2017/80 Supported by k nKonw A A weldegdeg e ol n oNtoet e s eSrei r e ise s f ofro r p r&a c t hteh e nEenregryg y Etx itcrea c t i v e s G l o b a l P r a c t i c e The bottom line Promoting Productive Uses of Electricity in Rural electrification programs can be more effective in Rural Electrification Programs: Experience from Peru stimulating economic growth, social development, and Why is this issue important? uses a similar definition: “Productive uses of electricity are those sustainable utility operations that increase income or productivity (that is, they add value…)” (EUEI when they promote productive Rural electrification programs can often multiply their PDF and GIZ 2011). The range of production processes is wide, from uses of electricity, as shown by effect by promoting productive uses of grid-based artisanal activities to large-scale commercial and industrial process- a decade of experience in Peru. electricity beyond basic household uses ing of agricultural products (box 1). To obtain the desired benefits, Most countries place a high priority on electrification, recognizing the rural electrification programs many benefits it can bring. These benefits include improved lighting; Box 1. Examples of productive uses of electricity need to encourage and support higher educational attainments of children; improved productivity in installation and reliable operation businesses and agriculture; improved health through reduced use Agriculture of electrical equipment that of kerosene lamps; more access to entertainment and information • Pumps (groundwater, surface water) makes production more efficient through radio, television and computers; and increased social activity and profitable. • Modern irrigation (sprinkler, drip) and safety through public lighting (IEG 2008). Today, electrification is • Processing centers for coffee, cereals, root crops, fruit often combined with investments in other areas, such as roads, water supply, education, training, technical assistance, and access to credit. • Grain and rice mills Janina Franco is a senior This brief focuses on the important benefits that can result from • Crop drying energy specialist and task the use of grid-based electricity for productive uses, over and above Animal husbandry team leader in the World basic household uses of electricity.1 It considers how the adoption • Centers for processing and storing dairy products and meat Bank’s Energy and of electrical equipment can increase the productivity of micro-, Extractives Global Practice. • Heated shelters, feed mixing and processing small, and medium-sized businesses, including those based in the V. Susan Bogach Metalworking and carpentry home. It also shows how promotion of productive uses can increase is a senior energy • Soldering equipment, saws, lathes, and sanders the financial viability of investments in electricity generation and consultant in the same distribution, especially in rural areas. Tourism, bakery, restaurants, crafts practice. “Any use of electricity that generates income for the user is a • Lights, fans, ovens, mixers, cookstoves Inés Pérez Arroyo productive use of electricity.” That definition comes from NRECA • Sewing machines is an energy consultant in the same practice. International, Ltd. (no date). The German development agency, GIZ, Source: Finucane, Bogach, and Garcia (2012). 1 Off-grid electricity from mini-grids and stand-alone systems is not considered here be- Maite Lasa is a cause of limited power. Biomass co-generation is also not considered. consultant in the Trade and Competitiveness Global Practice. 2 P r o m o t i n g P r o d u c t i v e U s e s o f E l e c tr i c i t y i n R u r a l E l e c tr i f i c a t i o n P r o g r a m s : E x per i e n c e f r o m P er u The simplest productive use of electricity is the extension of less than 20 employees, were based at home or nearby, and used working hours of restaurants, shops, clinics, schools, and artisanal electricity mainly for lighting and motive power (Fishbein 2003). businesses thanks to electric lights. Other common uses include the Applying electrical equipment to production increases produc- provision of cooling and refrigeration, heat, and motive power for tivity and income by (a) extending product life through electrical equipment for drying, refrigeration, freezing, and packaging; (b) agriculture, small industry, or commerce. Productive uses of raising output, standardizing product quality and cutting costs; (c) In Peru, which is the focus of this brief, common examples electricity are those replacing less-efficient equipment (e.g., diesel-powered motors); (d) include electric motors to grind grains and to process coffee, as that increase income or expanding access to information about markets and technologies; well as electric pumps to irrigate the land and improve growing and (e) creating jobs. These gains translate into higher incomes and productivity—that is, they conditions and yields. In Indonesia, a survey of businesses showed help catalyze economic growth in a community, thus contributing to add value. that most productive units were family owned and operated, had both increased household well-being and shared prosperity (figure 1). Figure 1. Main pathways from productive uses of electricity to income generation Use of electricity Refrigeration Communication Motive power Lighting Reduction of Mechanization/ Product preservation information costs automation Uniform production Time and money Extension Consumer drawn and higher quality savings operating hours Increased Cost reduction Higher prices Cost reduction unit quality Higher productivity Higher profitability Employment (+)/(-) Higher wages Higher owner income Source: GIZ, BMZ, ESMAP, AEI (2013). 3 P r o m o t i n g P r o d u c t i v e U s e s o f E l e c tr i c i t y i n R u r a l E l e c tr i f i c a t i o n P r o g r a m s : E x per i e n c e f r o m P er u Productive uses of energy can assist women, in particular, to Increased use of electricity for productive purposes can also earn income and improve their quality of life, through the use of improve the efficiency and financial sustainability of rural electric lighting to extend opportunities for cottage industries in the home systems and utility operations. When demand for electricity for and electrical equipment in activities such as baking and ceramics. productive uses is added to demand for household applications, Electrical equipment helps women save time and labor and creates not only do revenues increase but also the load curve changes, When demand for opportunities for education, socializing, and communication. Benefits enabling electricity systems to operate at more efficient levels. electricity for productive for women such as increased cash incomes, community develop- The demand profiles in electrified communities with a low level of ment, enhanced lighting for education, improved health services, productive activities often follow a classic pattern of morning and uses is added to demand lower indoor air pollution, and reduced labor burdens have been evening peaks of demand, mainly for lighting, with low demand for household applications, cited if not