92711 P i l o t R e p o rt RISE READINESS FOR investment IN sustainable ENERGY A tool for policymakers © 2014 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. 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R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 1 CONTENTS Foreword 5 Acknowledgments 6 Executive Summary 9 Key Findings 12 CHAPTER 1 INTRODUCTION 17 1.1 What is RISE? 18 1.2 How was RISE developed? 20 1.3 What are the RISE indicators? 22 1.4 What are the limitations of the RISE pilot? 25 1.5 What is the structure of the report? 26 CHAPTER 2 CROSS-CUTTING INDICATORS 29 2.1 What are the cross-cutting indicators? 29 2.2 How did the countries score? 32 2.3 What are the lessons for the global rollout? 33 CHAPTER 3 ENERGY ACCESS 37 3.1 Why does RISE matter? 37 3.2 How does RISE measure the enabling environment? 39 3.3 How did the countries score? 44 3.4 How can countries improve their performance? 52 3.5 What are the lessons for the global rollout? 53 CHAPTER 4 RENEWABLE ENERGY 55 4.1 Why does RISE matter? 55 4.2 How does RISE measure the enabling environment? 57 4.3 How did the countries score? 63 4.4 How can countries improve performance? 72 4.5 What are the lessons for the global rollout? 74 CHAPTER 5 ENERGY EFFICIENCY 77 5.1 Why does RISE matter? 77 5.2 How does RISE measure the enabling environment? 79 5.3 How did the countries score? 84 5.4 How can countries improve their performance? 95 5.5 What are the lessons for the global rollout? 96 CHAPTER 6 RISE, THE OVERALL INVESTMENT CLIMATE, AND SE4ALL GOALS 99 6.1 RISE scores in a nutshell 99 6.2 How is RISE related to overall investment climate? 100 6.3 How does RISE relate to the three SE4ALL goals? 101 6.4 How does RISE move forward? 102 REFERENCES 103 Annex I. RISE Scores 104 Annex II. RISE Methodology 112 Annex III. Proposal for global rollout 119 Annex IV. List of pilot countries 125 Annex V. List of existing sustainable energy indexes 126 Annex VI. List of advisory group members 127 Annex VII. List of contributors 129 Annex VIII. Country spotlights 131 2 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY LIST OF FIGURES Figure 1: A two-stage screening process 10 Figure 2: RISE—28 indicators and 85 sub-indicators in 4 categories and 3 pillars 11 Figure 3: RISE energy access scores 12 Figure 4: RISE renewable energy scores 13 Figure 5: RISE energy efficiency scores 14 Figure 6: RISE aggregate scores 15 Figure 1-1: The projected annual investment shortfall over 2010–30 is enormous 18 Figure 1-2: RISE is aligned to realizing SE4ALL goals 19 Figure 1-3: RISE draws from current initiatives 19 Figure 1-4: Geographic scope of exisiting indexes and RISE 19 Figure 1-5: RISE was piloted in 17 countries 21 Figure 1-6: A two-stage screening process for indicators was used 21 Figure 1-7: Categorizing the indicators 22 Figure 1-8: RISE—28 indicators and 85 sub-indicators in 4 categories and 3 pillars 24 Figure 2-1: Only a few countries in the sample generate electricity with subsidized fossil fuel 32 Figure 2-2: Only two developed countries have begun to introduce carbon pricing 33 Figure 2-3: Utility performance varies widely among countries 34 Figure 2-4: Across the sample, electricity prices vary by an order of magnitude 34 Figure 3-1: RISE energy access score 37 Figure 3-2: Many countries are far from universal electrification 38 Figure 3-3: Existence of an electrification plan is widely prevalent 45 Figure 3-4: A handful of countries have performed well in creating an enabling environment for mini-grids 45 Figure 3-5: Countries have taken investor-friendly steps for standalone home systems 46 Figure 3-6: All countries provide some form of dedicated support for electrification 47 Figure 3-7: Tariffs and affordability vary widely among countries 48 Figure 3-8: Subsistence level of electricity is affordable for most of the countries 48 Figure 3-9: Utility performance varies widely among countries 49 Figure 3-10: In a handful of countries, the cost and time for getting an electricity connection are high 50 Figure 3-11: Very few countries have any experience on implementing processes for mini-grid operations 51 Figure 4-1: RISE renewable energy score 55 Figure 4-2: Share of installed capacity by technology 57 Figure 4-3: Planning for renewable energy expansion 64 Figure 4-4: Only a few countries in the sample generate electricity with subsidized fuel(s) 65 Figure 4-5: Only two countries have a legally binding greenhouse gas emission reduction target or a carbon pricing mechanism 65 Figure 4-6: Six pilot countries indicate green traffic lights on their utility performance 66 Figure 4-7: More than half the sample countries have a legal framework to support renewable energy 66 Figure 4-8: Nine countries have introduced economic incentives to support renewable energy 67 Figure 4-9: Regulatory policies—policy design attributes 68 Figure 4-10: Policymakers need to be aware of the economic impact and efficiency of renewable energy subsidies 69 Figure 4-11: Network connection and pricing 70 Figure 4-12: A layer-cake of public financial support mechanisms 70 Figure 4-13: The ease of getting a renewable energy project running varies enormously 71 Figure 4-14: Year when policy to promote renewable energy was first enacted against RISE score 73 Figure 4-15: Countries with low fuel source diversity also have abundant renewable energy resource potential 74 Figure 4-16: Regulatory policy incentive level and LCOE 75 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 3 Figure 5-1: More-developed countries scored far higher on RISE energy efficiency indicators; emerging economies displayed varying strengths 77 Figure 5-2: Pilot countries experienced a wide range of levels and trends in primary energy intensity over 1990–2010 79 Figure 5-3: Nearly half the sample countries lack national plans or targets for energy efficiency 85 Figure 5-4: All countries have some entity overseeing energy efficiency 86 Figure 5-5: Comparing energy use of nearby consumers is not a common practice in any pilot country 87 Figure 5-6: Incentives for energy suppliers are absent in all developing countries in the pilot 88 Figure 5-7: Only three countries have energy saving obligations for public agencies 88 Figure 5-8: India, Kenya, and Denmark have the strongest mandates for large-scale users to invest in energy efficiency 89 Figure 5-9: Only six countries have mandatory or voluntary MEPS 90 Figure 5-10: Country performance on energy labels follows that on energy standards 90 Figure 5-11: About one-third of the pilot countries have building energy codes 92 Figure 5-12: Increasing block tariffs are common for the residential sector 92 Figure 5-13: Only a few countries in the sample generate electricity with subsidized fossil fuel 93 Figure 5-14: Only two developed countries have begun to introduce carbon pricing 94 Figure 5-15: Across the sample, electricity prices vary by an order of magnitude 94 Figure 6-1: RISE aggregate score 99 Figure 6-2: RISE aggregate score and WGI 100 Figure 6-3: RISE aggregate score and Doing Business index 101 Figure 6-4: Correlation between RISE score and GTF indicators 101 LIST OF TABLES Table 1: Countries by topic and traffic light 15 Table 1-1: Consultations to select RISE indicators 22 Table 2-1: Scoring methodology­ —cross-cutting indicators 31 Table 2-2: Only Denmark and the U.S. have adopted legally binding greenhouse gas emission reduction targets 33 Table 3-1: Scoring methodology—planning 40 Table 3-2: Scoring methodology—policies and regulations 41 Table 3-3: Scoring methodology—pricing and subsidies 42 Table 3-4: Typical procedures to operate a mini-grid 43 Table 3-5: Scoring methodology—procedural efficiency 44 Table 3-6: Time and cost of getting an electricity connection varies widely among countries 49 Table 3-7: Time and cost to developers to set up mini-grids can vary widely 52 Table 3-8: All countries have areas of opportunity for improving the enabling environment 52 Table 4-1: Scoring methodology—planning 58 Table 4-2: Scoring methodology—pricing and subsidies 60 Table 4-3: Scoring methodology—policies and regulations 61 Table 4-4: Scoring methodology—procedural efficiency 63 Table 4-5: Projects assesed for procedural efficiency 72 Table 4-6: All countries have areas of opportunity for improving the enabling environment 72 Table 5-1: Scoring methodology—planning 80 Table 5-2: Scoring methodology—policies and regulations 81 Table 5-3: Scoring methodology—pricing and subsidies 83 Table 5-4: All countries have opportunities to improve the enabling environment for investing in energy efficiency 95 Table 6-1: Countries and traffic light by pillar 100 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 5 FOREWORD Sustainable energy is vital to economic and social develop- renewable energy, and energy efficiency—and what policies ment. Without it, countries cannot eradicate extreme and other instruments they may need to move toward their poverty or increase shared prosperity. That is why the World sustainable energy vision. RISE highlights good practices Bank Group is serious about tackling energy poverty. across countries that can foster a good enabling environment for sustainable energy and support peer learning. As a key partner of the Sustainable Energy for All (SE4ALL) initiative, which World Bank Group President Jim Yong We are pleased to present this pilot report, the starting Kim co-chairs with United Nations Secretary-General Ban point for the launch of the global rollout (please visit Ki-moon, we are keenly focused on three goals—ensuring http://rise.worldbank.org for more comprehensive analysis universal access to modern energy services, doubling the and data). One objective of this pilot is to get additional share of renewable energy in the global energy mix, and feedback from all stakeholders to allow us to further refine doubling the rate of improvement in energy efficiency—all the indicators for the global rollout. We have learned much by 2030. To reach these goals an additional $600 billion through this pilot, particularly the need for strong data to in annual investments needs to be mobilized over the next support the indicators. RISE can help aggregate the many 15 years. Much of it needs to come from the private sector, sources of information—from government to private and given strained public finances. from utilities to regulators. The data collection process showed us what information is available as well as some of The good news? Many countries share this vision for a the data gaps that countries can work to fill. secure energy future for all people. But for most countries, realizing this vision requires massive investment in sustain- We are very excited about the potential of RISE. We hope it able energy and a solid enabling environment of policies, will serve not only as an overview of the sustainable energy regulations, and institutions. environment but also as a useful tool for policymakers. We still have work to do to refine the tool, but from feedback so The Readiness for Investment in Sustainable Energy (RISE) far we are encouraged by its usefulness at the country level. can help countries get to where they want to be. Through a Going forward, your feedback and ideas will be vital to RISE’s suite of indicators, RISE will provide a global reference point development. Let us know what you think by sending an for countries to see how they are performing in energy access, email to rise@worldbankgroup.org. Anita Marangoly George Augusto Lopez-Claros Senior Director Director Global Energy and Extractives Practice Global indicators Group World Bank Group World Bank Group 6 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY ACKNOWLEDGMENTS RISE was managed by a core team led by Gevorg Sargsyan. The External Advisory Group comprised renowned experts Sudeshna Ghosh Banerjee led the preparation of the report as including Sara Hayes and Rachel Young (American Council for well as authored the energy access chapter. Gabriela Elizondo an Energy-Efficient Economy); Ajay Mathur (Bureau of Energy Azuela and Jonathan Sinton were the primary authors of renew- Efficiency of India); Vijay Modi (Columbia University); Silvia able energy and energy efficiency chapters, respectively. Tanya Kreibiehl (FS-UNEP Centre for Climate and Sustainable Energy Primiani and Joonkyung Seong, the coordinators of RISE, led Finance); Wolfgang Mostert, Robert P. Taylor, and Bernard the data collection, data validation, and data analysis. The core Tenenbaum (Independent Consultants); Melanie Slade and Robert team included Asad Ali Ahmed, Joeri Frederik de Wit, Caroline Tromop (International Energy Agency); Gauri Singh (IRENA); Jens Frontigny, Amrita Kundu, Arsh Sharma, Ruchi Soni, Jayashree Drillisch (KfW Development Bank); Anil Cabraal (KMRI Lanka); Srinivasan, and Melissa Taylor. The team would especially like to Jeffrey Logan (National Renewable Energy Laboratory); Simon acknowledge the advice and support from Vivien Foster, Melissa Trace (Practical Action); Luiz Barroso (PSR); Christine Lins Johns, and Muthukumara Mani. RISE is a collaboration between (REN21); Joseph Nganga (Renewable Energy Ventures); Ibrahim the Global Energy and Extractives Practice and the Global H Rehman (The Energy and Resources Institute); Gianluca Indicators Group of the World Bank Group and benefited from Sambucini (UN Economic Commission for Europe); Djaheezah the overall guidance of Anita Marangoly George and Augusto Subratty (UN Environment Programme); Lauren Gritzke, Mark Lopez-Claros. Hopkins and Richenda van Leeuwen (UN Foundation); John Christensen (UNEP Risø Centre); Anton Eberhard (University of The team is grateful for the constructive feedback provided Cape Town); Sandra Winkler (World Energy Council); and Letha by the peer-reviewers Marianne Fay, Charles Cormier, Pankaj Tawney and Davida Wood (World Resources Institute). Gupta, Wendy Hughes, Todd Johnson, Mits Motohashi, Katharina Gassner, Efstratios Tavoulareas, Pepukaye Bardouille, RISE is underpinned by data collection efforts in 17 pilot coun- Ashok Sarkar, Stephen Halloway, and the International tries. The experts who led this work in each country are Murefu Renewable Energy Agency (IRENA). In addition, Denzel Barasa, Nathaniel Bue, Joshua Samuel Finn, John Gorosi, Teame Hankinson, Joshua Samuel Finn, and Joshua Morrison of DH Gebretsadik Gebrehiwot, Timothy Hewatt, Carlos Silva Montes, Infrastructure and Chris Trimble provided valuable inputs to the Mzumbe Musa, Madhavan Nampoothiri, Vahe Odabashian, initial development of RISE based on extensive literature review Barsha Pandey, Dorj Purevsuren, Karen Helveg Petersen, and their technical expertise. Salem Mohammed Bin Qadhi, Mohamed Rasheed, Mohamed Hady Sherif, Ibrahim Togola, and Reinerio Zepeda. A number of The team appreciates the suggestions and advice from the contributors must be acknowledged for thier support to data internal and external advisory groups created for RISE. The collection. The names of those wishing to be acknowledged Internal Advisory Group comprised technical experts of the individually are listed in Annex VII. The Renewable Energy Policy World Bank Group—including Ricardo Arias, Pierre Audinet, Network for the 21st Century (REN21) also contributed to data Vyjayanti T. Desai, Laurent Durix, David Vilar Ferrenbach, collection and validation effort for renewable energy. RISE will Mustafa Zakir Hussain, Ivan Jaques, Peter Johansen, Etienne continue engaging with REN21 during the global rollout. Raffi Kechichian, Oliver James Knight, Marcelino Madrigal, Luiz T. A. Maurer, Alejandro Moreno, Mohua Mukherjee, Daniel An editorial and design team comprising Bruce Ross-Larson, J. Murphy, Alexios Pantelias, Venkata Ramana Putti, Dana Jonathan Aspin, Jack Harlow, and Steven C. Francis significantly Rysankova, Ashok Sarkar, Jasneet Singh, Xiaoping Wang, elevated the quality and visual presentation of the final report. and Sean Whittaker—was involved in all phases of developing The online platform (http://rise.worldbank.org) was developed and piloting RISE. Other country experts also contributed by Preeti Endlaw, Kunal Patel, Mohan Pathapati, Vinod to validating information and data collected from the pilot Thottikkatu, and Hashim Zia. The outreach strategy is led by countries, including Morgan Bazilian, Manual Berlengiero, Nadine Ghannam and Elisabeth Jane Mealey. Fabrice Karl Bertholet, Daniel Camos Daurella, Issa Diaw, Raihan Elahi, Abdulaziz Faghi, Kanv Garg, Tendai Gregan, Amol The team gratefully acknowledges the funding support of Gupta, Ashish Khanna, Kamlesh Khelawan, Rahul Kitchlu, the Scaling Up Renewable Energy in Low Income Countries Arthur Kochnakyan, Sandeep Kohli, Mudit Narain, Laurencia Program (SREP) of the Climate Investment Funds, U.S. Agency Karimi Njagi, Stephanie Nsom, Zayra Romo, Ashish Shrestha, for International Development (USAID), IRENA, and Energy Ariel Yepez, and Jianping Zhao. Sector Management Assistance Program (ESMAP). Credit: World Bank R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 9 EXECUTIVE SUMMARY Readiness for Investment in Sustainable Energy (RISE) is a RISE will provide a global reference point that will support suite of indicators that assesses the legal and regulatory decision-making for governments and inform country-level environment for investment in sustainable energy. It estab- interventions under SE4ALL. RISE will help stimulate policy lishes a framework for better depicting the national enabling dialogue and identify priority areas for change. It will provide environment to attract investment into sustainable energy. In a first-order snapshot of what exists in a country and point to this way, RISE supports the achievement of the objectives of good practices across nations that could foster an enabling the Sustainable Energy for All initiative (SE4ALL): ensure uni- environment for sustainable energy. Underpinned by substan- versal access to modern energy services, double the share of tial data collection, RISE is expected to be updated regularly, renewable energy in the global energy mix, and double the rate thus benchmarking country performance and allowing coun- of improvement in energy efficiency by 2030. Reaching the tries to measure incremental changes. This reiteration should SE4ALL goals will require an almost tripling of historical annual also help countries adapt and customize policy measures and investment flows in these areas to about $1 trillion, such that compare themselves with peers and good performers. countries will need to embrace an enabling environment that attracts all forms of investment—public and private. This report presents the methodology and results of a pilot phase of RISE involving 17 developed and developing countries, RISE is aimed at policymakers who focus on actions as well as an in-depth case study on Kenya. The pilot is sup- within their control. Creating this environment is directed ported by data collected between December 2013 and June by policymakers—the primary constituency RISE aims to 2014. The pilot countries, representing varying status in data influence. Given that the private sector is expected to scale up availability and data quality, are: Armenia, Chile, Denmark, substantially to support the sustainable energy agenda, it is Ethiopia, Honduras, India, Kenya, Liberia, Maldives, Mali, an important stakeholder as well. However, RISE does not aim Mongolia, Nepal, the Solomon Islands, Tanzania, the United to substitute for a comprehensive screening tool for private States, Vanuatu, and the Republic of Yemen. An in-depth operators and does not intend to stand in for investors’ own exercise was carried out in Kenya to understand better due diligence. Rather, it aims to provide a broad picture of the progress in creating an enabling environment. enabling environment and the good faith of governments to support private sector participation in their countries and, This pilot report will be the starting point for launching the potentially, lower risk premiums. global rollout. It allows for a validation of the methodology, and for lessons learned from developing and implementing the RISE focuses only on the enabling environment as a deter- suite of indicators across these countries. Most important, it minant of investment. Many factors influence investment, will remain a baseline consultation document for the global including market conditions, macroeconomic stability, rollout—expected in 2015 and to cover about 100 countries— resource endowments, and financial environment, but RISE is helping refine the methodology and interpretation of results. limited to the policy and regulatory aspect, and so countries with a higher score on RISE may not always attract more The indicators were developed after wide-ranging stakeholder investment—and vice versa. Investors evaluate factors consultations. Based on a preliminary long list of indicators, a individually as well as collectively before making a decision. two-stage screening process (Figure 1) was employed to arrive RISE’s evolution over time will allow for rigorous econometric at the first shortlist, which went through multiple stakeholder analysis, enabling the relation between RISE and investment consultations and then informed the final suite of indicators to be analyzed, controlled for other factors. for the pilot. The shortlist was discussed with external 10 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 1: A two-stage screening process Obj ctiv Comp r bl Action bl Cont xt N utr l St I Indic tors should r fl ct Th m thod of Indic tors should m sur sp cts Indic tors should tr ck f cts nd not opinions. m sur m nt for n of th polic nd r ul tor ch r ct ristics of th Th should lso b b s d indic tor should b nvironm nt th t r und r th n blin nvironm nt on r p t bl n l sis of sil r plic bl in control of th polic m k rs nd th t would b b n fici l l ws, r ul tion nd pr ctic s. ch countr . c n inspir cl r r form. in n rl v r countr . Av il bl Cost Eff ctiv Cons nsus St II D t for n indic tor D t for n indic tor Th r should b cons nsus should b v il bl on c n b coll ct d t th t ch indic tor contribut s to lob l sc l . r son bl cost. chi vin r sults in ch pill r. Source: Authors. and internal advisory groups, created for each of the three A “traffic light” system is used to convey performance on pillars of RISE (energy access, renewable energy, and energy individual indicators and can be aggregated to represent efficiency) as well as with more than 200 private sector performance on different categories or pillars. Most indica- representatives through face-to-face interactions and an tors are scored between 0 and 100 and aggregated with online survey in more than 30 countries. Consultations with equal weights. While each indicator could have a different country representatives of the Scaling Up Renewable Energy number of sub-indicators, they all hold equal weight and in Low Income Countries Program (SREP)—one of the funders are aggregated to form the indicator score. The procedural of this work—also provided valuable feedback. efficiency indicators are scored based on the “distance to frontier” approach, where the frontier represents the best RISE encompasses 28 indicators across three pillars of performance by any country observed on each indicator. A sustainable energy. The pillars of energy access and renewable higher score indicates a more efficient business environment. energy each has seven indicators, energy efficiency 10. Further A green light highlights countries that are close to good prac- are four cross-cutting indicators on topics relevant to all three tice, in the context of RISE, on a certain indicator or pillar. pillars: fossil fuel subsidy, carbon pricing mechanism, utility A red light indicates that a country has much to improve to performance, and retail price of electricity. Each indicator is achieve good practice on what is measured by RISE. A yellow calculated from a group of sub-indicators (Figure 2). light shows that a country has embarked on creating an attractive enabling environment but still has some distance The indicators are further organized in four broad categories to go to achieve a green light. When a country receives to encompass the multidimensional aspects of enabling a green light, though, it doesn’t necessarily mean that it environment—planning; policies and regulations; pricing and lacks attributes to improve on—rather, it signals its current subsidies; and procedural efficiency. Planning captures the ex- readiness for investment, which for the investor provides tent to which government vision is translated into meaningful important evidence about the commitment and credibility of and regularly updated master plans. Policies and regulations government policymaking in creating an enabling environ- address specific policies and regulatory mechanisms to create ment. Therefore, countries with a higher score in RISE may an attractive business environment. Pricing and subsidies not always succeed with attracting more investment and deal with policies and incentives that focus on appropriate vice versa. Investors value various factors individually as well price signals to markets and subsidy mechanisms to facilitate as collectively before making a decision to go ahead. the development of sustainable energy. Procedural efficiency measures whether the processes adopted to develop sustain- RISE uses the country as the unit of analysis. The reality able energy are executed within reasonable time and cost, and in some large countries, particularly those with federal captures the administrative ease of doing business. arrangements, is that policies and their enforcement can R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 11 Figure 2: RISE—28 indicators and 85 sub-indicators in 4 categories and 3 pillars En r Acc ss R n w bl En r En r Effici nc Pl nnin El ctrific tion pl n Pl nnin for r n w bl n r N tion l pl n for incr sin N tion l pl n xp nsion n r ffici nc Cov r of rid nd off- rid R n w bl n r in N tion l n r ffici nc t r ts R ul r upd t xp nsion pl nnin En r ffici nc l isl tion/ ction pl n R n w bl n r in Sub-s ctor l t r ts tr nsmission pl nnin T r t with n ction pl n Entiti s for n r ffici nc polici s, Hi h qu lit r sourc m ppin r ul tion nd impl m nt tion S ttin n r ffici nc polic S ttin n r ffici nc st nd rds R ul tin n r ffici nc ctiviti s of suppli rs R ul tin n r ffici nc ctiviti s of consum rs Equipm nt st nd rds compli nc Buildin st nd rds compli nc Polici s nd En blin nvironm nt for L l fr m work for Qu lit of inform tion R ul tions r n w bl n r d v lop rs r n w bl n r provid d to consum rs to inv st in mini- rids R ports on l ctricit us Exist nc of r ul tions R ul tor polici s Qu lit of inform tion in r port R ul tion ttribut s Inc ntiv s to rid-conn ct d Comp rison with oth r us rs St nd rds r n w bl n r En r s vin inform tion Prot ction inst xpropri tion Inc ntiv s to distribut d Subsidi s or dut x mption r n w bl n r Inc ntiv s or m nd t s for R ul tor polici s- n r suppl utiliti s En blin nvironm nt for M nd t s for utiliti s st nd lon hom s st ms polic d si n ttribut s Pr dictibilit P n lti s for non-compli nc N tion l pro r m M sur m nt of s vin s St nd rds Sust in bilit Acc ss bilit ’ Third p rt v lid tion Subsidi s or dut x mption Cost r cov r for utiliti s R mun r tion ffici nc N twork conn ction nd pricin Inc ntiv s or m nd t s for Conn ction cost lloc tion public ntiti s N twork us pricin Obli tions for public buildin s Obli tions for oth r public f ciliti s Public fin nci l support m ch nisms Public procur m nt of Cr dit nh nc m nt n r ffici nc products Utilit p m nts u r nt Multi- r contr cts Fisc l inc ntiv s Allow nc to r t in s vin s Public fin ncin supports Inc ntiv s or m nd t s for l r -sc l us rs M nd t s for l r -sc l us rs P n lti s for non-compli nc M sur m nt of s vin s Inc ntiv s for l r -sc l us rs Minimum n r ffici nc p rform nc st nd rds Appli nc s Li htin El ctric motors Industri l quipm nt R ul r upd t P n lti s for non-compli nc En r l b lin s st m Appli nc s Li htin El ctric motors Industri l quipm nt Buildin n r cod s R sid nti l buildin s Comm rci l buildin s Compli nc s st m R nov t d buildin s Buildin n r inform tion Pricin nd Fundin support to l ctrific tion Fossil fu l subsid Inc ntiv s from l ctricit pricin Subsidi s D dic t d fundin El ctricit r t structur Subsid to hous hold conn ction C rbon pricin m ch nism Ch r s to l r custom rs Subsid to rid xt nsion GHG mission r duction t r t C rbon pricin m ch nism Fossil fu l subsid Afford bilit of l ctricit Utilit p rform nc C rbon pricin m ch nism Utilit p rform nc R portin pr ctic GHG mission r duction t r t R portin pr ctic Fin nci l p rform nc C rbon pricin m ch nism Fin nci l p rform nc R t il pric of l ctricit Proc dur l Est blishin n w conn ction St rtin n w r n w bl Effici nc n r proj ct P rmittin mini- rid Indic tors for sp cific pill r Cross-cuttin indic tors Source: Authors. 12 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY vary greatly. In the United States and India, for example, formal electrification plans. However, actions on policies and state governments not only have a role in implementing regulations, pricing and subsidies, and procedural efficiency federal policies but set state-specific policies. For simplicity, are still a distance away in many countries. Among the sub- the largest business city of the economy or the state where indicators, those related to creating an enabling environment the largest business city is located has been chosen for for mini-grids lag the farthest behind. analysis in such countries. In the United States and India, New York City and Mumbai were selected, so some indicators Still, a handful of countries such as Mali and Tanzania represent policies of New York City and Mumbai (or New York have set up innovative mechanisms to support mini-grid State or Maharashtra if a policy is governed at state level). development. These include: regulations outlining rights and mandates of developers, a right to charge a higher RISE’s suite of indicators builds on many other initiatives tariff than the national level to recover the incremental cost with similar objectives, but distinguishes itself along four of mini-grids, no requirement of prior regulatory approval major dimensions: it will cover more than 100 countries before sales, mini-grid standards, protection against expro- once the global rollout is complete; encompasses all three priation, and duty exemptions or subsidies. Another group pillars (energy access, renewable energy, and energy of countries including Ethiopia, Kenya, Mongolia, India, and efficiency) of the SE4ALL initiative; is expected to be Nepal have regulations explicitly allowing operation of mini- frequently updated; and is underpinned by substantial data grids, but they are not yet comprehensive. However, only in collection, which will be publicly available for countries and very few countries do privately owned mini-grids operate researchers (http://rise.worldbank.org). and the process to obtain a permit to operate varies widely. As an example, it takes a developer in India about 90 days, RISE is slated to transition to the first global rollout in 2015 $48, and interaction with only one public agency to set up a with an aspiration to regularly update the exercise until renewable energy project, while the same activity takes 510 2030. As a global initiative, it will also likely evolve dynami- days, $6,620, and interaction with three public agencies cally: in addition to the core group of indicators, opportuni- in Tanzania, where the process is complicated by costly ties may exist for designing a secondary set of indicators environmental clearances. of interest to groups of countries. RISE is thus a “living” initiative, expected to continue supporting SE4ALL actions. Compared with mini-grids, standalone home systems are promoted more often. Honduras, India, Mongolia, Nepal, and Tanzania all have policies that include desirable attri- KEY FINDINGS butes to promote such systems, such as national promotion In energy access, India, Nepal, and Tanzania are in the green programs, application of minimum quality standards, and zone; the rest are in the yellow zone. None of the countries is duty exemptions or subsidies for these systems. At the in the red zone, demonstrating the headway made by all of other end is Yemen, which has yet to adopt any policy to them on certain indicators (Figure 3). Particularly, planning is promote standalone home systems. In all other countries, the most widely adopted among categories. All but two have the missing piece is typically minimum quality standards. Figure 3: RISE energy access scores 100 94 80 80 75 71 68 65 65 60 57 60 48 40 40 30 20 0 Indi N p l T n ni M li Mon oli K n Ethiopi Hondur s Solom n V nu tu Ym n Lib ri Isl nds Proc dur l ffici nc Polici s nd r ul tions Pricin nd subsidi s Pl nnin Note: The indicators for energy access are relevant for only 12 countries as Armenia, Chile, Denmark, Maldives, and the United States have already reached universal access. Source: RISE database. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 13 The time to get a new household electricity connection of the system or degree of renewable energy penetration, in rural areas varies from one week in India and Solomon countries that have committed to specific renewable energy Islands to one year in Ethiopia. In Kenya, it takes nearly targets need to apply an anticipatory approach to planning three months to obtain a new connection. Customers have to to ensure the cost-effectiveness and economic efficiency wait a month to receive an inspection visit from the utility’s of the scale-up. Countries with a commitment to increase engineers, a month to receive an estimate and sign the the penetration of renewable energy will generally need to supply contract, and another one for the connection works introduce a cost-effective and customized basket of regula- and meter installation. In Tanzania, once all the administra- tory, fiscal, and financial incentives. tive process is completed, the connection works are often delayed because the utility faces shortages of poles and Countries that have lagged behind in renewable energy energy meters. have a less diversified fuel mix. A few of them—for example, Ethiopia and Nepal—have a high share of hydropower In renewable energy, countries report a high degree of generation. Others—including, Mongolia, Tanzania, and heterogeneity, ranging from Denmark to Yemen. Four groups Yemen—have a high share of fossil fuel–based generation. can be identified (Figure 4): In these countries, non-hydro renewable energy could be •• Countries that exhibit a strong performance and have important in reducing either the risk of rationing during dry introduced most of the elements necessary for a robust seasons and acute droughts, or fuel oil dependence. In fact, enabling environment (green traffic light)—Denmark, the most of these countries appear to have abundant non- United States, and India. hydro renewable energy resources, and they could consider •• Countries that have made good progress, but where promoting renewable energy as an energy diversifying there is still room for improvement in the areas of strategy. planning and of policies and regulations (yellow traffic light)—Chile, Armenia, Honduras, Kenya, and Mongolia. Most of the countries with a regulatory policy to promote •• Countries in the initial stages of introducing the basic renewable energy still need to improve their design in order measures to promote investment (yellow traffic light)— to secure the investment grade attributes for attracting Tanzania, Nepal, and Ethiopia. private sector participation. A major policy challenge is •• Countries in which most of the essential elements are to balance affordability of support programs on the one missing—Liberia, the Solomon Islands, Maldives, Mali, hand with effectiveness and the need for improved investor Vanuatu, and Yemen (red traffic light). certainty on the other. Policymakers and regulators should ideally conduct ex ante economic analysis of the long-term In planning, many countries still need to develop high-quality impact of incentives on affordability. In certain cases, these resource mapping—ideally associated with strategic officials could consider designing price incentives with planning or zoning guidance—and link data on renewable downward adjustments to reflect changes in technology energy potential to anticipatory planning in expansion of costs in order to control potential overexpansion of renew- both generation and transmission. Regardless of the size able energy capacity. Figure 4: RISE renewable energy scores 100 92 88 81 80 73 60 59 58 50 46 40 34 33 29 23 21 21 19 20 16 6 0 D nm rk U.S. Indi Chil Arm ni Hondur s K n Mon oli T n ni N p l Ethiopi Lib ri Solomon M ldiv s M li V nu tu Ym n Isl nds Proc dur l ffici nc Polici s nd r ul tions Pricin nd subsidi s Pl nnin Source: RISE database. 14 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Starting a renewable energy project can be fairly have already established or taken steps toward establish- straightforward on time, interactions with number of ing the institutions required to carry out energy efficiency agencies, and cost in countries like Denmark and Maldives, policy. Many of them need to take the next step and give but much more cumbersome in countries like Tanzania these institutions a clear mission and means to achieve it and the United States. There is significant variation in by expressing targets in national (and/or subnational) plans performance across the three dimensions of this indicator. supported by legislation. In Maldives, a solar project developer deals only with the State Electric Company and the Maldives Energy Authority The next priority for many countries would be to bring in and can be up and running in as little as 96 days. In the standards and labels for appliances and equipment, and United States, a solar developer must work with up to building energy codes. Standards are an area in which six agencies and follow procedures taking almost half a many technical and financial resources for assistance are year to get a project running. Whereas permitting and available; labels and reporting of energy use are proving to connecting a wind project is of little or no cost in Chile be an important means of communicating the market value and Denmark, obtaining a land permit and tariff approval, of energy efficiency and deserve attention. Building energy among other procedures, costs over $50,000 in Mongolia. codes are more challenging, but would be a useful next prior- High transactions costs in India and Tanzania tend to ity for countries, particularly those rapidly urbanizing. Good be associated with the need to meet environmental places to start for both these elements would be buildings safeguards. and facilities owned by government agencies themselves. For energy efficiency, Denmark and the United States are in Most countries can learn from the public procurement and the green traffic light zone, while the rest are split between other programs that have proven effective in many countries the yellow and red zones (Figure 5). All countries have taken in reducing government expenditures on energy purchases, some steps important to incentivizing energy efficiency. and in creating markets for energy-efficient equipment and Actions such as establishing entities with responsibility (if services. These moves could complement efforts to put in not always authority) for energy efficiency, setting appropri- place incentives and mandates for big industrial and com- ate electricity rate structures (if not always price levels), mercial energy users, another area in which most countries and providing customers with information on their power are deficient. These programs, for public and private consumption (though even the developed countries can do entities, require significant capacity to monitor pre- and better here) are commonly seen. post-intervention energy consumption in order to evaluate outcomes—capacity that needs to be developed in parallel to Many countries would benefit from adopting or strengthen- designing and rolling out new policies and regulations. ing national and subnational energy efficiency targets and plans supported by legislation, to provide a firm basis for Denmark and the United States rank highest in the RISE the detailed policy and regulatory elements. Most countries aggregate score that combines as a simple average the Figure 5: RISE energy efficiency scores 100 83 80 75 65 60 50 40 38 37 31 29 24 24 24 23 23 22 22 20 17 15 0 D nm rk U.S. Indi Chil K n Arm ni Mon oli Hondur s Ethiopi V nu tu T n ni N p l Lib ri M li Solomon M ldiv s Ym n Isl nds Pricin nd subsidi s Polici s nd r ul tions Pl nnin Source: RISE database. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 15 Figure 6: RISE aggregate scores 100 92 88 80 80 74 65 60 51 49 48 46 45 44 39 40 37 33 30 25 20 20 0 D nm rk U.S. Indi Chil Arm ni K n Hondur s Mon oli M ldiv s N p l T n ni Ethiopi M li Solomon V nu tu Lib ri Ym n Isl nds En r ffici nc R n w bl n r En r cc ss Source: RISE database. three scores on energy access, renewable energy, and energy as clean energy embracing these two aspects often appears efficiency (Figure 6). The score reveals a wide heterogeneity to be pursued in tandem. Still, the renewable scores are in performance, ranging from 92 in Denmark to 20 in Yemen. typically higher than those for energy efficiency, particularly Within the group of developing countries, India scores the in Armenia, Chile, and Honduras. Similarly, access scores highest—and not only does it lead in access, it also takes are frequently higher than those for renewable energy, third place in renewable energy and efficiency. Chile is the particularly in Mali, Nepal and Tanzania. The correlation other developing country that performs relatively well coefficient of the access and renewable energy scores is in renewable energy and energy efficiency. Yemen is the 0.69, and that of the access and efficiency scores 0.65. only country in the red zone, highlighting that policies and regulations to support sustainable energy are nascent. On all three pillars, one group of countries performs well The remaining 12 countries show a yellow traffic light— (such as Denmark, India, and the United States) and another suggesting they have either made some progress on each of group lags behind (such as the Solomon Islands, Vanuatu, the pillars or scored highly on one or two of them. and Yemen) (Table 1). On energy efficiency, nine countries are in the red traffic light zone—highlighting the consider- Developing countries appear to prioritize energy access over able distance they still need to traverse to demonstrate an renewable energy or energy efficiency. All the developing investor-friendly environment. It also suggests that many countries are assessed as yellow or green on energy access countries are yet to prioritize energy efficiency within the (or have no energy access challenges), while between six sustainable energy space. On all three pillars, the biggest and nine of them still show a red traffic light on renewable single traffic light group is yellow, suggesting that they have energy and efficiency. Countries that tend to do well on embarked on a path of creating an attractive investment renewable energy also perform well on energy efficiency (the climate, but one still a work in progress. correlation coefficient of the two scores is very high at 0.93), Table 1: Countries by topic and traffic light Solomon Armenia Chile Denmark Ethiopia Honduras India Kenya Liberia Maldives Mali Mongolia Nepal Islands Tanzania U.S. Vanuatu Yemen Energy Access – – – – – Renewable Energy Energy Efficiency Note: – means the country does not have energy access challenges. Source: RISE database. 16 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Credit: Yusuf Türker/World Bank R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 17 CHAPTER 1 INTRODUCTION Recognizing the vital role of sustainable energy1 in sustain- Reaching these goals will require historical capital flows to be able development, the United Nations (UN) Secretary General almost tripled, as business as usual will not remotely suffice. launched three global objectives in 2011 under the Sustainable The Global Tracking Framework (GTF)5 report estimates that Energy for All (SE4ALL) initiative:2 ensure universal access almost a trillion dollars of annual investments are required to modern energy services, double the share of renewable over 2010–30, against the $400 billion actually spent in energy in the global energy mix, and double the rate of 2010. The bulk of those investments are for renewable energy improvement in energy efficiency—to be accomplished by and energy efficiency objectives, with energy access expen- 2030. The initiative, cochaired by the UN Secretary General ditures far smaller (though, at six times, the energy access and World Bank President, now has more than 85 “opt-in” gap is greater, relatively, than those in renewable energy and countries, where country actions are promoted. The SE4ALL energy efficiency—Figure 1-1). Investments of this size cannot goals are included in the standalone energy goal proposed in be realized through public funds alone—private investment the UN High Level Panel constituted to establish the post- will have to step up. Even then, not all aspects of sustainable 2015 development agenda3 and in the Open Working Group energy are equally attractive to the private sector. For energy document on sustainable development goals that proposes access, the public sector has historically played the dominant to “ensure access to affordable, reliable, sustainable, and role and will continue to do so in the near future, although the modern energy for all.”4 space for private activity is dynamic and evolving. The World Bank Group has been designated as the knowledge Countries will need to signal to investors that they are hub for SE4ALL working through partnerships with many ready for capital flows in sustainable energy, which requires other stakeholders. The 2013 Global Tracking Framework bold policy measures as well as an effective regulatory and report, prepared by the World Bank as part of an inter- institutional environment. Empirical evidence suggests national consortium, quantified these SE4ALL goals and that enabling political, legal, and institutional frameworks established the tracking mechanisms, with a commitment to form a key determinant of private participation in infra- monitor progress every two years (World Bank and IEA 2013). structure. The Organisation for Economic Co-operation From 2010’s starting point, the rate of access to electricity and Development (OECD 2007), in its principles for private and the use of modern cooking solutions have to rise from sector participation in infrastructure, reinforces the need 83 percent and 59 percent, respectively, to 100 percent by for an enabling policy framework for investment. Providing 2030. Renewable energy’s contribution to total final energy certainty, stability, and predictability through the rule consumption has to double from 18 percent to 36 percent. of law, property and contractual rights, and credible and And the rate of improvement in energy intensity has to double enforceable regulatory frameworks is typically important from 1.3 percent to 2.6 percent during this period. to attracting private investment.6 Liberalizing the invest- ment regime and creating a competitive environment are 1. In this report, provision of sustainable energy refers to providing and achieving sustainable 6. Banerjee, Oetzel, and Ranganathan 2006; Basilio 2010; Hammami, Ruhashyankiko, and energy access, improving energy efficiency, and increasing the use of renewable energy, as Yehoue 2006; Harris 2003; Pargal 2003. per the SE4ALL goals. 2. For further information on SE4ALL, see www.sustainableenergyforall.org 3. UN High Level Panel 2013. 4. Open Working Group 2013. 5. World Bank. 2014. Global Tracking Framework. Sustainable Energy for All Report 85415, Washington, DC. http://documents.worldbank.org/curated/en/2014/01/19164902/global- tracking-framework 18 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 1-1: The projected annual investment shortfall over 2010–30 is enormous 1029 573 402 417 228 180 54 9 En r Acc ss R n w bl En r En r Effici nc Tot l Actu l inv stm nt for 2010 (US$ billion) Annu l inv stm nt r quir d 2010–30 (US$ billion) Source: World Bank and IEA 2013. also important for enhancing the quality of the investment Underpinned by primary data collection, RISE is expected climate and harnessing the potential of private sector to be updated regularly, thus benchmarking country perfor- participation.7 In addition, strength of the local capital mance on the indicators over time while allowing countries markets is crucial as local private players are expected to be to measure incremental changes, which together will help important investors in sustainable energy. countries adapt and customize policy measures and compare themselves with peers and good performers. The data will be available on the RISE website (http://rise.worldbank.org) 1.1 WHAT IS RISE? as a public good for stakeholders as well as for interested Readiness for Investment in Sustainable Energy (RISE) is researchers to carry out further analysis. a suite of indicators that assess the legal and regulatory environment for investment in sustainable energy—energy RISE assesses the investment climate across three pillars (electricity) access,8 renewable energy and energy efficiency. of energy access, renewable energy, and energy efficiency RISE is relevant for a wide group of stakeholders. Crucially, it in sustainable energy, thus better articulating the link is aimed directly at the policymakers responsible for creating between country policy actions and SE4ALL goals (Figure a strong enabling environment and for identifying priority 1-2). While RISE builds on the hypothesis that the enabling areas for change. However, seeking feedback from the private environment is important to generating investment flows sector is an important aspect in the RISE development to support sustainable energy outcomes in a country, other process as the policy and regulatory processes are designed factors such as the macroeconomic environment, local to attract investors. It is a careful balance as policymakers capital market, and other market conditions also affect have to design the policy platform not only to secure invest- investment. A global dataset, particularly in panel format, ments but also to ensure that the platform is for the larger can allow robust identification of how the enabling environ- good of achieving sustainable energy for all. By focusing on ment affects investment flows, controlling for other factors. actions within policymakers’ control, RISE will contribute to domestic policy debates by providing a global reference point RISE originates from a previous World Bank Group initiative, on actions to facilitate the environment needed to support the Climate Investment Readiness Index, which evalu- sustainable energy investments and to inform country ated the environment for private investment in climate interventions under SE4ALL. Along with GTF, RISE will be one mitigation and low-carbon technologies in South Asian of the flagship products prepared by the World Bank Group, countries—Bangladesh, India, Maldives, Nepal, Pakistan, in its role as the knowledge hub for SE4ALL. and Sri Lanka—compared with other emerging economies and developed regions. The index focused on renewable energy (particularly solar photovoltaic (PV), onshore wind, 7. Harris 2003; OECD 2007; Pargal 2003. small hydro, and biomass) and energy efficiency (particularly 8. Development of indicators for modern cooking solutions has been excluded in the pilot phase and will be considered in the global rollout. lighting, appliances, and building codes). R e a d i n e s s F o r I n v e s t m e n t I n S u s ta i n a b l e E n e r gy 19 Figure 1-2: RISE is aligned to realizing SE4ALL goals Sc l -up of Fin ncin (both public nd priv t ) Countr Priv t Outcom s S ctor m sur d b P rticip tion Glob l Tr ckin in inv stm nt Fr m work (GTF) M rk t Conditions (popul tion, incom l v l, fford bilit , tc.) M cro conomic St bilit (infl tion, pric st bilit , tc.) En blin Environm nt m sur d b RISE Fin nci l Environm nt (loc l c pit l m rk t, cc ss to fin nc , tc.) Oth r D t rmin nts (r sourc v il bilit , risk p rc ption, tc.) Source: Authors. RISE’s value rests on its design attributes that build on current on Latin America and the Caribbean and on renewable energy; initiatives that measure the enabling environment for sustain- its latest exercise is expanding coverage to Africa and Asia. able energy in countries across the globe (Figures 1–3 and 1–4). (Relevant indexes are in Annex V.) For example, the International However, it is important to highlight two caveats on RISE Energy Efficiency Scorecard of the American Council for an that arise by virtue of its inherent objective and design. Energy-Efficient Economy ranks various energy efficiency policies and programs in the world’s 16 largest economies. RISE does not cover other factors relevant for attracting Climatescope assesses climate-related investments, focusing investments. Countries with a higher score in RISE will not Figure 1-3: RISE draws from current initiatives Figure 1-4: Geographic scope of exisiting indexes and RISE S CES AC Poor RGY E P opl ’s EN En r Outlook En r D v lopm nt Ind x RE NE W AB LE EN ERG RISE Clim t scop Y CREF RE Isl nds Int rn tion l Ind x En r RE Countr Effici nc Clim t Attr ctiv n ss Scor c rd Inv stm nt Indic s R din ss En r Ind x Sust in bilit Ind x RE-Sh pin ENER GY EFFICIENCY Source: Authors. Source: Authors. 