful. Arranging model, the government including the Ministry of at which the system is installed for a central entity to make payments to the private sector can reduce Energy, the Ministry of (health center, school); its parent bureaucracy and uncertainty. selects a service provider Finance, and the public ministry; local authorities; the Contracts should include and protect the interests of all parties. They to provide electricity utility. Ministry of Finance; and the should include key performance indicators and termination clauses. community. services to public Involving the community can help ensure that the service is valued. It institutions over a 10- to can increase willingness to pay and encourage vigilant security to protect assets from theft and vandalism. 15-year period. The service Accountability Public utility May be any of the stakeholders. Stakeholder consultations determine which government agency signs the provider is responsible for contracts and is accountable for payments. Clear delegation of payment responsibilities and community participation are crucial to give the private raising investment capital sector confidence that it will be paid and that its systems will be used and and ensuring that key beneficial. Financial Private sector Private sector The World Bank Group, other development partners, and governments performance indicators are resources for should discuss and agree on how to support the private sector in raising met during the contract investment this investment capital. The government can provide complementary (capital and financial support to the private sector in the form of grants, loans, and period. O&M) equity. It can raise funds from donors against results-based financing to ensure regular payment to the private sector, subject to satisfactory performance. Financial Individual consumers Public institutions (government) The government should allocate funds explicitly through a budget line item resources for paying utility bills and users (students and patients) for the cost of electricity consumed by public institutions. It should raise payment of funds from donors to support the cost of service instead of raising funds to services purchase equipment. It should encourage beneficiaries, such as students and patients, to pay a portion of the service cost. Community representatives, such as parent-teacher associations, should take the initiative to manage the users’ share of payments. Operations and The private sector is paid Systems are too often perceived, Long-term (10–15 year) service contracts are preferable to ownership of maintenance on a performance basis erroneously, as maintenance equipment. (O&M) and responsible for system free; many are therefore installed Ministries of health and education should provide funding for O&M. performance. and commissioned with no O&M plan. When systems fail Government implementing agencies can tap into federal programs, such as to function, they are often the Decentralized Financing Facility under the Basic Health Care Provision abandoned before the end of Fund in Nigeria, which provides about $325 a month to select health their useful life. facilities in seven states for costs such as O&M. 6 I n c r e asi n g H u m a n Ca p ita l b y E l e c t r i f y i n g H e a l th C e n t e r s a n d S c hoo l s power generation project in Nigeria to receive guarantee support electrification in Niger, Nigeria, and 17 other countries in West Africa from IBRD and MIGA and funding from IFC (the International Finance covered by ROGEP . Corporation). ROGEP’s goal is to establish a market for the private sector to Electrifying public institutions through long-term electricity become a supplier of electricity services rather than a supplier of service contracts for stand-alone solar technology is more challeng- solar equipment, moving the focus from ownership of equipment to ROGEP’s goal is to ing than promoting IPPs. Table 1 describes some of these challenges delivery of services. Mechanisms such as guarantees and insurance establish a market for and measures to mitigate them. could be used to reduce the nonpayment risk of the government and the private sector to instill confidence in the private sector. Such efforts are expected to What is being done to advance the service-based improve the financing of capital investments, attract more qualified become a supplier of approach? developers, and ensure reliable and cheaper electricity service electricity services rather against timely payment. Multiple private sector companies operating than a supplier of solar The World Bank is testing the approach to bring in Niger and Nigeria have expressed keen interest in this approach. equipment, moving the it into the mainstream The approach is consistent with the Bank Group’s goal of maximizing focus from ownership of Working with the governments of Niger and Nigeria, the World Bank finance for development. has launched an effort under the West Africa Regional Off-Grid The aim of the start-up phase is to encourage private companies equipment to delivery of Electrification Project (ROGEP) to help both countries electrify health already providing solar solutions in the two countries to raise services. financing to procure and install solar photovoltaic systems and then and education facilities. The start-up phase, during which about 15 health centers and schools in each country will be electrified, provide long-term (10- to 15-year) O&M service contracts to clinics will assess the feasibility of the technological and business model and schools after they have installed the systems. With the aid of dig- proposed under ROGEP . Lessons learned will be applied to scale up ital remote monitoring (described below and in figure 1) and mutually Figure 1. Schematic diagram for delivery of electricity service by private sector to public institutions Long-term electricity supply contract (key performance indicators) Health and education facilities Electricity service providers Monthly payment for meeting Health and education key performance indicators facilities with support from World Bank Group as needed Uses digital remote monitoring technology to verify performance and trigger payment Third-party agency 7 I n c r e asi n g H u m a n Ca p ita l b y E l e c t r i f y i n g H e a l th C e n t e r s a n d S c hoo l s Table 2. Comparison of costs of two ways of financing a 15 percent lower when service providers raise the finance needed to hypothetical 5 kW solar electricity system (U.S. dollars) procure, install, operate, and maintain the equipment. Spreading the cost of the systems over many years and keeping service providers Costs to Costs to government engaged is expected to reduce up-front capital costs for government government if if service agencies and improve the long-term performance of systems. A concern highlighted it pays capital providers raise Lessons from this start-up phase will be used to help scale up Item costs up front debt finance during fieldwork is the the electrification of public institutions by designing risk-mitigation Capital cost schemes that allow the private sector to invest in electricity service possibility that international Procurement and installation cost 30,000 0 provision. By virtually eliminating initial capital costs and spreading firms may crowd out the O&M and replacement of equipment the financial burden of these systems over time, such a structure will local private sector. One Monthly payment over 20 years 184 enable governments to provide reliable electricity services to rural possible solution is to Annual payment over 20 years 2,208 health clinics and schools at a much faster rate than might otherwise ensure that local players Monthly payments in first four years 809 be feasible. Scaling up the program in countries should also allow Monthly payments in years 5–20 184 providers to lower their prices, as a result of economies of scale are involved in different Total cost associated with larger volume. parts of the business Lifetime cost (capital and O&M) 74,160 74,160 cycle, which may include Present value cost of proposed What challenges confront this new approach? 46,500 39,300 distribution, routine solution Fieldwork suggests some ways to ease the budget maintenance, customs, Note: Estimates assume that the installed cost (including batteries) is $6 per watt, the annual operating cost is 2.5 percent of the installed cost of the systems, and the discount rate is constraints of public institutions and to reassure shipping, and consumer 12 percent. potential private providers of off-grid solar systems relations. agreed performance indicators, the government will pay the private Fieldwork and discussions in Nigeria revealed that almost all public sector monthly to cover their capital and operational expenses. In the facilities are largely responsible for paying the O&M costs associated start-up phase, the payments will be structured so that the private with electricity but that few have the resources to do so. The health sector recovers its capital cost in four years. clinics surveyed were responsible for their own utility and mainte- Quality standards for equipment, design, and installation are nance bills; school development committees and parent-teacher combined with digital remote monitoring technology to ensure and associations often helped foot utility and maintenance bills at verify the performance of off-grid solar systems. By monitoring the schools. Monthly available revenues to the facility, including utility performance of the systems against agreed performance indicators, payments and site maintenance, averaged $126, while their reported a third party verifies that the service provider is delivering the willingness to pay for the operation and maintenance of a solar contractually agreed service and signals the government agency to electricity system averaged $14 a month. Only large boarding schools pay the corresponding fee. and clinics were willing to pay more than $14 a month. However, To illustrate the proposed financial structure for the start-up their ability or willingness to pay was linked to the cost they currently phase, table 2 compares a payment structure in which the capital incur for the limited electricity service they receive. Thus, for this cost is paid up front by the government agency (through its own scheme to be sustainable, funding support from other sources will funds or donor funds) with one in which service providers raise be needed to cover monthly costs, given the low willingness to pay debt finance to cover the capital cost. It shows that the lifetime for O&M of solar systems at public institutions. There is a clear need present-value cost to the government of a 5 kW solar system is to investigate options for financial support from other sources, such 8 I n c r e asi n g H u m a n Ca p ita l b y E l e c t r i f y i n g H e a l th C e n t e r s a n d S c hoo l s as federal or state governments or outside funds, so as to ensure the Private sector firms are also concerned about what happens long-term viability of the framework. to stand-alone systems if the grid is extended. Accordingly, it is In a recent mission to Nigeria, the ROGEP team learned that important to select health centers and schools that are likely to use the federal ministry directly allocates about 100,000 ($327) a a stand-alone system for a long enough period for firms to recoup month to some primary health centers in seven states through the their investment. The long-term service contract must set mutually The World Bank Group Decentralized Financing Facility under the Basic Health Care Provision agreeable terms for termination of the contract to mitigate the risk of and its partners should Fund. This allocated budget is sufficient to pay the monthly O&M