always documented. Increased income and fulfillment during the day. Daytime use of electricity in businesses can maximize not only do electricity of social needs in turn allows greater use of modern energy, with the use of the power infrastructure at times when it is otherwise system revenues increase further development benefits (White 2002; Cabraal, Barnes, and underused. Figure 2 provides a dramatic example from an Indian Agarwaal 2005). village. but also the load curve changes, enabling more efficient operation. Figure 2. Daily load curve in the village of Naurangabad, India, with and without productive uses 10 9 8 Productive user load profile 7 Hourly load (kW) Household load profile 6 5 Average daily energy demand: Household 11 kWh, productive use 54 kWh 4 3 2 1 0 5 am–6 am 6 am–7 am 7 am–8 am 8 am–9 am 9 am–10 am 10 am–11 am 11 am–12 pm 12 pm–1 pm 1 pm–2 pm 2 pm–3 pm 3 pm–4 pm 4 pm–5 pm 5 pm–6 pm 6 pm–7 pm 7 pm–8 pm 8 pm–9 pm 9 pm–10 pm 10 pm–11 pm 11 pm–12 am 12 am–1 am 1 am–2 am 2 am–3 am 3 am–4 am 4 am–5 am Morning Afternoon Evening Night Source: Rammelt (2015). 4 P r o m o t i n g P r o d u c t i v e U s e s o f E l e c tr i c i t y i n R u r a l E l e c tr i f i c a t i o n P r o g r a m s : E x per i e n c e f r o m P er u Why doesn’t the adoption of electrical equipment Supply constraints include: for production occur spontaneously? • Unreliable electricity service. An unreliable grid poses threats to equipment from voltage fluctuations and interruptions and can Demand, supply, and policy constraints must prevent realizing a return on investment in electrical equipment. often be overcome before electrical equipment is For example, ice cream factories in semi-rural areas in Sri Lanka Promotional efforts are integrated into production and Bangladesh grew quickly but continued using small-scale often needed to encourage generators due to the unreliability of the grid (IEG 2008). In spite of the potential benefits identified above, international experi- • Physical limitations of rural grids. Most rural distribution the adoption of electrical ence shows that promotional efforts are often needed to encourage systems use single-phase circuits (two-wire configurations with equipment for production the adoption of electrical equipment for production (Finucane, a neutral conductor or single-wire earth return). Such lines can and to overcome demand Bogach, and Garcia 2012). A major evaluation of World Bank-assisted accommodate small-scale applications such as sewing machines rural electrification projects concluded that simply providing an and refrigerators. However, the motors needed for many produc- constraints, supply electricity connection did not lead to adoption of electrical equipment tive uses can create problems on such systems. Motors have high constraints, and policy in businesses or significant development impacts (IEG 2008). The U.S. starting currents (often six to ten times their running currents) constraints. National Rural Electric Cooperative, with many years of experience that can cause a voltage depression on start-up. As a result, many worldwide, recognizes that increasing the productive uses of electric- utilities limit the size of the motors that can be run on rural circuits. ity is a long-standing challenge (NRECA International, Ltd. ND). • Minimal service by rural utilities. Utilities serving rural areas The reasons why adoption of electrical equipment requires often provide minimal service, focusing on connections, billing, promotion relate to (a) the nature of rural producers and the markets and collection. Many have no staff to help rural producers select for their products (demand constraints); (b) the characteristics of electrical equipment or design connections and facilities. rural electricity supply (supply constraints); and (c) tariff and regula- • Low distribution company revenues and viability in rural tory issues (public policy constraints). areas. Utilities often incur high costs but earn low revenues in Demand constraints include: rural areas owing to a combination of low levels of demand, the • Limited market opportunities. The local market may not be lack of cost-reflective tariffs and the absence of compensating able to absorb the expected increase in production from use of subsidies. The result is poor quality and minimal service. electrical equipment. • Limited access to information. Producers may lack Public policy constraints include: knowledge about business opportunities or technology options • Tariff issues. Rural tariffs may not fully cover costs, discour- (electrical equipment types, sizes, brands, local availability), or aging utilities from promoting demand. Tariff structures may how to connect to the grid. In a survey on productive uses in discourage productive uses of electricity. In Peru, for example, Indonesia, this was the main barrier identified. users with demand of less than 100 kWh per month are entitled • Lack of technical and management skills. Adopting a to a graduated cross-subsidy. If they increase consumption, they new technology may require know-how that rural producers may lose all or part of that subsidy. lack. They may not have the skills to present a business plan to • Electrification targets and system designs that focus on financing institutions. In rural areas, qualified technicians may not access and ignore motorized uses. When programs focus be available to maintain equipment. only on numbers of connections, system designs often use least- • High investment costs and limited financing. Producers cost single-phase or single-wire earth return distribution lines. may face high upfront costs for grid connection and new As noted above, such lines often limit the use of motors that equipment. Credit to finance those costs may be scarce in some are essential for common applications such as grinding, milling, rural areas. pumping, and sawing. 5 P r o m o t i n g P r o d u c t i v e U s e s o f E l e c tr i c i t y i n R u r a l E l e c tr i f i c a t i o n P r o g r a m s : E x per i e n c e f r o m P er u • Lack of evidence linking productive uses of electricity to socioeconomic development. Data on the results of promot- Box 2. Promotion of productive uses of electricity in ing productive uses of electrical power has focused on increases Indonesia in demand for electricity and producers’ output. There is a lack of data and evidence-based conclusions on the broader effects— Two World Bank–assisted rural electrification projects in Indonesia (RE I & II) pioneered the application of business development services Target areas and on income generation, health, and education—of expanding the for productive uses of electricity. Implemented by the national communities were productive use of electricity. utility, PLN, the projects reached out to small businesses through • Electrification seen as an end in itself. Rural electrification nongovernmental organizations that addressed lack of information, selected based on tariff barriers, and service quality. Impact studies showed that 66,000 must be seen not as an end, but as a means of promoting rural criteria that included enterprises adopted electrical equipment under the