20 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY for individual investors. RISE can let the private sector appreci- Annual investment requirements ate the broad picture of a country’s enabling environment and have to rise more than double to identify the good faith of governments undertaking certain a trillion dollars to achieve the actions to support private sector participation—but it will not SE4ALL objectives. replace investors’ own due diligence. necessarily attract more investment, as it assesses a part of 1.2 HOW WAS RISE DEVELOPED? significant determinants to investment decision-making. A This pilot report presents the results of a pilot phase country can be ready but still not be an attractive investment comprising 17 developed and developing countries, and destination, and vice versa: readiness and attractiveness for an in-depth case study on Kenya. It is supported by data private investment are not necessarily synonymous. Multiple collected and validated between December 2013 and June factors affect private investment decisions, many of them 2014, thus reflecting latest data updates as of June 2014. outside the immediate control of policymakers responsible The pilot report allowed for a validation of the methodology, for energy. For instance, market conditions, resource endow- and lessons learnt from the process entailed developing ments, macroeconomic frameworks, the broader rule of law, and implementing the suite of indicators across countries and geographic location are all relevant for private sector that represent a varying status in data availability and data decisions. Market conditions are characterized by market quality. Most importantly, it forms a solid base as a con- size, income level, and affordability of consumers, which are sultation document for the global rollout expected in 2015. critical to the feasibility of infrastructure services and to the It serves as a starting point by allowing for refinements in reduction of demand risks.9 In countries with a large popula- the methodology and in interpretation of indicators. The tion and high GDP per capita, therefore, an ability to pay for global report will serve as a reference point of measurement infrastructure services is likely to attract more private capital. covering about 100 countries with a goal to regularly assess until 2030, allowing the tracking of the evolution of enabling Macroeconomic stability is another key factor to reduce environment for sustainable energy. risks that private investors are exposed to and thus promote their interest. Limited inflation and price stability provide RISE was developed in collaboration with the African long-term stability, although risk-financing instruments Development Bank and the Inter-American Development such as price guarantees may mitigate this risk case by Bank, and has received funding from the Scaling Up case. The private sector initially seeks low-hanging fruits, Renewable Energy in Low Income Countries Program and a country can pay a huge risk premium if its policy and (SREP) of the Climate Investment Funds, the International institutional mechanisms are only at the nascent stage. Renewable Energy Agency (IRENA), the U.S. Agency for Over time, as the country’s readiness for sustainable energy International Development (USAID), and the Energy Sector evolves, the risk premium may fall, laying the groundwork for Management Assistance Program (ESMAP). The selection of systemic change. Thus RISE can provide a signal to investors countries is therefore predisposed toward those participat- about a government’s commitment in attracting resources ing in SREP. Non-SREP countries such as Chile, Denmark, and in lowering risks to investment. India, and the United States have been included for wider representation. RISE does not aim to present exhaustive information set for private investors. Though RISE provides information and measurements The pilot countries, representing varying status in data on policies and regulations to foster an enabling environ- availability and data quality, are Armenia, Chile, Denmark, ment—one of the significant determinants of investment—it is Ethiopia, Honduras, India, Kenya, Liberia, Maldives, Mali, not intended that RISE covers a comprehensive and exhaustive Mongolia, Nepal, the Solomon Islands, Tanzania, the United information package for the private sector to assess that States, Vanuatu, and the Republic of Yemen (Figure 1-5). environment. As risk appetite varies from investor to investor, They represent a mix of incomes (high, upper middle, lower investment decision-making is a subjective matter that cannot middle, and low) and most regions (Africa, Americas, Asia be replaced by an “information set,” “scores,” or “traffic lights” and Pacific, Europe, and the Middle East). The indicators for based on a standardized methodology that is not customized energy access are relevant for only 12 countries as Armenia, Chile, Denmark, Maldives, and the United States have 9. Bannerjee, Oetzel, and Ranganathan 2006; Basillio 2010; Hammami, Ruhashyankiko, and already reached universal access. The case study on Kenya Yehoue 2006; Mengistu 2013. R e a d i n e s s F o r I n v e s t m e n t I n S u s ta i n a b l e E n e r gy 21 Figure 1-5: RISE was piloted in 17 countries Source: GSDPM, Map Design Unit, World Bank. aims to depict in a more comprehensive manner progress in that set the broad direction for the initiative and mobilized creating an enabling environment for sustainable energy. A funding; and an external advisory group of technical few text boxes are placed in the three thematic chapters on experts across the three pillars to ensure rigor, quality, energy access, renewable energy, and energy efficiency. and relevance. The external advisory group comprises 30 experts. In addition, an internal advisory group of World The pilot phase was governed by a two-tier arrangement: a Bank Group experts, who have knowledge of the three steering committee of donors and implementing agencies SE4ALL areas, was consulted to ensure that the initiative Figure 1-6: A two-stage screening process for indicators was used Obj ctiv Comp r bl Action bl Cont xt N utr l St I Indic tors should r fl ct Th m thod of Indic tors should m sur sp cts Indic tors should tr ck f cts nd not opinions. m sur m nt for n of th polic nd r ul tor ch r ct ristics of th Th should lso b b s d indic tor should b nvironm nt th t r und r th n blin nvironm nt on r p t bl n l sis of sil r plic bl in control of th polic m k rs nd th t would b b n fici l l ws, r ul tion nd pr ctic s. ch countr . c n inspir cl r r form. in n rl v r countr . Av il bl Cost Eff ctiv Cons nsus St II D t for n indic tor D t for n indic tor Th r should b cons nsus should b v il bl on c n b coll ct d t th t ch indic tor contribut s to lob l sc l . r son bl cost. chi vin r sults in ch pill r. Source: Authors. 22 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Table 1-1: Consultations to select RISE indicators RISE is a suite of indicators to Number of Consultation Schedule Participants assess the legal and regulatory RISE Internal Advisory Group May/October 2013 20+ environment for sustainable SREP country representatives May 2013 40+ energy. Private sector online survey June 2013 140+ Private sector focus group June 2013 10 cost-effectiveness of the data collection, and presence of a (Washington, DC) common consensus were then used. Private sector focus group July 2013 15 (Delhi, India) This first shortlist went through multiple stakeholder consulta- Private sector focus group August 2013 12 tions that informed the selection of the final suite of indicators (Kathmandu, Nepal) (Table 1-1). First, the external advisory group provided expert Private sector focus group August 2013 8 (Nairobi, Kenya) advice and quality control in two rounds of consultations. Private sector individual interviews August 2013 11 Similar discussions were held with the internal advisory RISE Extrenal Advisory Group October 2013 23 group—the World Bank Group technical experts, who have RISE Internal Advisory Group April 2014 20+ knowledge of the three SE4ALL areas. The experts helped incorporate close country knowledge from World Bank Group RISE External Advisory Group May 2014 20+ operations. Second, the selection of indicators and associated Source: Authors. methodologies was discussed with private sector representa- was pragmatic and would contribute to the ongoing policy tives. As RISE recognizes the importance of engaging that dialogue and operational agenda in client countries (Annex sector, consultations with private developers and investors were VI). held in Washington, DC (all pillars), Nepal (energy access), Kenya (renewable energy), and India (energy efficiency). The selection A preliminary long list of indicators was initially identified of indicators also benefited from a private sector survey–based based on consultation with various stakeholders (Annex II). A online consultation with more than 140 stakeholder groups two-stage screening process was then employed to arrive at in over 30 countries worldwide. The private sector was also the first shortlist (Figure 1-6). represented in the external advisory group to ensure integration of their perspective in the indicators. Third, consultations with Stage I. Four principles of objectivity, comparability, action, country representatives of SREP—one of the programs of and context-neutrality were applied to ensure that indicators Climate Investment Funds as well as funders of this pilot—also will be deployable in almost every country. provided valuable feedback. An attribute that stood out at this stage was one of reconcil- ing various approaches that are considered good practice at 1.3 WHAT ARE THE RISE INDICATORS? different time points. In renewable energy development for RISE is anchored on a framework developed to encompass instance, feed-in-tariffs and reverse auctions have both been multidimensional aspects of a policy framework in a country promoted at various times by different countries. So RISE that fosters an enabling environment for sustainable energy. attempts to be neutral and avoid making value judgments on Four broad categories under the framework are an organiz- the approach a country is taking to promote an outcome. ing principle: planning, policies and regulations, pricing and subsidies, and procedural efficiency (Figure 1-7). Stage II. Three principles of universal data availability, Figure 1-7: Categorizing the indicators Polici s nd Pricin nd Proc dur l Pl nnin R ul tions Subsidi s Effici nc Source: Authors. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 23 Planning represents visions of governments translated The unit of analysis in RISE is a country. For large countries into master plans at the national level and their attributes with federal arrangements, the biggest business city was for good practice. Policies and regulations address specific chosen for analysis, because policies and their enforcement policies and regulatory mechanisms to create an attractive can vary widely within the country. For instance, in the business environment. Pricing and subsidies deal with United States and India, state governments not only have policies and incentives focusing on appropriate price signals a role in implementation of federal policies but also set to markets and subsidy mechanisms to facilitate the state-specific policies. Here, the largest business city of development of sustainable energy. Procedural efficiency the economy or state where the largest business city was measures whether the processes adopted to develop chosen: New York City and Mumbai. sustainable energy are adopted within a reasonable time and cost, and captures the administrative ease of doing business. In the three categories of planning, policies and regulations, Procedural efficiency may be exemplified with the following and pricing and subsidies, indicators are scored between 0 story. Imagine Abeba, a farmer who lives without electricity and 100 and aggregated with equal weights. For procedural in Ethiopia. Last month, engineers installed electricity poles efficiency, the questions adopt the “distance to frontier” and cables in her rural village. She gathered the necessary (DTF) approach, where the frontier presents the best money and applied to connect her household. Unfortunately, performance by any country observed on each indicator. The she will have to wait a year to obtain the connection, as distance to frontier is a relative measure normalized to range the utility has difficulties coping with the high demand for between 0 and 100, with 100 representing the frontier. A new connections. Thus even when a legal framework and higher score indicates a more efficient business environment. adequate subsidies are in place, implementation issues—in this case, lack of materials and workforce—may remain. All the indicators are weighted equally. While it can be argued that some indicators are more important than Development of the framework was informed by results others, a justification in a consistent manner was not from a 2004 worldwide survey of international power applicable in all cases. Further, the Doing Business project investors, which outlines what they look for while deciding that inspires RISE has carried out analysis of several ways of on their investments.10 The top priority was adequate tariff weighting indicators that have proved inconclusive, and have levels and collection discipline, which allows for reasonable not proceeded with weighting. Further, while each indicator revenue generation. Among the other priorities was a clear in RISE could have a different number of sub-indicators, and enforceable legal framework. Investors want certainty— they each hold equal weight which are aggregated at the where government upholds its commitments to investors. indicator level. As a result, the weight for each sub-indicator They also sought administrative or government efficiency, is different. There is an implicit weighting in the sense that allowing them to recoup their investments without govern- one indicator can have two sub-indicators with 50 percent ment interference. Finally, regulatory arrangements inde- weight while another indicator may have five sub-indicators pendent from government were also found attractive. The with 20 percent weight. The implications of this aspect will categories of pricing and subsidies, policies and regulations, be further reviewed at global rollout. and procedural efficiency in RISE map into these priorities. Some indicators present a scalar way of capturing quality The final list of 28 RISE indicators encompasses the three of the policy and regulations. Typically, sub-indicators pillars of energy access, renewable energy, and energy are formulated in a binary form to ensure objectivity, but efficiency, as well as four cross-cutting indicators for topics aggregating all sub-indicators enables the comprehensive relevant to all three SE4ALL goals (Figure 1-8): fossil fuel presentation of a country’s achievement on that indicator. For subsidy, carbon pricing mechanism, utility performance, and instance, the indicator on electrification plans in the energy retail price of electricity. Energy access is assessed on eight access pillar includes three sub-indicators—whether there is indicators including one cross-cutting indicator; renewable a plan, if it includes both grid and off-grid, and if it is updated energy on 10 indicators including three cross-cutting indica- tors; and energy efficiency on 13 indicators including three cross-cutting indicators. Traffic lights denote the countries’ readiness for investment in sustainable energy. 10. Lamech and Saeed 2004. 24 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 1-8: RISE—28 indicators and 85 sub-indicators in 4 categories and 3 pillars En r Acc ss R n w bl En r En r Effici nc Pl nnin El ctrific tion pl n Pl nnin for r n w bl n r N tion l pl n for incr sin N tion l pl n xp nsion n r ffici nc Cov r of rid nd off- rid R n w bl n r in N tion l n r ffici nc t r ts R ul r upd t xp nsion pl nnin En r ffici nc l isl tion/ ction pl n R n w bl n r in Sub-s ctor l t r ts tr nsmission pl nnin T r t with n ction pl n Entiti s for n r ffici nc polici s, Hi h qu lit r sourc m ppin r ul tion nd impl m nt tion S ttin n r ffici nc polic S ttin n r ffici nc st nd rds R ul tin n r ffici nc ctiviti s of suppli rs R ul tin n r ffici nc ctiviti s of consum rs Equipm nt st nd rds compli nc Buildin st nd rds compli nc Polici s nd En blin nvironm nt for L l fr m work for Qu lit of inform tion R ul tions r n w bl n r d v lop rs r n w bl n r provid d to consum rs to inv st in mini- rids R ports on l ctricit us Exist nc of r ul tions R ul tor polici s Qu lit of inform tion in r port R ul tion ttribut s Inc ntiv s to rid-conn ct d Comp rison with oth r us rs St nd rds r n w bl n r En r s vin inform tion Prot ction inst xpropri tion Inc ntiv s to distribut d Subsidi s or dut x mption r n w bl n r Inc ntiv s or m nd t s for R ul tor polici s- n r suppl utiliti s En blin nvironm nt for M nd t s for utiliti s st nd lon hom s st ms polic d si n ttribut s Pr dictibilit P n lti s for non-compli nc N tion l pro r m M sur m nt of s vin s St nd rds Sust in bilit Acc ss bilit ’ Third p rt v lid tion Subsidi s or dut x mption Cost r cov r for utiliti s R mun r tion ffici nc N twork conn ction nd pricin Inc ntiv s or m nd t s for Conn ction cost lloc tion public ntiti s N twork us pricin Obli tions for public buildin s Obli tions for oth r public f ciliti s Public fin nci l support m ch nisms Public procur m nt of Cr dit nh nc m nt n r ffici nc products Utilit p m nts u r nt Multi- r contr cts Fisc l inc ntiv s Allow nc to r t in s vin s Public fin ncin supports Inc ntiv s or m nd t s for l r -sc l us rs M nd t s for l r -sc l us rs P n lti s for non-compli nc M sur m nt of s vin s Inc ntiv s for l r -sc l us rs Minimum n r ffici nc p rform nc st nd rds Appli nc s Li htin El ctric motors Industri l quipm nt R ul r upd t P n lti s for non-compli nc En r l b lin s st m Appli nc s Li htin El ctric motors Industri l quipm nt Buildin n r cod s R sid nti l buildin s Comm rci l buildin s Compli nc s st m R nov t d buildin s Buildin n r inform tion Pricin nd Fundin support to l ctrific tion Fossil fu l subsid Inc ntiv s from l ctricit pricin Subsidi s D dic t d fundin El ctricit r t structur Subsid to hous hold conn ction C rbon pricin m ch nism Ch r s to l r custom rs Subsid to rid xt nsion GHG mission r duction t r t C rbon pricin m ch nism Fossil fu l subsid Afford bilit of l ctricit Utilit p rform nc C rbon pricin m ch nism Utilit p rform nc R portin pr ctic GHG mission r duction t r t R portin pr ctic Fin nci l p rform nc C rbon pricin m ch nism Fin nci l p rform nc R t il pric of l ctricit Proc dur l Est blishin n w conn ction St rtin n w r n w bl Effici nc n r proj ct P rmittin mini- rid Indic tors for sp cific pill r Cross-cuttin indic tors Source: Authors. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 25 regularly (in the last five years)—the two follow-up questions is aggregated and made available to the surveyor. Even to the first question on the existence of plan aim to capture if staff numbers are known, for example, factors that the quality of the plan (or plans). But this approach is by no substantially affect their performance (e.g., technical means complete. Questions can be raised on implementation capability, or degree of authority conferred by their posi- of such a plan, as well as financial and human resources used. tions) may not be easily accounted for. A small department As RISE does not rely on expert judgment, arriving at objective of energy specialists in one country could be equivalent in measures of such quality dimensions will continue to evolve. impact to an untitled (and therefore uncounted) individual Another example is the indicator on policy design attributes in an influential position in another. in the renewable energy pillar. Four sub-indicators (capturing predictability, sustainability, accessibility, and remuneration Universal applicability. Some measures on providing sustainable efficiency) were evaluated, together providing a wide-ranging energy have narrow applicability which, if properly used, can view of the quality of policy design in renewable energy. help promote better sustainable energy outcomes. However, there may not always be agreement among experts that an A “traffic light” indicates the score for indicators, categories, indicator reflecting a measure deemed good in one country and pillars. A green light is reported for countries with a score at a particular time would also be beneficial in another. For of 75 or more, which are considered close to good practice instance, subsidies for energy efficiency can be highly effective on a certain indicator or a pillar. A red light indicates that a if well designed and well timed—or they can be very waste- country scores 25 or less and has a lot to improve to achieve ful and ineffective. Similarly, explicit government support good practice on what RISE measures. A yellow light shows is useful especially during early stages of energy-efficient countries that are in between green and red. When a country market development, for example, as public funds or rebates receives a green light on a pillar, it doesn’t necessarily mean for purchases of efficient equipment, or as subsidized loans that the country lacks attributes to improve on—rather, it for larger projects. But such support is rarely suitable for signals its current readiness for investment. For the investor, long-term use; while it may represent best practice in certain this provides important evidence about the commitment and tight circumstances, it is not universally applicable and is thus credibility of government policymaking to create an attractive excluded from RISE. In addition, some indicators may simply enabling environment. (The private sector will of course carry not be relevant in every country. out further due diligence before investing.) Quality of indicators. Although RISE attempts to measure the quality of policies by aggregating sub-indicators and present- 1.4 WHAT ARE THE LIMITATIONS OF THE ing each indicator in a scalar way, the extent to which quality RISE PILOT? is captured is limited to the current set of sub-indicators. The RISE pilot is confined to the current set of indicators and For instance, two countries that have electrification plans there are important limitations to its results. While the pilot (grid and off-grid) and are being updated regularly receive has collected data on indicators developed over several rounds the same score under RISE, yet the quality of their plans may of consultations, it has also exposed new information on vary by other attributes that are not yet assessed through current availability, credibility, and validity of the indicators. sub-indicators. However, as more attributes are gradually identified as critical for a certain policy, RISE will capture Implementation of policies and regulations. In RISE, indicators them—in short, the indicator’s quality will evolve and improve. on procedural efficiency attempt to measure effectiveness This evolution also means that countries with a green traffic of policy implementation. However, this still presents the light today cannot stand idle as emerging good practices shift limitation of the complete set of indicators in revealing the the goalposts, prompting them to work toward a favorable implementation or effectiveness of all the policies. One enabling environment. example could be exclusion of indicators on effectiveness of institutions from the RISE pilot, as it is problematic to measure it in a way that is comparable across countries. Government and private sector staff numbers and RISE includes 28 indicators budgets, for instance, are hard to pin down, in absolute or and 85 sub-indicators relative terms, in ways that have the same significance in every country. Further, even where such information is measurable, channels of reporting may limit how easily it 26 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY As a global initiative, RISE is presumed to evolve dynamical- ly. In addition to the core group of indicators, opportunities may exist in designing a secondary set of interest to certain groups of countries. RISE is a “living” initiative, expected to continue supporting SE4ALL actions, keeping open the options to improve. 1.5 WHAT IS THE STRUCTURE OF THE REPORT? The rest of the report is organized in five chapters plus annexes. The cross-cutting indicators are discussed in Chapter 2. The thematic elaborations on methodology and results of energy access, renewable energy, and energy efficiency are outlined in Chapters 3, 4, and 5. These chapters also articulate the proposed refinements for the global rollout of RISE planned for 2015. Finally, Chapter 6 aggregates the results of the three pillars and illustrates the relationships between RISE and achievement of the SE4ALL goals, as well as highlighting plans for the global rollout. 28 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Credit: Boris Rumenov BalabanovWorld Bank R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 29 CHAPTER 2 CROSS-CUTTING INDICATORS During the development of RISE, it emerged that four consumption, disproportionately benefit the better-off—a indicators have great influence on the enabling environment study of household survey data in several countries found across all three pillars of sustainable energy: fossil fuel that the bottom 20 percent of the population receives only subsidy, carbon pricing mechanism, utility performance, 7 percent of the benefits12—and frequently lead to energy and retail price of electricity. Collectively, these indicators shortages, black markets, smuggling, declining investment, allude to a price signal: Is the country pricing its electricity and financial insolvency, leaving energy infrastructure in aligned with cost? How is the country cross-subsidizing disrepair. Subsidies of this form actively encourage firms to between industrial and residential consumers? How is overproduce and consumers to use more fossil fuels, with the country pricing fossil fuels for power generation? And heavy environmental implications.13 is the country putting a price on carbon? Making energy prices right has been discussed as a means of correcting In RISE, the focus is on fossil fuel subsidies for power a distorted incentive structure and promoting sustainable generation only. If the primary fuel source of the country is energy technologies. As Parry and others (2014) argue, subsidized, it artificially lowers the cost of service for both in many countries, energy prices are set at levels that do the utilities and consumers. Other things equal, this can not reflect financial or economic cost. The latter omission make any kind of clean energy investment in either renew- is particularly important as environmental damage from able energy or energy efficiency less competitive, and can energy use is not factored into prices. make it harder to mobilize finance.14 Coal—responsible for the majority of power generation worldwide—is taxed less Each of the cross-cutting indicators is controversial and than other fossil fuels and is sometimes actively subsidized. the subject of much research; there is no readymade data source to draw from. Efforts in this pilot phase have been There has not been any single methodology to capture the on highlighting the importance of these indicators to scale of fossil fuel subsidy to electricity generation in a sustainable energy pillars with a more vibrant analytic and consistent manner across countries. In this pilot exercise, data collection agenda in the future. This chapter discusses datasets from the International Energy Agency (IEA) how the countries were measured on these cross-cutting and the International Monetary Fund (IMF) were used to indicators. More detailed analysis is included in the following measure it. Instead of the amount of subsidy, RISE calcu- chapters, particularly on the cross-cutting indicators as they lates the proportion of electricity generated by subsidized relate to each pillar. fossil fuel as the primary source. For example, if a country produces 60 percent of its electricity from coal and the rest from gas but subsidizes the price of coal, this indicator 2.1 WHAT ARE THE CROSS-CUTTING returns 60 percent regardless of the subsidy value. Because INDICATORS? higher is better, the difference with 100 (40 percent) is Fossil fuel subsidies are prevalent, estimated at about presented as an indicator. Good practice on this indicator is US$600 billion and concentrated in a handful of countries.11 reported when a country generates more than 75 percent Particularly problematic, and all too common, are of its electricity from nonsubsidized fossil or other fuels. universal price subsidies, which distort market signals, drain government budgets, encourage wasteful energy 12. IMF 2013. 13. Whitley 2013. 11. IEA 2013. 14. Whitley 2013. 30 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Carbon pricing mechanisms, including any form of economic incentives for reducing carbon emissions, are the other side of the coin to fossil fuel subsidies. Policies to introduce Retail price of electricity for carbon pricing instruments are important to create economic residential consumers ranges incentives for low-carbon technologies and to foster private from $0.02/kWh to $0.92/kWh investment to complement limited public resources.15 There are typically two forms of pricing mechanisms: cap and trade create additional revenues from other advanced countries, initiatives (such as emission trading) and a carbon tax. Both such as the Clean Development Mechanism of the United have been widely discussed in international climate forums Nations Framework Convention on Climate Change or similar as market-based mechanisms to reduce emissions. Cap and regional agreements among developed and developing trade mechanisms put a cap on emissions and countries countries. In addition, RISE focuses only on mechanisms that can trade emission credits if they are over or under the cap. aim to put an explicit price on emissions and does not account By creating a supply and demand for emission credits, the for indirect pricing mechanisms such as renewable energy mechanism creates a market and hence a price for carbon.16 certificates and “white certificates,” which naturally lead to A carbon tax, based on the Pigouvian principle of quantifying lower carbon emissions. The scoring methodology for the four the social cost of negative externalities, raises the cost of cross-cutting indicators is in Table 2-1. a fuel based on its carbon content. By making the cost of electricity production based on fossil fuels more expensive, Utility performance, or the financial situation of the utilities, a carbon tax incentivizes energy efficiency and makes represents cost recovery from selling electricity. A viable renewable energy more cost effective. While a few European utility can expand service to new areas and consumers, countries have adopted some variant of a carbon tax, it provide better service to existing areas, honor power remains hotly debated, particularly because of anticipated purchase agreements, and build resources. This indicator is impacts on consumer welfare stemming from an increase relevant to the energy access and renewable energy pillars. in the cost of service provision. The other concern is carbon For energy access, while capital expenditure for electrification leakage: the producer or consumer of fossil fuel may simply could be funded out of some form of government support, leave the area of geographic relevance and settle in a market service delivery to new consumers is the responsibility of with a lower price or no price at all.17 the utility. Similarly for renewable energy, the offtake risk is heightened if the utility is unable to pay for renewable energy, RISE has included this indicator even though establishing a which therefore impinges on its creditworthiness and serves carbon pricing regime may not be a critical issue for many as a barrier to entry for private investment. In such cases, the developing countries whose contribution to global emissions private sector would demand a higher risk premium to invest is small and that have other development challenges that in developing renewable energy. need to be tackled first. RISE presents this indicator as a long-run target for those countries, as such mechanisms Definition of key financial ratios allow environmental externalities to be internalized and clean energy development made more attractive. The utility performance indicator uses five financial ratios as proxies for evaluating key performance and risk factors. To assess carbon pricing mechanisms, two sub-indicators Current ratio: (Current assets)/(current liabilities), to are used (good practice on this indicator is when a country measure liquidity risk; a minimum threshold is 1.0 reports positive responses to both). First, countries are EBITDA margin: (EBITDA)/(revenue), to measure profitability; identified if they have a legally binding reduction target a minimum threshold is 0.0 for greenhouse gas emissions, introduced by legislation to Debt service coverage ratio: (net income available for acknowledge carbon externalities and to commit to emis- debt service)/(debt service cost), to measure credit risk; a sion reduction. Second, the existence of a carbon pricing minimum threshold is 1.0 mechanism is examined. RISE counts only domestic policy Days payable outstanding: (accounts payable)/(cost mechanisms that put a price on the externalities of carbon of goods sold)*365, to measure offtake risk; a minimum emissions, but not any international flexible mechanisms that threshold is 90 days Days receivable outstanding: (accounts receivable)/ (revenue)*365, to measure revenue collection performance; a 15. World Bank 2014 a. 16. World Bank 2014 b. minimum threshold is 90 days 17. Hope 2014. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 31 Table 2-1: Scoring methodology­—cross-cutting indicators Indicator and Questions Scoring Traffic Light Pricing I. Fossil fuel subsidy Percentage of electricity generation X≥75 What is the proportion of electricity generation by subsidized fossil fuel? by nonsubsidized fossil fuel and 25≤X<75 other fuel X<25 II. Carbon pricing mechanism Sum and divide by 2 Is there a legally binding greenhouse gas emission reduction target in place? Yes—100, No—0 X≥75 25≤X<75 Is there any mechanism to price carbon in place (e.g. carbon tax, auctions, emission trading system)? Yes—100, No—0 X<25 III. Utility performance Sum and divide by 2 Financial reporting practice Yes to (i) & (ii)—100 X≥75 (i) Are the financial statements of the largest utility publicly available? Yes to only (i)—50 25≤X<75 (ii) If yes to (i), are they audited by an independent auditor? No to (i) & (ii)—0 X<25 Financial performance Sum of five scores of sub-elements (i) Current ratio Score 20 0 (ii) EBITDA margin (i) ≥1 <1 (iii) Debt service coverage ratio (ii) ≥0 <0 (iv) Days payable outstanding (iii) ≥1 <1 (v) Days receivable outstanding (iv) ≤90 >90 (v) ≤90 >90 IV. Retail price of electricity What is the unit price of average consumption of electricity for residential users? ($/kWh) Not scored n/a What is the unit price of average consumption of electricity for industrial users? ($/kWh) Not scored n/a Source: Authors. In countries with multiple electricity utilities, the largest embedded in the tariff structures. For instance, Sub-Saharan company serving in the largest business city is selected Africa reports the highest price of electricity among regions. for the utility performance indicator, which has two parts. It is an indicator relevant for the energy efficiency and energy First, financial reporting practice is examined. Good practice access pillars. It serves as a reference point for adopting on this sub-indicator is when utility financial statements demand-side energy efficiency if the retail price is too high. are both publicly available and independently audited. This Consumers will be incentivized to move toward more efficient allows investors and other stakeholders to do their own consumption. Therefore the higher the retail price of electric- financial analysis and credibly value the risk premium. ity, the better the incentives for energy efficiency. For energy Second, a group of five ratios are computed to understand access, the retail price matters from an affordability perspec- financial performance—current ratio, EBITDA (earnings be- tive. If the price is affordable to people, not only will existing fore interest, taxes, depreciation, and amortization) margin, consumers be more willing to pay for electricity service, but debt service coverage ratio, days payable outstanding, and it will also be possible to expand service to new areas and days receivable outstanding. The thresholds are based on consumers. Affordable electricity also reduces the revenue the minimum performance needed for the utility to operate. risk for utilities and allows them to invest in capital-intensive By applying these thresholds, this indicator intends not to infrastructure to scale up access and provide better quality. acknowledge good performers but to identify utilities that Thus the lower the retail price of electricity, the better the demonstrate undesirably weak financial results on these probability of consumers hooking up and consistently paying financial ratios. Countries that report ratios higher than for electricity service. For renewable energy, this matters these thresholds score higher on this sub-indicator. for distributed generation that supplies electricity directly to retail consumers. However, for grid-connected large-scale Retail price of electricity for residential consumers reflects generation facilities, a wholesale price that offtakers pay to cost-of-service delivery, although there are subsidies typically producers, and its cost recovery, are more important. In the 32 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 2-1: Only a few countries in the sample generate electricity with subsidized fossil fuel 100 100% 80 78% 60 55% 40 44% 20 1% 11% 0 Arm ni Chil D nm rk K n Lib ri M li Mon oli N p l Solomon T n ni V nu tu Ethiopi Indi U.S. Hondur s Y m n M ldiv s Isl nds El ctricit n r t d b non-subsidi d fossil fu l nd oth r fu l El ctricit n r t d b subsidi d fossil fu l Source: RISE database. renewable energy pillar therefore other indicators on this target for greenhouse gas emissions that can be a basis aspect are considered rather than this indicator. for carbon pricing and adopted legislation to make it legally binding (Table 2-2). The retail price of electricity for residential customers is calcu- lated based on average consumption for each country, derived These are also the only two countries that have domestic from IEA’s National Balances database. For industrial custom- policy mechanisms to price carbon.19 In the United States, ers, consumption of 10,000 kWh per month is consistently policy mechanisms vary across states. New York State, applied across all countries, along with other assumptions on where the largest business city is located, is participating demand and other factors to make data comparable across in the Regional Greenhouse Gas Initiative, along with eight countries. A unit price calculated at the respective consump- other states. The Regional Greenhouse Gas Initiative is a cap tion level based on tariff schedules is used. This indicator has and trade system that allows prices to be set in the market not been scored, as there is very little evidence to set the mechanism. Denmark is part of the European Union Emission thresholds on high or low retail prices of electricity. Trading System (EU ETS), which has formed a carbon market inside the EU. A carbon tax has been imposed on residential and industrial energy consumers since 1992 (Figure 2-2). 2.2 HOW DID THE COUNTRIES SCORE? Fossil fuel subsidy. Among the pilot countries, only six are Utility performance. The sub-indicator on reporting practice identified as generating electricity with subsidized fossil suggests that more pilot countries get their financial state- fuel. In Maldives, for instance, such fuels dominate the entire ments audited (compared to making them public). Countries energy mix for power generation (Figure 2-1).18 The remaining such as Liberia, Maldives, Mongolia, Tanzania, Vanuatu, and countries either do not have fossil fuel as a primary contribu- Yemen audit their statements but do not make them public. tor to power generation or the fossil fuel is not subsidized. Nine countries have utility companies that make their finan- Although this indicator does not capture information on the cial statements publicly available. The number of countries scale of fossil fuel subsidy to electricity generation, it still where the utility has its financial statements independently provides valuable information on the renewable energy and audited is larger; among them, eight countries carry out energy efficiency pillars. their audits while making their financial statements publicly available. Financial performance, as measured by five key Carbon pricing mechanism. Most countries have not adopted financial ratios, varies: the current ratio and days payable any form of carbon pricing mechanism. Only two countries, outstanding, which represents liquidity and offtake risk, Denmark and the United States, have established a reduction is where countries have the most difficulty meeting the minimum threshold—only 35 percent do so. Conversely, 18. Tan bars refer to share of power generated from fossil fuels supported by some form of subsidy, direct or indirect. They refer to no information about the size of those subsidies or of their impacton retail electricity prices. Estimating that is a complex analytical task beyond 19. In September 2014 Chile passed a tax law, which includes bringing in a carbon tax in the scope of RISE. 2017. As it occurred after the cut-off date of June 30, this report did not score it. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 33 Table 2-2: Only Denmark and the U.S. have adopted legally binding greenhouse gas emission reduction targets Countries Greenhouse gas emission reduction target Legislation Denmark Reduce by 40% by 2020 compared to 1990 levels A law on climate change approved in June 2014 U.S. Reduce by 80% by 2050 compared to 1990 levels (New York State) Executive Order No. 24 (2009) by the Governor of New York State Source: Authors. crossing the minimum threshold for financial ratios such as fuel subsidy particularly is inadequate. It is important to days receivable outstanding and EBITDA margin is relatively understand the opportunity cost of the fuel the utilities buy easier for a larger group of countries (Figure 2-3). for power generation. If such fuels are internationally traded (oil and gas), then such a calculation is possible. For coal—the Retail price of electricity. This is not scored, but indicated as mainstay for power generation in many countries—the op- a unit price per kWh. Ethiopia has the lowest average price portunity cost is hard to estimate as it has a relatively small of electricity among the pilot countries (Figure 2-4), given its international trading market. Moving forward, RISE aims to abundant hydropower resources. Small island countries such arrive at a more refined methodology to estimate fossil fuel as Maldives, the Solomon Islands, and Vanuatu price electric- subsidy for power generation. ity high, which reflects their high dependence on diesel and heavy fuel oil, often imported and vulnerable to international The carbon pricing mechanism indicator will be refined price fluctuations. Another inference is a gap between resi- to incorporate the quality of carbon pricing mechanisms dential and industrial consumers. Only in Ethiopia and Liberia beyond simply whether there is one. The achievement do the two groups pay the same; in Armenia, Denmark, Mali, of emission reduction targets or the carbon price, which and Vanuatu, residential consumers pay more per kWh, captures its effectiveness, along with other alternative sub- which may be caused by cross-subsidy between residential indicators will be considered. Merging two indicators—fossil and industrial customers or a difference in cost of connecting fuel subsidy and carbon pricing mechanism—will also be the two groups. For the rest of the countries, industrial deliberated as they represent two ends of the spectrum to consumers pay more. Yemen stands out—industrial consum- make the price right, by cutting subsidies or pricing carbon ers pay five times as much as residential consumers. externalities. 2.3 WHAT ARE THE LESSONS FOR THE GLOBAL ROLLOUT? Utilities in very few countries The cross-cutting indicators, as key contributors to the make their financial enabling environment for sustainable energy, require further statements public. refinement in the global rollout. The information on fossil Figure 2-2: Only two developed countries have begun to introduce carbon pricing 100 100 100 80 60 40 20 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 D nm rk U.S. Arm ni Chil Ethiopi Hondur s Indi K n Lib ri M ldiv s M li Mon oli N p l Solomon T n ni V nu tu Ym n Isl nds C rbon pricin m ch nism GHG r duction t r t Source: RISE database. 34 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 2-3: Utility performance varies widely among countries RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 90 90 90 90 80 Fin nci l st t m nt v il bilit 53% R portin 80 pr ctic 70 60 Fin nci l st t m nt udit 82% 60 50 40 40 Curr nt r tio 35% 40 35 30 20 EBITDA m r in 71% p rform nc 20 Fin nci l 10 0 0 D bt s rvic cov r r tio 59% 0 N p l M li Isl nds Solomon U.S. V nu tu Hondur s M ldiv s Ym n D nm rk Chil Ethiopi Mon oli T n ni Indi Arm ni Lib ri D sp bl outst ndin 35% K n D s r c iv bl outst ndin 76% Fin nci l p rform nc R portin pr ctic Source: RISE database. there have been responses to this indicator that the retail Only two countries, the United tariff needs to be compared with the cost of electricity. In the States and Denmark, have global rollout, a methodology to figure out and compare cost adopted any form of carbon recovery of electricity tariffs that can be applied consistently pricing mechanism. across countries will be sought. The methodology, too, for this indicator could be improved: the retail price of electric- Measurements on utility performance are limited to a few ity should ideally be measured at a representative level of proxies that represent key financial aspects of the utility. consumption customized for each country. But such con- Data collection for this indicator was, however, onerous, as sumption figures, though available for residential consumers, was the derivation of globally relevant minimum thresholds. are not so for industrial consumers. In this pilot phase, the More discussion is needed on selecting such thresholds and same volume has been assumed for each country, which on other indicators that could be easily derivable and present will need to be amended to country contexts in subsequent a comprehensive view of utility performance. versions of RISE. Finally, although the retail price of electricity provides valu- able information and affects investment decision-making, Figure 2-4: Across the sample, electricity prices vary by an order of magnitude 120 100 96 92 U.S. c nts/kWh 80 77 65 60 57 57 44 40 37 34 26 20 30 18 22 20 17 18 20 14 12 15 15 18 14 6 8 10 7 10 13 11 2 2 3 5 0 Ethiopi Mon oli Ymn Arm ni Indi Np l U.S. Kn Hondur s T n ni Chil M li D nm rk M ldiv s Lib ri V nu tu Solomon Isl nds R sid nti l Industri l Source: RISE database. 36 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Credit: Sudeshna Ghosh Banerjee/World Bank R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 37 CHAPTER 3 ENERGY ACCESS The summary RISE energy access score (Figure 3-1) places the 12 pilot countries (for this pillar) against the traffic lights 3.1 WHY DOES RISE MATTER? of readiness for energy access investments: India, Nepal, The energy access pillar of SE4ALL emphasizes the role of and Tanzania are green, reporting “best in class” policy electricity in household welfare and economic growth. For actions; the rest are yellow. RISE quantifies the distance households, the lack of electricity stymies income-generating these countries still have to traverse to reach the green zone. opportunities and stunts outcomes on education, health, None of the countries are in the red zone, demonstrating the and women’s empowerment (Barnes 2014). For firms, lack of headway made by all of them on certain indicators. Planning, electricity is one of the top constraints to doing business, par- particularly, is the most widely adopted among enabling ticularly among the poorest countries.20 Achieving energy access environment categories, but actions on policies and regula- goals also complements the renewable energy goal to the extent tions, pricing and subsidies, and procedural efficiency are still that off-grid electrification, largely driven by local renewable a distance away. resources, powers new connections in rural areas. New initiatives to integrate energy efficiency mechanisms with energy access Specifically, creating an enabling environment for mini-grids are also now being promoted in developing countries. is a work in progress and very few countries report any pri- vate sector mini-grids. The pilot provided insights into what The goal of achieving the SE4ALL goal of universal access policy actions some of the countries with a green traffic light to electricity by 2030 is still far away (Figure 3-2). These 12 have adopted and if they can be customized in other country pilot countries encompass close to 500 million people—the settings. A number of good practices, identified by RISE for size of the EU. Among them is India—the country with the energy access, are prevalent among the pilot countries, giving largest access deficit—as well as Liberia that reports one an optimistic view of results as encapsulated in international of the lowest electrification rates in the world. The small and national targets. island countries, such as the Solomon Islands and Vanuatu, Figure 3-1: RISE energy access score 100 94 80 80 75 71 68 65 65 60 57 60 48 40 40 30 20 0 Indi N p l T n ni M li Mon oli K n Ethiopi Hondur s Solom n V nu tu Ym n Lib ri Isl nds Proc dur l ffici nc Polici s nd r ul tions Pricin nd subsidi s Pl nnin Source: RISE database. 20. Dethier 2008. 38 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 3-2: Many countries are far from universal electrification ( ) Acc ss r t (% of p opl with l ctricit ) (b) El ctricit cc ss d ficit (Million p opl ) Mon oli 86% V nu tu 0.2 Hondur s 81% Solomon Isl nds 0.4 N p l 76% Hondur s 1.4 Indi 75% Mon oli 2.8 Ym n 45% Lib ri 3.8 V nu tu 24% N p l 7.1 K n 23% M li 12.8 Ethiopi 23% Ym n 13.3 Solomon Isl nds 19% K n 31.2 M li 17% T n ni 38.2 T n ni 15% Ethiopi 63.9 Lib ri 4% Indi 306.2 Source: World Bank and IEA 2013. still have relatively low electrification rates though their automatically into household adoption of electricity. Retail access deficit is miniscule. India has scripted a remarkable tariffs can include fixed and variable charges, reflecting electrification journey, reaching 474 million people over the revenues potentially recouped from consumers and the two decades between 1990 and 2010, or 24 million people level of cost recovery. Inadequate resource generation from annually, with annual growth of around 2 percent, or higher below cost-recovery tariffs stymies the ability to invest than the global average of around 1 percent. Aside from in infrastructure to expand access and improve service India, only Honduras and Yemen report access growth of quality. higher than the global average during the 20 years. Limited affordability and low returns from poor consumers. The barriers to reaching universal access are manifold, Rural areas, with largely low-volume agriculture and some within the control of policymakers and some—so- residential consumers, are not an attractive revenue base. cioeconomic, geographic, and demographic—exogenous to The limited revenue potential, coupled with the high cost of policymaking. servicing them and establishing the billing and collection infrastructure, makes it challenging for service providers. High cost of supply. The challenge of reaching remote This high-cost–low-return investment creates a low-level and dispersed populations, notably in rural areas, equilibrium—rural and remote consumers cannot pay makes capital-intensive electrification even more costly. cost-recovery tariffs and consume little electricity; service Infrastructure in network services, such as grid electricity, providers do not want to serve unless compensated for the involves huge investments that are cumbersome during cost; and countries cannot meet the cost of infrastructure the construction phase. These upfront investments, as from their own resources or domestic capital markets. 22 well as operating expenses, need to be recovered from Also, the weak financial position of utilities, particularly in consumers through fixed and variable (often) monthly low-income countries, makes it very difficult for them to charges. If the high cost is spread across populations that access the financing required for extending their distribu- are far apart, remote, and poor, the charges can indeed be tion grid in a timely manner. Still, affordability is a complex prohibitive. 21 Fixed charges are typically recouped through equation as many households pay for kerosene—the most high connection charges and can be a major deterrent for common alternative—which may be more expensive than consumers—and is one of the major reasons that providing grid electricity. access to villages or neighborhoods does not translate 21. World Bank 2010. 22. World Bank 2010. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 39 Inadequate regulatory mechanisms. There is an immense onus policies and regulations, and procedural efficiency (the on regulatory mechanisms to ensure clear articulation of framework in Chapter 1) needed to strengthen the operating prices and subsidies, quality of service regulations, and a environment of private developers and service providers. promise to honor any commitments embodied in the licenses, concessions, and bidding documents.23 Their most important 3.2 HOW DOES RISE MEASURE THE role is to design an appropriate pricing and subsidy mecha- ENABLING ENVIRONMENT? nism that addresses the trade-off between cost recovery and equity. Allowing cost recovery (either allowing an adequate Resources—private and public—can flow into the sector if tariff or through having adequate and credible compensation the inherent and emerging risks are managed. Investments that covers the gap) for utilities and for off-grid providers is are capital intensive and uneven, and returns come in much essential to ensure they invest in new connections. However, later and are typically not enough to recoup the cost. That is cost recovery needs to be balanced to reflect consumers’ why electrification has traditionally been in the government affordability profiles. Aside from tariff setting, the other domain—both as a funder and operator of services. The important work of regulators is setting and enforcing quality traditional grid solution of utilities is now being complemented of service standards. This has become particularly important by off-grid options, encompassing mini-grids and standalone for off-grid solutions where such standards are important home systems, which are evolving in response to a realization for market stability (by establishing the credibility of the that large, capital-intensive solutions may not be the most products and providing assurance to consumers). Finally, the appropriate to serve low-volume consumers with limited role of regulators is also to set a level playing field for off-grid capacity to pay. The scale of investment to achieve universal operators without making it burdensome on them. access presents an important business opportunity for the private sector: the International Finance Corporation Weak planning and implementation capacity. A focused elec- (IFC) estimates there is an $18 billion market to serve these trification effort—well designed and implemented—requires bottom-of-the-pyramid consumers that represents an technical human resources. Various workstreams on planning, untapped market opportunity for the private sector.24 prioritizing projects in the geographic areas, strengthening or creating institutions, and setting technical standards are The role of the government consequently extends from all human-capital intensive. While empirical evidence does financing infrastructure functioning to facilitating—through not point to the superiority of any one form of institutional policy and regulatory support—emergence of a private structure responsible for electrification, the dedicated body sector supply chain and viability-gap funding support to has to be equipped with appropriate and well-trained staff. meet any shortfall in revenues for the financial sustainability of private operators. This role starts from good planning RISE aspires to capture in its suite of indicators the policy carried out on least-cost principles and supported by and institutional mechanisms that address these barriers to geographic data, which establish which communities will be promoting access expansion. Policy processes establish the electrified through grid extension in what time frame, helping parameters for the function and performance of the electric- provide clarity to the private sector on which communities ity sector and are key to the sector’s governance. While can be targeted through off-grid activities. some of these solutions are context specific and need to be supported by efforts to build the capacity of local institu- Similarly, grid extensions can benefit from government tions, most address generic problems found in most (perhaps interventions that improve the private sector operating all) countries seeking to deliver access to modern energy. environment, including removing limits on service area if They involve topics on the planning, pricing and subsidies, appropriate, easing mechanisms for serving illegal urban areas, rationalizing tariff structures, and providing con- nection cost subsidies to final beneficiaries. 25 Sanghvi and Seven countries have developed Barnes (2001) highlight the importance of an appropriate legal framework and risk-mitigation mechanisms to ensure a planning process including grid both a level playing field and the flexibility to charge cost- and off-grid electrification and recovery tariffs. regular updates. 24. IFC 2012. 23. Reiche, Tenenbaum, and de Mästle 2006. 25. IFC 2012. 40 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Table 3-1: Scoring methodology—planning Questions Scoring Traffic Light Planning I. Electrification plan Sum and divide by 3 If the score X is 1. Is there a national electrification plan? Yes —100, No—0 X≥75 1.1. Does it include both grid and off-grid? Yes —100, No—0 25≤X<75 1.2. When was the last update? <5 yrs. — 100, other — 0 X<25 Source: Authors. Although off-grid modes of serving the bottom of the market A country prioritizes access to energy via a national can be commercially viable, they need specific business electrification plan (grid and off-grid) that is frequently ecosystem conditions in the form of policy and regulatory updated based on current technical, financial, and enablers. Policymakers create an enabling environment sociopolitical attributes (Table 3-1). Setting a vision and by promoting a level playing field that includes technology target is the first indication of government commitment, awareness, product standards, and nondiscriminatory duty although the target doesn’t mean much unless accompanied and tax arrangements. A comprehensive policy framework by planning on how electrification will proceed—which areas supporting mini-grids would involve institutional structure get electricity, when, and how. Legislation or electricity- and governance, technical studies and surveys, and financial sector policies on these plans play a crucial role in shaping incentives, financing, and tariffs.26 The ideal operating discussions and implementation. environment—particularly for small mini-grids—is a clear and light-handed regulatory framework that is adapted to Policies and Regulations the small project needs; allows them to legally operate in Indicator 2: Enabling environment for renewable off-grid areas and to charge cost-recovery tariffs; provides energy developers to invest in mini-grids28 clarity on technical and safety standards; ensures publically Indicator 3: Enabling environment for standalone available information on government-led electrification home systems29 plans, loads, and renewable energy resources; and assures Mini-grid operators, many of them first-time entrepreneurs, access to finance. will invest if they have the certainty of being allowed to carry on operations on a level playing field and a chance of building Planning sustainable revenue.30 For the former, policymakers can Indicator 1: Electrification plan create an environment that permits mini-grids to operate Irrespective of the institutional set-up, the planning of and should ensure regulations outlining the rights of opera- programs that provides a clear and transparent, overarching tors. These could be as licenses allowing them to operate framework is critical to enabling economic efficiency. Typically, under certain conditions and for a given time. Typically, good practices of rural electrification planning include: licenses are for larger businesses and registration is for •• A well-articulated system of prioritized areas to be smaller mini-grids. Registration is not a regulatory approval, electrified, and when. rather it signals to the government and regulators that •• Implementation of a multiyear vision coordinating both these operators exist and are providing a service.31 The risk grid and off-grid efforts and underpinned by optimized of expropriation must be mitigated, especially when there is technology options, grid/off-grid comparative economic uncertainty about the arrival of large grids in areas operated analysis, and publicly disclosed market studies. by mini-grids. While ensuring technical synchronization of •• An inclusive regional development approach that holistically considers other aspects of rural development (access to markets, roads, skills, etc.). 28. Mini-grids come under various names—they are energy producers who sell electricity either to the consumers directly or to the national grid or as an isolated mini-grid. The focus in RISE •• A clearly laid out institutional framework of the roles is on mini-grids as service providers to consumers. Mini-grids are small systems of varying capacities (typically 5–500 kW) supporting a local area distribution network. Mini-grids can and responsibilities of key stakeholders, including be underpinned by one or more technologies and provided by the community, private sector, private and public parties. 27 utility, or hybrid business models. 29. Standalone home systems are defined as facilities to provide basic electricity services at home, including solar photovoltaic (PV) systems and lanterns. Solar PV systems can be simple solar or rechargeable lanterns as well as “plug and play” solar kits. 26. Deshnukh, Carvallo, and Gambhir 2013. 30. Greacon and Nsom 2014. 27. World Bank 2010. 31. Greacon and Nsom 2014. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 41 Table 3-2: Scoring methodology—policies and regulations Questions Scoring Traffic Light Policies and Regulations II. Enabling environment for renewable energy developers to invest in mini-grids Sum and divide by 5 If the score X is 2. Are there regulations outlining rights of mini-grid operators? Yes —100, No—0 X≥75 25≤X<75 2.1 Can mini-grid operators charge tariffs that exceed the national tariff level? Yes —50, No—0 X<25 2.2 Do mini-grid operators need prior regulatory approval to enter into a power sales contract with Yes —0, No—50 consumers? 3. Are safety, reliability, and voltage and frequency standards for mini-grids made publicly available? Yes —100, No—0 4. Is there any general law that deals with expropriation of mini-grids? Yes —100, No—0 5. Are there duty exemptions or subsidies for mini-grid renewable energy technology? Yes —100, No—0 III. Enabling environment for standalone home systems Sum and divide by 3 If the score X is 6. Are there duty exemptions or subsidies for standalone home systems? Yes —100, No—0 X≥75 25≤X<75 7. Are there minimum quality standards for standalone home systems? Yes —100, No—0 X<25 8. Are there national programs that promote the deployment of standalone home systems? Yes —100, No—0 Source: Authors. mini-grids with larger grid networks is an operational matter, Regulators also have a responsibility to protect consumers from the mini-grid operators’ point of view, having legal by imposing quality standards, considering three design rights that prevent sudden appropriation by government elements: whether quality of service is affordable, whether is crucial. Therefore, good practice in creating an enabling quality of service standards are monitorable and enforceable, environment for mini-grids includes regulations outlining and whether the standards will be on inputs (typically techni- their rights as well as enforcing a law against expropriation. cal specifications) relative to outputs that require regular and costly monitoring.34 Whatever the design, the crucial aspects For the latter, commercial viability depends on revenues are that consumers perceive the service as value for money that should allow the mini-grid operator to at least break and that mini-grid operators are responsible for service even. However, the operator may not be allowed to charge standards—both necessary for building trust and ensuring a cost-recovery tariff so as to appease political constituen- sustainability of service delivery. Finally, the government has cies or to enforce a uniform tariff in the country. But for a responsibility to reduce costs for mini-grid operators by mini-grids to survive and thrive, they not only have to have imposing duty exemptions for mini-grid technology. a flexible system of payment for connection charges but also charge a “reasonable” tariff that at least meets costs. Good practice thus includes the ability to charge tariffs Given the low consumption in rural areas, the cost-recovery higher than the national tariff, no requirement for regula- tariff can often be exorbitant. 32 Therefore, arriving at tory approval for getting into power sales contracts with a common understanding between the operators and consumers, public availability of quality standards, and duty regulators (and government) on the size of the cost-revenue exemptions for mini-grid technology. The regulatory mecha- gap is important for assessing how to close that gap. nism needs to be light-handed, and not impose a burden on Measures may include allowing mini-grids to charge above either regulators or operators, particularly for small projects. the national tariff, cross-subsidizing consumer groups, and having the flexibility to decide on tariff structures most With standalone home systems, discriminatory import appropriate for operators. 33 Or the government can provide tariffs on components raise the cost and distort the a subsidy to developers to close the gap (often called playing field. The IFC (2012) argues that such tariffs create “viability gap funding”). perverse incentives to move provision from renewable energy–based access programs. Duties and exemptions are 32. Tenenbaum and others 2014. 33. Tenenbaum and others 2014. 34. Tenenbaum and others 2014. 42 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY therefore relevant, as are quality standards for products. this agenda as its fiscal ability to allocate resources. This For consumers, such quality standards build credibility of funding support at different levels of the sector value chain products and prevent market spoilage—for instance, the can be a dedicated budget line or a fund for capital costs; Lighting Africa program and the Bangladesh Solar Home covering part of the household connection costs; or financing System program have shown the importance of quality distribution lines to villages. In RISE, existence of all three standards. Finally, a national commitment in the form of a funding avenues represents good practice (Table 3-3). program signals government credibility to pursue this option and its integration in energy access. Existence of all three— Affordability (indicator 5), from the consumers’ perspective, re- duty exemptions, minimum quality standards, and a national veals their potential contribution to electricity service provision, program promoting standalone home systems—represents allowing policymakers to estimate the gap to be filled in order good practice for this indicator (Table 3-2). to reach cost recovery. For regulators, the challenge is to design a tariff structure that balances cost recovery with affordability Pricing and Subsidies among a wide group of consumers. If electricity is unaffordable, Indicator 4: Funding support to electrification access expansion is compromised, although prices should Indicator 5: Affordability of electricity not be kept artificially low to make energy affordable as that Indicator 6: Utility performance undermines utility viability. There is no universally accepted These indicators collectively represent the ability of govern- definition of affordability, however: households typically spend ment and utilities to build capital-intensive infrastructure and to provide electricity services to consumers, as well as consumers’ ability to pay. Only five countries have quality standards for standalone home Funding support for electrification (indicator 4), from the systems. government’s point of view, reveals the priority it places on Table 3-3: Scoring methodology—pricing and subsidies Questions Scoring Traffic Light Pricing and Subsidies IV. Funding support to electrification Sum and divide by 3 If the score X is 9. Does the government have a dedicated funding line or budget for electrification? Yes—100, No—0 X≥75 25≤X<75 X<25 10. Does the utility or government cover a portion of the costs for the household connection? Yes—100, No—0 11. Do capital subsidies exist for utilities to provide distribution lines to villages? Yes—100, No—0 V. Affordability of electricity Use the score below If the score X is If the percentage X is: X≥75 12. What is the annual cost of subsistence consumption (30kWh/month) as percentage of GNI per X≤5% → 100 25≤X<75 household? 5%90 (v) Days receivable outstanding (v) ≤90 >90 Source: Authors. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 43 Table 3-4: Typical procedures to operate a mini-grid No Procedures Agencies involved 1 Obtain approval from the central or municipal government Central or municipal governments 2 Obtain agreement with the community User community 3 Publication to encourage competition Rural electrification agencies 4 Obtain water rights (for small hydro) Government authorities 5 Obtain environment clearance Environment authorities 6 Obtain technical approval Rural electrification agencies 7 Obtain operating permit Electricity authorities Note: Not all procedures are required in all countries. Each country has different steps with different types of agencies to pass through. These procedures may vary depending on size of the mini-grid. Source: Authors. anywhere from 3 percent of household expenditure in South To examine utilities’ financial performance, five key ratios are Asia and 6 percent in Sub-Saharan Africa to up to 20 percent in calculated. The purpose of this sub-indicator is not to give Eastern Europe and Central Asia, where the heating load is part credit to the most profitable utility but to flag those below of the household energy bill.35 minimum performance. Each ratio is evaluated whether it is beyond a minimum threshold, identified by good practices in There is some value judgment on what constitutes afford- the industry. ability, depending on spending envelopes and geographic context. As the access deficit is overwhelmingly in countries in Procedural Efficiency South Asia and Sub-Saharan Africa, a threshold of 5 percent Indicator 7: Establishing a new connection is considered appropriate for RISE. This threshold is then Indicator 8: Permitting a mini-grid compared with a subsistence volume of electricity, typically Establishing a new connection (indicator 7) records all accepted as 1 kWh a day per household or 30 kWh a month procedures required for rural customers to connect to the per household. In RISE, electricity is considered affordable if grid in a village where electricity service is available. These annual expenditure on a basket of 30 kWh per month is less procedures include applications and contracts with electric- than or equal to 5 percent of gross national income (GNI) per ity utilities, all necessary inspections and clearances from household. A country gets a zero on this metric if the basket the utility and other agencies, and the external and final costs more than 10 percent of GNI per household. Ideally, the connection works. The indicator measures the time and cost expenses associated with electricity should be compared with to complete the connection process. the household budget, but recent household surveys were unavailable for some of the countries in the pilot, and so a To make the data comparable across economies, several as- proxy of GNI per household was used. sumptions about households and connections are used. The connection is single-phase, 10 kVA and the household is in a Utility performance (indicator 6), scores the importance of rural area where electricity service is available. The measure service providers’ financial position in expanding access. captures the median duration that households indicate (For RISE, in countries with multiple utility companies, is necessary in practice, rather than required by law, to the largest one in the largest business city was selected.) complete a procedure with minimum follow-up and no extra Two sub-indicators are assessed: reporting practice payments. All the fees and costs associated with completing and financial performance. In many countries, financial the connection procedures are recorded, including those statements of the utility are not even available to the public, which limits any feasibility analysis from potential investors. Credibility of the statements is another issue, which can be resolved only by independent audit. For RISE, It costs $6,620 to set up good practice encompasses public availability of audited a mini-grid in Tanzania financial statements. compared with $48 in India and $37 in Nepal. 35. Banerjee and others 2008; Banerjee and others 2014; Fankhauser and Tepic 2007. 44 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Table 3-5: Scoring methodology—procedural efficiency Questions Scoring Traffic Light Procedural Efficiency VI. Establishing a new connection Average of time and cost DTF score If the score X is X≥75 Distance to frontier (DTF) method 15. Time and cost to connect to the grid by rural customers 25≤X<75 for cost and time X<25 VII. Permitting a mini-grid Average of three DTF scores If the score X is X≥75 DTF method for cost, time and 16. Time and cost to provide licenses/permits to operate a mini-grid 25≤X<75 number of agencies X<25 Source: Authors. a common unit: (max − y)/(max − min), with the minimum Only seven countries have value (min) representing the frontier—the highest per- developed regulations allowing formance on that indicator across all countries. Second, mini-grids to operate and allowed for each country the scores for individual indicators are aggregated through simple averaging into one DTF score. developers to charge a higher An economy’s DTF is indicated on a scale from 0 to 100, tariff—among them only five have where 0 represents the lowest performance and 100 the standards for mini-grids. frontier (Table 3-5). related to obtaining clearances from government agencies, applying for the connection, receiving inspections of both the 3.3 HOW DID THE COUNTRIES SCORE? site and the internal wiring, purchasing material, getting the Indicator 1: Electrification plan actual connection working, and paying a security deposit. All the pilot countries, apart from Liberia and the Solomon Information from households and from regulations and fee Islands, have made some progress on the planning process schedules are used as sources for costs. If several house- (Figure 3-3). They have an electrification plan and all of holds provide different estimates, the median reported value them, Honduras aside, include grid and off-grid projects is used. The cost excludes bribes. in their plans. A number of countries have updated their electrification plans in the last five years; most have either Permitting a mini-grid (indicator 8) records all procedures a 2012 or 2013 plan in place (except Yemen, which is using a necessary to obtain permits to operate a mini-grid (typical 2009 version). This suggests proactivity, commitment, and procedures are summarized in Table 3-4). The indicator consistency to the planning process. Mali and Mongolia have measures the number of agencies involved, time necessary not, however, updated their plans in the last five years. Based for these agencies to deliver the required approvals, and cost on these dimensions, seven countries are in the green traffic to be paid to the agencies. The data were collected from mini- light zone, three in the yellow, and two in the red. grid developers in each country. The type and size of mini-grid permit studied is the most likely scenario for its development The countries have approached planning in their own way. for each country. When the estimates from respondents differ, Those in the green zone have not only identified electrification the median reported value is used. The cost excludes bribes. as a critical national goal but have also set ambitious and time-bound targets with a government entity responsible The score on the procedural efficiency indicators is the for implementing and monitoring programs. Most of these simple average of the “distance to frontier” (DTF) on its countries have now branched out from only on-grid power and component indicators (time and cost). The DTF measure have started emphasizing off-grid electricity as well. illustrates the distance of an economy to the frontier, which represents the most efficient practice achieved on each of For instance, Kenya in its second Rural Electrification the component indicators across countries. To calculate Master Plan, which was set up in 2009, aims to achieve an the DTF, first, individual indicator scores are normalized to electrification rate of 40 percent by 2020. The plan covers R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 45 Figure 3-3: Existence of an electrification plan is widely prevalent RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 100 100 100 100 100 100 80 67 67 67 N tion l pl n 83% 60 40 Cov r of rid nd off- rid 75% 20 0 0 0 N p l M li Isl nds V nu tu Ym n Hondur s Solomon Ethiopi T n ni Mon oli Indi Lib ri K n R ul r upd t 67% R ul r upd t Cov r of rid nd off- rid N tion l pl n Source: RISE database. not only grid extension in urban areas but also off-grid program—Rajiv Gandhi Grameen Vidyutikaran Yojana—was solutions, including local mini-grids for rural towns. launched in 2005 and aimed to cover 125,000 unelectrified villages and 78 million households. The Rural Electrification Similarly in Tanzania, the Power System Master Plan Corporation is the nodal agency for the program’s implemen- 2010–2035 targets an electrification rate of at least tation and financing. 75 percent by 2035. In the short term, the government is targeting 30 percent by 2015. The Rural Energy Policy and Indicator 2: Enabling environment for renewable energy the National Electrification Investment Prospectus serve developers to invest in mini-grids as guidelines. The prospectus, launched in February 2013, Mali and Tanzania demonstrate a strong enabling environ- covers 2013–2022 aims to advance electrification cost- ment that incentivizes private, mini-grid developers (Figure efficiently, including grid and off-grid means. 3-4). It includes regulations outlining rights and mandates of developers, a right to charge a higher tariff than the In India, the national flagship rural electrification national rate (to recover the incremental costs of mini-grids), Figure 3-4: A handful of countries have performed well in creating an enabling environment for mini-grids RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 90 90 80 80 Exist nc of r ul tions 58% 70 70 70 60 R ul tion 60 58% ttribut s Ri ht to ch r hi h r t riff 40 No pprov l r quir d 17% 20 20 20 20 St nd rds 42% 0 0 0 Prot ction inst xpropri tion 25% M li N p l Isl nds Hondur s Solomon V nu tu Ym n Ethiopi T n ni Mon oli Indi Lib ri K n Subsidi s or dut x mption 83% Subsidi s or dut x mption R ul tion ttribut s Prot ction inst xpropri tion Exist nc of r ul tions St nd rds Source: RISE database. 46 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 3-5: Countries have taken investor-friendly steps for standalone home systems RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 100 100 100 100 80 67 67 67 N tion l pro r m 75% 60 40 33 33 33 St nd rds 42% 20 0 0 N p l M li Isl nds Hondur s Solomon V nu tu Ym n Ethiopi Mon oli T n ni Indi Lib ri K n Subsidi s or dut x mption 83% Subsidi s or dut x mption St nd rds N tion l pro r m Source: RISE database. mini-grid standards, protection against expropriation, and than the national rate, and in flexible ways. In addition, the duty exemptions or subsidies (although there is a require- procedure for tariff approval for mini-grids is simplified so ment of prior regulatory approval before sales). as not to provide an excessive burden on service providers or the regulator. In Mali, very well-defined legal guidelines have been estab- lished to support development and smooth functioning of Countries such as Ethiopia, India, Kenya, Mongolia, and mini-grids. The Ministry of Energy grants authorization to Nepal have regulations explicitly allowing mini-grids, but operators to establish and operate power plants distributing they are not comprehensive. Honduras, the Solomon Islands, low-voltage electricity with installed capacity of 50–250 kW; and Vanuatu do not have such regulations but have some of operators for over 250 kW must obtain a concession. Supply the regulatory elements desirable for mini-grid developers, contracts between a concessionaire and the customers such as duty exemptions or subsidies on mini-grid technolo- are approved by the Mali Electricity and Water Regulatory gies. At the other end of the spectrum are Liberia and Yemen, Commission, which also sets the tariffs while ensuring cost which do not have such a policy framework. recovery for mini-grids. In 2009, Mali suspended collection of value-added tax (VAT) and duties on renewable energy In Ethiopia, mini-grid operators must follow the same safety equipment for five years. standards and conditions as on-grid operators. When the utility takes over the power supply activity of mini-grids, the operator In Tanzania, the Energy and Water Utilities Regulatory is provided with prompt, fair, and adequate compensation. In Authority has drafted the Small Power Projects (SPP) Rule,36 Kenya, a supply and distribution license, environmental impact which establishes a comprehensive framework for regula- assessment license, and other resource-specific permits tions on operating SPPs, whether grid connected (under are required to launch a mini-grid. In India, all off-grid solar 10 MW) or mini-grids. Legislation37 also exempts smaller PV systems get a 30 percent capital subsidy if they use PV projects (including mini-grids) under 1 MW from licensing modules made in India; imported solar PV modules, inverters, requirements. Although prior regulatory approval on tariffs and other system components get an excise duty exemption. by the authority is required to sell electricity to final custom- ers, mini-grid operators are allowed to charge a higher tariff Indicator 3: Enabling environment for standalone home systems Honduras, India, Mongolia, Nepal, and Tanzania have policies 36. Eligible SPPs range from 100 kW to 10 MW and use renewable energy sources intended to that include desirable attributes to promote standalone supply commercial electricity to the national grid or isolated grids, and therefore match the definition of mini-grids in RISE. home systems, such as the existence of national promotion 37. These include the Electricity Act 2008, Energy and Water Utilities Regulatory Authority programs, the application of minimum quality standards, and (EWURA) Act Cap 414, Guidelines for Development of Small Power Projects, Standardized Small Power Purchase Agreements (SPPAs), and Standarized Tariff Methodologies. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 47 Figure 3-6: All countries provide some form of dedicated support for electrification RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 100 100 83 80 67 67 67 67 67 67 D dic t d fundin 83% 60 40 33 33 Subsid to hous hold conn ction 50% 20 0 M li Isl nds Solomon Hondur s V nu tu Ym n N p l Ethiopi T n ni Mon oli Indi Lib ri K n Subsid to rid xt nsion 75% Subsid to rid xt nsion Subsid to hous hold conn ction D dic t d fundin Source: RISE database. duty exemptions or subsidies (Figure 3-5). Yemen by contrast Energy (PROSOL), part of the off-grid electrification sub- has yet to adopt any policy to promote home systems. In all component in the World Bank-supported Honduras Rural other countries, the missing piece is typically minimum quality Infrastructure Project, has installed more than 5,000 solar standards for standalone home systems. Countries promote PV systems over the period of 2007-2013 to households and these systems more often than mini-grids. rural community facilities that lack access to the national grid . Additional funding was approved in 2013, which will The off-grid component of Tanzania’s Energy and support the installation of 7,200 solar PV systems in total Development Access Project (TEDAP) sets solar PV insti- by 2016. The Honduran Fund of Social Investment—the tutional and household systems as an important objective program’s executing agency—has accredited local solar PV and provides technical and financial support. Tanzania also companies that meet the minimum criteria including system provides duty exemptions and subsidies for standalone standards. Accredited companies can seek financial support home systems—in 2005 the Value Added Tax Act, 1997, was and technical assistance through PROSOL. amended to exempt solar energy system components and wind energy technology rated up to 30 kW; TEDAP provides Indicator 4: Funding support to electrification solar home systems with a subsidy up to $0.25/Watt peak All countries provide some sort of financial support for (Wp). Similarly, Kenya exempts 10 percent of import duty electrification (Figure 3-6). The best performing, such as for solar PV equipment and accessories, and the Bureau of Ethiopia, the Solomon Islands, and Tanzania, have dedicat- Standards sets standards for solar PV systems. ed funding or a budget for electrification, capital subsidies to utilities for extending distribution lines to villages, and Among the Asian countries surveyed, Mongolia’s National government- or utility-supported financing to cover a por- 100,000 Solar Ger Electrification Program, which began in tion of new household connection costs. At the other end 2000, provides portable solar PV home systems for nomadic are countries such as Vanuatu and Yemen that offer only herders. In India, a capital subsidy under the Jawaharlal one of these three types of support. Among all countries, Nehru National Solar Mission (JNNSM) applies to solar home the most common type is dedicated funding, reported by all systems. The JNNSM promotes off-grid applications of solar except Vanuatu and Liberia; also relatively common (nine energy and provides financial supports along with minimal technical requirements and quality standards for off-grid solar PV systems. Affordability to pay for Honduras has a different framework for standalone home subsistence electricity is a systems. The Rural Electrification Program with Solar concern only in Liberia. 48 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 3-7: Tariffs and affordability vary widely among countries Solomon Isl nds 91.7 Lib ri 9.0% Lib ri 57.1 Solomon Isl nds 3.7% M li 26.0 M li 2.4% V nu tu 23.3 K n 0.9% K n 9.4 T n ni 0.8% Hondur s 8.1 N p l 0.8% N p l 6.9 V nu tu 0.5% T n ni 6.8 Indi 0.3% Indi 6.7 Hondur s 0.3% Mon oli 5.7 Ethiopi 0.3% Ym n 2.7 Mon oli 0.2% Ethiopi 1.6 Y m n 0.1% US c/kWh for 30 kWh monthl consumption Annu l bill for 30 kWh month/GNI p r hous hold Source: RISE database. out of 12 countries) are subsidies for extending distribution The Tanzanian government also has a dedicated funding line. lines; and financing for household connection costs is The Rural Energy Agency (REA) sets out financial prospects available in six countries. to achieve electrification targets by 2020 and provides support of about $400 million a year for grid and off-grid ac- In Ethiopia, the government has established the Rural tivities. Funding support from REA includes capital subsidies Electrification Fund for off–grid, private sector–led rural for utilities to provide distribution lines to villages as well as electrification. The fund has very structured responsi- technical support and training in PV system design, instal- bilities, including financing rural electrification projects lation, maintenance, and repair, at vocational education that are carried out by the private sector; promoting training centers in rural areas. REA is funded by the govern- and facilitating technical, operational, and business ment budget, levies on electricity, and development partners development support services for rural electrification; and like the World Bank and Swedish International Development preparing an off-grid rural electrification master plan and Cooperation Agency. feasibility studies to identify renewable energy projects for the private sector. India’s Rajiv Gandhi Grameen Vidyutikaran Yojana offers Figure 3-8: Subsistence level of electricity is affordable for most of the countries RISE Indic tor Scor 100 100 100 100 100 100 100 100 100 100 100 100 80 60 40 21 20 0 Ethiopi Hondur s Indi K n M li Mon oli N p l Solomon T n ni V nu tu Ym n Lib ri Isl nds Source: RISE database. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 49 Figure 3-9: Utility performance varies widely among countries RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 90 90 Fin nci l st t m nts v il bilit 42% 80 R portin pr ctic 60 Fin nci l st t m nts udit 75% 60 50 40 40 Curr nt r tio 42% 40 35 20 EBITDA m r in 58% 20 p rform nc Fin nci l 10 0 0 D bt s rvic cov r r tio 50% 0 Hondur s Isl nds Solomon N p l V nu tu Ym n M li Ethiopi T n ni Mon oli Indi Lib ri D sp bl outst ndin 42% K n D s r c iv bl outst ndin 67% Fin nci l p rform nc R portin pr ctic Source: RISE database. funding support. The government covers some of the costs of Indicator 6: Utility performance connecting “below poverty line” households. In Honduras, the Reporting practices are still nascent in many pilot countries. government contributes at least HNL 10 million ($469,484)38 Even though financial statements are audited in three- to the Social Fund for Electricity Development annually; fourths of the countries, they may not be publicly available companies in the electricity sector, including Empresa (Figure 3-9). The financial ratios suggest many countries are Nacional de Energia Electrica, contribute 15 percent of net commercially unviable, where just about half the countries profit to this fund. are meeting the minimum threshold of good practice. On these two sub-indicators, the Solomon Islands, India, and Indicator 5: Affordability of electricity Kenya perform the best, Mali and Tanzania the worst. Households around the world pay a wide range of tariffs for subsistence consumption—30 kWh per month (Figure 3-7). Indicator 7: Establishing a new connection In the small island state of the Solomon Islands, for example, The time to get a new connection varies from around one which is highly dependent on imported fossil fuels, consum- week to one year (Table 3-6). In Kenya, for example, one ers pay 91.7 c/kWh for 30 kWh—hugely more than Ethiopia’s consumers who pay only 1.6 c/kWh. In some countries, small- volume consumers are required to pay a nominal amount Table 3-6: Time and cost of getting an electricity connection called a lifeline or social tariff: in eight of the 12 countries, varies widely among countries charges are less than 10 c/kWh. The burden it imposes on Countries Time (days) Cost ($) households as a share of GNI also varies dramatically—from Ethiopia 365 126 about 0.1 percent in Yemen to 9 percent in Liberia. Honduras 17 156 India 8 74 Affordability to pay for subsistence consumption is not Kenya 83 369 a barrier in most of the pilot countries (Figure 3-8). All Liberia 14 20 countries except Liberia score 100—suggesting subsistence Mali 18 86 volume of electricity is affordable to the population. However, Mongolia 21 10 in Liberia, electricity expenses for 30 kWh/month are 9 Nepal 21 26 percent of GNI per household, imposing a substantial burden Solomon Islands 8 470 on potential consumers. Tanzania 69 73 Vanuatu 28 675 Yemen 30 303 38 Assuming $1=21.3HNL. Source: RISE database. 50 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 3-10: In a handful of countries, the cost and time for getting an electricity connection are high RISE Indic tor Scor 98 98 97 95 100 93 88 87 80 75 65 62 60 47 41 40 20 0 Lib ri Mon oli N p l Indi M li Hondur s T n ni Ym n Solomon K n V nu tu Ethiopi Isl nds Cost Tim Source: RISE database. of the higher cost and time countries, it takes nearly three connection process takes only a week in India and Solomon months to obtain a new connection. Customers have to Islands. wait roughly a month to receive an inspection visit from the utility’s engineers, another month to receive an estimate The cost to obtain a new electricity connection is often and sign the supply contract, and another one for the a fixed fee for households. The fees usually depend on connection works and meter installation. In Tanzania, once the voltage or the number of phases of the connection. all the administrative process is completed, the connection In Liberia and Mongolia the fixed fees for new connection works are delayed because the utility faces shortages are less than $20. Nevertheless, fixed fees can be high for of poles and energy meters. Comparatively, this whole a new connection – in Kenya the fee for a single-phase Box 3-1: Mini-grid development in Kenya Kenya is still at an early stage of promoting private of Southampton (United Kingdom) in Kitui County under investment in renewable energy-based mini-grids. Most the five-year “replication of rural decentralized off-grid of the existing ones are community-based or private electricity generation through technology and business sector pilots. innovation” program. Another research project is the Ikisaya solar energy center model, also in Kitui County. On the policy level, the 1997 Rural Electrification Master The University of Oslo, with the Research Council of plan focused on central grid extension without addressing Norway and local partners, have set up a 2.16 kW decentralized or off-grid supply options, covering 46 of solar PV system that provides electricity for lantern the 68 districts. This approach dramatically changed in charging and renting, and charging of mobile phones and the 2009 Rural Electrification Master Plan, which deals battery-based lighting systems . The center also provides with off-grid electrification. Due to this shift at least 18 IT services, TV and video shows and has the capacity isolated grids (in remote and isolated areas, including to serve up to a total of 180 households. Although not islands) have been constructed and commissioned by REA funded commercially, the project aims for economic and are managed by Kenya Power and Lighting Company. sustainability after the demonstration phase. REA hands over completed projects to Kenya Power and Lighting Company for operation and maintenance based The few private sector pilots include Powerhive’s solar on service level agreements. PV and battery system in Kisii County; and three from Powergen: Takawira Island 1.4 kW system for 31 customers, At least three community-based mini-grids are Mageta Island 0.36 kW system for seven customers, and operational in Kirinyaga, Embu, and Meru. A research- Remba Island 3 kW solar-wind hybrid system. focused mini-grid is being implemented by the University R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 51 Figure 3-11: Very few countries have any experience on implementing processes for mini-grid operations RISE Indic tor Scor 100 100 86 80 60 57 40 20 20 0 0 0 0 0 0 0 0 0 Indi M li N p l T n ni Ethiopi Hondur s K n Lib ri Mon oli Solomon V nu tu Ym n Isl nds Numb r of nci s Cost Tim Source: RISE database. connection is over $350, which represents 10 percent of the countries, the legal framework for mini-grids is in place, but gross national income (GNI) per household. their market is not ready to operate commercial mini-grids using renewable energy sources. It is important to underline Among the 12 countries, eight score well, reflecting an that comparisons across countries are difficult because of the efficient method of establishing a new connection. India and very small sample of countries with any mini-grid activity. the Solomon Islands score the best for time (Figure 3-10), each taking only eight days to get a connection, while in Kenya has 18 operational diesel-based isolated mini-grids Mongolia, it costs the least to get an electricity connection under Kenya Power and 15 more in development through a ($10). Ethiopia has the worst time performance of 365 days, partnership with the Rural Electrification Agency (REA) and and so scores 0 on that variable. Similarly Vanuatu, with the Kenya Power. Only four non-Kenya Power mini-grids exist, worst cost performance, scores 0 on that variable. but none of them is purely commercial (and see Box 3–1). In Honduras mini-grids are small—almost all 5–30kW—and Information was also collected for time and cost to get new operated by municipalities. The country requires no permits connections in peri-urban areas. In most countries, a title of or licenses for generation, distribution, environmental property is not required, which makes it easier for informal impact, or tariff because it has no regulations on mini-grids, parts of a city to get connected. However, in four out of the which it considers social solutions for isolated communities. 12 countries—Ethiopia, Honduras, India, and Vanuatu—the In Vanuatu, as the Utilities Regulatory Agency does not distribution utility requires new clients to produce legal regulate electricity services outside concession areas, no documents showing housing ownership. In Mongolia, an rule, permit, or license is required for mini-grids. A few very informally settled family can receive an official temporary small mini-grids run on copra oil, but they are not regulated, address from their administration unit, with which they can and charge over US$2.00/kWh to customers. apply for a connection. For countries where privately owned mini-grids operate, the Indicator 8: Permitting a mini-grid process to obtain a permit varies. Some have light regulations Among the pilot countries, only a handful has operational for mini-grid operations: in India for example, biomass mini- privately owned mini-grids. There are no privately owned, grids do not need a permit, and the only document required is renewable energy–based mini-grids in, for example, Ethiopia, a “no objection certificate” from the Pollution Control Board, Liberia, Mongolia, the Solomon Islands, and Yemen. The which can be obtained in three months for less than $50. In reasons for their absence are diverse: in some countries, Nepal too, the government has kept the cost minimal at $37. private mini-grids are simply forbidden as the utility keeps a It also provides subsidies to mini-grid promoters. Still, the monopoly on electricity distribution; in others, the framework process to obtain all the necessary approvals is quite long for mini-grid development and operations are still nascent, and burdensome, as it requires approvals from six agencies probably deterring private investment; and in still other and takes more than seven months. Partly for these reasons, 52 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY of socioeconomic and environmental impacts of the mini- Table 3-7: Time and cost to developers to set up mini-grids can vary widely grid, but usually approves it in four months. The government and the rural electrification agency require no fee for the Country Time (days) Cost ($) Number of agencies mini-grid permit, aiming to make the sector attractive to the India 90 48 1 private sector. Mali 181 - 2 Nepal 215 37 6 Tanzania 510 6,620 3 3.4 HOW CAN COUNTRIES IMPROVE THEIR Source: RISE database. PERFORMANCE? India, Nepal, and Tanzania are the top performers in this these countries do well on the RISE score (Figure 3-11). pilot, with green lights, and have incorporated almost all the critical pieces to create an enabling environment. The Yet seven months is still quite quick relative to the process remaining countries are in the yellow zone (none has a in Tanzania, where most mini-grids are owned by the utility red traffic light). Planning is the most prevalent attribute (and former power monopoly) TANESCO as isolated diesel adopted by countries. Policies and mandates for off-grid powered grids. There are a number of private, small hydro electrification through renewable energy mini-grid develop- plants that provide electricity to isolated churches and ment and standalone home systems lag behind. Countries other facilities and, after the REA provided incentives for have recognized the importance of funding support for developers (such as $500 per connection), the private sector electrification and most countries have some sort of has invested again in mini-grids. Small rural power projects dedicated funding support. below 1 MW are exempted from licenses from the Energy and Water Utilities Regulatory Authority. However, to operate a India is the only country with a green light on all indicators. mini-grid, promoters have to obtain an environmental clear- The remaining countries have a pending agenda for creating ance from the National Environment Management Council, an enabling environment (Table 3-8). For instance, Honduras depending on size and technology—a small solar-based could emphasize the development of mini-grids for off-grid system, for example, does not need a clearance. For others, electrification, achievable by including off-grid projects in the it takes a little less than a year to get but costs more than national electrification plan and by subsequently introducing $6,000, or 10 times GNI per capita (Table 3-7). regulations that create a favorable operating environment for mini-grids. There could also be a provision for the Compare this to Mali, where the utility also requires a report Table 3-8: All countries have areas of opportunity for improving the enabling environment Solomon Ethiopia Honduras India Kenya Liberia Mali Mongolia Nepal Islands Tanzania Vanuatu Yemen Electrification plan Enabling environment for renewable energy developers to invest in mini-grids Enabling environment for standalone home systems Funding support to electrification Affordability of electricity Utility performance Establishing a new connection Permitting a mini-grid Source: RISE database. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 53 government or the utility to cover a portion of the costs for new household connections. It takes a year to get a rural household electricity The Solomon Islands has strong funding support to connection in Ethiopia versus electrification, and electricity prices in the islands are 8 days in India and Solomon affordable. However, the country could tap renewable energy–based mini-grid potential to achieve off-grid Islands. electrification through stronger regulations and mandates. all countries need to deploy both grid and off-grid applications The Renewable Energy Investment Plan, which has been for achieving universal access, but they have to consider both prepared but not yet adopted, includes components of options to find the best way. Also, “electrification” needs to a national electrification plan and could strengthen the be defined clearly to ensure it refers to household use— some planning category of energy access once adopted. Finally, countries use different definitions. standalone home systems in the country should have minimum quality standards. In indicator 2, enabling environment for renewable energy developers to invest in mini-grids, the term “mini-grid” will Nepal could improve its mandates for mini-grids by includ- be more clearly defined because countries use it differently ing provisions for reliability and safety, and laws against in their regulatory framework. For indicator 8, permitting a expropriation. It could also usefully seek to adopt financing mini-grid, the indicator will be presented with well-specified for rural and new household connections. For its part, case studies, which will ensure comparability of results Ethiopia needs to focus on reducing the time to get a new across countries. Among pilot countries, only a few have connection—one year. Mali needs to update its electrification had private developers operating renewable energy–based plan (dated 2007); it also needs to bring in minimum quality mini-grids, and even among them size and technology vary. standards for standalone home systems and to provide During the global rollout, making the data comparable would financing for new connections. be important for the analysis. 3-5 WHAT ARE THE LESSONS FOR THE A new indicator on the enabling environment for grid electri- GLOBAL ROLLOUT? fication in peri-urban areas will be considered. As urbaniza- tion is set to gain momentum, electrification in peri-urban While all indicators in energy access will be retained, areas will become critical and require new approaches by many of them will be refined and indicators added to policymakers and service providers. The policy and regula- better reflect the policy and institutional profile needed to tory framework particularly needs to be aligned to embrace support energy access investments. Questions and survey people who have migrated from rural areas and informally methodologies will be refined, as feedback is collected from settled in slum areas. An indicator that captures mitigating stakeholders. A few proposals are presented below. mechanisms to address the illegality of tenure arrangements For indicator 1, electrification plan, the second question will be in peri-urban areas could therefore be considered. reframed to check whether the national plan has considered Finally, off-grid space is still nascent, but dynamic. Business both grid and off-grid options to reach every household, models are evolving and so is the understanding of what a although it ends up choosing only grid extension in the plan. In supportive operating environment looks like. There will be the pilot countries, no issue has arisen from this. However, not opportunities to reflect on this in future editions of RISE. 54 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Credit: Dana Smillie/World Bank R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 55 CHAPTER 4 RENEWABLE ENERGY Performance on the RISE index for renewable energy varies The pilot exercise revealed the combination of measures hugely, from a normalized score of 92 in Denmark (out of adopted by best performing countries and what kind of 100) to 6 in Yemen (Figure 4-1). Four broad groups can be policy actions are still missing in countries with lower scores. distinguished: Progress and good practice are features of many of the •• Countries that exhibit a strong performance and have countries in different areas of the RISE index. introduced most of the elements necessary to offer a robust investment climate for private participation in 4.1 WHY DOES RISE MATTER? renewable energy development (green light)—Denmark, the United States, and India. The SE4ALL goal of doubling the share of renewable energy •• Countries that have made good progress, but still have in the global energy mix between 2010 and 2030 will bring room to improve planning, and policy and regulation, substantial benefits to all countries. Renewable energy including in pricing carbon and electricity and in proce- deployment can improve energy security, increase energy dural efficiency (yellow light)—Chile, Armenia, Honduras, access, reduce global and local pollutants (with associated Kenya, and Mongolia. health gains), and create new markets and jobs. •• Countries in the initial stages of introducing the basic measures to promote renewable energy investment The global expansion of renewable energy markets, manufac- (yellow light)—Tanzania, Nepal, and Ethiopia. turing, and investment has been remarkable in recent years. •• Countries in which most of the essential elements for an In electricity, renewable source-based power generation adequate investment climate are still lacking (red light)— grew 5.5 percent annually over 2006–13, up from 3 percent Liberia, the Solomon Islands, Maldives, Mali, Vanuatu, a year over 2000–06.39 The compound annual growth rate and Yemen. of final energy consumption from wind, biogas, and solar has been in the order of 25, 17, and 11 percent, respectively, Figure 4-1: RISE renewable energy score 100 92 88 81 80 73 60 59 58 50 46 40 34 33 29 23 21 21 19 20 16 6 0 D nm rk U.S. Indi Chil Arm ni Hondur s K n Mon oli T n ni N p l Ethiopi Lib ri Solomon M ldiv s M li V nu tu Ym n Isl nds Proc dur l ffici nc Polici s nd r ul tions Pricin nd subsidi s Pl nnin Source: RISE database. 