costs the grid reaching a public facility served by a private company under to the private sector under the ROGEP service-delivery model. Niger the service contract. identify mechanisms for has a fund managed by the World Bank in which many donors place fostering a service-delivery their resources for health care provision; the Ministry of Health deter- How can the World Bank help to scale up energy ecosystem that will allow mines how these resources are to be used. If governments, donors, access to public institutions? the private sector to invest and implementing agencies agree, the fund could be used to pay the capital and O&M costs of off-grid systems installed by private provid- Several success criteria have emerged from in and serve health centers ers. Similar funds in the Ministry of Education could also be tapped. work to date and schools with reliable The sale of electricity for productive uses (gardening, photocopying) Electrification of health centers, schools, and other public institutions electricity supply. could help generate additional revenue to cover O&M costs. has been limited by the slow pace at which national grid networks As previously noted, lack of trust that the government will make are being extended to connect them. Off-grid solutions have timely payments makes the private sector reluctant to provide enormous potential to shape their future—in Sub-Saharan Africa and services. Financing support from institutions such as the World Bank across the world. may provide comfort to private providers, but there is uncertainty Innovations in technology and new business models can provide about how effective such support would be. The private sector is reliable electricity service to public institutions through long-term fearful of reputational damage if it disconnects a health center for service contracts with the private sector. The World Bank is currently nonpayment. Hence, it is important to set the right expectations promoting such contracts through its projects in Niger, Nigeria, and regarding terms and timeline of payments and associated risk-miti- Uganda, and it aims to use similar models to electrify health centers gation measures. Contracts must protect the interests of all parties and schools in other countries. Staff have also peer-reviewed reports and mitigate the risk of change of government, which often leads to on this subject and spoken at global conferences highlighting the changes in policies and priorities. importance of this topic. Another concern highlighted during fieldwork is the possibility of Several recommendations for scaling up energy access to public international firms crowding out the local private sector. Several local institutions emerge from this work: firms remarked that foreign companies can secure financing at low • The World Bank Group and its partners should identify mecha- rates from their home countries, leaving little room for competition nisms for fostering a service-delivery ecosystem that will allow by local players. The high cost of financing (more than 20 percent a the private sector to invest in and serve health centers and year) in many Sub-Saharan Africa countries typically does not allow schools with reliable electricity supply. The focus must be on businesses to serve rural public institutions viably. One possible delivery of electricity service rather than ownership of equip- solution is to ensure that local players are involved in different ment. Maintaining systems over the lifetime of the project is parts of the business cycle, which may include distribution, routine critical. maintenance, customs, shipping, and consumer relations. Business • Contracts should protect the interests of all parties involved models should promote partnerships between local and foreign (public institutions, private company, community stakeholders) by private companies to provide the best possible sustainable solutions setting key performance indicators and termination clauses. To to consumers. 9 I n c r e asi n g H u m a n Ca p ita l b y E l e c t r i f y i n g H e a l th C e n t e r s a n d S c hoo l s garner the trust of the private sector, measures for the mitigation References MAKE FURTHER of payment risk should be less bureaucratic, and the terms of Chen, Chen, Rita Mwachandi, and Sanjoy Sanyal. 2019. “In Kenya’s CONNECTIONS payment must be clear. 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Jordan. and Recommendations for Achieving the Electrification of electricity services is likely to increase communities’ willingness Primary and Secondary Schools. New York. https://sustain- Live Wire 2015/51. “Scaling Up Access to pay for services and protect solar system assets from vandal- abledevelopment.un.org/content/documents/1608Electricity%20 to Electricity: Emerging Best Practices ism and theft. for Mini-Grid Regulation,” by Chris and%20Education.pdf. Greacen, Stephanie Nsom, and Dana • Better coordination among sectors within both government and World Bank Group. 2018. Off-Grid Solar Market Trends Rysankova. donor agencies will help identify and implement sustainable Report. Washington, DC. https://www.lightingglobal. solutions. Live Wire 2019/106. “Planning Models org/2018-global-off-grid-solar-market-trends-report/. for Electricity Access: Where Do World Bank Implementation Completion and Results Report We Go from Here?” by Debabrata (ICR00004301) for MZ-Energy Development and Access Project, Chattopadhyay and Rahul Srinivasan. December 15, 2017. http://documents.worldbank.org/curated/ Find these and the entire Live Wire en/530521514407393256/pdf/ICR00004301-12152017.pdf. archive at https://openknowledge. The authors thank Dana Rysankova, Abir Burgul, Scherezad Latif, and Prajakta worldbank.org/handle/10986/17135. Chitre for their valuable review comments. They also thank Deea Ariana for her contributions. 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