RE 1 project, and development and the well-being of rural populations. more than 20,000 jobs were created. “Outsourcing” to NGOs was an a surplus of electricity • Lack of coordination with other development efforts. effective way to reach individual producers, although the program did Too often, electrification is not coordinated with efforts in other not take hold as hoped within PLN. supply, 24-hour electricity Source: Fishbein (2003). sectors, such as health, education, agricultural extension, or service, adequate physical small-industry development programs. infrastructure, availability 8.2 percent. Through the FONER projects, distribution companies of complementary support Can those constraints be overcome? received capital cost subsidies to establish 124,300 new connections services and programs, Peru has achieved good results by promoting through grid extension, while an additional 18,900 households, and, most importantly, small businesses, and public buildings obtained regulated electricity productive uses of electricity the presence of small service from individual household solar photovoltaic systems Over the last decade, Peru has made a concerted effort to increase owned and maintained by distribution companies. The two projects enterprises with potential rural electricity coverage, introducing the Rural Electrification Law also helped more than 25,000 family businesses adopt electrical to increase electricity of 2006 and establishing, in 2007, the General Directorate of Rural equipment that increased their productivity. The Bank’s Energy consumption. Electrification (DGER) within the Ministry of Energy and Mines. From Sector Management Assistance Program (ESMAP) provided technical 2007 to 2015, electricity coverage increased from 29 to 78 percent in assistance to support the projects. DGER’s productive uses activities rural areas and from 74 to 93 percent nationally (Ministry of Energy were designed using previous experience in Indonesia (box 2). and Mines 2016). Promotion of productive uses under Peru’s FONER I and II The DGER’s National Plan for Rural Electrification 2016–25 projects was carried out through a series of activities in specific recognizes that the promotion of productive uses of power fosters geographical areas selected for the presence of productive activities economic and social development. The plan aims to exploit that and the willingness of the distribution company to participate potential through capacity building and education of rural producers (Finucane, Bogach, and Garcia 2012). For each activity, the DGER in coordination with other government agencies in value chains such first signed a memorandum of understanding with the distribution as coffee, cocoa and grain processing, bakeries, livestock and dairy company. It then signed a contract with a competitively selected production. local NGO to assess the market for productive uses of electricity and Peru’s rural electrification efforts have included two World carry out promotional activities to increase them, in collaboration Bank-assisted Rural Electrification Projects implemented by the DGER with the distribution company and other local development efforts. (known as FONER I and II) that have led the way in establishing the Key elements of the approach are described below. importance of productive uses of electricity. FONER I was carried out Selection of the communities. Target areas and communities between 2006 and 2013; FONER II closed in August 2017. Together, were selected based on criteria that included a surplus of electricity the two projects provided electricity access to more than 597,100 supply, 24-hour electricity service, adequate physical infrastructure, rural residents, increasing national rural electrification coverage by availability of complementary support services and programs, and, 6 P r o m o t i n g P r o d u c t i v e U s e s o f E l e c tr i c i t y i n R u r a l E l e c tr i f i c a t i o n P r o g r a m s : E x per i e n c e f r o m P er u The activities targeted were chiefly small-scale operations in agriculture (e.g., coffee, cacao, grains, cereals, fruits, livestock, dairy); and off-farm activities (e.g., artisanal mining, textiles, carpentry, metal working, bakeries, ceramics, transportation, and distribution). Throughout the country, a total of 600 interventions increased electricity demand by 22.3 GWh per year, exceeding the target of 19.5 GWh. Figure 4. Power-assisted brick making most importantly, the presence of small enterprises with potential to motivation for social development. They tailored their approaches to increase electricity consumption. the communities and their own skill sets, using innovative methods Memorandum of understanding with distribution compa- like live theater performances to attract attention. The contracts had nies. Distribution companies were selected based on their interest two phases. Phase 1 consisted of about three months for surveys, in promoting productive uses. The DGER signed an agreement with assessments, coordination with other programs and sectors, and each company, establishing its role and responsibilities. identification of opportunities. The program then negotiated with Time-limited contracts with NGOs. The project team in the the NGO performance targets for Phase 2 based on the analysis of DGER competitively procured the services of an NGO for promotional Phase 1. Phase 2 consisted of about nine months of capacity building activities in each area. The NGOS were key actors and change of individual producers and cooperatives and implementation of makers, given their links with the communities, field experience, and business plans. 7 P r o m o t i n g P r o d u c t i v e U s e s o f E l e c tr i c i t y i n R u r a l E l e c tr i f i c a t i o n P r o g r a m s : E x per i e n c e f r o m P er u credit for equipment and electricity infrastructure.2 An institutional platform was created for the project. Activities targeted. While the activities targeted varied by region, they were chiefly small-scale operations in agriculture (e.g., coffee, cacao, grains, cereals, fruits, livestock, dairy); and off-farm About a third of the activities (e.g., artisanal mining, textiles, carpentry, metal working, producers that benefited bakeries, ceramics, transportation, and distribution) (figures 3 and 4). In Cuzco, the main productive activities included grain milling, coffee from the productive uses processing, agricultural processing, and milk products. In Junin, the promotion were women. focus was on coffee production and grain milling, working mainly This came about naturally, with cooperatives. In Lima provinces, the focus was on pumping for as women entrepreneurs the production of prickly pear, ceramics, and dairy products. Leadership within the project team. Essential to the success are active in bakeries, of the entire effort was an effective productive-uses coordinator dairy production, ceramics, on the FONER team who maintained close contact among the and textiles and are parties and supervised the activities of the NGOs and distribution represented in most companies. other types of productive activities in Peru. What does the