39. IEA 2014a. 56 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY over 1990–2010.40 The economic case for the transition to a insufficient transparency of policies and legislation. higher and substantial share of renewable energy is compel- •• Market barriers such as inconsistent pricing structures ling; however, important obstacles remain. that disadvantage renewables, asymmetrical information, market power, financially unsustainable Investment trends. The investment volume required for a large- utilities (offtakers), subsidies for fossil fuels, and scale transition to sustainable energy is huge. The SE4ALL the failure of costing methods to include social and Global Tracking Framework 2013 reports that a doubling of the environmental costs. share of renewable energy in total final energy consumption •• Financial barriers associated with an absence of to 2030 will require an average annual global investment of adequate funding opportunities and financing products $250 billion–$400 billion. The IEA has recently estimated for renewable energy. cumulative investment needs of around $6 trillion for renew- •• Infrastructure barriers that mainly center on the flexibility able energy expansion over 2014–35 under the New Policies of the energy system to integrate and absorb renewable Scenario—about $270 billion a year—and up to $9 trillion energy generation, e.g., access to the electrical grid. dollars under the 450 Scenario—roughly $400 billion a year.41 •• Lack of knowledge and adequate planning relating to insufficient knowledge of resource potential, availability However, the reality is that total new investment in renewable and performance of renewables, and lack of rigorous and energy—excluding large hydropower—reached $214 billion in anticipatory planning for renewable energy scale-up. 2013, down 14 percent from 2012 and 23 percent lower than •• Institutional and administrative barriers that include the the record in 2011. This second consecutive year of decline in lack of strong, dedicated institutions; absence of clear investment, after several years of growth, has been attributed responsibilities; and complicated, slow, or nontranspar- to dramatic reductions in technology costs—especially in wind ent permitting procedures. and solar—but also to increased policy uncertainty.42 Indeed, recent analysis by the IEA suggests that increasing policy and These barriers translate into multiple risks that affect the market risks raise concerns over how fast renewable energy private decision to invest. Thus a fundamental goal of the can scale up to meet long-term global deployment objectives. policymaker today is to develop plans and to implement policies, regulatory measures, and administrative processes A substantial increase in the share of renewable energy that address the various risks that concern private inves- depends heavily on private sector participation, as the tors, while making sure there is a net benefit for consumers availability of finance from traditional sources—utilities, and the economy. This is a delicate balancing act, where commercial-bank project finance, and governments—is information asymmetries and key considerations need to be limited, representing a key constraint to achieving the weighed and continuously calibrated. SE4ALL goal. The RISE framework in renewable energy focuses on the Economic barriers. Depending on technological maturity elements of the business environment considered essential in and the extent to which external costs and benefits are attracting private sector participation in renewable energy internalized, renewable energy technologies differ in their development across four dimensions: planning; policies and competitiveness from conventional energy technologies,43 regulations; pricing and subsidies; and procedural efficiency. the lack of externality pricing constitutes an economic RISE is intended to support policymakers in identifying barrier to deploying renewable energy technologies. challenges, good practices, and opportunities to improve the existing framework and practices that directly affect the Multiple and differentiated risks. Risks associated with renew- private decision to invest in renewable energy. able energy projects stem from underlying economic and noneconomic barriers. Some of the noneconomic barriers are: All countries in the pilot have a high resource potential in one •• Regulatory and policy uncertainty, which relate to or more of the renewable energy options; however, RISE does suboptimal policy design, or discontinuity and/or not assume that all countries will commit to develop all ex- isting options—especially those exhibiting a high incremental cost due to existing market barriers—or to attract private 40. World Bank and IEA 2013. 41. IEA 2014c. sector investment in renewable energy scale-up. A low RISE 42. REN21 2014. 43. External costs may include those associated with greenhouse gas emissions reductions, score simply means that a particular system or market pollution remediation, and damage to health. The benefits of renewable energy can include a does not offer an attractive business environment for such reduction of greenhouse gas emissions, a contribution to energy security, and many others. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 57 Figure 4-2: Share of installed capacity by technology ( ) At th r of 2011 (b) Ch n b tw n 1990 nd 2011 D nm rk D nm rk K n Hondur s Hondur s V nu tu V nu tu Indi Indi K n Chil Chil U.S. U.S. Ethiopi Mon oli Mon oli M ldiv s M ldiv s Arm ni Arm ni N p l Ym n T n ni T n ni Ym n Solomon Isl nds Solomon Isl nds N p l Lib ri M li M li Lib ri Ethiopi 0% 20% 40% 60% 80% 100% -60% -40% -20% 0% 20% 40% 60% Oth r R n w bl En r H dro Fossil Fu ls Nucl r Source: Authors, based on data from the Energy Information Administration. investment; this may be the case, for example, in systems scores will emerge clearly. For now, it suffices to note that with vertically integrated monopolies that do not offer the the pilot survey covers countries spanning the global range option of public–private partnerships (such as independent of renewable performance, and it is hoped that lessons power producers) or in very small markets, where the scale of drawn in this exercise will be useful in preparing for the next capacity additions and scope for competition are limited. step toward a global survey. The RISE score is expected to correlate with increases in renewable energy capacity fully or partly financed by the 4.2 HOW DOES RISE MEASURE THE ENABLING ENVIRONMENT? private sector. The RISE framework in renewable energy scores all countries It is not possible at this time to draw conclusions from the on seven indicators specific to renewable energy and three correlation (or lack thereof) between past renewable energy cross-cutting indicators, which apply also to the energy trends and results of the pilot survey, in part because not all efficiency and energy access pillars. One indicator concerns capacity additions in renewable energy have been supported planning; five, policies and regulations; and one, procedural by a robust investment climate and the participation of the efficiency. The three cross-cutting indicators are carbon private sector (Figure 4-2a). In many developing countries, pricing mechanism, utility performance, and fossil fuel public and concessional financing is helping demonstrate subsidy. The scope of the RISE framework is limited to grid- renewable energy scale-up, even in systems where the connected renewable source–based power generation, and investment climate is still not conducive to private sector does not apply to renewable energy development in off-grid participation. and mini-grid markets. In 2011, fossil fuels and hydropower accounted for the bulk Planning of installed power generating capacity in the pilot countries Indicator 1: Planning for renewable energy expansion (Figure 4-2a); renewables other than hydropower experienced RISE captures good practice on this indicator through the large increases in capacity share over 1990–2011 (Figure 4-2b). following sub-indicators: definition of a target with a cor- responding action plan; inclusion of existing renewable energy As future rounds of RISE accumulate results, it is expected options in long-term expansion planning using traditional that the relationship between private investment and RISE least-cost planning and, if possible, other complementary or 58 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Table 4-1: Scoring methodology—planning Questions Scoring Traffic Light Planning I. Planning for renewable energy expansion Sum and divide by 4 Target with an action plan • Does a renewable energy target exist? Yes—50, No—0 • If yes, does a renewable action plan to attain the target exist? Yes—50, No—0 Planning: • Does an electricity expansion plan that includes renewable energy development exist? Yes—100, No—0 Incorporation of renewable energy in transmission expansion: • Does current transmission planning consider renewable energy scale-up? Yes—50, No—0 • Is there an anticipatory planning process for least cost expansion of transmission Yes—50, No—0 network infrastructure in order to connect one or more renewable energy plants? High quality resource mapping • Does a high quality validated national atlas of renewable energy resource potential exist? A full score of 50 for resource mapping requires that it possess three standards: X≥75 1. Modeling outputs that are validated by ground level 25≤X<75 measurements for at least one year X<25 2. A spatial resolution of 10km or better 3. Temporal coverage equal to or greater than 10 years The standards have equal weight and the resource with the most attributes is chosen for the final score. • Does strategic planning or zoning guidance for renewable energy resources exist? A full score of 50 for strategic planning and zoning guidance requires that it possess four attributes: 1. Considered systematic renewable energy mapping outputs alongside other factors 2. Undertaken as part of a strategic environmental social assessment 3. Included appropriate stakeholder engagement 4. Is consolidated into government policy and communicated to stakeholders The attributes have equal weight and the resource with the most attributes is chosen for the final score. Source: Authors. cutting-edge tools; anticipatory transmission expansion plan- a good target is ambitious, realistic, and time-bound, while ning; and comprehensive, high-quality and validated resource an action plan for achieving the target should be as concrete assessment and mapping, ideally including the publication of a as possible, detailing steps, phases, and measures. strategic planning or zoning guidance (Table 4-1). Traditional long-term expansion planning (also known as The setting of a specific renewable energy target and the least-cost approach) determines the type, size, and timing of preparation of an action plan or policy mission to promote capacity additions in generation, transmission, and distribu- renewable energy development provide a particularly tion required to meet future electricity demand at minimum strong signal of government commitment.44 Financiers look cost while satisfying reliability criteria and other potential for a clear outline and plan for renewable energy market constraints (technical, social, financial, political, geographic, development along scale and time, investment required, and environmental, etc.).45 Renewable energy resources and mechanisms that will facilitate the challenge. In RISE, exhibit, however, distinct characteristics that do not apply countries are assessed on whether they have a renewable to conventional or fossil fuel–based generation, including energy target and an action plan for achieving it. In general, 45. In monopolies, the least-cost expansion plan is traditionally conducted by the vertically 44. A recent survey on the drivers and barriers for private finance in renewable energy in integrated utility; however, in liberalized markets a reference expansion plan is also normally developing countries confirms that a national target is the most powerful mechanism for prepared by the planning authority or the independent system operator to guide investors on unlocking private investment in renewable energy (UNEP 2012). the optimal technical and economic evolution of the system. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 59 resource variability, zonal spread, and learning effects. consideration for renewable energy in transmission expansion; Integrating renewable energy into long-term expansion second, use of a forward-looking transmission expansion ap- planning requires special attention to these characteristics, proach conceived to introduce a set of projects in a geographic for which cutting-edge planning tools have been developed, area, thereby reducing costs and improving efficiency.48 although traditional methods and tools can also be adapted.46 Mapping renewable energy resources is a crucial step for Ideally, planning renewable energy expansion involves two tiers: governments looking to encourage scale-up and commercial incorporation of the specific characteristics of renewable energy investment in clean energy. Mapping raises awareness of a into long-term expansion planning; and use of other comple- country’s resource potential, potentially reduces information mentary tools to assess the contribution of renewable energy to costs and shortens project timelines for commercial develop- individual or multiple policy objectives (energy security, eco- ers, and provides valuable information for designing zoning nomic growth, energy access, and global or local environmental guidance, tariff levels, and other policies. sustainability). For practical reasons—and as a first stage—RISE assesses good practice simply by whether or not renewable In RISE, best practice in resource mapping involves two energy is integrated into long-term expansion planning. elements: the existence of a high-quality validated national atlas, and the publication of a strategic planning or zoning It is essential that expansion planning and decisions are guidance. The standards considered in RISE to verify the coordinated and followed by appropriate procurement and existence of a high quality validated national atlas are: regulatory mechanisms.47 Such mechanisms, like feed-in tariff modeling outputs validated by ground-level measurements (FIT) policies, renewable portfolio standards with or without for at least one year; a spatial resolution of 10km or better; tradable certificates, competitive bidding, and auctions, vary and temporal coverage of at least 10 years. among countries; however, the planning exercise must lead to the commissioning of renewable energy projects through any An appropriate strategic planning or zoning guidance in RISE of these mechanisms. The existence of explicit procurement or conforms to the following standards: systematically considers regulatory mechanisms is included in RISE. renewable energy mapping outputs alongside other factors, including environmental, social, physical, and infrastructural; One of the main obstacles to scaling up renewable energy is is undertaken as part of a strategic environmental and social connecting sites to the grid efficiently. Sites with renewable assessment or equivalent process; includes appropriate energy resource potential are often dispersed across multiple stakeholder engagement and consultation; and consolidated locations or far from consumption centers and the transmis- into government policy and communicated to stakeholders. sion system. Unlike fossil fuel–based generation capacity whose technologies are more modular and fuel sources more Pricing and Subsidies mobile, renewable energy capacity is more constrained by Indicator 2: Fossil fuel subsidy the location of the resource and for this reason transmission Indicator 3: Carbon pricing mechanism networks need to be extended to reach them. Transmission Indicator 4: Utility performance expansion has traditionally been reactive, responding to Cost-reflective pricing is a fundamental criterion for economic interconnection requests. A forward-looking approach to efficiency. Prices should direct investment toward the goods transmission planning, however—one that explicitly takes into account the geographic spread and potential scale-up of renewable energy—can in the long run be more cost effective and increase the technical efficiency of the grid. Thirteen countries have a renewable energy target, but In RISE, good practice in transmission expansion that incorpo- rates renewable energy is assessed on two tiers: first, simple only 8 have an action plan to attain the target and 2 a high 46. For instance, in the least-cost approach the incorporation of renewable energy could be quality resource map. modeled as follows: representing renewables as a “unreliable thermal unit” or as a “run-of- river hydro plant;” through adjustments to the net load duration curve; and determining the “firm capacity” of renewable energy source generation offline and adjusting upwards the assumption on reserve requirement in the model. 47. We refer to “procurement” when a firm supplies a good to the government and to “regulation” when it supplies a good to consumers on behalf of the government (defined in Laffont and 48. It is possible that this last provision does not apply to island countries; in this case RISE Tirole 1999). scoring is adjusted to avoid unfair penalization. 60 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Table 4-2: Scoring methodology—pricing and subsidies Questions Scoring Traffic Light Pricing and subsidies II. Fossil fuel subsidy Percentage of electricity generation X≥75 What is the proportion of electricity generation by subsidized fossil fuel? by unsubsidized fossil fuel and 25≤X<75 other fuel X<25 III. Carbon pricing mechanism Sum and divide by 2 Is there a legally binding greenhouse gas emission reduction target in place? Yes—100, No—0 X≥75 25≤X<75 Is there any mechanism to price carbon in place (e.g., carbon tax, auctions, emission trading system)? Yes—100, No—0 X<25 IV. Utility performance Sum and divide by 2 Reporting practice of financial statements Yes to (i) & (ii)—100 (i) Are the financial statements of the largest utility publicly available? Yes to only (i)—50 (ii) If yes to (i), are they audited by an independent auditor? No to (i) & (ii)—0 Sum of five scores of sub-elements Financial performance X≥75 Score 20 0 0 25≤X<75 (i) Current ratio (ii) EBITDA margin (i) ≥1 <1 X<25 (iii) Debt service coverage ratio (ii) ≥0 <0 (iv) Days payable outstanding (iii) ≥1 <1 (v) Days receivable outstanding (iv) ≤90 >90 (v) ≤90 >90 Source: Authors. and services that provide the greatest benefit to society, and operational track record or outlook, or even unfavorable which requires that prices reflect both private and external policies on the utility’s cost-recovery arrangements create costs (climate change is an example of a market failure involv- high counterparty risk. The financial performance of utilities ing externalities and public goods). Fossil fuel subsidies and is therefore verified in RISE through two sets of sub-indicators the absence of carbon pricing violate this principle and lead as a proxy for offtake risk: public disclosure and third-party to energy prices that increase fossil fuel consumption, limit auditing of financial statements; and a combination of five renewable energy consumption, and cause welfare loss. financial performance measures as described in Chapter 2. In RISE, the absence of fossil fuel subsidies and presence Policies and Regulations of carbon pricing are therefore standards of good practice Indicator 5: Legal framework for renewable energy (Table 4-2). A legally binding greenhouse gas emission target Indicator 6: Regulatory policies and procurement is also considered good practice as it signals a government’s Indicator 7: Regulatory policies—policy design attributes intent to reduce such emissions; this adds credibility to any Indicator 8: Network connection and pricing carbon pricing mechanisms in place. Primary mechanisms Indicator 9: Public financial support mechanisms for pricing carbon are carbon taxes and emission trading The existence of robust policy, legal, and regulatory frame- systems. In 2014, 39 national and 23 subnational jurisdic- works remains central for attracting financing in renewable tions, accounting for more than 22 percent of global emis- energy. Indeed, investors examine national policy conditions sions, implemented or are scheduled to implement these two reflecting client interest, or as specific market opportunities mechanisms (World Bank 2014). Aside from creating a more arise. Financiers are interested in clear, investment-related level playing field for renewables vis-à-vis conventional fuels, information on national drivers as well as legal and regulatory carbon pricing mechanisms can also raise revenues to pro- regimes that detail the types of renewable energy supported, vide renewable energy investors with additional incentives. the types of incentives, and other provisions associated with market development and the conditions to enable investment. The financial sustainability of the offtaker is critical to renewable energy investment and financing. Limitations in the A solid framework provides clarity on the size and stability utility’s credit quality, corporate governance, management of revenues in renewable energy projects and contributes R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 61 Table 4-3: Scoring methodology—policies and regulations Questions Scoring Traffic Light Policies and regulations V. Legal framework for renewable energy X=100 X=0 Does a legal framework for renewable energy development exist? Yes—100, No—0 VI. Regulatory policies and procurement X=100 Are there incentives for grid-connected renewable energy generation? Yes—50, No—0 X=50 X=0 Are there incentives for distributed renewable energy generation? Yes—50, No—0 VII. Regulatory policies—policy design attributes Sum and divide by 3 Predicability: Maximum of following Does the policy possess the following attributes: • Renewable purchase obligation? Yes—100, No—0 • Rules on price level modification and frequency? Yes—100, No—0 • Provisions in auctions to deter aggressive pricing? Yes—100, No—0 Sustainability: Does the policy possess the following attributes: X≥75 • The renewable energy subsidy is passed through to the consumer tariff? 25≤X<75 Yes—50, No—0 X<25 • The renewable energy subsidy is less than 2% of total residential electricity bill? Yes—50, No—0 Accessibility: Does the policy possess the following attributes: • Prioritized access to the grid (priority dispatch)? Yes—33.3, No—0 • Grid code with measures or standards to manage/operate variable renewable energy? Yes—33.3, No—0 • Clear polices/rules on curtailment cost (full, partial, or no compensation)? Yes—33.3, No—0 Remuneration Efficiency: Not scored in the pilot stage • Does the policy lead to a price incentive that is sufficient to cover the costs of generation? VIII. Network connection and pricing Sum and divide by 2 Connection cost allocation policy Yes—50, No—0 X≥75 • Are there rules about the allocation of connection costs? Super shallow—50 25≤X<75 • If yes, what is the type of the connection cost allocation policy (super-shallow/shallow/deep)? Shallow—25, Deep—0 X<25 Network usage pricing • Are there rules defining who pays for transmission and distribution wheeling charges? Yes—100, No—0 IX. Public financial support mechinisms Does the government off the following: • Fiscal incentives for renewable energy? Yes—25, No—0 X≥75 25≤X<75 • Public financial incentives for renewable energy? Yes—25, No—0 X<25 • Backing of utility payments (with letter of credit or other)? Yes—25, No—0 • Credit enhancement or risk mitigating (through reserve accounts, sovereign guarantees or other)? Yes—25, No—0 Source: Authors. to lower the cost of financing by addressing the policy risk, In RISE, good practice in policies and regulations, including while delivering renewable energy at lowest cost to society. procurement, is verified through several indicators (Table 4-3). The financial sustainability of the offtaker is also critical to financing; policymakers can implement measures or enhance- Price- or quantity-setting regulatory policies include FITs, ments—in tariff or performance regulation, or through risk feed in-premiums (FIPs), renewable portfolio standards (with mitigation—to promote good practice and reduce or eliminate or without certificate markets), and tenders (henceforth the offtake risk. 62 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY access to the grid. The three elements included are: (i) prioritized access to the grid (or priority dispatch), Nine countries have a specific (ii) existence of a grid code that includes measures or regulatory policy to support standards for managing and integrating variable renew- able energy, and (iii) clear policies or rules on curtailment renewable energy, with an equal costs (full, partial or no compensation). distribution of policy choice •• Remuneration efficiency refers to appropriate compensa- between FIT/FIPs, RPS and tion. While policymakers need to ensure that the price auctions. incentive is closely aligned to costs, investors welcome and advocate for higher price incentives. In RISE, the level regulatory policies).49 Absent direct externality pricing, these of price incentives is compared with actual project costs policies are essential for effective promotion of renewable to ensure that incentives are at least within appropriate energy options that exhibit an incremental cost compared country and regional ranges, but not below.54 with conventional alternatives. There are several incentives for distributed renewable energy generation, although in the RISE RISE does not advocate for any specific type of regulatory pilot scoring is limited to the existence of net-metering policies. policy and focuses on the attributes and monitoring elements required to unlock financing. These attributes and rules can be Regulatory policies to support grid-connected renewable included either in regulatory frameworks or codes, or embed- energy function as the cornerstone instrument for trans- ded in contract design. Indeed, each regulatory policy has its formation efforts; however, the design of these instruments own advantages (and disadvantages). The choice of regulatory has to embrace the attributes to attract private investment, policy, instrument design, and complexity of policy package i.e., (in RISE) predictability,50 sustainability, accessibility, and (or regulatory regime) should be tailored to the conditions of remuneration efficiency (or appropriate compensation).51 52 the system and type of market, nature and level of risks, and •• Predictability is assessed through existence of three institutional and administrative capacity. elements: (i) purchase obligation imposed on utilities, discos (distribution companies) or other service providers, Investors are also concerned about the clarity and design of (ii) explicit rules for price level modifications and their network connection and pricing. Transmission infrastruc- frequency, and (iii) inclusion of mechanisms in tenders ture cost-allocation and network-pricing policies are critical that promote realistic price bids (so that investors know to renewable energy development as they can signify high that aggressive price bidding is penalized later on for costs to developers and so become an important determi- delays in the—or for no—construction of plants).53 nant of investment.55 Although these policies are generally •• Sustainability of incentives is measured through the included in formal regulatory frameworks, some may be existence of two elements: (i) a pass-through to the included in standardized power purchase agreements, or consumer tariff (surcharge), and (ii) consumer afford- even in wheeling service agreements. In RISE, good practice ability, which is measured as the impact of the subsidy in network connection and pricing involves two tiers: on the average residential bill as well as on per-capita existence of explicit and clear policies or regulations, and income. Thresholds and a good practice frontier for preference for rules that lower the burden on renewable “affordable” and “not affordable” subsidies will be derived energy (e.g., super-, semi-, or shallow interconnection cost as RISE progress to a global level. policies as opposed to deep interconnection cost policies; •• Accessibility is associated with renewable energy and connection cost paid over a period as opposed to a one-time payment).56 49. Many sources describe price- and quantity-setting instruments in detail. The economics literature shows that in the presence of a binding emissions cap, additional renewable policies of any kind do not affect emissions but could, however, correct for market failures (e.g. market 54. The data on renewable energy project costs at country level will be sourced by the and regulatory barriers, spillovers from technological innovation and learning) (Fischer and International Renewable Energy Agency’s Costing Alliance initiative. Preonas 2010). 55. See Madrigal and Stoft (2012) for a detailed description of transmission cost allocation 50. Inclusion of mechanisms in tenders that promote realistic price bids enables investors to know policies, connection costs, and usage pricing policies, including curtailment. that aggressive price bidding is penalized later for delays—or even cancellation—in plant 56. Costs of extending transmission or upgrading transmission infrastructure are typically construction. allocated between the project developer and the transmission system operator (TSO) using 51. In RISE, the level of price incentives is compared to actual project costs to ensure that one of the four cost-allocation policies: super-shallow, semi-shallow, shallow, or deep (see incentives are at least within appropriate country and regional ranges, but not below. Table 4-3). In a super-shallow policy, the project developer has to pay only for the installation 52. See Elizando and Barroso (2012). of enabler facilities or immediate connection assets (internal substation, transformer); in a 53. For example, a limit on the quantity of energy that is stimulated by price setting FIT and deep policy, developers are responsible for all transmission infrastructure costs, including FIP policies can be achieved with a program cap, while a price control in a quantity-setting construction of enabler facilities, system extension, and network upgrades. Semi-shallow and renewable purchase obligations program can be achieved with price floors and ceilings. shallow are in the middle of these two extremes. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 63 Procedural efficiency Table 4-4: Scoring methodology—procedural efficiency Indicator 10: Starting a new renewable energy project Questions Scoring Traffic Light Renewable energy developers need to go through multiple Procedural efficiency bureaucratic procedures, requiring them to deal with a raft X. Starting a new renwable energy project of institutions. Some of these licenses and permits include concessions to exploit natural resources, licenses to gener- Time taken, cost incurred Higher average (between and number of agencies hydro and non-hydro ate power, zoning authorizations, building permits, clearance contacted to start a projects) of three DTF renewable energy project measures on time, cost, or approval of engineering standards, environmental impact of types: and number of agencies X≥75 assessment approvals, environmental licenses, and technical contacted 25≤X<75 1) Small hydro X<25 approvals for connection to the grid. 2) Solar, wind, or biomass (choosing the technology that is in most In RISE, the good practice frontier in procedural efficiency is widespread use defined by the time, cost, and number of agencies contacted for a renewable energy developer to construct a plant, Source: Authors. connect to the grid, and operate and sell its electricity Regulatory and procurement instruments can be designed output to the grid (Table 4-4). To make data comparable to function simultaneously as policy de-risking, financial de- across economies, RISE tests procedural efficiency with risking, and output-based instruments.57 However, regulatory hypothetical projects or cases where the capacity, distance policies alone may not be sufficient to promote renewable to grid, operating lifetime, environmental safeguards, and energy, especially in economies or business environments that other parameters are established ex ante.59 exhibit multiple and high risks. These instruments are usually supplemented by fiscal and financial incentives to address Thresholds and a good practice frontier for “best” and “worst” residual investment risks (those associated with the business performers will be derived as RISE progresses to global level. A environment, including offtake risk and the lack of affordable distance to frontier (DTF) approach is applied to this indicator equity or debt financing). Different types of public finance to illustrate the distance of an economy to the frontier, which instruments can be used to address these constraints (public represents the most efficient practice achieved on each of loans, partial loan guarantees, political risk insurance, partial the component indicators across countries. The DTF metrics risk guarantees, and others). Ultimately, the customized in each of the three dimensions (time, cost, and number of basket of incentives should be designed to achieve a cost- agencies involved in permitting or licensing) is added for a total effective and economically efficient support scheme. score. The project (hydro or non-hydro) with the highest total score is the final measure on procedural efficiency. The RISE indicator on public financial support mechanisms verifies for the existence of four types of renewable energy support mechanisms58 other than regulatory policies: 4.3 HOW DID THE COUNTRIES SCORE? (i) fiscal incentives (capital subsidies, grants or rebates, Indicator 1: Planning for renewable energy expansion investment or production tax credits, tax reductions, energy All pilot countries except Maldives and Tanzania have production payments, or other), (ii) public financing support established renewable energy targets (Figure 4-3). These are (public investment, loans or grants, and public competitive typically defined as shares of electricity generation or energy bidding/tendering), (iii) credit enhancement and risk mitiga- consumption, although a few countries including India and tion (such as reserve accounts, direct sovereign guarantees, Kenya (Box 4–1) specify capacity targets. Most countries credit lines, or soft loans), and (iv) utility payments guaran- with targets publish action plans. tee (a letter of credit or other). In addition to Denmark, the United States, and India, many of the pilot countries are now explicitly integrating renewable energy into expansion planning. Ethiopia in particular has conducted a strong planning exercise and issued its five-year 57. For instance, elements of policy such as guaranteed access to the grid and must-take requirements function as policy de-risking instruments, a guaranteed price over several years provides financial de-risking, and incentives paid against energy delivered are output based. 59. To score the indicator on procedural efficiencies three non-hydro cases and one hydro case are Both price- and quantity-setting instruments can include a combination of these elements, in described: an 80 MW grid-connected wind based generation plant, a 1 MW grid-connected either regulatory or contract design. solar PV plant, a 10 MW grid-connected biomass plant, and an 80 MW grid-connected 58. Source of information on (i) fiscal incentives and (ii) public financing support is REN21 (2014). hydropower plant. 64 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 4-3: Planning for renewable energy expansion RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 100 R n w bl n r in 83 xp nsion pl nnin 53% 80 75 R n w bl n r in tr nsmission 63 63 53% Anticip tor xp nsion 60 tr nsmission pl nnin 50 50 46 R n w bl n r in nticip tor 40 38 38 tr nsmission pl nnin 29% 29 25 20 T r t with 13 13 13 T r t on r n w bl n r 88% n ction pl n 0 0 R n w bl n r ction pl n 59% to impl m nt t r t M li N p l Isl nds U.S. Hondur s Ym n Solomon V nu tu M ldiv s D nm rk Chil Ethiopi Mon oli T n ni Indi Arm ni Lib ri K n N tion l tl s on r n w bl 18% pot nti l n r r sourc s pot nti l R sourc d t Hi h qu lit r sourc m ppin Str t ic pl nnin on xistin 12% T r t with n ction pl n r n w bl n r r sourc s R n w bl n r in tr nsmission pl nnin R n w bl n r in xp nsion pl nnin Source: RISE database. Growth and Transformation Plan, which sets ambitious Box 4-1: Renewable energy target and planning in targets to 2015 (75 MW of geothermal capacity, 10.6 GW of Kenya hydropower, and 770 MW of wind power); in addition Ethiopia is aiming to reach 1 GW of geothermal capacity and 22 GW A new government elected in April 2013 has launched of hydropower capacity by 2030.60 Kenya is also progressing “5000+MW by 2016, Power to Transform Kenya” program, which includes targets for additional generation capacity in aligning renewable energy scale-up with transmission of 1,646 MW from geothermal, 1,050 MW from natural expansion planning. gas, 630 MW from wind, and 1,920 MW from coal. The program also mentions the construction of 4,679 The strongest performers on planning (Denmark, the United kilometers of high voltage transmission lines (132 KV, 500 States, India, and Ethiopia) conduct anticipatory transmission KV) and 3,579 kilometers of distribution line. planning. In India for instance, the National Electricity Plan incorporates renewable energy expansion and its large-scale This follows the Least Cost Power Development Plan integration to the grid with the development of green cor- (LCPDP) 2011. The plan defines geothermal, hydro, and ridors. The nature and sophistication of such planning varies wind power among others as least-cost expansion options. greatly, even within, say, the United States (some states, such Geothermal is highlighted as the resource of choice and as Texas with its renewable energy zones, are ahead).61 plans are to increase capacity to 5,530 MW by 2030, or 26% of the installed capacity. Geothermal scores high on Only very few countries—such as Denmark, the United States, the LCPDP because it is abundantly available in the Rift Valley, can be used as baseload power, has low greenhouse and Chile—have prepared and made available comprehensive, gas emissions and is cheaper on levelized cost terms. high-quality, and validated resource maps as well as strategic planning or zoning guidance for some—if not all—of their The LCPDP outlines the required additional transmission renewable energy sources. India, Armenia, Chile, Mali, Nepal, and distribution capacity each year for the planning and the Solomon Islands are progressing on this front. period and goes into detail including the location, length, voltages, and rationale. A focus is placed on evacuating Indicator 2: Fossil fuel subsidy power from high-potential renewable energy production Six of the 17 countries—Maldives, Yemen, Honduras, the areas including the Rift Valley geothermal production United States, India, and Ethiopia—subsidize fossil fuels used zones. Quantitative targets are set in the LCPDP for in electricity generation: all six subsidize oil, the United States system stability, including caps for system frequency and voltage deviation. Apart from wind, which is expected to contribute marginally to overall capacity, 60. REN21 2014. the selected renewable energy options are dispatchable, 61. Texas has devised a planning process that quickly connects RE to the transmission system. The system is based on the designation of “competitive renewable energy zones” (Madrigal lowering risks of intermittency. and Stoft 2012). R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 65 Figure 4-4: Only a few countries in the sample generate electricity with subsidized fuel(s) 100 100% 80 78% 60 55% 40 44% 20 1% 11% 0 Arm ni Chil D nm rk K n Lib ri M li Mon oli N p l Solomon T n ni V nu tu Ethiopi Indi U.S. Hondur s Y m n M ldiv s Isl nds El ctricit n r t d b non-subsidi d fossil fu l nd oth r fu l El ctricit n r t d b subsidi d fossil fu l Source: RISE database. subsidizes coal, and India subsidizes gas (see Figure 4-4). The Indicator 3: Carbon pricing mechanism presence of subsidies for the production and consumption of Only Denmark and the United States (New York State) have fossil fuels remains a huge impediment to renewable energy legally binding greenhouse gas emission reduction targets development and the global shift to sustainable energy, as (Figure 4-5).62 they force renewables to operate on an uneven playing field in which energy prices do not fully reflect externalities. Six other countries have non-binding greenhouse gas targets including Chile, Ethiopia, India, Liberia, Maldives and Of the countries that provide fossil fuels, all except Yemen Mongolia. Targets are usually set as a percentage emission simultaneously support renewable energy with economic, reduction below the level in a base year. Denmark and the fiscal, and financial incentives. United States (New York State) are also the only countries to have issued a carbon pricing policy. Denmark introduced a carbon dioxide tax in 1992, which applies to oil, gas, coal, and electricity and covers around 45 percent of total greenhouse gas emissions. It also participates in the EU Emissions Trading System. New York State is one of the nine member Figure 4-5: Only two countries have a legally binding greenhouse gas emission reduction target or a carbon pricing mechanism RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 100 80 60 GHG missions r duction t r t 12% 40 20 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 C rbon pricin m ch nism M li N p l Isl nds U.S. Hondur s M ldiv s Solomon V nu tu Ym n D nm rk 12% Chil Ethiopi Mon oli T n ni Arm ni Indi Lib ri K n C rbon pricin m ch nism GHG missions r duction t r t Source: RISE database 62. In September 2014 Chile passed a tax law, which includes bringing in a carbon tax in 2017. As it occurred after the cut-off date of June 30, this report did not score it. 66 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 4-6: Six pilot countries indicate green traffic lights on their utility performance RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 90 90 90 90 80 Fin nci l st t m nt v il bilit 53% 80 R portin pr ctic 70 60 Fin nci l st t m nt udit 47% 60 50 40 40 Curr nt r tio 35% 40 35 30 20 EBITDA m r in 71% p rform nc 20 Fin nci l 10 0 0 D bt s rvic cov r r tio 59% 0 N p l M li Isl nds Solomon U.S. V nu tu Hondur s M ldiv s Ym n D nm rk Chil Ethiopi Mon oli T n ni Arm ni Lib ri 35% Indi D sp bl outst ndin K n D s r c iv bl outst ndin 76% Fin nci l p rform nc R portin pr ctic Source: RISE database. states of the Regional Greenhouse Gas Initiative, a cap and and increased number of supply agreements, leading to very trade system.63 low liabilities, no debt, and relatively low system losses.64 Indicator 4: Utility performance Both Tata Power in India and the Kenya Power and Lighting Utilities in high- and middle-income economies score well Company score relatively well on this indicator. Tata Power on utility performance, as do some in low-income countries operates in the wealthiest and most developed state in India, (Figure 4-6). where billing collection and the level of electricity tariffs are less of a concern. The latter company also scores well on The Solomon Islands Electric Authority performs very well, both reporting practice and financial performance, except on with maximum score on the seven elements of this indicator, the number of days payable outstanding. The power sector reflecting a strategy that combines asset revaluations, in Kenya is largely financially sound due to robust regulatory resolution of outstanding payments, streamlined logistics, policies, especially for design of contracts and retail tariffs. Figure 4-7: More than half the sample countries have a legal framework to support renewable energy RISE Indic tor Scor 100 100 100 100 100 100 100 100 100 100 100 80 60 40 20 0 0 0 0 0 0 0 0 Arm ni Chil D nm rk Hondur s Indi K n Lib ri Mon oli T n ni U.S. Ethiopi M ldiv s M li N p l Solomon V nu tu Ym n Isl nd Source: RISE database. 63. This is a market-based greenhouse gas reduction program covering carbon dioxide emissions The system affects fossil fuel power plants with 25 MW or more generating capacity. The regional from power plants in nine Northeast and Mid-Atlantic states of the United States. Emission cap on emissions is reduced periodically and set to decline by a further 2.5 percent each year permit auctioning began in September 2008 and proceeds are used to promote energy from 2015 to 2020. The auctioned price has hovered between $2 and $4. conservation and renewable energy. 64. Government of Solomon Islands 2013. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 67 Indicator 5: Legal framework in renewable energy than 200 MW, a tradable certificates system, and tenders or Armenia, Chile, Denmark, and Mongolia have already intro- auctions for price premiums.65 duced dedicated renewable energy laws, while Honduras, India, Kenya, Tanzania, Liberia, and the United States have Denmark, New York, and Chile have net metering policies laws on renewable energy embedded in broader legislation in support of distributed generation for solar PV and other (Figure 4-7). A dedicated renewable energy law is often an small-scale renewable energy. Denmark revised its policy indication of a comprehensive legal framework, one that in 2013 restricting payments for self-generation by moving lays down national targets, incentive mechanisms, duties from yearly to hourly net metering and setting an eligibility and responsibilities of key institutions, and other criteria. cap of 20 MW for solar PV systems. In the United States, Countries without dedicated renewable energy laws have net metering policies apply in 43 states, Washington, D.C., legal provisions for renewable energy scattered in broader and four territories. New York tripled its solar PV capacity legislation; however RISE does not verify the degree to which cap in 2013, opening the program to more consumers.66 Chile such legislation is comprehensive. introduced its net metering policy in 2012, with an eligibility cap on residential users of 100 kW and a purchase obliga- Indicator 6: Regulatory policies and procurement tion imposed on electricity companies with installations Nine countries use regulatory policies to support grid- or purchases higher than 200 MW. In India, solar rooftop connected renewable energy and four support distributed development is already supported by several states employ- renewable energy (Figure 4-8). Many countries have in- ing various incentives. troduced price- or quantity-setting regulatory policies to promote grid-connected renewable energy, including FITs Indicator 7: Regulatory policies—policy design attributes in Armenia, Kenya, Maldives, and Mongolia; premiums in The United States and Denmark score very high on policy Honduras and India (generation-based incentives for wind design attributes as they have gradually designed policy and solar); and renewable portfolio obligations in the United instruments that provide investors with the following: a States (New York State) and Chile. certain degree of predictability regarding price adjustments either in regulation or procurement; subsidies paid through Chile in 2013 introduced a mix of economic incentives to fit sustainable recovery mechanisms (typically a direct pass- the conditions of its liberalized electricity market: a target through to consumer tariffs); and clear rules on access to of 20 percent of renewable energy in the national energy the grid including prioritized dispatch, network integration, mix by 2025, a purchase obligation of 10 percent imposed and curtailment. on electricity generators with portfolios or capacities larger Figure 4-8: Nine countries have introduced economic incentives to support renewable energy RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 100 100 100 Inc ntiv s for rid-conn ct d F d in t riff/pr mium 29% 80 r n w bl n r 60 50 50 50 50 50 Quot obli tion/ 29% r n w bl portfolio st nd rds 40 20 Comp titiv biddin / uctions 29% 0 0 0 0 0 0 0 0 0 Isl nds Solomon N p l Ym n U.S. M ldiv s Hondur s V nu tu M li D nm rk Chil Arm ni T n ni Mon oli Ethiopi Indi Lib ri K n Inc ntiv s for distribut d 24% r n w bl n r Inc ntiv s for distribut d n r tion r n w bl n r Inc ntiv s for rid-conn ct d r n w bl n r Source: RISE database. 65. The market platform for renewable energy certificates is in the design stage. 66. REN21 2014. 68 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 4-9: Regulatory policies—policy design attributes RISE Indic tor Scor Pr v l nc of Good Pr ctic s Rul s on pric l v l modific tion nd fr qu nc 35% 100 100 Pr dict bilit 83 R n w bl n r 18% 80 purch s obli tion 72 67 Compli nc rul s for tim l d plo m nt of 61 29% 60 r n w bl n r proj cts 50 44 R n w bl n r subsid p ss d 29% Sust in bilit 40 throu h to th consum r t riff R tio of r n w bl n r subsid 17 to tot l l ctrict bill <2% 29% 20 0 0 0 0 0 0 0 0 0 Priori d cc ss to th 24% 0 rid for r n w bl n r Ym n Isl nds Solomon M ldiv s V nu tu Acc ss bilit N p l M li Hondur s D nm rk U.S. Ethiopi T n ni Lib ri Mon oli Indi Arm ni Sp cific op r tion l rul s for m n in Chil K n 24% v ri bl r n w bl n r Rul s d finin th sh rin of curt ilin costs 12% Acc ss bilit Sust in bilit Pr dict bilit Source: RISE database. The regulatory policies of other countries could still be and geothermal, and 85 percent of the costs of solar FITs, improved, especially sustainability and accessibility as should be passed on to consumers (Box 4-2). defined by RISE (Figure 4-9). Where there is no pass-through, the implications for the ef- Predictability. A country can score full points when its fectiveness of the policy can be steep. For instance, although regulatory policy includes any of the following: transparency India has deployed different price and quota mechanisms on price or premium calculations and adjustments (FIT and with fairly sophisticated and customized designs, the FIP); existence of a renewable purchase obligation/renew- sustainability of incentives is still perceived as weak because able portfolio standard program that provides assurance there is no clarity as to how the cost of the incentives will be of continued renewable energy support (FIT, FIP, renewable covered. The perception that the transfer of a government portfolio standards, and auctions); or existence of compli- subsidy to utilities is unlikely or partial affects the decision ance mechanisms that help ensure effective procurement to invest, notably when there is a track record of transfer or and construction of plants (tenders and auctions). payment defaults. In Chile, renewable portfolio standards are in the design stage and there is still no clarity on the nature The states of Maharashtra and New York employ all three of the incremental cost-recovery mechanism. types of regulatory policy and satisfy the predictability criteria for each type. All five countries that use auctions Sustainability—affordability. A high penetration of renewable reported that the design of the auction would typically energy can have a notable impact on residential electricity feature compliance mechanisms. Maldives and Mongolia bills, and consumer affordability may impose a de facto are the only countries that do not satisfy any of the pre- threshold on the volume of the incentive. A key element of dictability criteria. They run FIT programs without clearly the sustainability of economic incentives is the capacity of specifying how or when FIT levels can be adjusted. electricity consumers—or taxpayers—to afford the incre- mental cost associated with some types of renewable energy Sustainability—incremental cost-recovery mechanism . All of over time. Spain, Denmark, and Germany, for example, the eight countries with some type of regulatory policy em- have increased renewable energy penetration in their power ploy either FIT or FIP programs, signifying additional cost systems to the point that renewable energy subsidies have to taxpayers or consumers. Of these, only five reported a more visible impact on the residential bill, of 3.35 percent, passing on the costs of the subsidy to consumers. When 3.20 percent, and 2.38 percent, respectively (Figure 4-10a). the policy or regulation mandates a pass-through to the consumer tariff, it is rarely in full and is not straightforward Some countries with high renewable energy penetration have to calculate. Kenya is an exception, as it states that had to adjust their incentive programs—policy caps or even 70 percent of the costs of the FITs for wind, hydro, biomass, moratoriums—in response to political or consumer concerns. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 69 Box 4-2: Evolution of feed-in tariff policies in Kenya Kenya adopted a feed-in tariff (FIT) policy in March 2008; a second iteration was released in 2010; and the policy was further revised in December 2012 (see table). Term Year Technologies PPA Contracts Tariff basis Interconnection (years) Connection costs may be paid Negotiated. Cost plus reasonable return but Wind, small hydro (up to by KPLC and recovered from the 2008 KPLC recovers any cost above 20 with regard to avoided cost. 10 MW), biomass tariff payments. US 2.6c/kWh from consumers Firm and non-firm tariffs. Guaranteed priority purchase. Cost plus reasonable return, Connection costs may be paid Negotiated. avoided cost, other FIT policies Wind, small hydro, biomass, by KPLC and recovered from the 2010 KPLC recovers 70% of the FIT portion 20 and socioeconomic conditions biogas, solar, geothermal tariff payments. from consumers (85% for solar PV) in Kenya. Guaranteed priority purchase. Firm and non-firm tariffs Cost plus reasonable return Standardized for small generators up Connection costs paid by the (with an escalable portion) Wind, hydro,biomass, biogas, to 10MW. Standardized but optional developer and paid up front. but not to exceed the long-run 2012 solar (grid), solar (off-grid), for generators over 10 MW. KPLC 20 Guaranteed priority purchase marginal cost under the Least geothermal recovers 70% of the FIT portion from (take or pay) for small Cost Power Development Plan consumers (85% for solar PV) generators. 