work in Peru show us? Promotion of productive uses of electricity in rural areas worked and benefited producers Under FONER I and II, the DGER carried out seventeen contracts with ten NGOs working together with eleven distribution companies Figure 3. Coffee processing with the aid of electricity in eighteen Peruvian provinces, benefiting more than 25,000 family productive units. The productive uses program was active in all three major geographical regions in Peru—the dry, flat, coastal Business development services. The NGOs helped small desert plains, the highland areas of the Andes, and the Amazonian enterprises address constraints using business development tech- rainforest. The NGOs developed a business plan for each value chain niques that included: (a) deployment of strong field-based teams; (b) identified. Throughout the country, a total of 600 interventions under analysis of market opportunities for electricity based on productive both projects increased electricity demand by 22.3 GWh per year, chains; (c) assistance in preparing business plans and obtaining exceeding the projects’ combined targets of 19.5 GWh. credit from financial institutions; (d) targeting of low-risk agricul- An impact evaluation of the productive uses component of the ture-based businesses; (e) integration with other projects, sectors, FONER I Project estimated that its promotional activities increased and government programs; and (f) coordination with distribution the average electricity consumption of the participating producers companies on how to provide adequate connections. from 56 to 240 kWh per month, an increase of more than 300 Collaboration with other actors and programs. The success of the small NGO teams depended on active collaboration with other 2 Partners include INAI (Instituto Nacional de Innovación Agraria), SENATI (Servicio Nacional actors such as other government programs and agencies, municipal- de Aprendizaje y Trabajo Industrial), ALIADOS (Programa de Apoyo a las Alianzas Productivas ities and local associations, and finance organizations that provided de la Sierra), AGRORURAL (Programa de Desarrollo Productivo Agrario Rural), CIED (Centro de Investigación y Educación), Ministry of Agriculture, and local universities and technical institutes. 8 P r o m o t i n g P r o d u c t i v e U s e s o f E l e c tr i c i t y i n R u r a l E l e c tr i f i c a t i o n P r o g r a m s : E x per i e n c e f r o m P er u percent. Participating producers reported a number of benefits: Rural electrification authorities must lead the effort to more productive hours during the day (56 percent); higher levels promote productive uses of electrical power by integrating of production (39 percent); better product quality (40 percent); and productive uses into efforts to extend the rural grid. They must higher market prices (39 percent). A comparison between producers organize business development services to actual and potential that benefited from the productive uses interventions and those that producers; ensure that distribution companies address the demands Peru’s success could be did not estimated that the producers under the project had higher and constraints of productive users; modify rural distribution systems replicated where similar net gains of about S/. 130 per month, a project-related increase of 18 to foster productive uses; and adapt regulatory practices to cover percent (Prisma, Macroconsult, and Instituto Cuanto 2016). rural marketing costs and the costs of infrastructure. conditions exist. These About a third of the producers that benefited from the productive Distribution companies must support the promotion conditions include: (a) uses promotion were women. This came about naturally, as women of productive uses by providing quality service in rural areas, broad-based economic entrepreneurs are active in bakeries, dairy production, ceramics, responding to requests for connections for productive uses, and growth that reaches into and textiles and are represented in most other types of productive sharing in the cost of those connections, based on regulations. activities in Peru. For example, FONER I assisted an association of Change agents are needed. Rural electrification programs rural areas; (b) strong NGOs women in adapting its electrical installations to the requirements of need to contract NGOs or similar agents of change to interact with that are active in rural idle productive machinery to increase production of bakery products, individual producers as distribution companies cannot be expected development efforts; (c) especially cookies, made from kiwicha (amaranth seed), a high-nu- to lead the work of promoting productive uses with individual rural adequate infrastructure trition traditional crop native to Peru, and to more effectively brand, producers. The structure of the NGO contracts was one key to label, and market the goods. success in Peru, especially their results-based and phased approach. and availability of financing The incorporation of productive uses into the National Rural Also key was the flexibility given to NGOs to apply their particular for rural productive Electrification Plan and the availability of funds for capacity building strengths. investments; and, (d) from Peru’s Rural Electrification Fund provide a foundation for the While opportunities may be easy to identify, constraints willingness of distribution DGER and the electricity distribution companies to continue promo- need to be addressed. In the FONER projects, finding opportuni- companies to make tion of productive uses after FONER II closes. ties for adoption of electrical equipment by existing producers was DGER held an international forum on Peru’s productive uses relatively easy. Peer-replication worked well, once first adopters set productive connections. promotion experience in Lima in November 2016. The 200 attendees a strong example. Financing was accessible after solid business included participants from Argentina, Bolivia, Colombia, Germany plans were prepared. The degree to which markets would absorb (GIZ), Haiti, and the United States (NRECA). Conclusions from the increased production was not known ahead of time, but this poten- forum are reflected in this brief. tial constraint proved less serious than expected. The potential of monitoring and reporting needs to Could Peru’s experience be replicated? be fully exploited. Monitoring beneficiaries for 1–2 years after adoption of electrical equipment would increase knowledge of Yes, where supportive conditions exist impacts. To assess broader impacts, it would be useful to introduce FONER’s success could be replicated where similar conditions exist. additional indicators such as increased production and income and These conditions include: (a) broad-based economic growth that employment generation. reaches into rural areas; (b) strong NGOs that are active in rural development efforts; (c) adequate infrastructure and availability of financing for rural productive investments; and, (d) willingness of distribution companies to make productive connections. Lessons from Peru are summarized below. 9 P r o m o t i n g P r o d u c t i v e U s e s o f E l e c tr i c i t y i n R u r a l E l e c tr i f i c a t i o n P r o g r a m s : E x per i e n c e f r o m P er u What can we conclude? Collaboration with other actors and availability of com- plementary infrastructure increase probability of success Promoting productive uses of electricity can enhance and impact. Promotion of productive uses depends on collabora- producers’ results while simultaneously improving tion with actors outside the electricity sector such as agricultural and the viability of electricity distribution rural development programs, municipalities, and local associations Change agents are needed. and finance organizations. Success is more likely in places that have The promotion of productive uses of electricity can signifi- Distribution companies achieved a certain level of development and where complementary cantly improve productivity in rural areas. Experiences in infrastructure (transport, water supply, and ICT services) and services cannot be expected to World Bank-assisted projects in Peru and Indonesia have shown (e.g., availability of credit) already exist (Fishbein 2003). Credit and lead the work of promoting that such promotion can have a significant effect on: (a) adoption concessional loans programs allowed local entrepreneurs to explore of electrical equipment in rural areas (66,000 enterprises adopted productive uses with possibilities for electrification in India and Sri Lanka; while knowl- equipment through Indonesia’s RE I and 25,000 through Peru’s individual rural producers. edge and training on how to use new-found electrical and motive FONER I and II); (b) electricity use (an estimated 300 percent increase power increased profitability for households under the Nepal Home The structure of the NGO annually per participating producer in Peru’s FONER I); (c) income Employment and Lighting Package (IEG 2008). contracts was one key to and employment in rural enterprises (an increase in monthly income Assessment of the broad impacts of promoting produc- of 18 percent by participating producers through RE I in Peru and an success in Peru. tive uses needs to be strengthened. More evidence is needed additional 20,000 jobs through RE I in Indonesia). that links adoption of electrical equipment to increased economic Rural electrification programs need to actively promote activity and well-being. Monitoring of electrification programs has productive uses of electricity. Between 2000 and 2014, however, focused on sector outputs (connections, kWh sales) rather than only 16 of 278 World Bank electricity-sector projects (about 6 outcomes (income creation, employment). Impact evaluations and percent) included indicators in their results frameworks for tracking other research could investigate and measure the channels through productive uses and increased income associated with electricity which electricity increases economic activity, raises incomes, and access (IEG 2015). Fewer projects included active promotion of improves livelihoods at levels beyond the firm and the household productive uses. level (GIZ, BMZ, ESMAP, and AEI 2013). Research could test whether a Standards and regulations for rural electrification need given intervention created desirable effects such as provision of new to be adapted to support productive uses. Designs of rural higher-value goods, more-efficient processing of local raw materials, electrification systems must support productive uses of electricity and transfer of production from urban to rural areas—or whether it (such as three-phase electric motors), not just lights and a few simply reallocated incomes among different producers (EIUI PDF and appliances. The costs of providing adequate levels of service in rural GIZ 2011). areas need to be reflected in rural tariffs. Rural tariffs also need to The demonstrated benefits to rural producers and elec- encourage productive uses, including lower tariffs for larger-scale trical utilities already justify the inclusion of strong efforts demand or off-peak electricity consumption. to promote productive uses in electrification programs. If NGOs have proven to be successful agents of change in rural people are to be fully integrated into modern economies, rural programs to promote productive uses of electricity. They can electricity systems must facilitate a broad range of productive uses work directly with producers and coordinate among stakeholders, beyond providing power for lighting and basic household appliances. including other government programs, as a natural extension of their development activities. Other change agents could be small business development centers, microfinance institutions, programs that provide credit to small and medium-sized enterprises, small business accelerators, and chambers of commerce. 10 P r o m o t i n g P r o d u c t i v e U s e s o f E l e c tr i c i t y i n R u r a l E l e c tr i f i c a t i o n P r o g r a m s : E x per i e n c e f r o m P er u References Ministry of Energy and Mines. 2016. National Rural Electrification Plan Make further Cabraal, R. A., D. F. Barnes, and S. G. Agarwal. 2005. “Productive 2016–2025. Rural Electrification Directorate, Ministry of Energy connections and Mines. Lima, Peru. Uses of Electricity for Rural Development.” Annual Review of NRECA International, Ltd. No date. Guides for Electric Cooperative Environmental Resources 30: 117–44. Live Wire 2014/6. “Measuring Development and Rural Electrification. Module 9: Productive EUEI PDF (EUEI Partnership Dialogue Facility) and GIZ (Deutsche the Results of World Bank uses of electricity. Produced with funding from the U.S. Agency Gesellschaft für Internationale Zusammenarbeit). 2011. Lending in the Energy Sector,” for International Development. Arlington, VA, USA: NRECA Productive Uses of Energy—PRODUSE: A manual for electrifica- by Sudeshna Ghosh Banerjee, International, Ltd., http://www.nrecainternational.coop. Ruchi Soni, and Elisa Portale. tion practitioners. Eschborn, Germany. Prisma, Macroconsult, and Instituto Cuanto. 2016. “Servicio de Finucane, J., S. V. Bogach, and L. E. Garcia. 2012. Promoting Productive Live Wires 2014/30. “Tracking consultoría para la evaluación de resultados e impacto del Uses of Electricity in Rural Areas of Peru: Experience and Lessons Progress Toward Providing Componente 3: Promoción de usos productivos de la electrici- Learned. Energy Sector Management Assistance Program, Sustainable Energy for All dad,” Lima, Peru: Ministry of Energy and Mines. World Bank, Washington, DC. in Latin America and the Rammelt, M. 2015. Productive Uses of Electricity: Opportunities for Fishbein, R. 2003. “Survey of Productive Uses of Electricity in Rural Caribbean,” by Elisa Portale Rural Electrification. Areas.” Unpublished paper submitted to Africa Energy Unit, and Joeri de Wit. (Related UN General Assembly. 2013. Report of the Secretary General, World Bank, Washington, DC. briefs are available for other 2014–2024—United Nations Decade of Sustainable Energy for All. GIZ, BMZ (Federal Ministry for Economic Cooperation and regions of the world.) New York. Development), ESMAP (Energy Sector Management Assistance White, R. D. 2002. GEF-FAO Workshop on Productive Uses of Live Wire 2014/35. “Planning Program), AEI (Africa Electrification Initiative). 