2011 (except off-grid solar PV) By mid-2012, 84 expressions of interest had been accepted by the FIT committee. Wind represented 76 percent of potential installed capacity and 40 percent of all applications. Hydro-based projects remained prominent on number of applications (38 percent) although the project sizes were small, accounting for only 7 percent of the potential installed capacity with biomass accounting for 9 percent. Most of the solar project developers were targeting higher off-grid tariffs. Despite the growing interest from local and international investors, only one operational project (Imenti Tea Small Hydro) has been completed under this policy. However, several other projects have closed financing arrangements and are at an advanced stage. Figure 4-10: Policymakers need to be aware of the economic impact and efficiency of renewable energy subsidies ( ) R n w bl n r p n tr tion vs. imp ct of (b) Imp ct of r n w bl n r subsid for 1 GWh of r n w bl n r subsid on r sid nti l bill r n w bl n r on hous hold incom nd r sid nti l bill Imp ct on GNI p r HH for 1GWh of RE Addition (tot l nnu l r n w bl n r n r tion) (tot l nnu l r n w bl n r n r tion) 1.0% 0.001% Armenia Germany Imp ct on GNI p r Hous hold 0.0001% Kenya Spain 0.1% Denmark (Lo Sc l ) (Lo Sc l ) 0.00001% Chile New York Germany 0.01% Denmark Chile New York 0.000001% Kenya India India Armenia Spain 0.001% 0.0000001% 0.05% 0.50% 5.00% 0.00001% 0.0001% 0.001% 0.01% Imp ct on R sid nti l Bill Imp ct on R sid nti l Bill for 1GWh of RE Addition (Lo Sc l ) (Lo Sc l ) Electricity Consumption (kWh) per Capita: 0 -500 1000 - 2000 3000 - 4000 >5000 Note: Bubble size denotes renewable energy penetration. Source: Authors. 70 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 4-11: Network connection and pricing RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 Exist nc of polic 53% 88 88 88 88 88 88 Conn ction cost lloc tion polic 80 60 Sh llow conn ction cost polic 41% 40 38 25 25 20 Sup r-sh llow conn ction 0% 0 0 0 0 0 0 0 0 cost polic 0 Ym n Isl nd N p l Solomon M ldiv s V nu tu U.S. Hondur s M li D nm rk Chil Lib ri Mon oli Arm ni Indi Ethiopi T n ni K n N twork us pricin 35% N twork us pricin Conn ction cost lloc tion polic Source: RISE database. Affordability is even more important in low-income countries, Except for Denmark, none of the countries in the pilot have where renewable energy subsidies may have a high impact on introduced renewable energy incentives with an impact on household revenue, regardless of renewable energy penetra- residential bills higher than 2 percent (Figure 4-10a). tion (as shown in Figure 4-10b, which depicts the impact for one unit of renewable energy penetration). Of course, Accessibility. Of the three elements scored (see Figure 4-9), the social and economic impacts of the subsidy depends on only Denmark, the United States, India and Honduras a range of variables (e.g., level electricity tariffs, type and mandate prioritized access to the grid for renewable energy. mix of renewable energy introduced, resource potential, Chile, Denmark, India, and the United States have a grid equipment sourcing and cost, and system’s supply-demand code or operational rules to allow a better integration of dynamics). Furthermore, any consideration regarding the renewable energy into the grid. Only Denmark and the United impact of renewable energy incentives needs to be carefully States provide clear rules on curtailment. contextualized, balanced, and complemented with actions aimed at rationalizing inefficient fossil fuel subsidies that Remuneration efficiency. Countries have not been scored on encourage wasteful consumption. this attribute due to insufficient data points to deliver a robust analysis. A brief discussion on this issue as well as a the Figure 4-12: A layer-cake of public financial support mechanisms RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 Cr dit nh nc m nt m ch nisms 47% 80 75 75 75 75 75 60 50 50 50 Utilit p m nt u r nt 6% 40 25 25 20 Fisc l inc ntiv s 65% 0 0 0 0 0 0 0 M li Ym n Hondur s Isl nds N p l Solomon U.S. V nu tu D nm rk M ldiv s Mon oli Indi Ethiopi Chil Lib ri T n ni Arm ni K n Public fin ncin supports 41% Utilit p m nt u r nt Cr dit h nc m nt m ch nisms Public fin ncin supports Fisc l inc ntiv s Source: RISE database. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 71 Figure 4-13: The ease of getting a renewable energy project running varies enormously RISE Indic tor Scor 100 100 93 87 87 83 80 80 66 65 60 52 40 30 20 0 0 0 0 0 0 0 0 M ldiv s Hondur s N p l Indi D nm rk U.S. Chil Arm ni Mon oli T n ni Ethiopi K n Lib ri M li Solomon V nu tu Ym n Isl nds Numb r of nci s Cost Tim Note: Countries without scores are where no data could be collected given the absence of a private developer or very limited experience in starting renewable energy projects. Source: RISE database. results of an analysis that compares the per kilowatt-hour reductions—are the most prevalent. Credit-enhancement price incentives resulting from regulatory support policies mechanisms are used in half the pilot countries and come in with the costs of generating power using renewable technolo- many guises including soft loans (Chile), sovereign guaran- gies is in Section 4.5. tees (Honduras and Mali), and escrow accounts (India). Indicator 8: Network connection and pricing Public financing in the form of investments, loans, or grants All high-income and a few middle-income countries in the pilot is used in Denmark and the United States, as well as Chile, have a shallow transmission-infrastructure cost-allocation India, Honduras, Ethiopia, and Nepal (Figure 4-12). India is the policy as well as regulated network pricing (Figure 4-11). only country where the government backs utility payments Denmark, the United States, India, Chile, Honduras, Armenia, (with a letter of credit), thereby giving it a maximum score on and Mongolia have clear network cost-allocation policies that this indicator. In fact, India applies all forms of public financial support a shallow allocation. Kenya and Tanzania, however, support that are categorized and assessed by RISE. have introduced deep interconnection cost policies, which could represent a heavy financial burden on renewable energy Indicator 10: Starting a new renewable energy project developers. Most low-income countries have yet to introduce Starting new projects can be fairly straightforward for cost-allocation policies for transmission infrastructure. time, number of agencies involved in permitting or licens- ing procedures, and cost in, for example, Maldives and Only a few countries, including Denmark, the United States, Denmark but much more cumbersome in, say, the United India, Chile, Honduras, and Armenia, apply network pricing. States and Tanzania (Figure 4-13).67 Indicator 9: Public financial support mechanisms The three aspects show significant performance variation. In All high-income and many middle-income countries offer a Maldives, a solar project developer deals only with the State range of fiscal and financial incentives to complement their Electric Company and the Maldives Energy Authority, and regulatory instruments. Fiscal incentives—specifically tax can be up and running in as little as 96 days (Table 4-5). In the United States (New York State), a solar developer must work with six agencies and follow procedures taking about Time to obtain permits/licenses half a year to get the project “live.” Whereas permitting and to set up a new renewable energy connecting a wind project is of little to no cost in Denmark facility ranges from 96 days in Maldives to 840 days in Tanzania. 67. Performance on this indicator is assessed on standard case studies: the case study on hydro was chosen for Armenia, Honduras, India, and Nepal; the case study on wind in Chile and Denmark; the case study on solar in Maldives and the United States; and the biomass case study in Tanzania. 72 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Table 4-5: Projects assessed for procedural efficiency 4.4 HOW CAN COUNTRIES IMPROVE Economy Technology Time Agencies Cost ($) PERFORMANCE? (days) contacted final Armenia Hydro 340 14 4,882 Most countries in the pilot can introduce additional measures to enhance the business environment for investments in renew- Chile Wind 610 5 70 able energy. Denmark is the only country that scores a green Denmark Wind 317 4 0 traffic light on all RISE indicators (Table 4-6). The United States is also approaching the frontier of good practice. Honduras Hydro 531 1 7,500 India Hydro 270 5 99,010 In planning, many of the pilot countries still need to develop Maldives Solar 96 2 0 high-quality resource mapping—with associated strategic plan or zoning guidance—and link data on renewable energy Mongolia Wind 387 9 52,974 potential to anticipatory planning in expanding both genera- Nepal Hydro 570 3 7,141 tion and transmission. Tanzania Biomass 840 3 192,631 Regardless of the size of the system or degree of renewable U.S. Solar 179 6 7,690 energy penetration, countries committed to targets need to apply an anticipatory approach to ensure cost-effective Source: RISE database. and economically efficient scale-up. Various organizations and international coalitions are supporting countries on this and Chile, obtaining a land permit and tariff approval among front by providing state-of-the-art modeling and geo-spatial other procedures costs over $50,000 in Mongolia. High costs tools, technical assistance, or concessional financing. in Tanzania and India are associated with environmental safeguards. Countries with a commitment to increase the penetration of renewable energy—especially in the case of renewable Table 4-6: All countries have areas of opportunity for improving the enabling environment Solomon Armenia Chile Denmark Ethiopia Honduras India Kenya Liberia Maldives Mali Mongolia Nepal Islands Tanzania U.S. Vanuata Yemen Planning for renewable energy expansion Fossil fuel subsidy Carbon pricing mechanism Utility performance Legal framework for renewable energy Regulatory policies and procurement Regulatory policies—policy design attributes Network connection and pricing Public financial support mechanisms Starting a new renewable energy project Source: RISE database. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 73 energy options that exhibit an incremental cost—will need Denmark, India, and the United States have comprehensive to introduce a cost-effective and customized basket of policy and regulatory frameworks in place. These countries regulatory, fiscal, and financial incentives. The policy choice have either a dedicated renewable energy law (Denmark) or and design of incentives need to be consistent with the legal provisions to promote renewable energy embedded in characteristics of the system for size, market structure energy or electricity laws (United States, India), quota-type and dynamics, institutional capacity, affordability con- instruments with competitive biddings (the United States straints, resource endowments, availability of concessional with renewable portfolio standards, and Denmark and India finance, and the overall investment climate. with auctions), and price-setting instruments (India with FIT and Denmark with FIP).68 Countries with a long track record of experience in the design and implementation of policies to support renewable energy Denmark, India, the United States, and Chile have introduced development score high on RISE. Their experience with incen- net metering policies to support renewable energy in distrib- tives, and their capacity to pay for clean energy through uted generation schemes. All high-income and many of the market volume or high consumer income have allowed middle-income countries offer fiscal and financial incentives. countries like Denmark, the United States, and India to test Some of the countries with less experience in renewable and improve the design of policy measures and so transform energy incentives are leapfrogging and making progress in the market substantially. structuring regulatory policy packages. India, for example, started to promote renewable energy Countries that have lagged behind in the implementation of in 1982 with the creation of the Department of Non- measures to promote renewable energy and that score low Conventional Energy Sources and the Solar Energy Centre, on RISE are also those with less fuel-source diversity (mea- the precursors to the Ministry of New and Renewable Energy sured with the Herfindahl-Hirschman concentration index— in 1993, which introduced its first Renewable Energy Tariff Figure 4-15a). A few of them—Ethiopia and Nepal—have Guidelines soon after it was created. a high share in hydropower generation; others—Mongolia, Yemen, and Tanzania—have a high share of fossil fuel–based Countries with overall scores in RISE below 50 percent generation. In these countries, non-hydro renewable energy have only recently started to introduce policy and strategic could play an important role in reducing either the risk of frameworks to promote renewable energy (Figure 4-14). rationing during dry seasons and acute droughts, or of fuel oil dependence. In fact, most of these countries appear to In most countries the type and size of existing risks call for have abundant non-hydro renewable energy resources, and the design of a package of economic, fiscal, and financial could consider promoting renewable energy as an energy incentives tailored to the system’s conditions. security strategy (Figure 4-15b). Figure 4-14: Year when policy to promote renewable energy was first Most of the pilot countries with a regulatory policy to promote enacted against RISE score renewable energy still need to improve their design to embrace Polici s th t n bl d th promotion of r n w bl n r the policy design attributes necessary to attract the private 100 sector—introducing a sustainable, incremental cost-recovery D nm rk 90 mechanism is crucial, for example. Fiscal transfers or 80 U.S. Indi surcharges to consumer tariffs need to be transparent, Chil 70 sustainable, and limited, although fiscal transfers’ stabil- 60 Hondur s ity—especially when delivered through or in special agree- RISE Scor 50 Arm ni ments with SOEs—is less predictable and requires financially Mon oli K n sustainable utilities. 40 30 T n ni N p l M ldiv s A major policy challenge is to balance the affordability 20 Ethopi Lib ri of support programs with effectiveness and the need for 10 Solomon Isl nds M li Ym n 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 68. India has a sophisticated package of incentives that applies differently to various types of Y r of Polic En ctm nt renewable energy, including renewable purchase obligations on utilities; a REC market with solar and non-solar RECs; auctions to award contracts with FITs; and premiums (also known as generation-based incentives), as well as a range of fiscal and financial incentives. Policy Source: RISE database. effectiveness has not always been guaranteed (see Elizondo and Barroso 2011). 74 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY against falling technology costs, so as to control potential Figure 4-15: Countries with low fuel source diversity also have abundant renewable energy resource potential overexpansion of renewable energy capacity. Indeed, a central challenge facing regulators today is to balance ( ) RISE Scor vs. Div rsit in G n r tion Mix the need to deploy renewable energy at lowest cost with 100 U.S. D nm rk the need to attract private sector participation, while 90 Indi managing information asymmetries and the complexity of 80 Chil regulatory and procurement activities. 70 Hondur s 60 Given the pilot countries’ striking variations in time, cost, and RISE Scor 50 Arm ni Mon oli number of agencies involved in permitting or licensing proce- 40 dures to start a new renewable energy project, more laggard 30 T n ni performers may consider the following: easily accessible 20 N p l Ethopi information on permit fees, application requirements, and 10 Ym n processes (for example, via websites); faster review processes 0 (over-the-counter reviews, electronic processing); standard 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 and transparent permitting requirements; capped and Mor Div rsifi d L ss Div rsifi d efficient permitting fees (flat rather than value-based fees or fees that reflect fairly administration costs); and one-window Source: Estimated by authors, using a Herfindahl-Hirschman Index (2010 data). processing of permits and licenses. (b) Resource potential Wind Solar Hydro Biomass Geothermal Ocean 4.5 WHAT ARE THE LESSONS FOR THE GLOBAL ROLLOUT? Armenia 3 5 5 1 2 x Chile 5 5 5 5 5 ? During the design of the RISE framework, great efforts were Denmark 5 2 1 5 ? 5 made to balance the complexity of the factors that drive the Ethiopia 5 5 5 5 5 x private decision to invest in renewable energy with the need Honduras 5 5 5 5 5 ? to design a simple and practical index applying to a range of India 5 5 5 5 5 ? country and market conditions, all while complying with the principles established for RISE (Chapter 1). This meant omit- Kenya 5 5 5 3 5 3 ting many possible indicators. Those left in the pilot survey Liberia 1 3 5 5 ? 3 provided useful results, and all will be retained for the next Maldives 3 5 ? 3 ? 1 version of RISE. Yet future versions of RISE will likely incorpo- Mali 5 5 5 3 ? x rate three types of changes, exemplified in the following. Mongolia 3 5 5 5 5 x Nepal 3 5 5 5 ? x Clarity of questions and terms. The pilot provided information Solomon Island 3 5 3 1 3 1 on possible ambiguities or omissions in the questionnaire Tanzania 5 5 5 5 5 3 or its glossary of terms (Annex III). For example, confusion U.S. (New York) ? 3 ? ? ? ? existed over the meaning of “pass-through (of policy cost Vanuata 3 5 1 1 5 3 to the consumer tariff)” and “renewable purchase obliga- Yemen 3 5 ? 5 ? ? tion,” whether the Clean Development Mechanism counts Low Not Known/ as carbon pricing or not, and what exactly constitutes an High Applicable electricity expansion plan. In the next stage, with guidance LEGEND 5 4 3 2 1 ?/x for respondents and tighter phrasing, the questions and terms will be made fully clear. Source: IRENA (2014). Building on existing questions. Although it is expected that investor certainty. Policymakers and regulators need to the full list of existing indicators will be preserved, the conduct ex ante economic analysis of the long-term impact information they collect or the way they are ordered, scored, of incentives on affordability, in some cases considering and weighted in the RISE index will be adjusted to better the design of price incentives with adjustment mechanisms measure readiness for investment in sustainable energy. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 75 Figure 4-16: Regulatory policy incentive level and LCOE 40 35 30 US c nts/kWh 25 20 15 10 5 0 Sol r PV Sol r PV Sol r PV Sol r PV Sol r PV Sol r PV Sol r PV Sol r CSP Sol r CSP Sol r CSP G oth rm l G oth rm l G oth rm l G oth rm l Biom ss H dro Wind Biom ss H dro Wind Biom ss H dro Wind Biom ss H dro Wind H dro Wind Biom ss H dro Wind Biom ss H dro Wind Biom ss H dro Wind Indi U.S. Arm ni Chil D nm rk K n Mon oli T n ni (M h r shtr ) (N w York) Inc ntiv Av r Inc ntiv M x nd Min Note: The levelized cost of energy (LCOE) range for each incentive-eligible technology is represented by a bar (green for biomass, blue for hydro, etc). Source: LCOE data from the International Renewable Energy Agency’s Renewable Costing Alliance; Incentive level data compiled by authors. Two indicators likely to be modified are “ planning” and “policy The main challenge of this exercise is the lack of data on real design attributes.” project costs for different technologies at the country level and the need to rely on LCOE ranges based on only a few A more nuanced measure of “planning” will be sought to projects or on regional data. For many countries, the quality distinguish between anticipatory and proactive planning. of data at the level of granularity required is not available at Anticipatory planning for transmission expansion is con- present. The Costing Alliance of the International Renewable ceived to introduce a set of projects in a geographic area, Energy Agency (IRENA) is building a database of LCOEs based thus reducing costs and improving efficiency. In proactive on actual project costs that, over time, may be sufficiently planning, the relevant planning entity goes one step further rich to allow a robust analysis.70 and uses information on combined transmission and generation costs to ensure that the most cost-effective Additional questions or modules. In the next stage, an updated solution is exploited first, so as to achieve renewable energy questionnaire could include the following additions: development goals more efficiently. This approach internal- •• An updated version of policy design attributes that in- izes the trade-off between spending more on transmission cludes tighter definitions of predictability and the addition and accessing higher-quality but more remote sites.69 of stability as a new attribute to reflect a precedent (or In the RISE pilot, evidence of anticipatory planning (at a lack thereof) in retroactive policy changes or unexpected minimum) was determined as good practice, but if possible adjustments to policy design. the proposed two-tier measure (anticipatory and proactive •• A new subsection or module that deals with the design of planning) will be adopted. power purchase agreements (for example, whether they are long term, standardized, and enforceable). In “policy design attributes,” additional effort will be made to •• Consideration of regulatory incentives other than net analyze how the incentives provided by regulatory policies metering for promoting distributed renewable energy. compare with generation costs. During the RISE pilot, an •• A more refined set of questions to assess the effective- attempt was made to indicate whether FITs, FIPs, renewable ness of net metering policies (for example, including a purchase obligations, or auctions provided appropriate incen- comparison with existing electricity prices). tives for grid-connected renewable energy generation. This •• Additional questions to better assess the transparency exercise involved benchmarking the price incentive against and competitiveness of procurement processes, as well the levelized cost of energy (LCOE) for each incentive-eligible as how effectively the planning of renewable energy is renewable technology (Figure 4-16). bridged or coordinated with its procurement. 70. Representative project-level cost data is not available for all of the RISE pilot countries. Where 69. Madrigal and Stoft 2012. such data is missing, regional LCOE ranges are plotted in Figure 4-16. 76 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Credit: Jorge Royan R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 77 CHAPTER 5 ENERGY EFFICIENCY Summary results for readiness for energy efficiency those rapidly urbanizing. Most countries in the survey can investments for the 17 pilot countries were distributed learn from the public-procurement and other programs widely across the range of possible scores. Two, Denmark that have already proven effective in many countries in and the United States, are in the green zone, while the rest reducing government expenditures on energy purchases, are split between the yellow and red zones (Figure 5-1). All and in creating markets for energy-efficient equipment countries have taken some steps important to incentivizing and services. This could complement efforts to put in place energy efficiency, particularly in establishing entities with incentives and mandates for big industrial and commercial responsibility (if not always authority) for energy efficiency, energy users, another area in which most countries were setting appropriate electricity rate structures (if not always deficient. For all these efforts, implementation would be price levels), and providing customers with information enhanced by better capacity to monitor energy use and on their power consumption (though even the developed evaluate outcomes. countries can do better here). RISE suggests that many of the pilot countries would benefit by adopting or strengthen- 5.1 WHY DOES RISE MATTER? ing national and subnational energy efficiency targets and plans supported by legislation, to provide a firm basis for Reaching the SE4ALL goal of doubling the rate of improve- the detailed policy and regulatory elements that are so ment in energy efficiency worldwide will contribute to important in the efficiency arena. important development goals in every country. The envi- ronmental benefits are legion, whether improving indoor air The next priority for many countries would be standards quality, reducing emissions of pollutants of local concern, and labels for appliances and equipment, an area in which or mitigating greenhouse gases. Higher energy productivity many technical and financial resources for assistance are contributes to economic competitiveness. It contributes available. Building energy codes is more challenging, but to energy access, delivering greater development impact they would be a useful next step for countries, particularly for every kWh or liter of fuel delivered. Efficiency is integral Figure 5-1: More-developed countries scored far higher on RISE energy efficiency indicators; emerging economies displayed varying strengths 100 83 80 75 65 60 50 40 38 37 31 29 24 24 24 23 23 22 22 20 17 15 0 D nm rk U.S. Indi Chil K n Arm ni Mon oli Hondur s Ethiopi V nu tu T n ni N p l Lib ri M li Solomon M ldiv s Ym n Isl nds Pricin nd subsidi s Polici s nd r ul tions Pl nnin Source: RISE database. 78 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY good practices in creating an environment conducive to energy efficiency investments, but even the best among Only four countries have them have some distance to go in adopting all the good national energy efficiency practices to hand. targets that cover all sectors. Even more so than other areas of clean energy, “best to meeting the SE4ALL goal for renewable energy, as it practice” in energy efficiency can vary tremendously reduces overall growth in demand for energy, so a given depending on sector, geography, socioeconomic factors, amount of renewable energy will provide a larger proportion technical capacity, markets, infrastructure, climate, and a of total supply. host of site-specific circumstances. Success in implement- ing efficiency requires aligning incentives correctly along The investment opportunities are big, as the IEA has recently lengthy supply chains and across stakeholder groups with outlined.71 Estimated global investment in energy efficiency different and often divergent interests. Analysts concerned was $130 billion in 2012—small when set against invest- with efficiency have for decades spent considerable effort ments in the power sector and fossil fuels. Implementing cataloging, in a variety of contexts, the barriers to carrying policies to which countries have already committed will out energy efficiency measures that are cost effective and require annual investment in efficiency to more than qua- technically feasible but left undone. These barriers have druple by 2035. As an additional challenge, meeting the goal been the target of interventions in many countries. Even of limiting atmospheric carbon dioxide concentrations to 450 after decades of consistent action on energy efficiency in parts per million requires investments in efficiency to rise many countries, a lack of information persists, in large part eightfold over the same period, to $1.1 trillion a year. because energy is an intermediate good and often plays a hidden role. Efficiency is a field requiring a great deal of Opportunities range from purchases of readily available, specialization, and a paucity of trained personnel and of relatively inexpensive appliances and equipment and technical and managerial expertise is common. Unfamiliarity housekeeping measures at factories, to complex, systemic, with efficient technologies may lead to a perception of higher and costly changes in power and transportation systems. risk than is warranted. In countries with high energy intensities, solutions that have worked elsewhere can help point the way to quick Energy prices that are not cost reflective, whether by improvements, though the process is far from automatic. subsidies or other means (or which are otherwise distorted), Every country, every market, and to a certain extent every contribute fundamentally to blocking uptake of efficiency household is unique, and adapting existing approaches measures. Even where energy prices are rational, and where requires effort. Countries that are already among the most environmental and other externalities are factored in, other energy-efficient are also fertile ground for improvements, barriers interfere with the operation of the simple economic as, for instance, the progress in developing very low- and logic of higher relative energy prices leading to higher net-zero energy homes demonstrates. efficiency. High transactions costs, for instance, are com- mon, and high discount rates of end users may lead them Many if not most of the efficiency investments needed to to undervalue the benefits of investments with very short reach development and climate goals are cost effective, payback times. Efficiency measures require initial, some- and from a social perspective they will pay for themselves times large, investments, and end users may lack access through lower expenditures on energy supply and other to capital and credit. Finally, there are often mismatches benefits. Still, someone has to make those investments and between the incidence of costs and benefits of efficiency changes in behavior and operations, and a rich body of litera- investments (principal–agent issues), as with the owners and ture has grown in past decades enumerating the barriers to occupants of rental housing. them. RISE attempts to measure the efforts of countries to overcome these barriers through a raft of approaches that Overcoming these barriers is a matter of reorganizing and have been shown effective and that are typically available to reforming institutions—that is, the formal and informal policymakers. The pilot survey demonstrates that virtually rules that establish how market players interact—to all countries have made some important moves to adopt facilitate broader adoption of technically feasible and 71. IEA 2014d. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 79 Figure 5-2: Pilot countries experienced a wide range of levels and trends in primary energy intensity over 1990–2010 En r 8 35 6 30 int nsit l v l (MJ/$2005 PPP) 4 CAGR (p rc nt) 25 2 0 20 -2 15 -4 10 -6 -8 5 -10 0 Arm ni Mon oli Indi M li Solomon U.S. Np l Ethiopi T n ni D nm rk Chil Lib ri * Hondur s K n Y m n, V nu tu M ldiv s Isl nds R p. CAGR 1990-2010 (l ft) En r int nsit in 1990 (ri ht) En r int nsit in 2010 (ri ht) * Liberia’s energy intensity is out of the range of the secondary axis: between 1990 and 2000 the figure dropped from 73 to 50MJ/$2005 in purchasing power parity terms. CAGR = compound annual growth rate. Source: Authors, based on World Bank and IEA (2013). cost-effective energy efficiency measures.72 Establishing so lessons drawn from this exercise ought to be useful in and overseeing such institutions is the business of govern- preparing for the next step toward a global survey. ment, and as said the RISE indicators have been designed to measure the degree to which countries have adopted 5.2 HOW DOES RISE MEASURE THE approaches known to be effective in addressing the barriers. ENABLING ENVIRONMENT? The indicator “Entities for energy efficiency policy, regulation and implementation,” for instance, addresses the barrier While one cannot pretend to measure best practice in posed by an absence of regulation. The indicator “Fossil fuel energy efficiency comprehensively or exhaustively, the RISE subsidy” elicits information on an important possible cause energy efficiency indicators have been designed to indicate of the barrier posed by energy prices below marginal cost. the degree to which a given country approaches complete adoption of an important set of best practices relevant for Most of the countries in the pilot survey sample experienced most economies. The scoring is intended to indicate where falling energy intensity in the two decades from 1990 to 2010, performance could move closer toward the best-practice some of them considerably exceeding the global average rate frontier, not to single out “poor” performers among countries. of decline of 1.3 percent a year (Figure 5-2). Energy intensity varies greatly among the sample countries, with more than All countries in the survey were scored on 10 energy efficien- an order of magnitude separating the highest and lowest. It is cy and two cross-cutting (fossil fuel subsidies and carbon not, however, possible at this time to draw conclusions from pricing mechanism) indicators. Two of the indicators concern the correlation (or lack thereof) between energy intensity planning, seven policies and mandates, and three (including levels or trends and the results of the pilot survey. By way of the two cross-cutting ones) pricing. A third cross-cutting example, comparison of these energy intensity trends with indicator—retail prices of electricity—has an important retail electricity prices (Figure 5-15) shows that two of the bearing on energy efficiency and on renewable energy supply, countries with rising energy intensity, Yemen and Vanuatu, but is problematic to score, so only a qualitative analysis is have among the lowest and the highest electricity prices attempted in a later section of this chapter. among the sample countries, respectively. Still, as future rounds of RISE accumulate results, it is expected that rela- Planning tionships between country performances in energy efficiency Indicator 1: National plan for increasing energy efficiency and the RISE indicators can be discerned in a comprehensive Indicator 2: Entities for energy efficiency policy, way. For now, it suffices to note that the pilot survey covers regulation and implementation countries spanning the global range of efficiency performance, Energy efficiency doesn’t happen on its own, and it has long been known that among the most important ingredients in enabling energy efficiency is having firm targets, plans to reach 72. Taylor and others 2008. 80 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Table 5-1: Scoring methodology—planning Questions Scoring Traffic Light Planning I. National plan for increasing energy efficiency Sum and divide by 3 1. Is there an energy efficiency target at the national level? Yes—100, No—0 2. Is there national energy efficiency legislation and/or an action plan? Yes—100, No—0 X≥75 3. Does the energy efficiency plan include: Sum and divide by 4 25≤X<75 (i) Supply side targets? For each target, X<25 (ii) Residential targets? Yes—100 (iii) Commercial targets? Partial—50 (iv) Industrial targets No—0 II. Entities for energy efficiency policy, regulation and implementation Sum and divide by 6 4. Are governmental or independent bodies responsible for: (i) Setting energy efficiency (EE) strategy? (ii) Setting EE standards? X≥75 For each part, (iii) Regulating EE activities of energy suppliers? 25≤X<75 Yes—100, No—0 (iv) Regulating EE activities of energy consumers? X<25 (v) Certifying compliance with equipment EE standards? (vi) Certifying compliance with building EE standards? Source: Authors. them, and technically competent entities with enough resourc- which approach is best but scores based on the number of es to pursue those goals. Energy efficiency is certainly not the functional areas covered. In addition, some features of indica- only arena for which this is true, but—because efficiency is an tor 2 are covered by several of the indicators below on sector invisible, intermediate factor rather than a tangible product— policies. For instance, indicator 4, incentives or mandates to these elements of the enabling environment are crucial. In RISE, utilities, measures the presence of specific mechanisms—and good practice in this area is captured by indicators on national by implication the entities required for implementation. plans and entities responsible for energy efficiency (Table 5-1). Policies and Regulations Having a national plan for energy efficiency, with specific Indicator 3: Quality of information provided to targets and supporting laws and plans to meet them, is key consumers about electricity usage to setting direction for all stakeholders in making decisions Indicator 4: Incentives or mandates for energy supply on energy efficiency investments (indicator 1). This indicator utilities to invest in energy efficiency takes into account whether there is a national target for Indicator 5: Incentives or mandates for public entities73 energy efficiency and targets for particular sectors. It also to invest in energy efficiency reflects whether there is supporting legislation or an action Indicator 6: Incentives or mandates for large-scale plan in place to reach those targets, as simply articulating a users74 to invest in energy efficiency target is rarely sufficient to achieve it. Indicator 7: Minimum energy efficiency performance standards In that spirit, RISE also has an indicator on countries’ entities Indicator 8: Energy labeling systems for energy efficiency policy, regulation and implementation Indicator 9: Building energy codes (indicator 2). Energy efficiency is a diffuse and varied field, Approaches to energy efficiency vary widely among sectors, and such bodies may need to have specialized functional and so the largest number of indicators for this concerns the competencies or be located at different levels of government, policies, regulations, and pricing that are crucial to the vi- depending on local circumstances. Functions that have proven ability of investments (Table 5-2). RISE will eventually include important include setting energy efficiency policies and stan- indicators tailored to all major energy-consuming activities, dards, regulating energy efficiency activities on the supply side and among end users, and monitoring compliance with energy 73. Public entities include services provided by local government exclusive of energy supply (that performance standards. RISE does not attempt to judge is the energy-consuming sector). 74. Large-scale users include SOEs in the industrial and commercial sector. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 81 Table 5-2: Scoring methodology—policies and regulations Questions Scoring Traffic Light Policies and regulations III. Quality of information provided to consumers about electricity usage Sum and divide by 4 5. Do consumers receive reports of their electricity usage? Yes—100, No—0 6. If yes to Question 5, Sum and divide by 3 (i) At what intervals do they receive these reports? ≤1 month—100 1-6 months—75 6-12 months—50 > 12 months—0 X≥75 (ii) Do the reports include price levels? Yes—100, No—0 25≤X<75 X<25 (iii) Does a bill or report show electricity usage over time? Yes—100, No—0 7. Do customers receive a bill or report that compares them to other users in the same region and/or class? Yes—100, No—0 Yes—100 8. Do utilities provide customers with information on how to use electricity more efficiently, through bills or Intermittent—50 ther means? No—0 IV. Incentives or mandates for energy supply utilities to invest in energy efficiency Sum and divide by 5 9. Are utilities required to carry out energy-efficiency or carbon-reduction activities? Yes—100, No—0 10. Are there penalties in place for non-compliance with utility EE or carbon-reduction mandates? Yes—100, No—0 11. Are energy savings measured to track performance in meeting EE or carbon-reduction mandates? Yes—100, No—0 X≥75 25≤X<75 X<25 12. Are measured energy savings or carbon-reductions validated by an independent third party? Yes—100, No—0 13. Is there a mechanism for utilities to recover costs of or revenue lost from demand-side management Yes—100, No—0 activities? V. Incentives or mandates for public entities to invest in energy efficiency Sum and divide by 5 14. Are there binding energy savings obligations for public buildings? Yes—100, No—0 15. Are there binding energy savings obligations for other public facilities (may include water supply, Yes—100, No—0 wastewater services, municipal solid waste, street lighting, and transportation) 16. Is there a policy in place for public procurement of energy-efficient products and services at the Sum and divide by 2 (i) National level? For each level Yes—100 X≥75 (ii) Municipal level? Voluntary program—50 25≤X<75 No—0 X<25 17. Do public entities engage in multiyear contracts with service providers? Yes—100, No—0 18. Do public budgeting regulations and practices allow public entities to retain energy savings at Sum and divide by 2 (i) National level? For each level Yes—100 (ii) Municipal level? No—0 VI. Incentives or mandates for large-scale users to invest in energy efficiency Sum and divide by 4 19. Are there energy-efficiency mandates for large energy users? If yes, which are applicable attributes? (i) Targets (ii) Mandatory audits Number of applicable X≥75 (iii) Action plans 25≤X<75 attributes x 20 X<25 (iv) Progress/tracking reports (v) Energy-management system (continued) 82 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Table 5-2: Scoring methodology—policies and regulations (continued) Questions Scoring Traffic Light 20. Are there penalties in place for non-compliance with regulatory obligations for energy efficiency? Yes—100, No—0 Sum and divide by 2 21. Measurement of energy savings X≥75 For each part (i) is there a measurement and verification program in place? 25≤X<75 Yes—100 (ii) is it carried out by a third party? X<25 No—0 22. Are energy efficiency incentives in place for industrial customers? Yes—100, No—0 VII. Minimum energy efficiency performance standards Sum and divide by 6 23. Have minimum energy efficiency (performance) standards been adopted for? For each part (i) appliances Yes—100 (ii) lighting equipment Voluntary program—50 (iii) electric motors X≥75 No—0 (iv) industrial equipment 25≤X<75 X<25 24. Is there any provision for regular updates to the energy efficiency standards? Yes—100, No—0 25. Is there a penalty for non-compliance with energy efficiency standards? Yes—100, No—0 VIII. Energy labeling systems Sum and divide by 4 26. Have energy efficiency labeling schemes been adopted for? For each part (i) appliances X≥75 Yes—100 (ii) lighting equipment 25≤X<75 Voluntary program—50 (iii) electric motors X<25 No—0 (iv) industrial equipment IX. Building energy codes Sum and divide by 5 Sum and divide by 2 27. (i) Are there energy codes for new residential buildings? Yes—100 (ii) If yes, is there a provision for regular updates? No—0 Sum and divide by 2 28. (i) Are there energy codes for new commercial buildings? Yes—100 (ii) If yes, is there a provision for regular updates? No—0 29. Is there a system to ensure compliance with energy codes? Yes—100, No—0 X≥75 25≤X<75 30. Are renovated buildings required to meet a building energy code, in Sum and divide by 2 X<25 (i) residential and Yes—100 (ii) commercial sectors? No—0 31. Building energy information and labeling: Sum and divide by 3 (i) Is there a standardized rating or labeling system for the energy performance of existing buildings? For each part (ii) Are commercial and residential buildings required to disclose property energy usage at the point of Yes—100 sale or when leased? Voluntary program—50 (iii) Are large commercial and residential buildings required to disclose property energy usage annually? No—0 Source: Authors. but in its sector-specific indicators the pilot survey covered measures are often left undone because stakeholders may only three: buildings (which consume about 31 percent of be unaware that such measures exist. If they are, they may final energy worldwide); industry (responsible for about have little or unreliable information, or may lack the techni- 37 percent of final energy use); and the utility sector (which cal capacity to evaluate and carry them out. A supportive consumes 38 percent of world primary energy).75 enabling environment, therefore, is one in which information on availability and features of energy efficiency measures Enabling investment in energy efficiency is often conceived of are available to all stakeholder groups, who are aware of, as overcoming barriers. For instance, economically attractive able, and motivated to act on them. Among the energy efficiency indicators in RISE is one on the information that consumers receive about their electricity usage—how much 75. IEA 2014a. Roughly one-third of the primary energy input to the utility sector is delivered to end-use sectors, including industry and buildings, for final consumption. they use, how much they pay, how often they receive it, and R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 83 Table 5-3: Scoring methodology—pricing and subsidies Questions Scoring Traffic Light Pricing and subsidies X. Incentives from electricity pricing Sum and divide by 2 Flat fee—33 Declining block—0 32. What types of electricity rate structure do the (i) residential, (ii) commercial, and (iii) industrial customers face? Constant block—67 (Tick all that apply) Increasing block—100 - Flat fee (per connection) If a country selects more - Constant (uniform) block rates than one option, the - Declining block rates highest score is selected. - Increasing block rates X≥75 Average score of each 25≤X<75 customer type X<25 For each part, number of 33. Which of the following charges do large electricity customers in the (i) industrial and (ii) commercial sector pay? applicable options X 33.3 (Tick all that apply) - Energy (kWh) Sum score for industrial - Demand (kW) and commercial sector and – Reactive power (kVAr) divide by 2 XI. Fossil fuel subsidy Percentage of X≥75 34. What is the proportion of electricity generation by subsidized fossil fuel? electricity generation by 25≤X<75 unsubsidized fossil fuel X<25 XII. Carbon pricing mechanism Sum and divide by 2 Yes—100 35. Is there a legally binding greenhouse gas emission reduction target in place? No—0 X≥75 25≤X<75 Yes—100 X<25 36. Is there any mechanism to price carbon in place (e.g. carbon tax, auctions, emission trading system)? No—0 XIII. Retail price of electricity 37. What is the unit price of average consumption of electricity for residential users? ($/kWh) Not scored n/a 38. What is the unit price of average consumption of electricity for industrial users? ($/kWh) Not scored Source: Authors. whether they are given comparisons with other users in the savings, and a change in regulations that allows them to same class or information on available efficiency measures recover costs of and even to profit from customers’ efficiency (indicator 3). investments. For government agencies, rules requiring public procurement to privilege efficient devices and budget rules Another set of indicators relates to incentives and mandates that permit entering into multiyear contracts with energy to raise energy efficiency (indicator 4), measuring them for service companies have proven fundamental to implement- energy utilities, public sector entities (excluding SOEs; indica- ing efficiency measures. Several questions in the pilot survey tor 5), and large-scale industrial and commercial end users aim to capture the status of such provisions in each country. (indicator 6). These indicators measure the extent to which the policy and regulatory measures important to creating Energy efficiency standards, codes, and labels (indicators and enforcing incentives for improving efficiency are in place, 7 and 8) have proven essential in building and maintaining such as energy performance standards, labeling systems, strong markets for energy efficiency. Well-designed minimum and requirements for audits with independent monitoring energy performance standards (MEPS) for appliances, lighting and verification. For energy supply utilities, expanding systems, equipment (represented in the survey by electric into energy efficiency requires both mandates to achieve motors, the single largest end-use category of electricity 84 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY different customer classes face declining, uniform, or inclining block tariffs. For larger industrial and commercial end users, All countries have charges for demand and reactive power alongside charges for institutions for setting energy consumption can be an inducement for load shifting, energy efficiency policy, which may not have a very large impact on-site but which can although they vary in their be associated with efficiency gains for the utility. mandates and capabilities. National performance in this arena, which is so fundamental to the investment environment for energy efficiency, is very worldwide), and industrial equipment are fundamental to difficult to measure in a way that fairly and transparently effective national approaches to efficiency. Alongside manda- compares performance across countries. For example, tory (and occasionally voluntary) standards, energy efficiency although higher retail electricity prices tend to induce greater labels are important complementary tools in ensuring that adoption of efficiency by end users, the impact of a given market players have appropriate information for decision- price may be quite different across countries as well, so making; RISE also measures implementation of these. Building it proved impossible to devise a scoring method for retail energy codes (indicator 9), which are more complex to design electricity prices (indicator 13). Nevertheless, this is important and implement, are also an important area of best practice. information, and the RISE pilot results include a comparison of normalized industrial and residential electricity prices.76 Pricing and subsidies Indicator 10: Incentives from electricity pricing While the RISE energy efficiency indicators are designed to be Indicator 11: Fossil fuel subsidy as broadly applicable as possible, owing to different national Indicator 12: Carbon pricing mechanism circumstances not every best practice represented is appli- Indicator 13: Retail price of electricity cable to every country. Thus it is not possible for any country Ideally, to promote uptake of available energy efficiency to achieve a full score on the energy efficiency pillar of RISE.77 measures, energy prices (Table 5-3) should be cost-reflective and undistorted relative to other goods and services, exter- nalities should be incorporated, and market actors (particu- 5.3 HOW DID THE COUNTRIES SCORE? larly consumers) should be aware of and able to respond to As might be expected, given their high levels of economic those prices. This means that subsidies for energy supply development and early adoption of efficiency measures, (indicator 11) ought to be minimal, if not entirely absent, as Denmark and the United States were the strongest perform- artificially low costs of energy supply make energy efficiency ers among the pilot countries, reflecting broad adoption of relatively more expensive. Results from this cross-cutting good practices in planning, institutions, policies, regulations, indicator are important to understanding countries’ environ- and pricing (see Figure 5-1). Of the developing countries, ments for efficiency investments. India and Chile performed markedly better than others, as both have for some years pursued a strong energy efficiency Environmental externalities could be mitigated through regu- agenda. India performs well due to the recent introduction of latory requirements concerning technology, but appropriate comprehensive energy efficiency strategies, establishment environmental charges, such as carbon pricing mechanisms of the Bureau of Energy Efficiency, standards and labeling on (indicator 12, also cross-cutting), in principle should also tend appliances and buildings, and incentives for large consumers to promote adoption of energy efficiency measures in cases to adopt and promote energy efficiency through its Perform, where fossil fuel use will be reduced. Market mechanisms, Achieve and Trade program. Chile provides good guidance on like trading of white certificates (certified energy savings) under a cap, can perform a function similar to environmental taxes and so also promote energy efficiency. 76. From a macro perspective, an essential characteristic of efficient prices is cost-reflectiveness. It has so far been impossible, however, to devise a consistent, easy-to-apply method of measuring the degree of cost-reflectiveness of electricity prices. In addition, there are There are other incentives from electricity pricing other than significant variations in energy resource endowments and geography among countries, which also contribute to differences in prices. For these reasons among others, a direct comparison absolute price levels (indicator 10), and RISE attempts to of retail price levels does not necessarily provide an accurate guide to the relative incentive measure some of these. Electricity rate structures have been value of electricity prices. 77. As with the renewable energy indicators, potential scores are not adjusted so that countries shown to have a powerful impact on adoption of efficiency, do have a theoretical opportunity to receive a full score, as to do so would require customizing the scoring method for each one, or at least for groups of similar countries. The number of so several survey questions elicit information on whether sub-indicators that are not applicable to all countries is very limited, however, and does not significantly affect relative overall performance. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 85 Figure 5-3: Nearly half the sample countries lack national plans or targets for energy efficiency RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 83 80 75 75 N tion l n r ffici nc t r t 24% 60 58 40 33 33 En r ffici nc l isl tion/ ction pl n 29% 20 13 8 8 0 0 0 0 0 0 0 0 0 Hondur s Isl nds U.S. Ym n M ldiv s M li N p l Solomon V nu tu D nm rk Chil Ethiopi T n ni Mon oli Indi Arm ni Lib ri K n Sub-s ctor l t r ts 41% Sub-s ctor l t r ts En r ffici nc l isl tion/ ction pl n N tion l n r ffici nc t r t Source: RISE database. energy efficiency to the public and private sectors through its efficiency are often important to the effectiveness, or spur Plan de Acción de Eficiencia Energética 2020. It has strong action on other elements in a country’s portfolio of mea- institutions for attaining its energy efficiency goals, and effec- sures, better enabling energy efficiency to flourish. Most of tive energy standards and labels for equipment and buildings. the countries have much work to do on this aspect. Most of the pilot countries are at relatively early stages of The top performers all have numeric national energy the energy efficiency policy process and have the opportunity efficiency targets with timelines, targets for some sectors, to draw on the experiences that higher-scoring countries and extensive planning and legislative support behind them. have accumulated. A number of countries have put in place Denmark, for instance, is subject to the 2012 EU Energy important elements of the comprehensive approach that Efficiency Directive that requires member states to set tar- energy efficiency requires, without also adopting comple- gets that contribute to the EU-wide goal of reducing energy mentary practices needed to take full advantage of those use by 20 percent in 2020 relative to 2014. It has accordingly already in place. Some have adopted energy efficiency plans in its Energy Agreement set annual targets for quantities of or set up agencies responsible for energy efficiency, but have energy savings, which are more stringent than percentage not designed the policies, mandates, and regulations needed targets that it set on its own in the previous decade and for implementation. which had been exceeded. Denmark also has a target for the utility sector, but not for end-use sectors. Indicator 1: National plan for increasing energy efficiency Only a handful of countries—Chile, Denmark, India, and India amended its 2001 Energy Conservation Act in 2010 Liberia—have national energy efficiency targets that cover and established a National Mission for Enhanced Energy all sectors (Figure 5-3). In the first three of these the targets Efficiency. It has quantitative targets for both fuel and are established through national energy efficiency legislation energy savings at the national level, and has targets for and/or action plans. Two other countries have such legisla- several industries (facilities covered by the Perform, Achieve tion or action plans. Armenia, for instance, has legislation and Trade program, discussed below), but not for buildings. on energy efficiency and specific sector targets but lacks State governments are responsible for taking their own a national target. Sector targets are more common than steps toward contributing to the national goals. national targets; countries with high losses in electricity transmission and distribution (such as Ethiopia, Tanzania, Chile complements its national target with ones for industry, and Yemen) have targets only for supply-side efficiency. construction, and transport. Its Plan de Acción de Eficiencia Energética 2020 guides public and private efforts to increase Three of the countries—Chile, India, and Denmark—score these sectors’ energy efficiency. The only other country very high. Specific national commitments to energy with a national target was Liberia. It put forward a national 86 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 5-4: All countries have some entity overseeing energy efficiency RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 100 100 83 83 S ttin n r ffici nc polic 100% 80 67 S ttin n r ffici nc st nd rds 71% 60 50 50 50 R ul tin n r ffici nc ctiviti s 40 of n r suppli rs 29% 33 33 33 33 33 20 17 17 17 R ul tin n r ffici nc ctiviti s of n r consum rs 41% 0 C rtif in compli nc with 41% V nu tu N p l M li Isl nds Ym n Solomon U.S. M ldiv s D nm rk Hondur s quipm nt st nd rds Chil T n ni Ethiopi Lib ri Indi Mon oli Arm ni K n C rtif in compli nc with 35% buildin st nd rds 0 20 40 60 80 100 C rtif in compli nc with buildin st nd rds R ul tin n r ffici nc ctiviti s C rtif in compli nc with quipm nt st nd rds of n r suppli rs R ul tin n r ffici nc ctiviti s S ttin n r ffici nc st nd rds of n r consum rs S ttin n r ffici nc polic Source: RISE database. savings target in its National Energy Policy, but the other Mismatches (presence of mandates without corresponding aspects measured by this indicator are absent. institutions, or vice versa) arise frequently. Armenia, for instance, has equipment and building energy standards Unlike India, which also has a federal structure, the United and labeling schemes, but no entity to certify compliance. States lacks a national target or an overarching national And while twelve countries have entities responsible for energy efficiency strategy. Still, when the RISE pilot survey setting energy efficiency standards, only four of them was conducted, 25 U.S. states had incorporated Energy (Chile, Denmark, India, and the United States) have actually Efficiency Resource Standards, which specify state-level enacted mandatory MEPS (see Figure 5-9). efficiency targets and policies. Chile and Denmark have nongovernmental bodies respon- Besides addressing transmission and distribution losses sible for implementing energy efficiency policies. In Chile the and residential lighting, Ethiopia, Tanzania, and Yemen have Superintendencia de Electricidad y Combustibles has given not set energy efficiency targets or developed plans and the responsibility to independent laboratories to test and legislation. The remaining pilot countries are just beginning certify compliance with energy efficiency standards, and to take steps toward preparing efficiency assessments and in Denmark, energy service companies (ESCOs) and energy targets. Of course, the impact of having a target may vary suppliers take on a significant role. In the United States, from country to country and over time, but it remains an many of the responsibilities, including formulating energy important element to track. efficiency policies and regulating energy efficiency activities of energy suppliers, devolve to the states. Of course, most Indicator 2: Entities for energy efficiency policy, countries have a variety of authorities allocated to different, regulation and implementation sometimes overlapping national and subnational authorities. All pilot countries have at least one government entity It is not possible to make generalizations about the “right” responsible for setting and implementing energy efficiency level for assigning a given type of energy efficiency–related policies and regulations (Figure 5-4). In most cases it is an authority, so countries are evaluated on whether there is any arm of a ministry with responsibility for the energy sector, agency at any level that holds the types of oversight powers as with, for example, the Bureau of Energy Efficiency in India, important to effective implementation. the Energy Regulatory Commission in Kenya, the Ethiopian Energy Authority, and the Chilean Energy Efficiency Agency. In Mali, Nepal, and Yemen, the energy ministries are responsible In other countries, responsibility for efficiency is dispersed for forming energy efficiency policy and strategy. In the absence among many bodies. of efficiency policies and mandates, however, institutional arrangements for implementation have yet to be formed. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 87 Figure 5-5: Comparing energy use of nearby consumers is not a common practice in any pilot country RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 80 R ports on l ctricit us 100% 75 75 75 75 75 75 75 75 75 75 71 67 67 67 60 54 54 Monthl r portin 94% inform tion in 50 Qu lit of r port 40 Pric l v l 100% 20 Us ov r tim 71% 0 Comp rison with oth r us rs 0% N p l M li Isl nds Hondur s Solomon U.S. V nu tu M ldiv s Ym n D nm rk Chil Ethiopi Mon oli T n ni Indi Lib ri Arm ni K n En r s vin inform tion 82% En r s vin inform tion Qu lit of inform tion in r port Comp rison with oth r us rs R ports on l ctricit us Source: RISE database. Indicator 3: Quality of information provided to Usage is reported annually, based on meter readings that consumers about electricity usage consumers take themselves. In some countries, such as In all the pilot countries (represented by the largest utility, Liberia and Tanzania, the practice of prepaying for electricity in the case of countries with more than one), consumers is widespread. This works differently from the usual post- receive information on their electricity usage and tariffs. The paid electricity usage reporting practice, and future RISE frequency of billing statements—the chief means of convey- surveys will need to account for the frequency and quality of ing to consumers how much electricity they consume—varies information conveyed to consumers by such approaches. from semi-monthly to annual, with monthly the most common. In over 70 percent of countries, consumers also Aside from providing consumers with information on ways receive information on electricity consumption over time, to save electricity through Chilectra’s website, the Chilean so they can compare the current statement with past Energy Efficiency Agency gives efficiency seminars, courses, performance. With the exception of Armenia, consumers and workshops for schools and municipal governments. also receive information on ways to use electricity more Consumers in Liberia and Mali receive information on energy efficiently, either through printed material, broadcast media, efficiency as a part of consumer-awareness efforts by or utility websites. international development organizations. A common risk of aid-driven programs, of course, is the possibility that they What is striking, however, is that none of the countries will cease when the initial projects end, unless a sustainable provides consumers with a piece of information that has footing is pursued as an explicit goal. been shown to be very effective in motivating customers to lower their energy consumption: comparisons of energy Beyond providing information to consumers, some programs use with that of neighboring or otherwise comparable also seek to influence future consumers. In the Solomon customers (Figure 5-5). Although a few U.S. utilities provide Islands, the draft Energy Efficiency Strategy and Investment such information to customers, it is not common practice Plan calls for course materials to teach energy efficiency in throughout the country.78 Consumers in Mongolia, in addition primary and secondary schools from 2019. to monthly electricity bills, have since 2009 also received annual reports summarizing the monthly bills, so they can Indicator 4: Incentives or mandates for energy supply see their usage over time. utilities to invest in energy efficiency Energy utilities have large reservoirs of efficiency potential In Denmark, payments for electricity are debited directly in their own right and the means to reach huge networks of from consumers’ bank accounts without itemized bills. consumers, making incentives to energy suppliers (Figure 5-6) important tools in pursuing national efficiency goals. Except for the developed countries in the survey—the United 78. American Council for an Energy-Efficient Economy 2014. 88 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 5-6: Incentives for energy suppliers are absent in all developing countries in the pilot RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 80 80 80 M nd t for utiliti s 12% 60 P n lti s for non-compli nc 6% 40 M sur m nt of n r s vin s 12% 20 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12% Third p rt v lid tion M li N p l Isl nds U.S. Hondur s M ldiv s Solomon V nu tu Ym n D nm rk Chil Ethiopi Mon oli T n ni Arm ni Indi Lib ri K n Cost r cov r for utiliti s 6% Cost r cov r for utiliti s P n lti s for non-compli nc Third p rt v lid tion M nd t for utiliti s M sur m nt of n r s vin s Source: RISE database. States and Denmark—no other country has mandates for Denmark’s Energy Agreement of 2012 set energy efficiency utilities to invest in energy efficiency. targets for electric utilities, oil and natural gas companies, and district heating companies. Rigsrevision, the govern- In Chile, although incentives or mandates are missing, ment auditing institution that reports to Parliament’s Public the Chilean Energy Efficiency Agency provides resources Accounts Committee, examines overall carbon dioxide reduc- for energy efficiency audits, programs for human capital, tions, and undertakes spot checks on energy companies. and other indirect support. Similarly in Armenia, although There is also self-policing by energy associations. formal mandates to invest in energy efficiency are lacking, utility investment plans are reviewed and approved by the In the United States, as alluded to earlier, mandates vary government, and energy efficiency is among the service from state to state. As part of New York’s79 Energy Efficiency quality requirements. Future RISE surveys may be modified Resource Standard program to reduce electricity usage by to reflect the value of such practices, which, though they fall 15 percent by 2015, the state’s utilities were required to file short of mandates, nevertheless have a positive influence on energy efficiency programs. The utility shareholder incentive the environment for efficiency. mechanism is structured over three tiers, allowing rewards or imposing penalties, depending on the share of annual saving Figure 5-7: Only three countries have energy saving obligations for public agencies RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 100 Obli tions for public buildin s 18% 80 60 Obli tions for oth r public f ciliti s 18% 60 procur m nt t n tion l l v l 12% products 40 Public 35 of EE 20 20 20 t municip l l v l 12% 20 Multi- r contr cts with 41% 0 0 0 0 0 0 0 0 0 0 0 s rvic provid rs M li N p l Isl nds U.S. M ldiv s Hondur s Solomon V nu tu Ym n D nm rk Allow nc to Chil Ethiopi Mon oli T n ni Arm ni Indi Lib ri t n tion l l v l 12% K n r t in n r s vin s t municip l l v l 18% Allow nc to r t in n r s vin s Obli tions for oth r public f ciliti s Multi- r contr cts with s rvic provid rs Obli tions for public buildin s Public procur m nt of EE products Source: RISE database. 79. New York State is the representative subnational region for the United States in this questionnaire; Consolidated Edison (“Con Edison”) is the representative utility. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 89 Figure 5-8: India, Kenya, and Denmark have the strongest mandates for large-scale users to invest in energy efficiency RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 100 90 T r ts 6% ffici nc m nd t s 80 for l r -sc l us rs 80 M nd tor udits 18% 60 12% Action pl ns 40 Pro r ss/tr ckin r ports 12% 25 En r 20 En r -m n m nt s st m 6% 0 0 0 0 0 0 0 0 0 0 0 0 0 0 P n lti s for non-compli nc 18% M li N p l Isl nds U.S. Hondur s M ldiv s Solomon V nu tu Ym n D nm rk Chil M sur m nt Ethiopi Mon oli T n ni Indi Arm ni Lib ri K n of s vin s M&V pro r m 18% B third p rt 18% Inc ntiv s for l r -sc l us rs P n lti s for non-compli nc M sur m nt of s vin s M nd t s for l r -sc l us rs Inc ntiv s for l r -sc l us rs 24% Source: RISE database. targets achieved. Several states in the United States have Some countries have acknowledged the need for mandates expanded the business environment to support investment for public agencies but have yet to pursue or enforce them. For in efficiency programs by electric utilities. Thirty-two states example, Honduras has expressed its intent to reduce energy have approved fixed-cost recovery mechanisms—14 with consumption in public buildings, but has no mandate requiring revenue decoupling (including New York) and 18 with lost- purchase of energy efficient appliances. Similarly in India, revenue adjustment mechanisms. guidelines on Energy Conservation Building Codes exist for public buildings, but are not enforced. A related program, though not Indicator 5: Incentives or mandates for public entities to an incentive scheme, is the Bureau of Energy Efficiency’s Bachat invest in energy efficiency Lamp Yojana program, which is replacing older incandescent Many countries have used the market power of their govern- lamps with compact fluorescent lamps (CFLs) in public buildings. ment agencies to jump-start markets for energy efficiency goods and services through incentives and mandates for Indicator 6: Incentives or mandates for large-scale users public agencies (Figure 5-7).80 None of the developing countries to invest in energy efficiency surveyed has a comprehensive approach in this area. Only An important means for encouraging energy efficiency invest- the United States and Denmark have a broad set of policies ments in the private sector (and in SOEs in many countries) is concerning public buildings and other such facilities, including to provide incentives to and enforce mandates on large-scale energy savings obligations, policies for public procurement of energy users, usually industrial and commercial facilities energy efficient products and equipment, and public budgeting (Figure 5-8). Denmark, India, and Kenya are the only countries regulations to allow entities to retain energy savings. with mandates for large-scale consumers to invest in energy efficiency. The United States provides some incentives to Among the developing countries, Kenya and Chile stand out. large-scale users, while the remaining countries have neither Kenya’s Energy Management Regulation of 2012 applies mandates nor incentives in effect. to public buildings and facilities, mandating binding energy savings obligations and performance tracking. Chile has a In Denmark, the mandates arise from the EU Energy voluntary policy and guidelines for procurement of energy Efficiency Directive. Denmark is also preparing a law to efficient products through the government’s purchasing require energy audits every four years, with fines for system, Mercado Publico. Armenia, Maldives, and Mongolia, non-compliance. India’s Perform, Achieve and Trade program which lack mandates but have allowed public entities to covers 478 companies in nine energy-intensive sectors, with engage with energy efficiency service providers for multi- the aim of achieving least-cost energy savings through trad- year contracts, earn partial scores. ing of white certificates. The verification program involves validation of energy savings by accredited third-party energy auditors, and imposes penalties for non-compliance. 80. In this survey, “public agencies” excludes the state-owned or state-invested enterprises that are prominent players in many economies. Kenya’s Energy Regulatory Commission ensures that large 90 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 5-9: Only six countries have mandatory or voluntary MEPS 100 100 RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 83 80 Appli nc s 18% 60 Li htin 24% 40 33 33 33 El ctric motors 18% 20 0 0 0 0 0 0 0 0 0 0 0 Industri l quipm nt 12% 0 M li N p l Isl nds U.S. Hondur s M ldiv s Solomon V nu tu Ym n D nm rk Chil Ethiopi Mon oli T n ni Indi Arm ni Lib ri K n R ul r upd t 18% P n lti s for non-compli nc El ctric motors P n lti s for non-compli nc 24% R ul r upd t Li htin Industri l quipm nt Appli nc s Source: RISE database. consumers of electricity81 adhere to the Energy Management Indicator 7: Minimum energy efficiency performance Regulations of 2012. This requires firms to conduct energy standards audits by licensed energy auditors and to submit the reports Only four countries have enacted mandatory MEPS (India, to the Commission. They must also prepare an implementa- the United States, Denmark, and Chile), and only India and tion plan based on the audit recommendations and carry out the United States have MEPS for all four surveyed categories at least half of them or face penalties. of products (Figure 5-9).82 MEPS for lighting and appliances are typically the first that countries adopt, followed by Although there is no energy efficiency mandate for large electric motors and industrial equipment. Enforcement users in the United States, federal, state, and municipal mechanisms for MEPS exist in all four countries, with penal- governments provide loans, technical assistance, and other ties for non-compliance. incentives to foster energy-efficient practices in industry. The Energy Policy Act of 2005 established a tax deduction for MEPS have been adopted for all four categories of products qualifying energy-efficient systems in commercial buildings. in India through the 5 Star program administered by the Figure 5-10: Country performance on energy labels follows that on energy standards 100 100 RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 80 75 75 Appli nc s 24% 60 50 50 40 Li htin 24% 20 El ctric motors 24% 0 0 0 0 0 0 0 0 0 0 0 0 M li N p l Isl nds U.S. Hondur s M ldiv s Solomon V nu tu Ym n D nm rk Chil Ethiopi Mon oli T n ni Indi Arm ni Lib ri K n Industri l quipm nt 12% Industri l quipm nt Li htin El ctric motors Appli nc s Source: RISE database. 82. Ideally, RISE would allocate credit for MEPS according to the share of energy use covered, but such data are difficult to obtain. Scoring based on number of equipment categories or types of facilities covered is also problematic, due to significant structural differences in sectors and 81. Enterprises consuming over 180 MWh per year. markets between countries. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 91 Bureau of Energy Efficiency, and in the United States via progress to make (Figure 5-11). Ensuring compliance with the Energy Star program of the Environmental Protection energy building codes is a critical piece that is missing even Agency. Denmark has enacted EU-compliant energy efficiency in developed countries like the United States and Denmark. standards for all categories except industrial equipment. Chile There are building energy labeling programs in all countries recently applied MEPS to lighting products, gradually phasing with building codes, except Armenia, where building energy out substandard products from November 2013 to January labeling is voluntary. 2015. It is considering MEPS for other products. Some of the countries are showing progress in formulating Box 5-1: Progress toward an energy-efficient Kenyan economy and adopting MEPS. Armenia and Honduras have voluntary efficiency standards, but they are far less effective than A new energy bill and an energy policy now being mandatory standards, so for this exercise only partial drafted aim to support energy efficiency in Kenya. On credit was given. Kenya’s Bureau of Standards is developing March 14, 2014, the Ministry of Energy and Petroleum criteria for lighting, air conditioners, refrigerators, and held a national workshop to gather public comments standalone motors. Similarly, Liberia’s Rural Renewable on the energy bill and energy policy. The energy bill Energy Agency is adopting regional standards prepared would establish an Energy Efficiency and Conservation by the Centre for Renewable Energy and Energy Efficiency Agency whose mandate would be, among other things, of the Economic Community of West African States to “coordinate the development of and updating of the (ECOWAS). Ethiopia is drafting regulations for energy national energy efficiency and conservation action plan efficiency standards for lighting and domestic appliances. biennially with relevant stakeholders and statutory Vanuatu in 2013 authorized drafting of legislation for authorities.” The agency would also promote the adoption of energy-efficient processes, equipment, devices, and MEPS. Scores for this indicator may therefore look very systems. Measures and mandates on energy efficiency different several years hence. and conservation are covered in the draft. The energy policy—the basis of the bill—states that the Energy Indicator 8: Energy labeling systems Efficiency and Conservation Agency would lead “energy Energy efficiency labels are typically based on norms efficiency and conservation activities to improve the associated with MEPS, so performance on this indicator is energy security and mitigate the effects of climate quite similar to the previous one (Figure 5-10). The four top change.” A consolidated energy fund would be set up to performers are again India, the United States, Denmark, and cover the costs of operations. Chile, although the latter two lack labels for industrial equip- ment. Armenia and Honduras receive some credit for their Energy performance standards and labeling are also being labeling efforts, which are voluntary and thus less effective developed. The Energy Efficiency Standards and Labelling as only some products are labelled. Programme is a GEF-funded project executed under the United Nation’s Development Programme’s National Several countries that did not receive scores for this indica- Execution Modality, with the Ministry of Industrialization as the national executing partner. This is a five-year tor are establishing labeling programs. In Kenya, a draft initiative with its inception in July 2010 and completion regulation on energy efficiency labels is under public review, expected in 2015. The program seeks to improve the to be forwarded to the Ministry of Energy for its endorse- energy efficiency of selected appliances and equipment ment (Box 5–1). Since 2012, Pacific island countries such as in residential, commercial, and industrial sectors, by the Solomon Islands have been assisted by the Secretariat introducing MEPS and removing barriers to uptake of of the Pacific Community to prepare legislation on appli- energy efficiency equipment and appliances. ance energy labels. Vanuatu is participating in the Pacific Appliance Labeling and Standards program, which supports The Energy Regulatory Commission with the Ministry introduction of energy standards and labels for electrical of Industrialization and the Kenya Bureau of Standards appliances throughout the region. have drafted appliance energy performance and labelling regulations that are now available for public comment. The Indicator 9: Building energy codes regulations propose the registration of all importers and Only one-third of the surveyed countries have building manufacturers of electrical devices by the commission and provide a schedule of all the appliances to which this energy codes, and of those none scores in the green traffic regulation applies.. light zone, sending a clear signal that all have substantial 92 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 5-11: About one-third of the pilot countries have building energy codes RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 Comm rci l R sid nti l 80 Buildin n r cod s 24% 73 67 R ul r upd t 24% 60 57 57 Buildin n r cod s 24% 40 R ul r upd t 24% 30 27 20 Compli nc s st m 12% R sid nti l 12% R nov t d buildin s 0 0 0 0 0 0 0 0 0 0 0 0 Comm rci l 12% M li N p l Isl nds U.S. Hondur s M ldiv s Solomon V nu tu Ym n D nm rk Chil Ethiopi Mon oli T n ni Indi Arm ni Lib ri K n St nd rdi d r tin s st m 29% inform tion nd Buildin n r Disclosur wh n sold/l s d l b lin 6% Buildin n r inform tion nd l b lin Comm rci l buildin s R nov t d buildin s R sid nti l buildin s Disclosur nnu ll 0% Compli nc s st m Source: RISE database. Energy codes and labels are most prevalent for newly con- ENERGY STAR labeling program promotes efficient buildings. structed buildings. Denmark has building energy codes and In India, building codes are in place for commercial buildings, labeling programs for both new residential and commercial along with labeling for energy performance, but disclosure of buildings and for existing buildings that undergo renovation. energy usage is not mandatory. New construction must be approved by the municipality and comply with the building codes, which are meant to be Chile has mandatory thermal conditioning requirements for updated every five years. new residential buildings and has recently started a labeling program for energy efficient housing. Armenia has energy In the United States, building codes vary from state to state. codes for both residential and commercial buildings, but Although the federal government provides research to help they are voluntary; if a developer chooses to apply them, the strengthen building codes, it has not adopted a national Urban Development State Inspectorate of the Ministry of code. It is common practice for states to adopt the 2009 Urban Development reviews compliance. IECC and ASHRAE Standard 90.1-2007 for both residential and commercial buildings to meet the energy code compli- Indicator 10: Incentives from electricity pricing ance requirement under federal law (Energy Policy Act 1992; All the pilot countries have adopted approaches to electric- American Recovery and Reinvestment Act of 2009). The ity pricing that provide incentives for energy efficiency, Figure 5-12: Increasing block tariffs are common for the residential sector RISE Indic tor Scor Pr v l nc of Good Pr ctic s 100 89 89 83 83 83 80 78 78 72 R sid nti l - incr sin block r t 65% 67 67 67 El ctricit r t structur 61 61 60 56 50 50 50 Industri l - incr sin block r t 24% 40 20 Comm rci l - incr sin block r t 35% 0 Hondur s N p l M ldiv s Isl nds V nu tu U.S. Ym n Solomon D nm rk M li Chil Ethiopi T n ni Mon oli Indi Arm ni Lib ri Industri l - ch r to kW/kWh/kVAr 24% K n Ch r s to l r custom rs Ch r s to l r custom rs Comm rci l - ch r to kW/kWh/kVAr 24% El ctricit r t structur Source: RISE database. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 93 Figure 5-13: Only a few countries in the sample generate electricity with subsidized fossil fuel 100 100% 80 78% 60 55% 40 44% 20 1% 11% 0 Arm ni Chil D nm rk K n Lib ri M li Mon oli N p l Solomon T n ni V nu tu Ethiopi Indi U.S. Hondur s Y m n M ldiv s Isl nds El ctricit n r t d b non-subsidi d fossil fu l nd oth r fu l El ctricit n r t d with subsidi d fossil fu ls (r rdl ss of d r of subsid ) Source: RISE database. though all have room for improvement (Figure 5-12). Some relative to efficiency (Figure 5-13). Many countries keep of the developing countries in the sample outperformed the prices of fossil fuels down to achieve important social the developed ones on this indicator, especially electricity and economic development aims. Countries where these rate structures. Large customers in the United States83 pay subsidies are widespread, like Maldives where all power decreasing block rates, while those in Denmark are charged is generated with imported fuels, or producer countries at constant block rates, rather than at increasing block like Yemen, have considerable potential for improving the rates, which represent better practice. incentives for conserving energy. Even where subsidies are relatively low and so not easily felt by consumers, as Residential consumers in two-thirds of the countries (the ex- in the United States, their prevalence can still be a factor ceptions are Armenia, Chile, Denmark, Liberia, the Solomon in making decisions on efficiency. Unwinding subsidies is, Islands, and Tanzania) are charged increasing block rates for of course, never simple, and promoting energy efficiency power consumption. Flat connection charges are also applied is rarely a motivating factor, but efficiency programs can to customers in many countries, so that consumers face be important elements in approaches to ameliorate the both fixed and variable charges. In India, consumers qualify- impacts of such reform efforts. ing for “below poverty line” service pay a flat fee, and there are no variable charges related to consumption levels. Indicator 12: Carbon pricing mechanism Turning to another cross-cutting indicator, it is perhaps Unlike in the residential sector, industrial consumers in not a surprise that only Denmark and the United States many countries benefit from either a constant or declining have introduced carbon pricing mechanisms. (Figure 5-14). block rate. While the latter may make sense from the Worldwide, there are currently no carbon prices in effect utility’s point of view as a seller of electricity, it is a barrier anywhere that are high enough to provide a significant to energy-efficient behavior. Commercial customers are incentive for energy efficiency or low-carbon energy supply charged at constant or increasing block rates in most of investments. Rather, this is a mechanism that is expected the countries. Industrial and commercial consumers in all to be of use in future, when carbon prices begin to rise. A countries pay for energy consumed (kWh), but in only eight positive score in this arena is a signal that the groundwork is of the countries do they also pay demand charges (based being laid for the operation of a mechanism that will help to on their maximum demand in kW), and in only six do they provide a more positive environment for such investments. pay for reactive power (kVAr). Indicator 13: Retail Price of Electricity Indicator 11: Fossil fuel subsidy All the pricing indicators concern influences on price levels, Six of the countries generate electricity with subsidized but they do not represent actual retail electricity prices, fossil fuels, which makes energy supply artificially cheaper which are the signals that consumers see and respond to (Figure 5-15). Since electricity rates are complex, and 83. Con Ed (New York), the representative utility. customer classes in different utility territories face diverse 94 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Figure 5-14: Only two developed countries have begun to introduce carbon pricing 100 100 100 80 60 40 20 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 D nm rk U.S. Arm ni Chil Ethiopi Hondur s Indi K n Lib ri M ldiv s M li Mon oli N p l Solomon T n ni V nu tu Ym n Isl nds C rbon pricin m ch nism GHG r duction t r t Source: RISE database. rates, arriving at a single “average” number is something It is difficult to draw conclusions from a snapshot comparison of an art (Annex II). Nevertheless, this comparison gives an of electricity prices. Current, absolute price levels are impor- idea of the relative incentives that consumers in different tant to investment decision-making, but just as, if not more, countries face to avoid electricity purchases through invest- important are recent and expected trends in prices. This initial ing in efficiency. view of electricity prices, then, is a step toward preparing the baseline against which to measure future movements. As the It is unsurprising that electricity is so expensive on the RISE survey develops over time and results are accumulated, small island states of Vanuatu and the Solomon Islands, or the possible correlation of price levels with other RISE indica- in a country like Liberia where access to electricity is still tors, as well as with energy intensity and other measures of quite rare. It seems within expectations that the two OECD energy efficiency, will be carefully watched. countries in the sample, Denmark and the United States (which have the highest overall scores on the RISE pilot energy efficiency indicators), would also have high electricity 5.4 HOW CAN COUNTRIES IMPROVE THEIR PERFORMANCE? prices relative to most of the poorer countries (though the level for industrial customers seems quite elevated). Higher While Denmark and the United States are the top scorers, prices for industrial customers seems to be the general rule; with all indicators falling into the green or yellow zones, there Armenia, Denmark, Mali, and Vanuatu are the only excep- is always the potential to do more (Table 5-4). For Denmark, tions. Cross-subsidizing residential customers is a common providing better feedback to consumers on their energy use and practice and may explain this in some countries. using tariff structures to strengthen incentives to conserve are key areas in which more could be done. For the United States, Figure 5-15: Across the sample, electricity prices vary by an order of magnitude 120 100 96 92 U.S. c nts/kWh 80 77 65 60 57 57 44 40 37 34 26 20 30 18 22 20 17 18 20 14 12 15 15 18 14 6 8 10 7 10 13 11 2 2 3 5 0 Ethiopi Mon oli Ymn Arm ni Indi Np l U.S. Kn Hondur s T n ni Chil M li D nm rk M ldiv s Lib ri V nu tu Solomon Isl nds R sid nti l Industri l Source: RISE database. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 95 Table 5-4: All countries have opportunities to improve the enabling environment for investing in energy efficiency Solomon Armenia Chile Denmark Ethiopia Honduras India Kenya Liberia Maldives Mali Mongolia Nepal Islands Tanzania U.S. Vanuata Yemen National plan for increasing energy efficiency Entities for energy efficiency policy, regulation and implementation Quality of information provided to consumers Incentives or mandates for energy supply utilities to invest in energy efficiency Incentives or mandates for public entities to invest in energy efficiency Incentives or mandates for large-scale users to invest in energy efficiency Minimum energy efficiency performance standards Energy labeling systems Building energy codes Incentives from electricity pricing Fossil fuel subsidy Carbon pricing mechanism Source: RISE database. taking a national approach to efficiency will be challenging, but means to achieve it by expressing targets in national (and/or this offers the opportunity to push for greater achievements, subnational) plans supported by legislation. This may be the as would targeting large energy users with incentives and first priority for many countries, as it provides a firm basis mandates beyond those effective measures already taken. for the detailed policy and regulatory elements that are so Both countries could do better on building energy codes, which crucial to the energy efficiency pillar. of course are challenging to implement anywhere. The next priority for many countries should be to adopt Most of the pilot countries have already established, or standards and labels for appliances and equipment. While taken steps to establish, the institutions needed to carry out these are not necessarily simple, there is a great deal of energy efficiency policy. Many of them need to take the next experience in other countries, and technical and financial step and give these institutions a clear mission and resources are available to help those with an interest to move relatively quickly to cover commonly used devices that absorb significant fractions of energy use. This is an area where many countries are only beginning to take action, and Six countries have where relatively rapid progress may well be seen in future building energy codes, and all but rounds of the RISE survey. one of those also have building energy labeling programs. Building energy codes are more challenging to design and implement but would be a useful subsequent priority 96 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY for countries, particularly those rapidly urbanizing. In all centralized nations are taken by the national government. climates, space conditioning, lighting, and other needs can In the next step of scaling up RISE towards global coverage, be met much more efficiently in new and existing buildings. for instance, it will be important to revise the indicators on Labels and reporting of energy use are proving to be an national energy efficiency plans and on entities for imple- important means of communicating the market value of menting energy efficiency policy, so as to capture and credit energy efficiency, and thus also deserve attention. There are developments at subnational levels, where appropriate. The more stakeholders involved than with equipment efficiency, level of sector detail reflected in the energy efficiency entities however, and greater problems of agency and authority, so indicator will be considered, and balanced with the need to quick results should not be expected. reflect sector-specific actions in other indicators. Comparing results across countries will of course be challenging. Further A good place to start with building energy use, and market consideration must be given to sector targets. One potential creation for more efficient equipment, is in buildings and problem to be avoided is double counting, which can happen facilities owned by government agencies themselves. Most when the utility sector is subject to targets that may be of the pilot countries have an opportunity to learn from the achieved through efficiency measures in end-use sectors, public procurement and other programs that have already which in turn are subject to their own, separate targets. proven effective in many countries in reducing government expenditures on energy and in developing domestically The pilot survey revealed unanticipated aspects concerning appropriate approaches to efficiency that can inform efforts the information on electricity use and energy efficiency in other sectors. This could complement efforts to put in opportunities that end users receive. Treatment of informa- place incentives and mandates for big industrial and com- tion by customers who use prepayment services to buy mercial energy users, another indicator on which most of the electricity, for instance, will need to be considered. The countries scored poorly. These programs, for both public and next RISE survey will better reflect the variety found across private entities, require large capacity to monitor pre- and countries in media used for transmitting this information to post-intervention energy consumption in order to evaluate customers, its quality and its impact. outcomes—capacity that needs to be developed in parallel to designing and rolling out new policies and regulations. In the pilot survey, no distinction was made between voluntary and mandatory standards and labels, but this difference can have a large impact on their effectiveness. This factor will be 5.5 WHAT ARE THE LESSONS FOR THE reflected in the future questionnaires and scoring. There are GLOBAL ROLLOUT? also opportunities for deepening the analysis of appliance In designing the indicators and survey questions, significant and equipment standards to provide higher resolution of the efforts were made to account for the varying availability and range of performance in this area, measuring, for instance, quality of information from different countries. This meant the devices covered by standards and the types of labels used. omitting many possible indicators. Those that remained in the The indicator on building energy codes can, with relatively little pilot survey provided useful results, and all will be retained for extra data-collection effort, be modified to capture significant the next version of RISE, with some modifications proposed features of such codes that are associated with greater or below. Future versions of RISE will likely also gradually add more lesser effectiveness, as has been done in the American Council energy efficiency indicators; several candidates are listed below for an Energy-Efficient Economy’s 2014 International Energy as well. Input from users of RISE on indicators is very welcome. Efficiency Scorecard. There will be an effort to develop scalar indicators, so that a relatively rich gradient of performance can be measured. In the pilot survey, it was not possible to include indicators for all sectors that are important for energy efficiency. In some countries, particularly those with a federal structure, Transportation efficiency measures are one area that will subnational governments play roles that in smaller or more be added to future RISE surveys, beginning, perhaps, with the status of fuel economy standards for light- and heavy- duty vehicles. Supply-side energy efficiency represents a Only four countries have enacted large portion of the efficiency potential in many countries, minimum energy efficiency and it will be important to capture the aspects of it that performance standards. are subject to policy and regulatory influence. Combined heat and power generation, both utility- and industry-scale, R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 97 are important to capture, and, for many countries, district although it should be phased out as commercial financing energy is as well. Distribution utilities play a large role, both becomes more common, it may be a good idea to track through reducing line losses in transmission and distribu- countries in the early stages of supporting energy efficiency tion infrastructure and in enabling efficiency at customer investments. Finally, whether and how to include an indicator sites and systemwide through smart grid upgrades and on procedural efficiency, as was done for renewables and for improved interconnections. For many countries, agricultural energy access, will be considered. energy efficiency is very important to achieving develop- ment goals. An indicator that is concerned with measures to improve water pumping for irrigation and other key agricultural activities may be introduced. Energy efficiency projects that are good bets on paper often have difficulty attracting financing, so indicators on the availability of financing mechanisms and allied capacity building should be tracked. In the initial stages of market creation, public financing can be an important tool and, 98 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Credit: Thinkstock R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 99 CHAPTER 6 RISE, THE OVERALL INVESTMENT CLIMATE, AND SE4ALL GOALS on energy efficiency—clean energy embracing these two 6.1 RISE SCORES IN A NUTSHELL pillars often seems pursued in tandem, as evidenced by a A RISE aggregate score—combining as a simple average very high correlation coefficient between the two scores of the results of the three pillars of energy access, renewable 0.93. Still, the renewable energy scores are typically higher energy, and energy efficiency—signals a pilot country’s than energy efficiency, particularly in Armenia, Chile, and readiness for investments in sustainable energy and allows Honduras. Similarly, access scores are frequently higher than one to appreciate some order of priority among the pillars. those for renewable energy, particularly in Tanzania, Mali, and Denmark and the United States rank highest as expected Nepal. The correlation coefficient of the access and renewable on this score, presenting a green traffic light. There is a energy scores is 0.69, and that of the access and efficiency wide heterogeneity in performance—from 92 in Denmark scores 0.65, suggesting degrees of association less than that to 20 in Yemen, the only country in the red traffic light zone, between renewable energy and energy efficiency. highlighting its nascent policies and regulations. Among the developing countries, India scores the highest followed by The analysis showcases a group of countries that have Chile, the first of the 13 countries showing a yellow traffic performed well on all three pillars (such as the United States, light, suggesting that they have either made some progress Denmark, and India) and projects another group of countries on each of the pillars or scored highly on one or two of them. that lag behind on all three pillars, such as the Solomon Islands, Vanuatu, and Yemen (Table 6-1). On energy ef- Of the three pillars, developing countries appear to prioritize ficiency, nine countries are in the red traffic light zone—high- energy access. All of the developing countries are yellow or lighting the considerable distance they still need to traverse green on energy access (or have no energy access challenges), to demonstrate an investor-friendly environment. It also while between six and nine of them still display a red traffic suggests that many countries are yet to prioritize energy light on renewable energy and energy efficiency. Countries efficiency within the sustainable energy space—the concept that tend to do well on renewable energy also perform well of energy efficiency as a low-hanging fruit is not borne out Figure 6-1: RISE aggregate score 100 92 88 80 80 74 65 60 51 49 48 46 45 44 39 40 37 33 30 25 20 20 0 D nm rk U.S. Indi Chil Arm ni K n Hondur s Mon oli M ldiv s N p l T n ni Ethiopi M li Solomon V nu tu Lib ri Ym n Isl nds En r ffici nc R n w bl n r En r cc ss Source: RISE database. 100 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Table 6-1: Countries and traffic light by pillar Solomon Armenia Chile Denmark Ethiopia Honduras India Kenya Liberia Maldives Mali Mongolia Nepal Islands Tanzania U.S. Vanuatu Yemen Energy – – – – – Access Renewable Energy Energy Efficiency Note: – means the country does not have energy access challenges. Source: RISE database. by these results. On all three pillars, the maximum number of index and with the rule of law index, as reported by the World countries find themselves in the yellow traffic zone, suggest- Bank’s Worldwide Governance Indicators (WGI). However, ing they have embarked on a path of creating an attractive a number of countries are on the left side of the trend investment climate, but one still a work in progress. line, suggesting that their RISE score is better than their WGI score (and vice versa for countries on the right side). For instance, India reports a much higher RISE score than 6.2 HOW IS RISE RELATED TO THE OVERALL its regulatory quality and rule of law would suggest (vice INVESTMENT CLIMATE? versa for Liberia, Vanuatu, and Yemen). These findings also A country’s investment climate for sustainable energy can- strengthen the case for developing RISE further, as countries not be viewed in isolation. The RISE aggregate score shows a do invest specifically in energy policies and regulations, aside generally positive relationship with the regulatory quality from their overall rule of law or regulatory quality. RISE is also linearly related to the Doing Business index, which measures business regulations and enforcement, with Access scores are higher than renew- countries on either side of the trend line. Once again, India able energy and energy efficiency scores higher on RISE than on Doing Business (and Liberia, scores for all countries. Yemen, and Vanuatu the opposite). Similar to the inference with WGI, countries can strengthen their energy-specific enabling environment so that it outperforms their overall Figure 6-2: RISE aggregate score and WGI 100 100 D nm rk D nm rk U.S. U.S. 80 Indi 80 Indi Chil Chil Arm ni Arm ni t scor t scor 60 60 K n K n Hondur s Hondur s Mon oli M ldiv s Mon oli N p l N p l M ldiv s r r T n ni T n ni 40 Ethiopi 40 Ethiopi M li M li Solomon RISE RISE Islands V nu tu V nu tu Lib ri Solomon Isl nds 20 Lib ri Y m n 20 Y m n R = 0.72 2 R2 = 0.62 0 0 -2.0 -1.0 0.0 1.0 2.0 -2.0 -1.0 0.0 1.0 2.0 WGI r ul tor qu lit WGI rul of l w Source: Authors. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 101 Figure 6-3: RISE aggregate score and Doing Business index 100 Denmark U.S. 80 India Chile RISE aggregate score Armenia 60 Kenya Honduras Mongolia Tanzania Maldives 40 Nepal Mali Ethiopia Solomon Islands Vanuatu Liberia 20 Yemen R2= 0.49 0 50 60 70 80 90 Doing Business index Source: Authors. investment climate, even though both are generally posi- progress in RISE scores ought to demonstrate relationships tively correlated. with flows of private investment as well as with incremental achievements in the SE4ALL goals. Because this is a pilot report comprising only 17 countries, identification of such 6.3 HOW DOES RISE RELATE TO THE THREE relationships is illustrative purposes. The pilot is too small to SE4ALL GOALS? draw any robust inferences. For energy access, the sample Understanding the investment climate for the three SE4ALL size is even smaller (12 countries). Even then, for energy goals (ensure universal access to modern energy services, access and renewable energy, the relationship appears linear, double the rate of improvement in energy efficiency, and while the correlation with energy efficiency is fairly weak, double the share of renewable energy in the global energy so the correlation may not indicate any robust relationship. mix by 2030) is foundational for achieving them. The The strength of the relationship, signaled by R 2, is highest for objective of RISE is to measure the elements that encompass renewable energy followed by energy access. an investment climate for sustainable energy. Over time, Figure 6-4: Correlation between RISE score and GTF indicators Sh r of r n w bl s in inst ll d n r tion Annu l v r incr s of cc ss r t Annu l v r rowth of n r int nsit c p cit ( xcludin h dro) in 2000-2010 on RISE En r Acc ss 2000-2010 on RISE En r Effici nc 2010 inst RISE R n w bl En r 1.4% 6% 40% 1.2% 4% 30% 1.0% 2% R2 = 0.01 0.8% 20% R2 = 0.34 0.6% 0% 0 50 100 0.4% 10% -2% 0.2% R2= 0.23 0% -4% 0 50 100 0.0% 0 50 100 -0.2% -6% -10% Source: Authors. 102 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 6.4 HOW DOES RISE MOVE FORWARD? India lies farthest ahead among RISE is slated to transition to the first global rollout in 2015, developing countries. with an aspiration to regularly update the exercise until 2030, similar to the GTF. Further, there is discrepancy in time between RISE score RISE presents an opportunity for countries to up their and SE4ALL Global Tracking Framework (GTF) indicators. game on data collection. The RISE development process RISE measures the current enabling environment, while highlighted the poor quality of data in many countries. RISE the SE4ALL indicators used in Figure 6-4 are typically of will be as robust as the data that underpin it. In spite of a improvements between 2000 and 2010. Considering that the selection of indicators where data were understood to be impact of today’s policies may take some years to translate available, data quality varied widely. The responsibility lies into tangible outcomes, this pair of inputs and outputs can- not only with governments, but also with private developers, not indicate a strong relationship. Further, the relationships regulators, industries, and utilities to come together to with the current status of SE4ALL indicators is misleading provide a coherent picture of the policy profile of a country. as the goal is to measure progress rather than the situation Public availability of information also allows investors today, which may be defined by many factors. In the future, to trust the policy pronouncements of governments, successive editions of RISE and GTF will allow analysts to limiting—for RISE and other initiatives tracking policy and measure the incremental difference and the relationship regulatory arrangements—misrepresentation of country between the investment climate and SE4ALL goals. efforts stemming from data issues and credibly showcasing a country’s achievements. However, the investment climate is but one of the determi- nants of private investment in energy infrastructure. Others The dynamism of both RISE and the sustainable energy include market conditions and attractiveness characterized ecosystem allows opportunities to arise in refining and adding by market size, income level, affordability of consumers, to existing indicators and in designing a secondary set of indi- and macroeconomic stability (Chapter 1). Once the global cators for specific country groups. RISE will remain dynamic, rollout is complete and data are available for a large sample as it evolves into a benchmarking and experience-sharing of countries, an econometric analysis is possible where other tool for countries while they choose pathways to accomplish factors can be controlled for and relationships with RISE international and national sustainable energy targets. variables quantified. This kind of analysis will also capture the time dimension of policy measures, so as to assess if a policy measure in place longer has more of an impact on SE4ALL goals. 