2013. Impact Renewable Energy: Experience, Strategies, and Project for Electricity Access,” by Monitoring and Evaluation of Productive Electricity Use: An Development, June 18–20, Workshop Synthesis. Rome. Italy. Debabrata Chattopadhyay, Implementation Guide for Project Managers. Eschborn, Germany. Rahul Kitchlu, and Rhonda L. ———.2013. Productive Use of Energy—PRODUSE: Measuring This note is based on the experience of two World Bank–assisted rural Jordan. Impacts of Electrification on Small and Micro-Enterprises in electrification projects in Peru (FONER I and FONER II), with support from the Sub-Saharan Africa. Eschborn, Germany. Energy Sector Management Assistance Program. The authors are grateful Live Wire 2017/76. IEG (Independent Evaluation Group). 2015. World Bank Group Support to the Ministry of Energy and Mines in Peru, especially the Directorate “Increasing the Potential of to Electricity Access, FY 2000–14. Washington, DC: World Bank General of Rural Electrification (DGER) and the project teams of FONER I and Concessions to Expand Rural II, for their efforts to promote the productive uses of electricity and the high Group. Electrification in Sub-Saharan quality of the documentation provided on the program, including impact ———. 2008. The Welfare Impact of Rural Electrification: a Africa,” by Richard Hosier, evaluations, that enabled the preparation of this note. The authors thank the Morgan Bazilian, and Tatia Reassessment of the Costs and Benefits. Washington, DC: peer reviewers of the note, Karen Bazex (senior energy specialist in the World Lemondzhava. World Bank Group. Bank’s Africa region) and Koffi Ekouevi (senior economist in the World Bank’s Khander, S.R., D. F. Barnes, H. A. Samad. 2009. Welfare Impacts of Latin America and Caribbean region). Live Wire 2017/79. “Rural Rural Electrification: A Case Study from Bangladesh. Washington, Electrification Using DC: World Bank. Shield Wire Schemes,” by Franklin K. Gbedey, David Vilar Ferrenbach, and Tatia Lemondzhava. Get Connected to Live Wire Live Wires are designed for easy reading on the screen and for downloading The Live Wire series of online knowledge notes is an initiative of the World Bank Group’s Energy and self-printing in color or “Live Wire is designed and Extractives Global Practice, reflecting the emphasis on knowledge management and solu- black and white. tions-oriented knowledge that is emerging from the ongoing change process within the Bank for practitioners inside Group. For World Bank employees: and outside the Bank. 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Once a year, the Energy and Extractives Global Practice takes stock of all notes that appeared, reviewing their quality and identifying priority areas to be covered in the following year’s pipeline. Please visit our Live Wire web page for updates: http://www.worldbank.org/energy/livewire e Pa c i f i c 2014/28 ainable energy for all in easT asia and Th 1 Tracking Progress Toward Providing susT TIVES GLOBAL PRACTICE A KNOWLEDGE NOTE SERIES FOR THE ENERGY & EXTRAC THE BOTTOM LINE Tracking Progress Toward Providing Sustainable Energy where does the region stand on the quest for sustainable for All in East Asia and the Pacific 2014/29 and cenTral asia energy for all? in 2010, eaP easTern euroPe sT ainable en ergy for all in databases—technical measures. This note is based on that frame- g su v i d i n had an electrification rate of Why is this important? ess Toward Pro work (World Bank 2014). SE4ALL will publish an updated version of 1 Tracking Progr 95 percent, and 52 percent of the population had access Tracking regional trends is critical to monitoring the GTF in 2015. to nonsolid fuel for cooking. the progress of the Sustainable Energy for All The primary indicators and data sources that the GTF uses to track progress toward the three SE4ALL goals are summarized below. consumption of renewable (SE4ALL) initiative C T I V E S G L O B A L P R A C T I C E ENERGY & EXTRA • Energy access. Access to modern energy services is measured T E S E R I E S F O R T H EIn declaring 2012 the “International Year of Sustainable Energy for energy decreased overall A KNO W L E D G E N Oand 2010, though by the percentage of the population with an electricity between 1990 All,” the UN General Assembly established three objectives to be connection and the percentage of the population with access Energy modern forms grew rapidly. d Providing Sustainable accomplished by 2030: to ensure universal access to modern energy energy intensity levels are high to nonsolid fuels.2 These data are collected using household Tracking Progress Towar services,1 to double the 2010 share of renewable energy in the global surveys and reported in the World Bank’s Global Electrification but declining rapidly. overall THE BOTTOM LINE energy mix, and to double the global rate of improvement in energy e and Central Asia trends are positive, but bold Database and the World Health Organization’s Household Energy for All in Eastern Europ efficiency relative to the period 1990–2010 (SE4ALL 2012). stand policy measures will be required where does the region setting Database. The SE4ALL objectives are global, with individual countries on that frame- on the quest for sustainable to sustain progress. is based share of renewable energy in the their own national targets databases— technical in a measures. way that is Thisconsistent with the overall of • Renewable energy. The note version energy for all? The region SE4ALL will publish an updated their ability energy mix is measured by the percentage of total final energy to Why is this important ? spirit of the work initiative. (World Bank Because2014). countries differ greatly in has near-universal access consumption that is derived from renewable energy resources. of trends is critical to monitoring to pursue thetheGTF in 2015. three objectives, some will make more rapid progress GTF uses to Data used to calculate this indicator are obtained from energy electricity, and 93 percent Tracking regional othersindicators primary will excel and data sources that elsewhere, depending on their the while the population has access le Energy for All in one areaThe goals are summarized below. balances published by the International Energy Agency and the the progress of the Sustainab respective track starting progress pointstowardand the three SE4ALL comparative advantages as well as on services is measured to nonsolid fuel for cooking. access. Accessthat they modern to are able to energy marshal. United Nations. despite relatively abundant (SE4ALL) initiative the resources and support Energy with an electricity connection Elisa Portale is an l Year of Sustainable Energy for To sustain percentage of by the momentum forthe the population achievement of the SE4ALL 2• Energy efficiency. The rate of improvement of energy efficiency hydropower, the share In declaring 2012 the “Internationa energy economist in with access to nonsolid fuels. three global objectives objectives, andathe means of charting percentage of the population global progress to 2030 is needed. is approximated by the compound annual growth rate (CAGR) of renewables in energy All,” the UN General Assembly established the Energy Sector surveys and reported access to modern universalAssistance The World TheseBank and data are the collected International using household Energy Agency led a consor- of energy intensity, where energy intensity is the ratio of total consumption has remained to be accomplished by 2030: to ensure Management Database and the World of theenergy intium of 15 renewable international in the World Bank’s Global agencies toElectrification establish the SE4ALL Global primary energy consumption to gross domestic product (GDP) energy the 2010 share of Program (ESMAP) relatively low. very high energy services, to double Database. measured in purchasing power parity (PPP) terms. Data used to 1 t ’s Household provides Energy a system for regular World Bank’s Energy the global rate of improvemen and Extractives Tracking Framework Health (GTF), which Organization in the energy intensity levels have come and to double the global energy mix, Global Practice. (SE4ALL 2012). based on energy. of renewable The sharepractical, rigorous—yet energy given available calculate energy intensity are obtained from energy balances to the period 1990–2010 global reporting, Renewable down rapidly. The big questions in energy efficiency relative setting by the percentage of total final energy consumption published by the International Energy Agency and the United evolve Joeri withde Wit is an countries individual mix is measured Data used to are how renewables will The SE4ALL objectives are global, economist in with the overall from renewable energy when every resources. person on the planet has access Nations. picks up a way energy that is consistent 1 The universal derived that isaccess goal will be achieved balances published when energy demand in from energy their own national targets through electricity, clean cooking fuels, clean heating fuels, rates the Bank’s Energy and countries differ greatly in their ability calculate this indicator are obtained to modern energy services provided productive use and community services. The term “modern solutions” cookingNations. again and whether recent spirit of the initiative. Because Extractives Global rapid progress and energy for Energy Agency and the United liquefied petroleum gas), 2 Solid fuels are defined to include both traditional biomass (wood, charcoal, agricultural will make more by the refers to solutions International that involve electricity or gaseous fuels (including is pellets and briquettes), and of decline in energy intensity some t of those of efficiency energy and forest residues, dung, and so on), processed biomass (such as to pursue the three objectives, Practice. depending on their or solid/liquid fuels paired with Energy efficiency. The rate stoves exhibiting of overall improvemen emissions rates at or near other solid fuels (such as coal and lignite). will excel elsewhere, rate (CAGR) of energy will continue. in one area while others liquefied petroleum gas (www.sustainableenergyforall.org). annual growth as well as on approximated by the compound and comparative advantages is the ratio of total primary energy respective starting points marshal. where energy intensity that they are able to intensity, measured in purchas- the resources and support domestic product (GDP) for the achievement of the SE4ALL consumption to gross calculate energy intensity Elisa Portale is an To sustain momentum terms. Data used to charting global progress to 2030 is needed. ing power parity (PPP) the International energy economist in objectives, a means of balances published by the Energy Sector International Energy Agency led a consor- are obtained from energy The World Bank and the SE4ALL Global Energy Agency and the United Nations. Management Assistance agencies to establish the the GTF to provide a regional and tium of 15 international for regular This note uses data from Program (ESMAP) of the which provides a system for Eastern Tracking Framework (GTF), the three pillars of SE4ALL World Bank’s Energy and Extractives on rigorous—yet practical, given available country perspective on Global Practice. global reporting, based has access Joeri de Wit is an will be achieved when every person on the planet The universal access goal heating fuels, clean cooking fuels, clean energy economist in 1 agricultural provided through electricity, biomass (wood, charcoal, to modern energy services The term “modern cooking solutions” to include both traditional and briquettes), and Solid fuels are defined the Bank’s Energy and use and community services. biomass (such as pellets 2 and energy for productive petroleum gas), and so on), processed fuels (including liquefied and forest residues, dung, involve electricity or gaseous at or near those of Extractives Global refers to solutions that overall emissions rates other solid fuels (such as coal and lignite). with stoves exhibiting Practice. or solid/liquid fuels paired (www.sustainableenergyforall.org). liquefied petroleum gas Contribute to If you can’t spare the time to contribute to Live Wire, but have an idea for a topic, or case we should cover, let us know! Do you have something to say? We welcome your ideas through any of the following Say it in Live Wire! channels: Via the Communities of Those working on the front lines of energy and extractives development in emerging economies Practice in which you are have a wealth of technical knowledge and case experience to share with their colleagues but active seldom have the time to write for publication. By participating in the Energy Live Wire offers prospective authors a support system to make sharing your knowledge as easy as and Extractives Global possible: Practice’s annual Live Wire • Trained writers among our staff will be assigned upon request to draft Live Wire stories with series review meeting staff active in operations. • A professional series editor ensures that the writing is punchy and accessible. 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This note is databases—technical updated version of energy for all? The region SE4ALL will publish an has near-universal access to WhyD is this important? ERGY PRACTICE work (World Bank 2014). E G E N O T E S E R I E S F O R T H E E N to electricity, and 93 percent of A K N O W L g regiona l trends is critical monitoring the GTF in 2015. data sources that the GTF uses to Trackin The primary indicator s and the population has access s of the Sustain able Energy for All the three SE4ALL goals are summari zed below. the progres track progress toward Understanding CO Emissions from the Global Energy Sector nonsolid fuel for cooking. is measured to modern energy services THE BOTTOM LINE to Your Name Here t (SE4ALL) initiativ e Energy access. Access connection despite relatively abundan 2 population with an electricity ional Year of Sustainab le Energy for by the percentage of the access to nonsolid fuels. 