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Online at www.aceee.org/research-report/e1402 Up: Emerging Lessons and Recommendations. Washington, DC: World Bank. 104 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY ANNEX I RISE SCORE Energy Access Solomon Islands United States Yemen, Rep. Honduras Denmark Mongolia Tanzania Maldives Vanuatu Armenia Ethiopia Liberia Kenya Nepal Indicator/ India Chile Mali Sub-indicator Question Planning I. Electrification plan  N/A N/A N/A 100 67 100 100 0 N/A 67 67 100 0 100 N/A 100 100 National Plan Is there a national electrification plan? Y Y Y Y N Y Y Y N Y Y Y Coverage of grid and If Yes, does the electrification plan include both grid Y N Y Y N/A Y Y Y N/A Y Y Y off-grid and off-grid? Regular update If yes, was the last update within five years? Y Y Y Y N/A N N Y N/A Y Y Y Policies and Regulations II. Enabling environment for renewable energy developers to invest in mini- N/A N/A N/A 70 20 80 70 0 N/A 90 70 60 20 90 N/A 20 0 grids Existence of Are there regulations outlining rights of mini-grid Y N Y Y N Y Y Y N Y N N regulations operators? If yes, can mini-grid operators charge tariffs that Y N/A Y Y N/A Y Y Y N/A Y N/A N/A exceed the national tariff level? Regulation attributes If yes, do mini-grid operators need prior regulatory approval to enter into a power sales contract with Y N/A N Y N/A Y Y N N/A Y N/A N/A consumers? Are safety, reliability, and voltage and frequency Standards N N Y Y N Y Y N N Y N N standards for mini-grids made publicly available? Protection against Is there any general law that deal with expropriation Y N N N N Y N N N Y N N expropriation of mini-grids? Subsidies or duty Are there duty exemptions or subsidies for mini-grid Y Y Y Y N Y Y Y Y Y Y N exemption renewable energy technology? III. Enabling environment for standalone home systems  N/A N/A N/A 67 100 100 33 33 N/A 67 100 100 67 100 N/A 33 0 Are there national programs that promote the National program deployment of standalone home systems (solar Y Y Y N Y Y Y Y Y Y N N photovoltaic systems and lanterns)? Are there minimum quality standards for standalone Standards N Y Y N N N Y Y N Y N N home systems? Subsidies or duty Are there duty exemptions or subsidies for standalone Y Y Y Y N Y Y Y Y Y Y N exemption home systems? Pricing and Subsidies IV. Funding support to electrification  N/A N/A N/A 100 67 83 67 67 N/A 67 67 67 100 100 N/A 33 33 Does the government have a dedicated funding line or budget for electrification (such as a funded national Dedicated funding line program, budget item, or rural electrification fund to Y Y Y Y N Y Y Y Y Y N Y finance electrification including grid, mini-grid, and standalone home systems)? Subsidy to household Does the utility or government cover a portion of the Y N P Y Y N N N Y Y Y N connection costs for the household connection? Subsidy to grid Do capital subsidies exist for utilities to provide Y Y Y N Y Y Y Y Y Y N N extension distribution lines to villages? V. Affordability of electricity  N/A N/A N/A 100 100 100 100 21 N/A 100 100 100 100 100 N/A 100 100 What is the relative cost of subsistence consumption Affordability of as percentage of gross national income per 0.3 0.3 0.3 0.9 9.0 2.4 0.2 0.8 3.7 0.8 0.5 0.1 electricity household? (%) N/A is not applicable. Y is yes; N is no; P is partial. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 105 Energy Access (continued) Solomon Islands United States Yemen, Rep. Honduras Denmark Mongolia Tanzania Maldives Vanuatu Armenia Ethiopia Liberia Kenya Nepal Indicator/ India Chile Mali Sub-indicator Question Pricing and Subsidies VI. Utility Performance  N/A N/A N/A 40 35 90 90 20 N/A 0 40 60 100 0 N/A 50 10 Are the financial statements of the utility publicly N Y Y Y N N N Y Y N N N available? Reporting practice If yes, are they audited by an independent third N/A N Y Y N/A N/A N/A Y Y N/A N/A N/A party? Current ratio 1.3 0.4 0.9 1.0 1.8 0.9 0.9 0.4 7.9 0.6 1.9 0.8 EBITDA margin (%) 1 –8 26 15 –27 –10 7 0 19 –32 23 –6 No No Financial performance Debt Service Coverage Ratio 0.3 N/A 2.2 2.9 N/A N/A 8.1 0.4 debt N/A 7.6 debt Days receivable outstanding 2 99 68 138 121 153 16 757 27 225 70 677 Days payable outstanding 6 40 46 68 64 185 24 126 64 139 60 259 Procedural Efficiency  VII. Establishing a New Connection  N/A N/A N/A 41 88 95 62 98 N/A 93 98 97 65 87 N/A 47 75 What is the procedural time to establish a new Procedural time 365 17 8 83 14 18 21 21 8 69 28 30 connection? (days) Procedural cost How much is the procedural cost to be paid? ($) 126 156 74 369 20 86 10 26 470 73 675 303 VIII. Permitting a Mini-grid N/A N/A N/A 0 0 100 0 0 N/A 86 0 57 0 20 N/A 0 0 What is the procedural time to permit a mini-grid? Procedural time N/A N/A 90 N/A N/A 181 N/A 215 N/A 510 N/A N/A (days) Procedural cost How much is the procedural cost to be paid? ($) N/A N/A 48 N/A N/A 0 N/A 37 N/A 6,620 N/A N/A Number of agencies How many agencies are there to go through? N/A N/A 1 N/A N/A 2 N/A 6 N/A 3 N/A N/A Energy Access Total N/A N/A N/A 65 60 94 65 30 N/A 71 68 80 57 75 N/A 48 40 Renewable Energy Planning I. Planning for Renewable Energy expansion 50 46 100 75 50 83 63 13 0 38 63 29 13 38 100 13 25 Target with an action Is there a target on renewable energy? Y Y Y Y Y Y Y Y N Y Y Y Y N Y Y Y plan Does the country have a renewable energy action Y N Y Y N Y N/A N N Y Y Y N N/A Y Y Y plan to implement the targets? Renewable energy in Does the country have an electricity expansion plan expansion planning that includes renewable energy development? Y N Y Y Y Y Y N N N Y N N Y Y N N Renewable energy in Does the current transmission planning consider N Y Y Y Y Y Y N N N Y N N Y Y N N transmission expansion renewable energy scale-up? planning Is there an anticipatory planning process or mechanism that allows the least cost expansion of N Y Y Y N Y N N N N N N N N Y N N transmission network infrastructure to connect one or more renewable energy plants? Resource potential data High-quality validated national atlas of renewable potential (maximum number of attributes) 0 2 3 0 0 2 0 0 0 3 0 1 0 0 3 0 0 Strategic planning or zoning guidance (maximum number of attributes) 0 0 4 0 0 0 0 0 0 0 0 0 0 0 4 0 0 Pricing and Subsidies II. Fossil Fuel Subsidy 100 100 100 99 45 89 100 100 0 100 100 100 100 100 56 100 22 What is the proportion of electricity generation by Fossil fuel subsidy 0 0 0 1 55 11 0 0 100 0 0 0 0 0 44 0 78 subsidized fossil fuel? (%) III. Carbon Pricing Mechanism  0 0 100 0 0 0 0 0 0 0 0 0 0 0 100 0 0 Greenhouse gas Is there a legally binding greenhouse gas emission emission reduction reduction target in place? N N Y N N N N N N N N N N N Y N N target Existence of carbon Is there any mechanism to price carbon in place pricing mechanism (carbon tax, auctions, emission trading system)? N N Y N N N N N N N N N N N Y N N N/A is not applicable. Y is yes; N is no; P is partial. 106 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Renewable Energy (continued) Solomon Islands United States Yemen, Rep. Honduras Denmark Mongolia Tanzania Maldives Vanuatu Armenia Ethiopia Liberia Kenya Nepal Indicator/ India Chile Mali Sub-indicator Question Pricing and Subsidies IV. Utility Performance  70 90 90 40 35 90 90 20 30 0 40 60 100 0 80 50 10 Are the financial statements of the utility Y Y Y N Y Y Y N N N N Y Y N Y N N publicly available? Reporting practice If yes, are they audited by an independent third Y Y Y N Y Y Y Y Y party? Current ratio 0.7 0.9 1.3 1.2 0.4 0.9 1.0 1.8 0.7 0.9 0.9 0.4 7.9 0.6 1.0 1.9 0.8 EBITDA margin (%) 10 16 19 1 –8 26 15 –27 11 –10 7 0 19 –32 26 23 –6 No –2.0 No Financial performance Debt Service Coverage Ratio 0.2 2.6 1.2 0.3 N/A 2.2 2.9 N/A 3.9 –2.0 8.1 0.4 debt 3.7 7.6 debt Days receivable outstanding 105 89 145 2 99 68 138 121 95 153 16 757 27 225 92 70 677 Days payable outstanding 56 58 79 6 40 46 68 64 80 185 24 126 64 139 43 60 259 Policies and Regulations V. Legal Framework for Renewable Energy  100 100 100 0 100 100 100 100 0 0 100 0 0 100 100 0 0 Does the country have a legal framework on Legal framework Y Y Y N Y Y Y Y N N Y N N Y Y N N renewable energy development? VI. Regulatory Policies and Procurement 50 100 100 0 50 100 50 0 50 0 50 0 0 0 100 0 0 Does the country use competitive bidding Incentives for grid- or auctions to promote renewable energy N Y Y N Y Y Y N N N N N N N Y N N connected renewable development? energy generation Do price subsidies or premiums exist to support Y Y Y N Y Y Y N Y N Y N N N Y N N renewable energy generation? Incentives for distributed renewable Does a net metering program exist? N Y Y N N Y N N N N N N N N Y N N energy generation Do the legal or regulatory frameworks include Y N N N/A Y N Y N/A N N/A N N/A N/A N/A Y N/A N/A a formula for price change/adjustment? If yes, is the frequency of allowed renewable energy price level modifications specified in the Y N/A N N/A Y N/A N N/A N/A N/A N/A N/A N/A N/A Y N/A N/A regulatory framework? If no, is such formula included in standard N/A Y Y N/A N/A Y N/A N/A N N/A N N/A N/A N/A N/A N/A N/A contractual agreements? Predictability If yes, is the frequency of allowed renewable energy price level modifications specified in the N/A Y Y N/A N/A Y N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A contract? Does a renewables purchase obligation exist? N Y N N N Y N N N N N N N N Y N N Does the design of the auction mechanism or bidding include compliance rules to N/A Y Y N/A Y Y N/A N/A N/A N/A N/A N/A N/A Y N/A N/A ensure timely completion and deployment of renewable energy projects? Is the renewable energy price subsidy or premium passed through to the consumer Y N Y N/A N N Y N/A N N/A Y N/A N/A N/A Y N/A N/A Sustainability tariff? Is the ratio of renewable energy subsidy to Y N/A N/A N/A Y N/A N/A Y Y N N/A Y Y Y N/A Y N/A total electricity bill less than 2%? Is there a prioritized access to the grid for N N Y N Y Y N N N N N N N N Y N N renewable energy? Is there a grid code – or specific operational Accessibility rules – for managing variable renewable N Y Y N N Y N N N N N N N N Y N N energy? Are there rules defining the sharing of N N Y N N N N N N N N N N N Y N N curtailment costs? N/A is not applicable. Y is yes; N is no; P is partial. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 107 Renewable Energy (continued) Solomon Islands United States Yemen, Rep. Honduras Denmark Mongolia Tanzania Maldives Vanuatu Armenia Ethiopia Liberia Kenya Nepal Indicator/ India Chile Mali Sub-indicator Question VIII. Network Connection and Pricing 88 88 88 0 88 88 25 0 0 0 38 0 0 25 88 0 0 Is there secondary legislation or regulations for Y Y Y N Y Y Y N N N Y N N Y Y N N the allocation of connection costs? Connection cost policy If yes, what is the cost policy? (SS: super- S S S N/A S S D N/A N/A N/A S N/A N/A D S N/A N/A shallow / S: shallow / D: deep) Network usage pricing Are there rules defining who pays for the wheeling charges of transmission and Y Y Y N Y Y N N N N N N N N Y N N rule distribution network? IX. Public Financial Support Mechanism 0 75 75 75 75 100 25 0 25 50 0 50 0 50 75 0 0 Does the government offer fiscal incentives for Y N Y Y N N Fiscal incentives N Y Y Y Y Y Y N Y Y N renewable energy? Does the government offer public financial Public financing N Y Y Y Y Y N N N N N Y N N Y N N incentives for renewable energy? Government-backed Does the government back utility payments N N N N N Y N N N N N N N N N N N utility payment with specific mechanisms? Credit enhancement Does the government offer credit enhancement or risk mitigation or risk mitigation mechanisms to renewable N Y Y Y Y Y N N N Y N Y N Y Y N N mechanisms energy developers? Procedural Efficiency X. Starting a New Renewable Energy Project  65 66 83 0 93 87 0 0 100 0 52 87 0 30 80 0 0 Technology W: wind / S: solar / B: biomass B W W S S W B S What is the procedural time to permit and Procedural time start operating a new renewable energy 313 610 345 N/A N/A 276 N/A N/A 96 N/A 387 N/A N/A 840 481 N/A N/A project? Procedural cost How much is the procedural cost to be paid? ($) 5,317 70 27k N/A N/A 0.3m N/A N/A 0 N/A 53k N/A N/A 0.2m 8,260 N/A N/A Number of agencies How many agencies are there to go through? 11 5 4 N/A N/A 8 N/A N/A 2 N/A 9 N/A N/A 3 8 N/A N/A Technology Small hydro What is the procedural time to permit and Procedural time start operating a new renewable energy 340 1,605 N/A N/A 531 300 N/A N/A N/A N/A N/A 570 N/A N/A N/A N/A N/A project? Procedural cost How much is the procedural cost to be paid? ($) 4,882 1.4m N/A N/A 7,500 1.3m N/A N/A N/A N/A N/A 7,141 N/A N/A N/A N/A N/A Number of agencies How many agencies are there to go through? 14 7 N/A N/A 1 5 N/A N/A N/A N/A N/A 3 N/A N/A N/A N/A N/A Renewable Energy Total 59 73 92 29 58 81 50 23 21 19 46 33 21 34 88 16 6 N/A is not applicable. Y is yes; N is no; P is partial. 108 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Energy Efficiency Solomon Islands United States Yemen, Rep. Honduras Denmark Mongolia Tanzania Maldives Vanuatu Armenia Ethiopia Liberia Kenya Nepal Indicator/ India Chile Mali Sub-indicator Question Planning I. National Plan for Increasing Energy Efficiency  58 75 75 8 0 83 0 33 0 0 0 0 0 13 33 0 8 National energy- Is there an energy-efficiency target at the national efficiency target N Y Y N N Y N Y N N N N N N N N N level? Energy-efficiency Is the national energy-efficiency target supported legislation or action plan by legislation or an action plan? Y Y Y N N Y N N N N N N N N Y N N Subsectoral target Does the energy-efficiency plan include supply-side N N Y Y N Y N N N N N N N Y N N Y target? Does the energy-efficiency plan include residential Y N N N N N N N N N N N N P N N N target? Does the energy-efficiency plan include commercial Y N N N N N N N N N N N N N N N N target? Does the energy-efficiency plan include industrial Y Y N N N Y N N N N N N N N N target? N N II. Entities for Energy Efficiency Policy, Regulation and Implementation 50 100 100 33 83 83 67 33 50 17 50 17 33 33 100 33 17 Entities for energy- Are there governmental or independent bodies efficiency policy, concerned with the followings? regulation, and implementation Setting energy-efficiency strategy and policy Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Setting energy-efficiency standards Y Y Y Y Y Y Y Y N N N N Y Y Y Y N Regulating energy-efficiency activities of energy Y Y Y N N N N N N N Y N N N Y N N suppliers Regulating activities of energy consumers N Y Y N Y Y Y N N N Y N N N Y N N Certifying compliance with equipment energy- N Y Y N Y Y Y N Y N N N N N Y N N efficiency standards Certifying compliance with building energy- N Y Y N Y Y N N Y N N N N N Y N N efficiency standards Policies and Regulations III. Quality of Information Provided to Consumers about Electricity Usage 50 75 71 75 75 75 67 54 67 54 75 75 75 75 75 75 67 Reports on electricity Do consumers receive reports of their electricity usage Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y usage? Quality of information At what intervals do they receive these reports? in report 1 1 12 1 1 11 1 1 1 1 1 1 1 1 1 1 1 (months) Do the reports include price levels? Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Do customers receive a bill or report that shows their Y Y Y Y Y Y N N N N Y Y Y Y Y Y N electricity usage over time? Comparison with other Do customers receive a bill or report which compares users N N N N N N N N N N N N N N N N N them with other users in the same region and class? Energy saving Do utilities provide customers with information information from on how to use electricity more efficiently, whether N Y Y Y Y Y Y P Y P Y Y Y Y Y Y Y utilities through bills or other means? IV. Incentives or Mandates for Utilities to Invest in Energy Efficiency 50 75 71 75 75 75 67 54 67 54 75 75 75 75 75 75 67 Are utilities required to carry out energy-efficiency Mandate for utilities N N Y N N N N N N N N N N N Y N N or carbon-reduction activities? If yes, are there penalties in place for noncompliance Penalties with utility energy-efficiency or carbon-reduction N/A N/A Y N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N N/A N/A mandates? Measurement of energy If yes, are energy savings measured to track performance in meeting energy-efficiency or carbon- N/A N/A Y N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Y N/A N/A savings reduction mandates? If yes, are measured energy savings or carbon- Third-party validation reductions validated by an independent third party? N/A N/A Y N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Y N/A N/A If yes, is there a mechanism for utilities to recover Cost recovery for costs associated with or revenue lost from N/A N/A N N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Y N/A N/A utilities mandated demand-side management activities? N/A is not applicable. Y is yes; N is no; P is partial. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 109 Energy Efficiency (continued) Solomon Islands United States Yemen, Rep. Honduras Denmark Mongolia Tanzania Maldives Vanuatu Armenia Ethiopia Liberia Kenya Nepal Indicator/ India Chile Mali Sub-indicator Question Policies and Regulations (continued) V. Incentives or Mandates for Public Entities to Invest in Energy Efficiency 20 35 100 0 0 0 60 0 20 0 20 0 0 0 100 0 0 Obligations for public Are there binding energy savings obligations for N N Y N N N Y N N N N N N N Y N N buildings public buildings? Are there binding energy savings obligations for Obligations for other other public facilities (may include water supply, N N Y N N N Y N N N N N N N Y N N public facilities wastewater services, municipal solid waste, street lighting, transportation, and heat supply)? Is there a policy in place for public procurement of energy-efficient products and services at national N P Y N N N N N N N N N N N Y N N Public procurement of level? energy efficient products Is there a policy in place for public procurement of energy-efficient products and services at municipal N N N N N N N N N N N N N N Y N N level? Multi-year contracts Do public entities engage in multi-year contracts Y Y Y N N N Y N Y N Y N N N Y N N with service providers with service providers? Allowance to retain Do public budgeting regulations and practices energy savings allow public entities to retain energy savings at N N Y N N N N N N N N N N N Y N N national level? Do public budgeting regulations and practices allow public entities to retain energy savings at N Y Y N N N N N N N N N N N Y N N municipal level? VI. Incentives or Mandates for Large-scale Users to Invest in Energy 0 0 80 0 0 100 90 0 0 0 0 0 0 0 25 0 0 Efficiency Mandates for large users Are there energy-efficiency mandates for large N N Y N N Y Y N N N N N N N N N N energy users? If yes, which of the following? Targets N/A N/A N N/A N/A Y N N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Mandatory audits N/A N/A Y N/A N/A Y Y N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Action plans N/A N/A N N/A N/A Y Y N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Progress and tracking reports N/A N/A N N/A N/A Y Y N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Energy-management system N/A N/A N N/A N/A Y N N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Penalties If yes, are there penalties in place for non- compliance with regulatory obligations for energy N/A N/A Y N/A N/A Y Y N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A efficiency? Measurement of energy If yes, is there a measurement and verification savings N/A N/A Y N/A N/A Y Y N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A program in place? If yes, is it carried out by a third party? N/A N/A Y N/A N/A Y Y N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Incentives for industrial Are energy-efficiency incentives in place for consumers N N Y N N Y Y N N N N NN N N Y N N industrial customers? VII. Minimum Energy Efficiency Performance Standards  33 33 83 0 33 100 0 0 0 0 0 0 0 0 100 0 0 Appliance Have minimum energy efficiency (performance) P N Y N P Y N N N N N N N N Y N N standards been adopted for appliance? Lighting Have minimum energy efficiency (performance) P Y Y N P Y N N N N N N N N Y N N standards been adopted for lighting? Electric motors Have minimum energy efficiency (performance) P N Y N P Y N N N N N N N N Y N N standards been adopted for electric motors? Industrial equipment Have minimum energy efficiency (performance) P N N N P Y N N N N N N N N Y N N standards been adopted for industrial equipment? Regular update of Is there any provision for regular updates to the N N Y N N Y N N N N N N N N Y N N standards energy efficiency standards? Penalty for Is there a penalty for non-compliance with energy N Y Y N N Y N N N N N N N N Y N N non-compliance efficiency standards? N/A is not applicable. Y is yes; N is no; P is partial. 110 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Energy Efficiency (continued) Solomon Islands United States Yemen, Rep. Honduras Denmark Mongolia Tanzania Maldives Vanuatu Armenia Ethiopia Liberia Kenya Nepal Indicator/ India Chile Mali Sub-indicator Question Policies and Regulations (continued) VIII. Energy Labeling Systems  50 75 75 0 50 100 0 0 0 0 0 0 0 0 100 0 0 Have energy-efficiency labeling schemes been Appliance P Y Y N P Y N N N N N N N N Y N N adopted for appliance? Have energy-efficiency labeling schemes been Lighting P Y Y N P Y N N N N N N N N Y N N adopted for lighting? Have energy-efficiency labeling schemes been Electric motors P Y Y N P Y N N N N N N N N Y N N adopted for electric motors? Have energy-efficiency labeling schemes been Industrial equipment P N N N P Y N N N N N N N N Y N N adopted for industrial equipment? IX. Building Energy Codes  30 27 73 0 0 57 0 0 0 0 67 0 0 0 57 0 0 Residential buildings Are there energy codes for residential buildings? P Y Y N N N N N N N Y N N N Y N N Is there any provision for regular updates to the P Y Y N N N N N N N Y N N N Y N N energy code? Commercial buildings Are there energy codes for commercial buildings? P N Y N N Y N N N N Y N N N Y N N Is there any provision for regular updates to the P N Y N N Y N N N N Y N N N Y N N energy code? System to ensure Is there a system to ensure compliance with P N N N N Y N N N N Y N N N N N N compliance building energy codes? Codes for renovated Are renovated buildings required to meet a building N N Y N N N N N N N N N N N Y N N buildings energy code in residential sector? Are renovated buildings required to meet a building N N Y N N Y N N N N N N N N N N N energy code in commercial sector? Building energy Is there a standardized rating or labeling system N Y Y N N Y N N N N Y N N N Y N N information and labeling for the energy performance of existing buildings? Are commercial and residential buildings required to disclose property energy usage at the point of N N Y N N N N N N N N N N N N N N sale or when leased? Are large commercial and residential buildings required to disclose property energy usage N N N N N N N N N N N N N N N N N annually? Pricing and Subsidies X. Incentives from Electricity Pricing  50 83 61 78 67 89 72 50 67 89 56 83 50 67 78 83 61 Electricity rate structure What types of electricity rate structure do the following customers face? (F: flat fee per connection / C: constant block rates / D: declining block rates / I: increasing block rates) Residential customers F,C C F,C I I I I C I I F,C,I F,C,I C C F,D,I F,I I Industrial customers F,C C F,D C I C C C I C C F,C,I C C F,D F,I C Commercial customers F,C C F,C I I C C C I C C F,C,I C C F,D F,I I Charges to large Which of the following charges do large electricity customers customers in the following sector pay? (E: energy (kWh) / D: demand (kW) / R: reactive power (kVAr)) Industrial sector E E,D,R E,D E, D E E,D,R E,D E E E,D,R E E,D E E,R E,D,R E,R E Commercial sector E E,D,R E,D E, D E E,D,R E,D E E E,D,R E E,D E E,R E,D,R E,R E XI. Fossil Fuel Subsidy  100 100 100 99 45 89 100 100 0 100 100 100 100 100 56 100 22 Fossil fuel subsidy What is the proportion of electricity generation by 0 0 0 1 55 11 0 0 100 0 0 0 0 0 44 0 78 subsidized fossil fuel? (%) N/A is not applicable. Y is yes; N is no; P is partial. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 111 Energy Efficiency (continued) Solomon Islands United States Yemen, Rep. Honduras Denmark Mongolia Tanzania Maldives Vanuatu Armenia Ethiopia Liberia Kenya Nepal Indicator/ India Chile Mali Sub-indicator Question Pricing and Subsidies (continued) XII. Carbon Pricing Mechanism 0 0 100 0 0 0 0 0 0 0 0 0 0 0 100 0 0 Greenhouse gas Is there a legally binding greenhouse gas emission emission reduction N N Y N N N N N N N N N N N Y N N reduction target in place? target Existence of carbon Is there any mechanism to price carbon in place? N N Y N N N N N N N N N N N Y N N pricing mechanism (e.g. carbon tax, auctions, emission trading system) XIII. Retail Price of Electricity N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A What is the unit price of electricity for average Residential 0.10 0.17 0.37 0.02 0.11 0.05 0.15 0.57 0.30 0.26 0.06 0.10 0.92 0.14 0.12 0.77 0.03 residential consumption? ($/kWh) What is the unit price of electricity for industrial Industrial 0.07 0.18 0.34 0.02 0.22 0.18 0.18 0.57 0.44 0.20 0.08 0.13 0.96 0.20 0.15 0.65 0.14 consumption of 10,000 kWh per month? ($/kWh) Energy Efficiency Total 37 50 83 24 29 65 38 23 17 22 31 23 22 24 75 24 15 N/A is not applicable. Y is yes; N is no; P is partial. 112 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY ANNEX II RISE METHODOLOGY This annex is divided into three different areas of methodology that have been used for RISE. I. Arriving at the short list of pilot indicators II. Selecting the unit of analysis for data collection III. Calculating indicators based on raw data I. ARRIVING AT THE SHORT LIST OF PILOT INDICATORS A preliminary long list of indicators was initially identified based on literature reviews and consultation with various stakeholders. An individual expert was hired in each of the 17 countries that fielded a questionnaire to elicit responses on these sub-indicators. Indicator Final selection Cross-cutting Average retail price of electricity Y Average retail price of gas and oil derivatives N Average retail price of district heating N Public availability of financial statements of utility companies Y Whether the financial statements of utility companies are audited by an independent party Y Commercially viability of utility companies Y Technical and commercial losses N Level of fossil fuel subsidies Y Carbon tax N Carbon pricing mechanism Y Energy Access National Electrification Plan National vision for electrification Y Timeframe for electrification plan N Electrification plan includes both grid and off-grid Y Cost-of-service study is updated regularly N Enabling Environment for Expanding Grid Access Presence of ring-fenced financing for electrification plan N Capital subsidies exist for cost of grid connection Y Subsidies for grid connection are output based N Presence of information technology platform for effective delivery of subsidies N Quality of Regulation for Off-grid Renewable Energy Laws in place to allow mini-grids to operate Y Time, cost and number of procedures to permit a mini-grid Y Anticipatory regulation for connecting mini-grids to larger grid N Appropriate tariff regulation for off-grid renewable energy developers Y Quality of Support for Mini-grid Renewable Energy Developers Dedicated source of funding for renewable energy mini-grid subsidies N Subsidies for connecting users to mini-grids are output based N Existence of mechanism to encourage lowest subsidy per new connection N Quality of Support for Off-grid Standalone Home Systems Customs duty exemption for renewable energy standalone systems Y Subsidies in place for standalone renewable energy systems Y Absence of subsidies for kerosene fuel N Getting a New Connection Affordability of connection N Cost and number of procedures to get a new connection Y Number of procedures for getting financing for customer connections N Affordability of electricity Y Y is yes; N is no. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 113 Indicator Final selection Technology Availability of technologies N Knowledge of technologies N Energy Efficiency Price Signals Price of energy to end-user as consumption increases Y Economic efficiency of end-user price subsidies N Low power factor penalty N Utility Incentive Alignment Linkage between revenues and profits (presence of decoupling) Y Financial incentives for utilities to exceed compliance requirements Y Presence of cap for the ability of utilities to pass through costs of losses on to customers Y Savings Mandates for Energy Suppliers Binding savings obligations over time Y Quality of measurement and verification Y Standard offers and white certificates in place for utilities to buy “energy savings” N Savings Mandates for Energy Consumers Binding savings obligation over time for government buildings Y Binding savings obligation over time for large users Y Absence of rolling blackouts N Energy-Efficient Procurement in the Public Sector Energy efficiency taken into account in the specification or award of materials and services Y Allowance of savings retention for energy-efficiency capital expenditures Y Allowance of multiyear energy-efficiency contracts Y Benchmarking measurement and verification of energy efficiency and usage in public buildings Y Model documents for energy performance contracts N Enabling Investment in Energy-Efficient Buildings Building codes are updated regularly Y Enforcement of building codes N Existence of penalties for not meeting code Y Presence of voluntary building code N Applicable across jurisdictions N Codes apply to existing buildings that do not meet energy-efficiency requirements Y Contract enforcement N Laws supporting appropriate ownership models N Access to Information Quality of information available to customer on their energy usage Y Frequency of collection Y Property energy data and rating disclosure policy Y Presence of energy labeling system for appliances and equipment Y Energy-Efficiency Standards for Products Regularly updated energy-efficiency standards for common appliances Y Regularly updated energy-efficiency standards for industrial equipment Y Penalty to manufacturers for noncompliance with energy-efficiency standard Y Energy Efficiency for Institutions Demand is considered an elastic variable in energy sector plan N Existence of a national energy-efficiency plan integrated into the energy suppliers sectoral plans Y Obligated energy-efficiency institution with access to customer usage data N Education and Training Strength of research and development N Education and training programs N Access to Energy-Efficiency Financing Effectiveness of loan guarantees N Robustness of financial institutions N Effective implementation of subsidies N Collateral required for energy-efficiency investments N Y is yes; N is no. 114 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Indicator Final selection Renewable Energy Level of Financial, Economic, and Fiscal Support for Renewable Energy Years of remuneration guaranteed to generator Y Value to generator of renewable energy capital cost subsidies N Level of remuneration available to generator Y Available rate of return on investments in renewable energy N Revenue Risk Facing Renewable Energy Projects The price paid in for power purchase agreements is not tied to market fluctuations such as fuel prices or system costs N Existence and type of cost- recovery mechanism for renewable energy subsidies and incentives Y Availability of sovereign risk guarantees for renewable energy projects Y Percentage of remuneration for renewable energy that is from subsidy N Burden of renewable energy subsidies on government budgets N Renewable energy targets Y Transparency of Subsidies for Renewable Energy Projects Whether the total amount of subsidy for RE renewable energy is specified in laws or policies N Duration of subsidies for renewable energy is specified N How often and when remuneration rates and incentives for RE renewable energy can be modified by government is specified in laws or regulation Y Whether the amount of adjustment that can be made to remuneration rates and incentives for renewable energy by government is identified in laws Y or regulations Renewables purchase obligations Y Quality of Transmission Framework for Renewable Energy Projects Which entities pay for each aspect of transmission interconnection for RE renewable energy are defined in laws, regulations, or rules Y The cost of transmission usage for renewable energy is defined Y Transmission pricing for renewable energy is based on a transmission expansion plan N Rules exist that define how renewable energy sources will be operated on the power grid Y Ability of Power Systems to Integrate Renewable Energy Sources Grid code with measures or standards to manage/operate variable renewable energy Y Prioritized access to the grid Y Clear policies/rules on curtailment Y Quality of electricity supply (frequency of outages) N Diversity of electricity supply N Long- term master plan for the system Y Independent regulator N Country Llegal Sstability N Level of corruption N Ease of Siting and Permitting a Renewable Energy Project Time and number of procedures to get environmental permits for a renewable project Y Time and number of procedures to get land use permits for a renewable project Y Time and number of procedures to get resource permits for a renewable project Y Time and number of procedures to negotiate an offtake agreement for a renewable project N Availability of the national mapping information on renewable energy sources Y Y is yes; N is no. A two-stage screening criteria was sequentially employed to ar- First, both an internal and external advisory group to provide rive at the first shortlist. expert advice and quality control was created. Two rounds of internal consultations with World Bank Group technical experts Stage 1. Four principles of objectivity, comparability, action, and with knowledge of the three Sustainable Energy for All initiative context-neutrality were applied to ensure that indicators will be areas were conducted. The experts helped incorporate knowledge deployable in nearly every country. from the World Bank Group operations. In parallel, two rounds of consultation over the indicators were also conducted with the ex- An attribute that stood out at this stage was reconciling trends. ternal advisory group. Second, this was discussed with represen- Various approaches are considered as good practices at different tatives of the private sector. Several focus group discussions were points in time. For instance, in renewable energy development, held with private sector developers and investors in Washington, feed-in-tariffs and reverse auctions have been both promoted at DC (all areas), Nepal (energy access), Kenya (renewable energy), various times by different countries. Therefore, in RISE, efforts and India (energy efficiency). It also benefited from private sec- have been made to be neutral, and to avoid making any value tor survey- based consultation with more than 150 stakeholder judgment on the approach the country is taking to promote an groups in over more than 30 countries in all regions of the world. outcome. Third, the indicators were reviewed by the external advisory group that comprises of experts in the space (complete list of experts Stage 2. Three principles of universal data availability, the cost- in Annex VI) who provided their objective feedback and review of effectiveness of the data collection, and the existence of a com- the indicators. Consultations with country representatives of the mon consensus were then employed. Scaling Up Renewable Energy in Low Income Countries Program (SREP), one of the programs of Climate Investment Funds, also This first shortlist went through multiple stakeholder consulta- provided valuable feedback. tions that informed the selection of the final suite of indicators. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 115 Energy Efficiency FINAL SET OF INDICATORS I. National Plan for Increasing Energy Efficiency •• National energy efficiency target Cross-cutting •• Energy efficiency legislation/action plan I. Fossil Fuel Subsidy •• Sub-sectoral targets II. Carbon Pricing Mechanism II. Entities for Energy- Efficiency Policy, Regulation, and Implementation •• Greenhouse gas emission reduction target •• Setting energy efficiency policy •• Existence of carbon pricing mechanism •• Setting energy efficiency standards III. Utility Performance •• Regulating energy efficiency activities of suppliers •• Reporting practice •• Regulating energy efficiency activities of consumers •• Financial performance •• Equipment standards compliance IV. Carbon Pricing Mechanism •• Building standards compliance •• GHG Greenhouse gas emission reduction target III. Quality of Information Provided to Consumers about Electricity Usage •• Existence of carbon pricing mechanism •• Reports on electricity usage V. Retail Price of Electricity •• Quality of information in report •• Average retail price of electricity for residential customers •• Comparison with other users •• Average retail price of electricity for industrial customers •• Energy saving information from utilities IV. Incentives or Mandates for Utilities to Invest in Energy Efficiency Energy Access •• Mandate for utilities •• Penalties I. Electrification Plan •• Measurement of energy savings •• National plan •• Third- party validation •• Coverage of grid and off-grid •• Cost recovery for utilities •• Regular update V. Incentives or Mandates for Public Entities to Invest in Energy Efficiency II. Enabling Environment for Renewable Energy Developers to Invest in •• Obligations for public buildings Mini-grids •• Obligations for other public facilities •• Existence of regulation •• Public procurement of energy efficient products •• Regulation attributes •• Multi-year contracts •• Standards •• Allowance to retain savings •• Protection against expropriation VI. Incentives or Mandates for Large-scale Users to Invest in Energy •• Subsidy or duty exemption Efficiency III. Enabling Environment for Standalone Home Systems •• Mandates for large-scale users •• National program •• Penalties for non-compliance •• Standards •• Measurement of savings •• Subsidy or duty exemption •• Incentives for large-scale users IV. Funding Support to Electrification VII. Minimum Energy-Efficiency Performance Standards •• Dedicated funding line •• Appliance •• Subsidy to household connection •• Lighting •• Subsidy to grid extension •• Electric motors V. Affordability of Electricity •• Industrial equipment VI. Utility Performance •• Regular update •• Reporting practice •• Penalty for non-compliance •• Financial performance VIII. Energy Labeling Systems VII. Establishing a New Connection •• Appliance VIII. Permitting a Mini-grid •• Lighting •• Electric motors Renewable Energy •• Industrial equipment I. Planning for Renewable Energy Expansion IX. Building Energy Codes •• Renewable energy in expansion planning •• Residential buildings •• Proactive transmission expansion •• Commercial buildings •• Target with an action plan •• Compliance system •• Resource potential data •• Renovated buildings II. Fossil Fuel Subsidy •• Building energy information III. Carbon Pricing Mechanism X. Incentives from Electricity Pricing •• Greenhouse gas emission reduction target •• Electricity rate structure •• Existence of carbon pricing mechanism •• Charges to large customers IV. Utility Performance XI. Fossil Fuel Subsidy •• Reporting practice XII. Carbon Pricing Mechanism •• Financial performance •• Greenhouse gas emission reduction target V. Legal Framework for Renewable Energy •• Existence of carbon pricing mechanism VI. Regulatory Policies and Procurement XIII. Retail Price of Electricity •• Incentives to grid-connected renewable energy •• Average retail price of electricity for residential customers •• Incentives to distributed generation renewable energy •• Average retail price of electricity for industrial customers VII. Regulatory Policies – Policy Design Attributes •• Predictability •• Sustainability •• Accessibility •• Remuneration efficiency VIII. Network Connection and Pricing •• Connection cost allocation •• Network usage pricing IX. Public Financial Support Mechanisms •• Credit enhancement •• Utility payments guarantee •• Fiscal incentives •• Public financing supports X. Starting a New Renewable Energy Project 116 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Cross-cutting—Retail Price of Electricity II. SELECTING THE UNIT OF ANALYSIS FOR Definition: A unit price per kWh at an average consumption level DATA COLLECTION of residential and industrial customers. Some policy instruments or regulations are governed not at a national level, but at a municipal level. For example, in the United States, Calculation: building codes are established and applied by the state government. Since RISE cannot cover all different municipalities in a country yet, Retail price of electricity for residential customers one principle is used to resolve this case. = (Cost to consume average consumption level per household in the country) (Average consumption level per household in the country) Principle 1. If answers vary by municipality, select the largest busi- ness city or the municipality where the largest business city is located. Average consumption level For residential customers, average consumption level per capita is A list of the largest business cities follows. calculated for country groups that the World Bank uses as below: Largest business Largest business •• East Asia and Pacific Country Country city city •• Europe and Central Asia Armenia Yerevan Chile Santiago •• Latin America and the Caribbean Denmark Copenhagen Ethiopia Addis Ababa •• Middle East and North Africa Honduras Tegucigalpa India Mumbai Kenya Nairobi Liberia Monrovia •• South Asia Maldives Malé Mali Bamako •• Sub-Saharan Africa Mongolia Ulan Bator Nepal Kathmandu •• High-income OECD members Solomon Islands Honiara Tanzania Dar es Salaam •• High-income non-OECD economies United .States. New York City Vanuatu Port Vila Yemen, Rep. Sana’a The consumption level is calculated based on the following: As a result, some indicators for the United States and India were assessed in New York City or State, or and for India in Mumbai or •• P: Population (World Development Indicators) Maharashtra. •• R: Access to electricity rate (Global Tracking Framework) •• C: Residential electricity consumption (International Energy For the Utility Performance indicator, if there are is more than one Agency) utility company in a country, RISE follows a principle 2 as below. •• A: Average household size (household surveys) Principle 2. If there is more than one utility company, select a Regional average consumption level per capita = , for all i utility with the largest customer base in the largest business city in the country group. of the country. Then, average consumption level per household is calculated as In countries where there are more than one utility, such as the below: United States, India, Chile, and Denmark among others, one = (Regional average consumption level per capita) x Ai utility was chosen for assessment. Cost to consume average consumption level per household for III. CALCULTING INDICATORS BASED ON RAW each country is calculated based on the level calculated above DATA and the tariff schedule for residential customers. Many of RISE indicators assess policy and regulatory framework Retail price of electricity for industrial customers based on the survey-type questionnaire. But some of the indica- tors are quantitatively calculated by authors using various data = (Cost to consume 10,000 kWh per month for industrial users in the country) collected from countries. Here is the list of indicators that have (10,000 kWh) been calculated: For industrial users, the consumption of 10,000 kWh per month is Pillar Indicator Sub-indicator applied across all countries. Cross-cutting Retail Price of Electricity Residential average price Industrial average price Fossil Fuel Subsidy Energy Access Affordability of Electricity Renewable Energy Investment Grade Policies Sustainability – Affordability Details on how to calculate each of these indicators are as follows: R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 117 Cross-cutting—Fossil Fuel Subsidy Calculating affordability Definition: Percentage of electricity generated by subsidized The ratio of subsistence consumption cost to gross national fossil fuel. income per household is calculated: Calculation: R = (Annualized cost of subsistence consumption) (GNI per household) Electricity Fuel Mix Affordability is scored: Data on electricity production by fuel type in the year of 2011 is obtained from the International Energy Agency (IEA). If R ≤ 5%, score 100; If R≥10%, score 0; Which type of fossil fuel is subsidized If 5% < R < 10%, score . An International Monetary Fund (IMF) report on “Energy Subsidy Reform: Lessons and Implications” provides data on pre-tax Renewable Energy—Investment Grade Policies – subsidies for petroleum products, natural gas, and coal, in 2011 as Sustainability – Affordability percentage of government revenue. Two assumptions are used: Definition: Impact of renewable energy subsidy on consumers 1. If a country has subsidies on petroleum products, natural gas, Calculation: or coal, there are subsidies on diesel, natural gas, or coal used to generate electricity, respectively. The affordability element of the sustainability sub-indicator 2. If the percentage indicated in the report is 0.00, the fuel was measures the impact of renewable energy subsidies on household considered not subsidized. income and residential electricity bill. Combine two different information •• This is assessed using the annual generation from renewable Pi: the proportion of electricity production by fuel type (from energy resources benefitting from subsidies and calculating IEA data), the overall incremental cost and its impact on both household Si = if there is subsidy to fuel type , otherwise 0 (from IMF data), income and residential electricity bill. •• The incremental cost is defined as the difference between the (Percentage of electricity generated by subsidized fossil fuel) = ∑i(Pi · Si) renewable energy incentive (for example, feed-in tariff) and the average cost of electricity generation. Energy Access—Affordability of Electricity Definition: The relative cost of subsistence consumption (30 Step 1. Estimate Total subsidy volume kWh/ per month) to GNI gross national income per household. 1. Estimate weighted average cost (AC) of generation mix (present or previous year) excluding the renewable energy technologies/ Calculation: sources that are subject to the incentive or subsidy (e.g. feed-in tariff (FIT) or other price premium). Calculating the cost of subsistence consumption 2. Compute incremental cost (IC) for each of the renewable energy Using tariff schedule of the utility, the monthly cost for consuming technologies or sources subject to the incentive or subsidy: 30kWh was calculated. All levies and taxes were added. The cost ICti = PIti – AC, was annualized by simply multiplying 12. Where: IC: incremental cost Calculating gross national income per household PI: price incentive (such as a FIT, or a premium)1 Gross national income per capita is obtained from the World Bank ti: annual generation technology, i. Database. Average size of households is found from mainly four AC: Weighted average cost of generation mix different sources: •• OECD Family Database. 3. Compute total subsidy volume (TSV): •• The Demographic and Health Surveys (DHS) Programs. TSV = ∑ ICti x Gti. •• Eurostat. Where Gti. is total electricity generation from the renewable •• Country’s latest census results if the country is not presented in any of above. energy source/technology i (GNI per household) = (GNI per capita) x (Average household size) 118 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 4. Calculate unit subsidy: 6. Estimate annual renewable energy consumption per household USRE = (TSV/GRE). (ECHH-RE): Where: ECHH-RE = ECHH x SRE. USRE: Unit subsidy to renewable energy GRE is the total annual generation of RE technologies subject 7. Calculate renewable energy subsidy burden per household to incentive or FIT (RESIHH): Step 2. Estimate impact on total residential bill RESIHH: USRE: x ECHH-RE. The impact on residential bill is calculated using the share of the renewable energy incentive (subsidy) paid by residential consum- Where: ers (assumed to be equal to the share of residential consumption in total electricity consumption), and the annual residential RESIHH: Renewable energy subsidy impact per household electricity bill. USRE: Unit subsidy 1. Estimate total residential bill: 8. Calculate gross national income per household (GNIHH): TRB= ECR x EPR (GNIHH)= (GNI per capita) * (Average household size) Where: TRB: total residential bill Where: ECR: Annual electricity consumption residential sector EPR: Retail electricity price for residential consumers Household size: number of people 2. Compute subsidy volume paid by the residential consumer 9. Compute impact of renewable energy subsidy on gross national class: income per household (RESIGNIHH): SVR= TSV x [(ECR)/(TEC)]. Where: RESIGNIHH = RESIHH / GNIHH SVR: Subsidy volume transferred to residential bill TEC: Total electricity consumption Source of data •• Retail price of electricity: latest available tariff schedules. 3. Calculate impact on total residential bill (IRB): •• Cost of electricity: –– Armenia, Honduras, and Kenya: SPREP investment plans. IRB= SVR / TRB. –– Denmark, Germany, and Spain: Eurostat—high voltage tariff (cost of energy and supply for industrial consumers Step 3. Impact on household income with a consumption of 70,000 MWh and above) The impact on household income is a function of the renewable –– India: India Power Sector Diagnostic Review, Second energy subsidy burden at the household level (calculated using DPL to Promote Inclusive Green Growth and Sustainable the consumption of renewable energy per household), and the Development in Himachal Pradesh. household income. –– Mongolia: UBDEN Financial Information 2013. –– Chile: Centro de Energias Renovables. 4. Estimate share of subsidized renewable energy in total electric- •• Feed-in tariffs: Government, regulator, and utility agencies. ity supply (SRE) Latest available year. •• Renewables surcharge: SRE = [(TSRE /TES) *100] –– Germany: NETWORK TRANSPARENZ.DE. (2010—2014). Where: EEG Apportionment. Retrieved 2014, from Information Platform of the German Transmission System Operators. TSRE : Total Subsidized renewable energy in year i (GWh) –– Denmark: Danish Energy Agency. (2011—2012). Energy TES: Total electricity supply in year i (GWh) Statistics. 5. Compute household electricity consumption (ECHH): ECHH = ECR / Number of households. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 119 ANNEX III PROPOSAL FOR GLOBAL ROLLOUT Energy Access Indicator/Sub-indicator Question Change Details Planning  I. Electrification Plan National plan Is there a national electrification plan? Modify It is necessary to define “electrification” clearly to ensure it means household use of electricity Coverage of grid and off-grid If Yes, does the electrification plan include both grid and Rephrase The question will be rephrased to check whether the national electrification plan off-grid? has considered both grid and off-grid options in order to reach every household Regular update If yes, was the last update within five years? Policies and Regulations II. Enabling Environment for RE Developers to Invest in Mini-grids Existence of regulations Are there regulations outlining rights of mini-grid Modify - It is necessary to define the term “mini-grid” clearly as it differs by country operators? Rephrase - “Are there regulations explicitly allowing mini-grids to operate and outlining their rights and obligations?” Regulation attributes If yes, can mini-grid operators charge tariffs that exceed Rephrase “Do mini-grid operators have legal rights to charge tariffs that exceed the the national tariff level? national tariff level?” If yes, do mini-grid operators need prior regulatory Rephrase “Do all mini-grid operators need prior regulatory approval to enter into a power approval to enter into a power sales contract with sales contract with businesses and residential consumers and charge tariffs?” consumers? Standards Are safety, reliability, and voltage and frequency standards for mini-grids made publicly available? Protection against expropriation Is there any general law that deal with expropriation of mini-grids? Subsidies or duty exemption Are there duty exemptions or subsidies for mini-grid renewable energy technology? III. Enabling Environment for Standalone Home Systems  National program Are there national programs that promote the deployment of standalone home systems (solar photovoltaic systems and lanterns)? Standards Are there minimum quality standards for standalone home systems? Subsidies or duty exemption Are there duty exemptions or subsidies for standalone home systems? (New) Enabling environment for grid electrification in peri-urban areas Add Policy framework Are there any mitigating mechanisms to address illegality Add As urbanization is envisaged to gain explosive momentum going forward, of tenure arrangements in urban areas? electrification in peri-urban areas will emerge as a critical issue and will require new approaches by policymakers and service providers. Particularly, policy and regulatory framework needs to be aligned to embrace people who have migrated from rural areas and informally settled in slum areas to provide them with access to electricity. Therefore, an indicator that captures mitigating mechanisms to address illegality of tenure arrangements in urban areas could be considered. Pricing and Subsidies IV. Funding Support to Electrification  Dedicated funding line Does the government have a dedicated funding line or budget for electrification (including such as a funded national program, budget item, and rural electrification fund to finance electrification including grid, mini-grid, and standalone home systems)? Subsidy to household connection Does the utility or government cover a portion of the costs for the household connection? Subsidy to grid extension Do capital subsidies exist for utilities to provide distribution lines to villages? V. Affordability of Electricity  Affordability of electricity What is the relative cost of subsistence consumption as percentage of gross national income per household? VI. Utility Performance  Reporting practice Are the financial statements of the utility publicly available? If yes, are they audited by an independent third party? Financial performance Current ratio EBITDA margin Debt Service Coverage Ratio Days receivable outstanding Days payable outstanding 120 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Energy Access (continued) Indicator/Sub-indicator Question Change Details Procedural Efficiency  VII. Establishing a New Connection  Procedural time What is the procedural time to establish a new connection? (days) Procedural cost How much is the procedural cost to be paid? ($) VIII. Permitting a Mini-grid Procedural time What is the procedural time to permit a mini-grid? (days) Procedural cost How much is the procedural cost to be paid? ($) Number of agencies How many agencies are there to go through? Renewable Energy Indicator/Sub-indicator Question Change Details Planning  I. Planning for Renewable Energy expansion Renewable energy in expansion Is there a target on renewable energy? Clarify Guidance is needed for the consultant to determine what qualifies as planning an “official target” Does the country have a renewable energy action plan to implement the targets? Renewable energy in expansion Does your country have an electricity expansion plan that includes planning renewable energy development? Renewable energy in transmission Does the current transmission planning consider renewable energy Clarify Guidance is needed for the consultant to interpret what qualifies as expansion planning scale-up? transmission planning that considers renewable energy scale up. Is there an anticipatory planning process or mechanism that Clarify Guidance is needed for the consultant to determine what constitutes allows the least cost expansion of transmission network pro-active planning for least-cost expansion of transmission networks infrastructure to connect one or more renewable energy plants? towards renewable energy plants. Resource potential data Does the Government publish a high quality validated national Modify Attributes that characterize a high quality validated national atlas atlas on renewable resources potential? on renewable resource potential need to be further tailored to each renewable resource type. Does the government publish a strategic planning or zoning Clarify Guidance is need for the consultant to understand the elements of this guidance on existing renewable resources? question. Abundance of renewable energy resources Add Renewable energy resource abundance snapshot collected from International Renewable Energy Agency (IRENA) renewable energy country profiles. Pricing and Subsidies II. Fossil Fuel Subsidy Fossil fuel subsidy What is the proportion of electricity generation by subsidized Modify Seek a methodology to capture the volume of fossil fuel subsidy fossil fuel? consistently across countries III. Carbon Pricing Mechanism  Greenhouse gas emission reduction Is there a legally binding greenhouse gas emission reduction target target in place? Existence of carbon pricing Is there any mechanism to price carbon in place? (e.g. carbon tax, mechanism auctions, emission trading system) IV. Utility Performance  Reporting practice Are the financial statements of the utility publicly available? If yes, are they audited by an independent third party? Financial performance Current ratio EBITDA margin Debt Service Coverage Ratio Days receivable outstanding Days payable outstanding Policies and Regulations V. Legal Framework for Renewable Energy  Legal framework Does the country have a legal framework on renewable energy Modify Based on questionnaire responses it appears necessary to clarify what development? constitutes a legal framework and specifically noting that regulations and policies are not legal VI. Regulatory Policies and Procurement Incentives to grid-connected Does the country use competitive bidding or auctions to promote Clarify The question needs to specifically mention that the type of promotion renewable energy renewable energy development? of renewable energy that is intended here is that of generation of electricity from renewable sources. This would exclude more general activities that could fall under promotion of renewable energy such as competitive solicitation for contractors to build a wind farm. Do price subsidies or premiums exist to support renewable energy generation? Incentives for distributed renewable Does a net metering program exist? energy generation R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 121 Renewable Energy (continued) Indicator/Sub-indicator Question Change Details VII. Regulatory Policies – Policy Design Attributes Predictability Do the legal or regulatory frameworks include a formula for price change/adjustment? If yes, is the frequency of allowed renewable energy price level modifications specified in the regulatory framework? If no, is such formula included in standard contractual agreements? If yes, is the frequency of allowed renewable energy price level modifications specified in the contract? Does a renewables purchase obligation exist? Does the design of the auction mechanism or bidding include compliance rules to ensure timely completion and deployment of RE projects? Sustainability Is the renewable energy price subsidy or premium passed through to the consumer tariff? Is the ratio of renewable energy subsidy to total electricity bill less than 2%? Accessibility Is there a prioritized access to the grid for renewable energy? Is there a grid code – or specific operational rules – for managing variable renewable energy? Are there rules defining the sharing of curtailment costs? Level and duration of price To what extent do price and quantity setting regulatory policies Add Feed-in tariffs, feed-in premiums, renewable purchase obligations, incentive lead to offtake prices for electricity produced from renewable and auctions are used to establish incentive (price) levels and terms energy sources that are sufficient to cover the costs of generation for electricity generated by renewable resources. In order to stimulate investments, the incentive level and term need to be set such that the benefits they provide exceed incremental costs of renewable electricity generation. This indicator aims to capture this essential component via through a comparison of the remuneration level and the levelized costs of electricity generation. VIII. Network Connection and Pricing Connection cost policy Is there secondary legislation or regulations for the allocation of connection costs? If yes, what is the cost policy (SS: super-shallow / S: shallow / D: deep)? Network usage pricing rule Are there rules defining who pays for the wheeling charges of transmission and distribution network? IX. Public Financial Support Mechanism Fiscal incentives Does the government offer fiscal incentives for renewable energy? Clarify Need to distinguish clearly the role of the government in providing such incentives vis-à-vis other organizations. Public financing Does the government offer public financial incentives for renewable energy? Government backed utility Does the government back utility payments with specific payment mechanisms? Credit enhancement or risk Does the government offer credit enhancement or risk mitigation Clarify Need to distinguish clearly the role of the government in providing such mitigation mechanisms mechanisms to renewable energy developers? incentives vis-à-vis other organizations. Procedural Efficiency  X. Starting a New Renewable Energy Project  Technology W: wind / S: solar / B: biomass Procedural time What is the procedural time to permit and start operating a new renewable energy project? Procedural cost How much is the procedural cost to be paid? ($) Number of agencies How many agencies are there to go through? Technology Small hydro Procedural time What is the procedural time to permit and start operating a new renewable energy project? Procedural cost How much is the procedural cost to be paid? ($) Number of agencies How many agencies are there to go through? 122 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Energy Efficiency Indicator/Sub-indicator Question Change Details Planning I. National Plan for Increasing Energy Efficiency  National energy- efficiency target Is there an energy- efficiency target at the national level? Modify To capture and credit developments at subnational levels Energy- efficiency legislation or Is the national energy- efficiency target supported by legislation Modify To capture and credit developments at subnational levels action plan and/or an action plan? Sub-sectoral target Does the energy- efficiency plan include supply- side target? Modify The relationship among targets given to the utility sector that may Does the energy- efficiency plan include residential target? be achieved through efficiency measures in end-use sectors subject to their own, separate targets can be considered further. Does the energy- efficiency plan include commercial target? Does the energy- efficiency plan include industrial target? II. Entities for Energy Efficiency Policy, Regulation and Implementation Entities for energy-efficiency policy, Are there governmental or independent bodies concerned with the Modify To capture and credit developments at subnational levels regulation, and implementation followings? Setting energy efficiency strategy/policy Setting energy efficiency standards Regulating energy efficiency activities of energy suppliers Regulating activities of energy consumers Certifying compliance with equipment energy efficiency standards Certifying compliance with building energy efficiency standards Policies and Regulations III. Quality of Information Provided to Consumers about Electricity Usage Reports on electricity usage Do consumers receive reports of their electricity usage? Modify - To take prepayment services into account in a better way - channels for transmitting and the quality of this information need to be considered Quality of information in report At what intervals do they receive these reports (months)? Modify - To take prepayment services into account in a better way Do the reports include price levels? - channels for transmitting and the quality of this information need to be considered Do customers receive a bill or report that shows their electricity usage over time? Comparison with other users Do customers receive a bill or report which compares them to Modify - To take prepayment services into account in a better way other users in the same region and/or class? - channels for transmitting and the quality of this information need to be considered Energy saving information from Do utilities provide customers with information on how to use Modify Channels for transmitting and the quality of this information need to utilities electricity more efficiently, whether through bills or other means? be considered IV. Incentives or Mandates for Utilities to Invest in Energy Efficiency Mandate for utilities Are utilities required to carry out energy-efficiency or carbon- reduction activities? Penalties Are there penalties in place for non-compliance with utility energy- efficiency or carbon-reduction mandates? Measurement of energy savings Are energy savings measured to track performance in meeting energy-efficiency or carbon-reduction mandates? Third party validation Are measured energy savings or carbon -reductions validated by an independent third party? Cost recovery for utilities Is there a mechanism for utilities to recover costs associated with or revenue lost from mandated demand-side management activities? V. Incentives or Mandates for Public Entities to Invest in Energy Efficiency Obligations for public buildings Are there binding energy savings obligations for public buildings? Obligations for other public facilities Are there binding energy savings obligations for other public facilities (may include water supply, wastewater services, municipal solid waste, street lighting, transportation, and heat supply)? Public procurement of energy Is there a policy in place for public procurement of energy-efficient efficient products products and services at national level? Is there a policy in place for public procurement of energy-efficient products and services at municipal level? Multi-year contracts with service Do public entities engage in multi-year contracts with service providers providers? Allowance to retain energy savings Do public budgeting regulations and practices allow public entities to retain energy savings at national level? Do public budgeting regulations and practices allow public entities to retain energy savings at municipal level? VI. Incentives or Mandates for Large-scale Users to Invest in Energy Efficiency Mandates for large users Are there energy-efficiency mandates for large energy users? If yes, which of the following? Targets Mandatory audits Action plans Progress and tracking reports Energy-management system R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 123 Energy Efficiency (continued) Indicator/Sub-indicator Question Change Details Penalties If yes, are there penalties in place for non-compliance with regulatory obligations for energy efficiency? Measurement of energy savings If yes, is there a measurement and verification program in place? If yes, is it carried out by a third party? Incentives for industrial consumers Are energy efficiency incentives in place for industrial customers? VII. Minimum Energy Efficiency Performance Standards  Appliance Have minimum energy- efficiency (performance) standards been Modify - Whether they are voluntary or mandatory will be reflected in an adopted for appliance? improved way Lighting Have minimum energy- efficiency (performance) standards been - Whether standards provide higher resolution of the rage of adopted for lighting? performance by measuring the devices covered by standards Electric motors Have minimum energy- efficiency (performance) standards been adopted for electric motors? Industrial equipment Have minimum energy- efficiency (performance) standards been adopted for industrial equipment? Regular update of standards Is there any provision for regular updates to the energy- efficiency standards? Penalty for non-compliance Is there a penalty for non-compliance with energy- efficiency standards? VIII. Energy Labeling Systems  Appliance Have energy- efficiency labeling schemes been adopted for Modify - Whether they are voluntary or mandatory will be reflected in an appliance? improved way Lighting Have energy- efficiency labeling schemes been adopted for - the types of labels used to assess if the labeling provide higher lighting? resolution of the rage of performance Electric motors Have energy -efficiency labeling schemes been adopted for electric motors? Industrial equipment Have energy- efficiency labeling schemes been adopted for industrial equipment? IX. Building Energy Codes  Residential buildings Are there energy codes for residential buildings? Modify To capture significant features of such codes that are associated Is there any provision for regular updates to the energy code? with greater or lesser effectiveness, as has been done in the American Council for an Energy-Efficient Economy’s 2014 International Energy Commercial buildings Are there energy codes for commercial buildings? Efficiency Scorecard. Is there any provision for regular updates to the energy code? System to ensure compliance Is there a system to ensure compliance with building energy codes? Codes for renovated buildings Are renovated buildings required to meet a building energy code in residential sector? Are renovated buildings required to meet a building energy code in commercial sector? Building energy information and Is there a standardized rating or labeling system for the energy labeling performance of existing buildings? Are commercial and residential buildings required to disclose property energy usage at the point of sale or when leased? Are large commercial and residential buildings required to disclose property energy usage annually? Pricing and Subsidies X. Incentives from Electricity Pricing  Electricity rate structure What types of electricity rate structure do the following customers face (F: flat fee per connection / C: constant block rates / D: declining block rates / I: increasing block rates)? Residential customers Industrial customers Commercial customers Charges to large customers Which of the following charges do large electricity customers in the following sector pay (E: Energy (kWh) / D: Demand (kW) / R: Reactive power (kVAr))? Industrial sector Commercial sector XI. Fossil Fuel Subsidy  Fossil fuel subsidy What is the proportion of electricity generation by subsidized fossil Modify Seek a methodology to capture the volume of fossil fuel subsidy fuel? consistently across countries XII. Carbon Pricing Mechanism Greenhouse gas emission reduction Is there a legally binding greenhouse gas emission reduction target target in place? Existence of carbon pricing Is there any mechanism to price carbon in place? (e.g. carbon tax, mechanism auctions, emission trading system) 124 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY Energy Efficiency Indicator/Sub-indicator Question Change Details XIII. Retail Price of Electricity What is the unit price of electricity for average residential Residential consumption? (US$/kWh) Modify Seek a methodology to capture a cost-recovery aspect What is the unit price of electricity for industrial consumption of Industrial 10,000kWh? (US$/kWh) Indicators under consideration to be added Transportation Efficiency Measure Add Fuel economy standards Add Fuel economy standard for light- and heavy-duty vehicles Supply-Side Energy Efficiency Add Combined heat and power To capture aspects that are subject to policy and regulatory influence, Add generation both utility- and industry-scale District energy Add To capture aspects that are subject to policy and regulatory influence Agricultural Energy Efficiency Add Water pumping for irrigation Add Important to achieving development goals Other key agricultural activities Add Important to achieving development goals Financing Mechanisms and Allied Capacity Building Add Availability of financing mechanism Add To address difficulties attracting financing to energy efficiency projects Capacity building Add To address difficulties attracting financing to energy efficiency projects Public financing Add Particularly important in the initial stage of market creation Procedural efficiency Add To measure actual efficiency of policy and regulatory framework, as Procedural efficiency Add was done for renewable energy and energy access R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 125 ANNEX IV LIST OF PILOT COUNTRIES SE4ALL Indicators (2010 figures) Access to Renewable Energy intensity level World Bank income GDP per electricity (% of energy installed of primary energy Region Pilot country group Population capita total population) capacity (GW) (MJ/$ 2005 PPP) Mongolia Lower middle income 2,796484 3160 86.2 0.0 13.75 East Asia & Pacific Solomon Islands Lower middle income 549,598 1130 19.2 0.0 3.00 Vanuatu Lower middle income 247,262 3080 23.5 0.0 2.72 Armenia Lower middle income 2,969,081 3720 99.8 1.2 6.76 Europe & Central Asia Denmark High income 5,590,478 59770 100 5.1 4.51 Chile High income 17,464,814 14280 99.5 6.2 5.20 Latin America & the Caribbean Honduras Lower middle income 7,935,846 2070 80.9 0.6 7.15 Middle East & North Africa Yemen, Rep. Lower middle income 23,852,409 1377 44.8 0.0 5.26 North America United States High income 313,914,040 50120 100 133.5 7.13 India Lower middle income 1,236,686,732 1530 75 56.3 7.79 South Asia Maldives Upper middle income 338,442 5750 99.9 0.0 9.31 Nepal Low income 27,474,377 700 76.3 0.7 13.23 Ethiopia Low income 91,728,849 410 23.0 1.9 17.98 Kenya Low income 43,178,141 840 19.2 1.0 13.65 Sub-Saharan Africa Liberia Low income 4,190,435 370 4.1 0.0 59.79 Mali Low income 14,853,572 660 16.6 0.2 6.62 Tanzania Low income 47,783,107 570 14.8 0.6 14.94 126 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY ANNEX V LIST OF EXISTING SUSTAINABLE ENERGY INDEXES Thematic coverage Geographic coverage Acronym Index Name Organization (number of countries) General EA EE RE Time dimension Regional Center for Renewable Energy and AFEX Arab Future Energy Index Arab (13) O O One-time (2013) Energy Efficiency (RCREEE) CCI Climate Competitiveness Index AccountAbility / UNEP Global (95) O One-time (2010) CIRI Climate Investment Readiness Index World Bank South Asia (6) O O One-time (2011) CREF CREF RE Islands Index Castalia Caribbean (22) O One-time (2012) CS ClimateScope IDB / Bloomberg Global (55) O O Regular EEGF Energy Efficiency Governance Framework IEA / EBRD / IDB Global (77) O One-time (2010) EDI Energy Development Index IEA Global (80) O Regular EGI Electricity Governance Initiative World Resources Institute Selected (8) O One-time ESI Energy Sustainability Index World Energy Council Global (94) O Regular American Council for an Energy-Efficient IEES International Energy Efficiency Scorecard Global (16) O Regular Economy (ACEEE) NEAP New Energy Architecture Performance World Economic Forum Global (105) O Regular PPEO Poor Peoples Energy Outlook Practical Action Selected (3) O Regular RECAI RE Country Attractiveness Index Ernst & Young Global (40) O Regular RES RE-Shaping European Commission EU (27) O Regular SAGCI Sustainability-adjusted GCI World Economic Forum Global (121) Regular American Council for an Energy-Efficient SEES State Energy Efficiency Scorecard United States (1) O Regular Economy (ACEEE) Readiness for Investment in Sustainable RISE World Bank Group Global (200+) O O O O Regular Energy EA is energy access; EE is energy efficiency; RE is renewable energy. R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 127 ANNEX VI LIST OF ADVISORY GROUP MEMBERS EXTERNAL ADVISORY GROUP Energy Access Name Organization Title Jens Drillisch KfW Development Bank Principal Energy Economist Richenda van Leeuwen UN Foundation Executive Director, Energy and Climate, Energy Access Initiative Vijay Modi Columbia University Professor Joseph Nganga Renewable Energy Ventures CEO Ibrahim H Rehman The Energy and Resources Institute Director for Social Transformation Division Bernard Tenenbaum Independent Energy and Regulatory Consultant Simon Trace Practical Action CEO Davida Wood World Resources Institute Senior Associate Renewable Energy Name Organization Title Luiz Barroso PSR Technical Director Anil Cabraal KMRI Lanka; KMR Infrastructures USA Advisor, Policy and International Development Anton Eberhard University of Cape Town Professor Silvia Kreibiehl FS-UNEP Centre for Climate and Sustainable Energy Finance Head of FS-UNEP Centre Christine Lins REN21 Executive Secretary Jeffrey Logan National Renewable Energy Laboratory Group Manager and Senior Energy Analyst, Strategic Energy Analysis Center Wolfgang Mostert Independent Energy Consultant Djaheezah Subratty UN Environment Programme Programme Officer Gianluca Sambucini UN Economic Commission for Europe Secretary of the Committee on Sustainable Energy Gauri Singh IRENA Director of Country Support and Partnerships Letha Tawney World Resources Institute Senior Associate Energy Efficiency Name Organization Title Sara Hayes American Council for an Energy-Efficient Economy Senior Manager and Researcher, Policy and Utilities Rachel Young American Council for an Energy-Efficient Economy National Policy Research Analyst Ajay Mathur Bureau of Energy Efficiency, India Director General Wolfgang Mostert Independent Energy Consultant Robert P. Taylor Independent Energy Consultant Robert Tromop International Energy Agency Head of Energy Efficiency Unit Melanie Slade International Energy Agency Manager, Energy Efficiency in Emerging Economies Mark Hopkins UN Foundation Director of International Energy Efficiency Lauren Gritzke UN Foundation Senior Associate, Energy Efficiency John Christensen UNEP Risø Centre Head of UNEP Risø Centre Sandra Winkler World Energy Council Director, Policies 128 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY INTERNAL ADVISORY GROUP Energy Access Name Title Organization Dana Rysankova Senior Energy Specialist World Bank Group Daniel J. Murphy Senior Energy Specialist World Bank Group David Vilar Ferrenbach Energy Specialist World Bank Group Laurent Durix Infrastructure Specialist World Bank Group Mohua Mukherjee Senior Energy Specialist World Bank Group Pierre Audinet Senior Energy Economist World Bank Group Venkata Ramana Putti Senior Energy Specialist World Bank Group Xiaoping Wang Senior Energy Specialist World Bank Group Renewable Energy Name Title Organization Alejandro Moreno Private Sector Development Specialist World Bank Group Luiz T. A. Maurer Principal Industry Specialist World Bank Group Marcelino Madrigal Senior Energy Specialist World Bank Group Mustafa Zakir Hussain Senior Energy Specialist World Bank Group Oliver James Knight Senior Energy Specialist World Bank Group Ricardo Arias Senior Infrastructure Specialist World Bank Group Sean Whittaker Senior Industry Specialist World Bank Group Vyjayanti T. Desai Lead Private Sector Development Specialist World Bank Group Xiaoping Wang Senior Energy Specialist World Bank Group Energy Efficiency Name Title Organization Alejandro Moreno Private Sector Development Specialist World Bank Group Alexios Pantelias Head, Investment Climate Istanbul Office World Bank Group Ashok Sarkar Senior Energy Specialist World Bank Group Etienne Raffi Kechichian Private Sector Development Specialist World Bank Group Ivan Jaques Senior Energy Specialist World Bank Group Jasneet Singh Senior Energy Specialist World Bank Group Luiz T. A. Maurer Principal Industry Specialist World Bank Group Peter Johansen Senior Energy Specialist World Bank Group Vyjayanti T. Desai Lead Private Sector Development Specialist World Bank Group Xiaoping Wang Senior Energy Specialist World Bank Group R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 129 ANNEX VII LIST OF CONTRIBUTORS ARMENIA Carlos Silva Montes Charles Muchunku Abgar Budaghyan World Bank Group Consultant Kenya Renewable Energy Association Public Services Regulatory Commission Emiliano Espinoza Eliud Lolo Anahit Simonyan Latin American Power Mumias Sugar Company UNIDO Guillermo Perez del Río Fred Kaato Angela Manukyan Lusakert Chilectra DHCL Power Biogas Plant CJSC Ignacio Santelices Humphrey Mulindi Armen Hayrapetyan Ministry of Energy Global Sustainable Limited Unon of Small HPPs Javier Gho Jenny Fletcher Astghine Pasoyan BMG Hidro Consultores Aeolus Kenya Energy Saving Foundation Natalia Arancibia Joseph Simiyu Azat Bagratyan Chilean Energy Efficiency Agency Genpro Power Systems Hydrocorporation CJSC Nicola Borregaard Kihara Mungai Daniel Stepanyan Ministry of Energy Ministry of Energy and Petroleum Ministry of Energy Maina Kanyua Diana Harutyunyan DENMARK Marco Borero Company UNDP Climate Change Programme Jakob Lundsager Murefu Barasa Energy Agency Gevorg Nazaryan World Bank Group Consultant ational Institute of Standards Karen Helveg Petersen Paul Chege World Bank Group Consultant Hayk Badalyan Practical Action Ministry of Energy ETHIOPIA Pavel Oimeke Hrachya Tsughunyan Amare Hadgu Seyoum Energy Regulatory Commission Ministry of Energy Embassy of Norway Hrant Ayvazyan LIBERIA Mekuria Lemma Transform Energy Group LLC Augustus Goanue Ethiopian Electric Power Corporation (EEPCO) Rural and Renewable Energy Agency Lusine Gasparyan Teame Gebretsadik Gebrehiwot Procurement Support Center SNCO Gregory Sylvestre World Bank Group Consultant Liberia Electricity Corporation Natalya Sarjanyan Yishak Seboka Meskele Electric Networks of Armenia CJSC Henry Kimber Ministry of Water, Irrigation and Energy Ministry of Lands, Mines and Energy Ruzanna Makinyan (MoWIE), Rural Electrification Fund Electric Networks of Armenia CJSC Mohamed Hady Sherif HONDURAS World Bank Group Consultant Samvel Srapyan Ministry of Urban Development Andrés Carbajal Soluz Mohammed Sherif Honduras, S.A. de C.V. Ministry of Finance Tamara Babayan R2E2 Fund Diego Roberto Midence National Company of Electrical Energy MALDIVES Tigran Vardikyan (ENEE) Abdul Malik Thaufeeg Gelieguzan LLC State Electric Company (STELCO) Reinerio Zepeda Vahe Odabashian World Bank Group Consultant Ahmed Ali World Bank Group Consultant Ministry of Environment and Energy Vahram Jalalyan INDIA Ajwad Mustafa UNDP-GEF Project Improving Energy Madhavan Nampoothiri Maldives Energy Authority Effiviency in Buildings World Bank Group Consultant Ibrahim Athif Viktor Afyan Nikhil Jaisinghani Plankton Investment Pvt Ltd (Contractor) Contact-A LLC Mera Gao Power Ibrahim Nashid Vram Tevosyan Renewable Energy Maldives Pvt Ltd Consecoard LLC KENYA Abubakar Ali Mohamed Rasheed Gulf Power World Bank Group Consultant CHILE Alfredo Solar Andrew Amadi Zeeniyaa Ahmed Hameed Acciona Energía Chile EED Energy Limited Ministry of Housing and Infrastructure Carl Weber Anthony Mbarine Hidromaule S.A. Marine Power Company 130 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY MALI Nawa Raj Dhakal Justina Uisso Ibrahim Togola Alternative Energy Promotion Center Rural Energy Agency (REA) World Bank Group Consultant Raju Maharjan Mzumbe Musa Ministry of Energy World Bank Group Consultant MONGOLIA Ram Chandra Pandey N’ganzi Kiboko Altai Erdenebaatar Nepal Electricity Authority Energy and Water Utilities Regulatory Aydiner Global LLC Authority (EWURA) Ram Hari Bohara Baasankhuu Bayasgalanbaatar Nepal Electricity Authority Sophia Mgonja Ministry of Energy Tanzania Electricity Supply Company Ram Prasad Dhital Bat-Erdene Enkhmandal (TANESCO) Alternative Energy Promotion Center Ministry of Energy Sangita Karki Bat-Erdene Enkhnasan UNITED STATES Nepal Electricity Authority Energy Development Center Ann Miles Suresh Shrestha Federal Energy Regulatory Commission Bayambasuren Munkhzaya Water and energy commission Secretariat Ulaanbaatar Electricity Distribution Network Donna Heimiller State Owned Enterprise om Lal Subedi National Renewable Energy Laboratory Nepal Electricity Authority Buyan Munkhbayar Fayeann Lawrence Ministry of Construction and Urban OnForce Solar Development SOLOMON ISLANDS Joseph Paolini Barnabas Upwe Chadraa Batbayar OnForce Solar Solomon Islands Electricity Authority Ministry of Energy Joshua Samuel Finn David Siriu Dorj Purevsuren World Bank Group Consultant Solomon Islands Electricity Authority World Bank Group Consultant Michael Pagonis Doris Riatako Enkhmend Myagmardorj Empower Solar Solomon Islands Electricity Authority Qleantech LLC /Mongolian Wind Energy Peyton Boswell Association/ Jan Sanga EnterSolar Solomon Islands Electricity Authority Jambaljamts Osgonbaatar Ulaanbaatar Electricity Distribution Network John Gorosi VANUATU State Owned Enterprise World Bank Group Consultant Timothy Hewatt Jargal Dorjpurev John Korinihona World Bank Group Consultant EEC LLC Ministry of Mines Energy and Rural Electrification YEMEN Myagmar Gansukh Ministry of Energy Abdo Almakaleh TANZANIA Sana’a University Myagmarsuren Mungunbileg Amini Kimaro Energy Development Center Abdulaziz Noman Africa Power Investment Ltd Public Electricity Corporation Nayanbuu Purevdagva Arthur Karomba Clean Energy LLC Ahmed Zabarah Windpower Serengeti -Mpanda Technical Supplies Center Ltd. Ovgor Bavuudorj Ayubu Lwilla National Renewable Energy Center Ali Alashwal Ujangala Mini Hydro Project Sana’a University Bahati Didace NEPAL Ali Alramsi Didace & Co Advocate Abhishek Adhikari Ministry of Trade and Industry Nepal Electricity Authority Bashir Ngela Hussien Al-Gunaid Kitanda Electic cooperatives Barsha Pandey Ministry of Water and Environment World Bank Group Consultant Batalia Hargava Ibrahim Alkadhi NextGenSolawazi -Kigoma Bhoj Raj Bhattarai Sheba Center for Stratygic Studies Nepal Electricity Authority Bengiel Msofe Mohammed Omar Rural Energy Agency (REA) Bir Bahadur Ghale Watani Taeck Company Hydro Energy Concern Pvt. Ltd. Charity Nyava Muhammed Ali Muqbel Imilinyi Cooperative Society Govinda Raj Pokharel Aden University Alternative Energy Promotion Center Elikana Kitahenga Omar Asakaf Jay Raj Bhandari Tandala Diaconical Centre Sana’a University Nepal Electricity Authority Erick Rugabera Salem Mohammed Bin Qadhi Kiran Gautam Ministry Of Energy and Minerals World Bank Group Consultant Water and energy commission Secretariat Francis Songela Taha Alkohlani Krishna Bahadur Khadka Mapembasi Hyropower Project Geological Survey Authority Nepal Electricity Authority Gilman Kasiga Towfick Sufian Kuber Mani Nepal EA Power Limited Sana’a University Ridi Hydropower Corporation Limited R e a d i n e s s F o r I n v e s t m e n t I n S u s ta i n a b l e E n e r gy 131 ANNEX VIII COUNTRY SPOTLIGHT 132 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY ARMENIA Region: Europe & Central Asia Income: Lower Middle Category Population: 2,976,566 GNI per capita: US$ 3,790 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Armenia Regional Global Electrification rate (%) 99.8 99.8 83.1 (CAGR)a (0.3) (0.1) (0.5) Access deficit (million) 0.0 0.2 1,165.7 (CAGR) (-16.0) (-15.9) (-0.5) RE installed capacity (GW) 1.16 4.64 1,210.8 (CAGR) ­— (11.8) (3.6) Renewable electricity mix (%) 39.5 37.4 19.4 (CAGR) (5.0) (2.0) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 6.8 10.3 7.9 (CAGR) (-7.3) (-4.7) (-1.3) – Agricultural sector 0.2 2.6 2.1 – Industrial sector 2.6 9.7 6.8 – Other sectors 8.9 8.1 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 Energy Renewable Energy 92 Access Energy Efficiency 83 80 Planning – 60 59 Policies and Regulations – 40 37 Pricing and Subsidies – 20 15 6 Procedural 0 Efficiency – – R n w bl En r En r Effici nc Low st Scor Arm ni Hi h st Scor Total – – means that there is no indicator in the category or this country is not assessed for energy access 3. RISE Indicator Scores R n w bl En r En r Effici nc Pl nnin for RE xp nsion N tion l Pl n for Incr sin EE Entiti s for EE Polic , R ul tions nd Impl m nt tion L l Fr m work for RE Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En r Suppl Utiliti s R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s N twork Conn ction Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Inc ntiv s from El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 133 CHILE Region: Latin America & the Caribbean Income: High Category Population: 17,619,708 GNI per capita: US$ 15,230 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Chile Regional Global Electrification rate (%) 99.6 88.8 83.1 (CAGR)a (0.3) (0.4) (0.5) Access deficit (million) 0.1 30 1,165.7 (CAGR) (-11) (-2.6) (-0.5) RE installed capacity (GW) 6.2 5.7 1,210.8 (CAGR) (4.2) (2.7) (3.6) Renewable electricity mix (%) 40.2 36.5 19.4 (CAGR) (-1.4) (-1.9) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 5.2 5.9 7.9 (CAGR) (-1.0) (-0.5) (-1.3) – Agricultural sector 1.3 2.6 2.1 – Industrial sector 5.6 5.1 6.8 – Other sectors 4.0 5.4 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 Energy Renewable Energy 100 92 Access Energy Efficiency 83 80 73 Planning – 60 50 Policies and Regulations – 40 Pricing and Subsidies – 20 15 6 Procedural 0 Efficiency – – R n w bl En r En r Effici nc Low st Scor Chil Hi h st Scor Total – – means that there is no indicator in the category or this country is not assessed for energy access 3. RISE Indicator Scores R n w bl En r En r Effici nc Pl nnin for RE xp nsion N tion l Pl n for Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En r Suppl Utiliti s R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s N twork Conn ction Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Inc ntiv s from El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 134 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY DENMARK Region: Europe (OECD) Income: High Category Population: 5,613,706 GNI per capita: US$ 61,110 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Denmark Regional Global Electrification rate (%) 100(0.3) 88.8 83.1 (CAGR)a (0.0) (0.4) (0.5) Access deficit (million) 0 30 1,165.7 (CAGR) (0.0) (-2.6) (-0.5) RE installed capacity (GW) 5.1 5.7 1,210.8 (CAGR) (13.4) (2.7) (3.6) Renewable electricity mix (%) 32.1 36.5 19.4 (CAGR) (12.3) (-1.9) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 4.5 5.9 7.9 (CAGR) (1.0) (-0.5) (-1.3) – Agricultural sector 13.9 2.6 2.1 – Industrial sector 4.4 5.1 6.8 – Other sectors 4.2 5.4 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 Energy Renewable Energy 100 92 92 Access Energy Efficiency 83 83 80 Planning – 60 Policies and Regulations – 40 Pricing and Subsidies – 20 15 6 Procedural 0 Efficiency – – R n w bl En r En r Effici nc Low st Scor D nm rk Hi h st Scor Total – – means that there is no indicator in the category or this country is not assessed for energy access 3. RISE Indicator Scores R n w bl En r En r Effici nc Pl nnin for RE xp nsion N tion l Pl n for Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En r Suppl Utiliti s R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s N twork Conn ction Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Inc ntiv s from El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 a. Compounded annual growth rate from 1990 to 2010 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 135 ETHIOPIA Region: Sub-Saharan Africa Income: Low Category Population: 94,100,756 GNI per capita: US$ 470 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Ethiopia Regional Global Electrification rate (%) 23.0 31.8 83.1 (CAGR)a (4.3) (1.7) (0.5) Access deficit (million) 63.9 589.4 1,165.7 (CAGR) (1.9) (1.9) (-0.5) RE installed capacity (GW) 1.9 20.4 1,210.8 (CAGR) (8.0) (1.2) (3.6) Renewable electricity mix (%) 99.4 22.7 19.4 (CAGR) (0.6) (0.7) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 18.0 12.4 7.9 (CAGR) (-1.4) (-1.1) (-1.3) – Agricultural sector 0.1 0.5 2.1 – Industrial sector 2.7 5.2 6.8 – Other sectors 37.1 17.4 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 Energy Renewable Energy 94 92 Access Energy Efficiency 83 80 Planning 65 60 Policies and Regulations 40 30 29 24 Pricing and 20 15 Subsidies 6 0 Procedural Efficiency – En r Acc ss R n w bl En r En r Effici nc Low st Scor Ethiopi Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 136 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY HONDURAS Region: Latin America & the Caribbean Income: Lower Middle Category Population: 8,097,688 GNI per capita: US$ 2,180 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Honduras Regional Global Electrification rate (%) 81.0 88.8 83.1 (CAGR)a (0.4) (0.4) (0.5) Access deficit (million) 1.4 30 1,165.7 (CAGR) (0.8) (-2.6) (-0.5) RE installed capacity (GW) 0.6 5.7 1,210.8 (CAGR) (1.9) (2.7) (3.6) Renewable electricity mix (%) 46.1 36.5 19.4 (CAGR) (-3.7) (-1.9) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 7.2 5.9 7.9 (CAGR) (-0.3) (-0.5) (-1.3) – Agricultural sector — 2.6 2.1 – Industrial sector 3.8 5.1 6.8 – Other sectors 8.3 5.4 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 94 Energy Renewable Energy 92 Access Energy Efficiency 83 80 Planning 60 60 58 Policies and 40 Regulations 30 29 Pricing and 20 15 Subsidies 6 0 Procedural En r Acc ss R n w bl En r En r Effici nc Efficiency – Low st Scor Hondur s Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 137 INDIA Region: South Asia Income: Lower Middle Category Population: 1,252,139,596 GNI per capita: US$ 1,570 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators India Regional Global Electrification rate (%) 75.0 74.5 83.1 (CAGR)a (2.0) (1.1) (0.5) Access deficit (million) 306.2 416.7 1,165.7 (CAGR) (-1.7) (-1.6) (-0.5) RE installed capacity (GW) 56.3 8.4 1,210.8 (CAGR) (5.6) (5.3) (3.6) Renewable electricity mix (%) 14.2 25.5 19.4 (CAGR) (-2.7) (-3.9) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 7.8 8.5 7.9 (CAGR) (-2.4) (-2.2) (-1.3) – Agricultural sector 1.1 0.7 2.1 – Industrial sector 7.8 4.9 6.8 – Other sectors 5.2 10.6 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 94 94 92 Energy Renewable Energy 83 Access Energy Efficiency 80 81 65 Planning 60 Policies and 40 Regulations 30 Pricing and 20 15 Subsidies 6 0 Procedural En r Acc ss R n w bl En r En r Effici nc Efficiency – Low st Scor Indi Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 138 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY KENYA Region: Sub-Saharan Africa Income: Lower Middle Category Population: 2,976,566 GNI per capita: US$ 3,790 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Kenya Regional Global Electrification rate (%) 19.2 31.8 83.1 (CAGR)a (2.9) (1.7) (0.5) Access deficit (million) 31.2 589.4 1,165.7 (CAGR) (2.0) (1.9) (-0.5) RE installed capacity (GW) 1.0 20.4 1,210.8 (CAGR) (2.1) (1.2) (3.6) Renewable electricity mix (%) 69.5 22.7 19.4 (CAGR) (-1.4) (0.7) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 13.6 12.4 7.9 (CAGR) (0.1) (-1.1) (-1.3) – Agricultural sector 0.3 0.5 2.1 – Industrial sector 4.2 5.2 6.8 – Other sectors 16.0 17.4 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 94 92 Energy Renewable Energy Access Energy Efficiency 83 80 Planning 65 60 50 Policies and 40 38 Regulations 30 Pricing and 20 15 Subsidies 6 0 Procedural En r Acc ss R n w bl En r En r Effici nc Efficiency – Low st Scor K n Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 139 LIBERIA Region: Sub-Saharan Africa Income: Low Category Population: 4,294,077 GNI per capita: US$ 410 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Liberia Regional Global Electrification rate (%) 4.1 31.8 83.1 (CAGR)a (20.4) (1.7) (0.5) Access deficit (million) 3.8 589.4 1,165.7 (CAGR) (3.0) (1.9) (-0.5) RE installed capacity (GW) 0.0 20.4 1,210.8 (CAGR) (—) (1.2) (3.6) Renewable electricity mix (%) 0.0 22.7 19.4 (CAGR) (-100.0) (0.7) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) — 12.4 7.9 (CAGR) (—) (-1.1) (-1.3) – Agricultural sector — 0.5 2.1 – Industrial sector — 5.2 6.8 – Other sectors — 17.4 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 94 Energy Renewable Energy 92 Access Energy Efficiency 83 80 Planning 60 Policies and 40 Regulations 30 30 23 23 Pricing and 20 15 Subsidies 6 0 Procedural En r Acc ss R n w bl En r En r Effici nc Efficiency – Low st Scor Lib ri Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 140 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY MALDIVES Region: South Asia Income: Upper Middle Category Population: 345,023 GNI per capita: US$ 5,600 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Maldives Regional Global Electrification rate (%) 100 74.5 83.1 (CAGR)a (0.3) (1.1) (0.5) Access deficit (million) 0.0 416.7 1,165.7 (CAGR) (17.3) (-1.6) (-0.5) RE installed capacity (GW) 0.002 8.4 1,210.8 (CAGR) ­— (5.3) (3.6) Renewable electricity mix (%) ­— 25.5 19.4 (CAGR) ­— (-3.9) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 9.3 8.5 7.9 (CAGR) (6.4) (-2.2) (-1.3) – Agricultural sector ­— 0.7 2.1 – Industrial sector ­— 4.9 6.8 – Other sectors ­— 10.6 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 Energy Renewable Energy 92 Access Energy Efficiency 83 80 Planning – 60 Policies and Regulations – 40 Pricing and 21 Subsidies – 20 15 17 6 Procedural 0 Efficiency – – R n w bl En r En r Effici nc Low st Scor M ldiv s Hi h st Scor Total – – means that there is no indicator in the category or this country is not assessed for energy access 3. RISE Indicator Scores R n w bl En r En r Effici nc Pl nnin for RE xp nsion N tion l Pl n for Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En r Suppl Utiliti s R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s N twork Conn ction Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Inc ntiv s from El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 141 MALI Region: Sub-Saharan Africa Income: Low Category Population: 15,301,650 GNI per capita: US$ 670 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Mali Regional Global Electrification rate (%) 27.0 31.8 83.1 (CAGR)a (1.6) (1.7) (0.5) Access deficit (million) 10.8 589.4 1,165.7 (CAGR) (2.6) (1.9) (-0.5) RE installed capacity (GW) 0.3 20.4 1,210.8 (CAGR) (6.4) (1.2) (3.6) Renewable electricity mix (%) 45 22.7 19.4 (CAGR) — (0.7) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 6.6 12.4 7.9 (CAGR) (2.3) (-1.1) (-1.3) – Agricultural sector — 0.5 2.1 – Industrial sector — 5.2 6.8 – Other sectors — 17.4 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 Energy Renewable Energy 100 94 92 Access Energy Efficiency 83 80 71 Planning 60 Policies and Regulations 40 30 Pricing and 20 19 22 Subsidies 15 6 Procedural 0 Efficiency – En r Acc ss R n w bl En r En r Effici nc Low st Scor M li Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 142 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY MONGOLIA Region: East Asia & Pacific Income: Low Middle Category Population: 2,839,073 GNI per capita: US$ 3,770 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Mongolia Regional Global Electrification rate (%) 86.2 65.6 83.1 (CAGR)a (0.4) (0.8) (0.5) Access deficit (million) 0.4 102.5 1,165.7 (CAGR) (-0.8) (-3.6) (-0.5) RE installed capacity (GW) 0 15.3 1,210.8 (CAGR) ­— (8.7) (3.6) Renewable electricity mix (%) 0 12.4 19.4 (CAGR) ­ — (-3.9) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 13.7 7.3 7.9 (CAGR) (-3.3) (-1.6) (-1.3) – Agricultural sector 1.6 1.2 2.1 – Industrial sector 13.4 6.7 6.8 – Other sectors 13.5 10.3 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 94 92 Energy Renewable Energy 83 Access Energy Efficiency 80 68 Planning 60 46 Policies and 40 Regulations 30 31 Pricing and 20 15 Subsidies 6 0 Procedural En r Acc ss R n w bl En r En r Effici nc Efficiency – Low st Scor Mon oli Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 143 NEPAL Region: South Asia Income: Lower Category Population: 27,797,457 GNI per capita: US$ 730 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Nepal Regional Global Electrification rate (%) 76.3 74.5 83.1 (CAGR)a (0.4) (1.1) (0.5) Access deficit (million) 7.1 416.7 1,165.7 (CAGR) (1.1) (-1.6) (-0.5) RE installed capacity (GW) 0.7 8.4 1,210.8 (CAGR) (5.4) (5.3) (3.6) Renewable electricity mix (%) 99.9 25.5 19.4 (CAGR) (0.0) (-3.9) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 13.2 8.5 7.9 (CAGR) (-1.5) (-2.2) (-1.3) – Agricultural sector 0.5 0.7 2.1 – Industrial sector 3.2 4.9 6.8 – Other sectors 27.4 10.6 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 Energy Renewable Energy 94 92 Access Energy Efficiency 83 80 80 Planning 60 Policies and Regulations 40 30 33 23 Pricing and 20 15 Subsidies 6 0 Procedural Efficiency – En r Acc ss R n w bl En r En r Effici nc Low st Scor N p l Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 144 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY SOLOMON ISLANDS Region: East Asia & Pacific Income: Lower Middle Category Population: 561,231 GNI per capita: US$ 1,610 SEA4All Global tracking framework (GTF) Outcomes Solomon GTF Indicators Islands Regional Global Electrification rate (%) 19.2 65.6 83.1 (CAGR)a (2.0) (0.8) (0.5) Access deficit (million) 0.4 102.5 1,165.7 (CAGR) (2.4) (-3.6) (-0.5) RE installed capacity (GW) ­— 15.3 1,210.8 (CAGR) ­ — (8.7) (3.6) Renewable electricity mix (%) ­ — 12.4 19.4 (CAGR) ­ — (-3.9) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 6.8 7.3 7.9 (CAGR) (-7.3) (-1.6) (-1.3) – Agricultural sector 0.2 1.2 2.1 – Industrial sector 2.6 6.7 6.8 – Other sectors 8.9 10.3 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 Energy Renewable Energy 94 92 Access Energy Efficiency 83 80 Planning 60 57 Policies and Regulations 40 30 21 22 Pricing and 20 15 Subsidies 6 0 Procedural Efficiency – En r Acc ss R n w bl En r En r Effici nc Low st Scor Solomon Isl nds Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 145 TANZANIA Region: Sub-Saharan Africa Income: Low Category Population: 49,253,126 GNI per capita: US$ 630 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Tanzania Regional Global Electrification rate (%) 14.8 31.8 83.1 (CAGR)a (4.0) (1.7) (0.5) Access deficit (million) 38.2 589.4 1,165.7 (CAGR) (2.4) (1.9) (-0.5) RE installed capacity (GW) 0.6 20.4 1,210.8 (CAGR) (2.7) (1.2) (3.6) Renewable electricity mix (%) 58.0 22.7 19.4 (CAGR) (-2.4) (0.7) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 14.9 12.4 7.9 (CAGR) (-1.2) (-1.1) (-1.3) – Agricultural sector 2.2 0.5 2.1 – Industrial sector 8.4 5.2 6.8 – Other sectors 23.2 17.4 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 94 Energy Renewable Energy 92 Access Energy Efficiency 83 80 75 Planning 60 Policies and 40 Regulations 30 34 24 Pricing and 20 15 Subsidies 6 0 Procedural En r Acc ss R n w bl En r En r Effici nc Efficiency – Low st Scor T n ni Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 146 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY UNITED STATES Region: North America (OECD) Income: High Category Population: 316,128,839 GNI per capita: US$ 53,670 SEA4All Global tracking framework (GTF) Outcomes United GTF Indicators States Regional Global Electrification rate (%) 100 99.7 83.1 (CAGR)a (—) (0.0) (0.5) Access deficit (million) — 8.7 1,165.7 (CAGR) (—) (-1.4) (-0.5) RE installed capacity (GW) 133.5 549.7 1,210.8 (CAGR) (2.1) (2.9) (3.6) Renewable electricity mix (%) 10.1 16.6 19.4 (CAGR) (-0.6) (0.0) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 7.1 6.3 7.9 (CAGR) (-1.7) (-1.1) (-1.3) – Agricultural sector 4.8 4.5 2.1 – Industrial sector 6.9 5.8 6.8 – Other sectors 4.7 4.1 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 Energy Renewable Energy 92 88 Access Energy Efficiency 83 80 75 Planning – 60 Policies and Regulations – 40 Pricing and 20 Subsidies – 15 6 0 Procedural Efficiency – – R n w bl En r En r Effici nc Low st Scor Unit d St t s Hi h st Scor Total – – means that there is no indicator in the category or this country is not assessed for energy access 3. RISE Indicator Scores R n w bl En r En r Effici nc Pl nnin for RE xp nsion N tion l Pl n for Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En r Suppl Utiliti s R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s N twork Conn ction Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Inc ntiv s from El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY 147 VANUATU Region: East Asia & Pacific Income: Lower Middle Category Population: 561,231 GNI per capita: US$ 1,610 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Vanuatu Regional Global Electrification rate (%) 23.5 65.6 83.1 (CAGR)a (1.3) (0.8) (0.5) Access deficit (million) 0.2 102.5 1,165.7 (CAGR) (2.1) (-3.6) (-0.5) RE installed capacity (GW) — 15.3 1,210.8 (CAGR) — (8.7) (3.6) Renewable electricity mix (%) — 12.4 19.4 (CAGR) — (-3.9) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 2.7 7.3 7.9 (CAGR) (0.9) (-1.6) (-1.3) – Agricultural sector — 1.2 2.1 – Industrial sector — 6.7 6.8 – Other sectors — 10.3 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 100 Energy Renewable Energy 94 92 Access Energy Efficiency 83 80 Planning 60 48 Policies and Regulations 40 30 24 Pricing and 20 16 15 Subsidies 6 0 Procedural Efficiency – En r Acc ss R n w bl En r En r Effici nc Low st Scor V nu tu Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 148 R E A D I N E S S F O R I N V E S T M E N T I N S U S TA I N A B L E E N E R GY YEMEN Region: Middle East & North Africa Income: Lower Middle Category Population: 24,407,381 GNI per capita: US$ 1,330 SEA4All Global tracking framework (GTF) Outcomes GTF Indicators Yemen Regional Global Electrification rate (%) 55 90.0 83.1 (CAGR)a (0.8) (0.6) (0.5) Access deficit (million) 13.3 18.3 1,165.7 (CAGR) (3.0) (-2.8) (-0.5) RE installed capacity (GW) 0.0 1.5 1,210.8 (CAGR) — (4.2) (3.6) Renewable electricity mix (%) 0.0 4.6 19.4 (CAGR) — (-3.7) (0.0) Energy intensity of primary energy (MJ/$2005 PPP) 5.3 7.8 7.9 (CAGR) (0.4) (-0.8) (-1.3) – Agricultural sector 7.3 3.8 2.1 – Industrial sector 2.3 4.1 6.8 – Other sectors 5.7 12.7 5.5 a. Compounded annual growth rate from 1990 to 2010 — is not available Note: All data come from the Global Tracking Framework (GTF) which was released in 2013 to establish baseline energy data of 2010 and provide regular updates on the output of the three pillars of the Sustainable Energy for All (SE4ALL) RISE ASSESSMENT RESULTS 1. Traffic light by pillar and category 2. Comparison with other countries by pillar Green: score ≥ 75 / Yellow: 25 ≤ score < 75 / Red: score < 25 Energy Renewable Energy 100 94 92 Access Energy Efficiency 83 80 Planning 60 Policies and Regulations 40 40 30 Pricing and 20 Subsidies 15 15 6 6 Procedural 0 Efficiency – En r Acc ss R n w bl En r En r Effici nc Low st Scor Ym n Hi h st Scor Total – means that there is no indicator in the category 3. RISE Indicator Scores En r Acc ss R n w bl En r En r Effici nc N tion l Pl n for El ctrific tion Pl n Pl nnin for RE xp nsion Incr sin EE Entiti s for EE Polic , R ul tions L l Fr m work for RE nd Impl m nt tion En blin Environm nt for RE Mini- rid D v lop rs Qu lit of Inform tion R ul tor Polici s Provid d to Consum rs nd Procur m nt Inc ntiv s or M nd t s for En blin Environm nt for En r Suppl Utiliti s St nd lon Hom S st ms R ul tor Polici s - Polic D si n Attribut s Inc ntiv s or M nd t s for Public Entiti s Fundin Support N twork Conn ction to El ctrific tion Inc ntiv s or M nd t s nd Pricin for L r -sc l Us rs Public Fin nci l Minimum EE P rform nc Afford bilit of El ctricit Support M ch nisms St nd rds En r L b lin S st ms Utilit P rform nc Utilit P rform nc Buildin En r Cod s Fossil Fu l Subsid Est blishin Inc ntiv s from N w Conn ction El ctricit Pricin C rbon Pricin M ch nism Fossil Fu l Subsid P rmittin Mini- rid St rtin N w RE Proj ct C rbon Pricin M ch nism 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 Many countries share the vision for a secure energy future for all people. But for most countries, realizing this vision requires massive investment in sustainable energy and a solid enabling environment of policies, regulations, and institutions. The Readiness for Investment in Sustainable Energy (RISE) can help countries get to where they want to be. Through a suite of indicators, RISE will provide a global reference point for countries to see how they are performing in energy access, renewable energy, and energy efficiency—and what policies and other instruments they may need to move toward their sustainable energy vision. RISE highlights good practices across countries that can foster a good enabling environment for sustainable energy and support peer learning. RISE pilot report and associated datasets can be downloaded from the following website: http://rise.worldbank.org In collaboration with Funding partners