2 hydropower, the share the energy sector contributes In declaring 2012 the “Internat objectives percenta ge of the population with establish ed three global and the and reported about 40 percent of global of renewables in energy All,” the UN General Assembly using household surveys Why is this issue important? access to modern These data are collected 2030: to ensure universal and the World Become an author has remained emissions of CO2. three- consumption to be accomplished by of renewable energy in in the World Bank’s Global Electrification Database high energy knowledge the share of the 2010 . energy requires very relatively low. Mitigating climate change services, to 1 double ld Energy Database quarters of those emissions rate of improvement Organization’s Househo CO2 intensity levels have come and to double the global Figure 1. CO2 emissions Health Figure 2. energy-related The share of renewable energy in the energy come from six major the global energy mix, sources of CO question s2 emissions to the period 1990–201 0 (SE4ALL 2012). by sector Renewab le energy. emissions by country consumption down rapidly. The big economies. although coal-fired in energy efficiency relative countries setting percenta ge of total final energy mix is measured by the of Live Wire and global, with individual LICs evolve les will opportunities to cut emissions of greenhouse aregases used to plants account for just are how renewab Identifying The SE4ALL objectives le energy resources. Data 0.5% picks upunderstanding of the main sources ofin those a way that is consistent with emis- the overall that is derived from renewab energy balances published 40 percent of world energy when energy demand requires a clear their own national targets in their ability are obtained from calculate this indicator Other Carbonrates for more than 80 percent of differ greatly countries Residential production, they were again and whethersions.recent dioxide (CO2) accounts spirit of the initiative. Because 6% sectors progress Other MICs nal Energy Agency and the United Nations. will make more rapid 15% intensity gas emissions globally, 1 primarily from the burning s, some 10% by the Internatio China improvement of energy efficiency is contribute to your responsible for more than of decline in energytotal greenhouse to pursue the three objective on their Other HICs . The rate of energy sector—defined include toexcel elsewhere, depending Energy efficiency 30% growth rate (CAGR) of energy will continue. of fossil fuels (IFCC 2007). The will 8% in one area while others by the compound annual Energy 70 percent of energy-sector as well as on 41% approxim and heat generation—contributed and compara tive advantages 41 ated Japan 4% energy the ratio of total primary Industry emissions in 2010. despite fuels consumed for electricity respective starting points 20% Russia energy intensity is that they are able to marshal. in 2010 (figure 1). Energy-related intensity, where USA product (GDP) measured in purchas- improvements in some percent of global CO2 emissions the resources and support 7% gross domestic practice and career! up the bulk of such ent of the SE4ALL Other consump tion to India 19% intensity is an at the point of combustion make for the achievem calculate energy countries, the global CO2 Elisa 2 emissions COPortale To sustain momentum transport Road 7% EU terms. Data used to andinare generated by the burning of fossil is needed. global progress to 2030 6% transport fuels, industrial ing power parity (PPP) the International economist objectives, a means of charting balances published by emissions 11% emission factor for energy energy 16% EnergyandSector nonrenewable municipal waste to generate nal Energy Agency led electricity Internatio a consor- are obtained from energy The World Bank and the thewaste, generation has hardly changed United Nations. ent Assistance venting and leakage to establish the emissions SE4ALL Global Energy Agency and the sector at the point and over the last 20 years. and heat. Black carbon and methane Managem tium of 15 international agencies Notes: Energy-related CO2 emissions are CO2 emissions from the energy from the GTF to provide a regional of the for regular This note usesanddata domestic Program (ESMAP) are not included in the analysis presented in this rk note. which provides a system (GTF), of combustion. Other Transport includes international marine aviation bunkers, of SE4ALL for Eastern Extractives Tracking Framewo available Other Sectors rail and pipeline transport; perspect ive on the three include pillars commercial/public World Bank’s Energy and given aviation and navigation, country on rigorous—yet practical, services, agriculture/forestry, fishing, energy industries other than electricity and heat genera- Global Practice. global reporting, based elsewhere; Energy = fuels consumed for electricity and Where do emissions come from? tion, and other emissions not specified as has in the opening paragraph. HIC, MIC, and LIC refer to high-, middle-, access Joeri de Wit is an will be achieved when on the planet heat generation, every person defined The universal access goal of countries heating fuels, energy economistare Emissions concentrated in 1 in a handful to modern energy services provided through electricity, fuels, clean and low-income clean cooking countries. cooking solutions” to include both traditional biomass (wood, charcoal, agricultural The term “modern Source: IEA 2012a. Solid fuels are defined and briquettes), and the Bank’s Energy and use and community services. biomass (such as pellets 2 and come primarily from burning and energy coal for productive electricity or gaseous fuels involve (including liquefied petroleum gas), of and forest residues, dung, and so on), processed Vivien Foster is sector Extractives Global refers to solutions that overall emissions rates at or near those other solid fuels (such as coal and lignite). with stoves exhibiting or solid/liquid fuels paired emissions closely manager for the Sus- The geographical pattern of energy-related CO Practice. gas 2 (www.sustainableenergy forall.org). liquefied petroleum middle-income countries, and only 0.5 percent by all low-income tainable Energy Depart- mirrors the distribution of energy consumption (figure 2). In 2010, ment at the World Bank countries put together. almost half of all such emissions were associated with the two (vfoster@worldbank.org). Coal is, by far, the largest source of energy-related CO2 emissions largest global energy consumers, and more than three-quarters globally, accounting for more than 70 percent of the total (figure 3). Daron Bedrosyan were associated with the top six emitting countries. Of the remaining works for London This reflects both the widespread use of coal to generate electrical energy-related CO2 emissions, about 8 percent were contributed Economics in Toronto. power, as well as the exceptionally high CO2 intensity of coal-fired by other high-income countries, another 15 percent by other Previously, he was an power (figure 4). Per unit of energy produced, coal emits significantly energy analyst with the more CO emissions than oil and more than twice as much as natural 2 World Bank’s Energy Practice. Gas Inventory 1 United Nations Framework Convention on Climate Change, Greenhouse 0.php gas. Data—Comparisons By Gas (database). http://unfccc.int/ghg_data/items/380