52795 THE WORLD BANK Beyond Bonn World Bank Group Progress on Renewable Energy and Energy Efficiency in Fiscal 2005 –2009 Beyond Bonn: World Bank Group Progress on Renewable Energy and Energy Efficiency in Fiscal 2005–2009 World Bank Group Energy and Mining Sector Board A L I N E R V E T A S L T T I M E N T M U L • • G Y U THE WORLD BANK C A R N A E N T G E E A Copyright © 2009 The International Bank for Reconstruction and Development / The World Bank Group 1818 H Street, NW Washington, D.C. 20433, USA All rights reserved First printing: December 2009 Manufactured in the United States of America This document is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of the Board of Executive Directors of the World Bank Group or the governments they represent. Contents Acronyms and Abbreviations vii Foreword ix Acknowledgments x Executive Summary xi Chapter 1: Introduction and Global Context 1 Trends 1 Climate Change Policy Drivers 2 Role of the World Bank Group 3 Alternative Energy and Energy Security Implications 5 Renewable Energy and Energy Efficiency Incentives and Experience 5 World Bank Group Interventions and Initiatives—Beyond Bonn 6 Chapter 2: Lessons from a Decade of IFC and World Bank Experience 13 Grid-Tied Renewable Electricity 13 Energy Efficiency 18 Chapter 3: Portfolio Review 29 Financial Commitments 29 Going Beyond the Bonn Commitment 30 Portfolio Characterization—Technology 31 Portfolio Characterization—World Bank Group Institutions 32 Region-wise Commitments 34 Outcomes and Impacts 36 Africa Renewable Energy Access Grants Program 40 The Asia Sustainable and Alternative Energy Program 42 The Energy Sector Management Assistance Program 43 Carbon Finance 44 Chapter 4: Looking Forward 51 The World Bank Group’s Past Efforts to Expand the Renewable Energy and Energy Efficiency Portfolio 51 Global Challenges for Scaling Up Renewable Energy and Energy Efficiency 52 The World Bank Group’s Continued Commitment into the Future: SFDCC and Energy Strategy 52 Mobilizing Additional Resources for Renewable Energy and Energy Efficiency 53 Helping the World Move toward a Cleaner Energy Future 58 Annex 1: Institutional Support for Renewable Energy and Energy Efficiency 63 Roles of the Institutions 63 iii Definitions 64 Different Reporting Styles 65 Annex 2: Annual Renewable Energy and Energy Efficiency Commitments from Fiscal 1990–09 67 Annex 3: Fiscal 2009 Projects 71 List of Boxes Box 1: World Bank Group Bonn Commitment 4 Box 2: Taking a Cross-Sectoral Perspective in India—a River Basin Study 16 Box 3: Responding to Stakeholder Concerns in the Nam Theun 2 Project 19 Box 4: Fostering Energy Efficiency Technology Innovation in the Industry Sector 20 Box 5: From Energy Efficiency Technology to Delivering Energy Savings—The Missing Link 21 Box 6: The IFC’s Energy Efficiency Interventions through the Financial Sector 22 Box 7: The First Clean Technology Fund Project 33 Box 8: IFC Investments in the Manufacture of Renewable Energy Technology 51 Box 9: Low-Carbon Growth Country Studies Program 54 Case Studies Case Study 1: The IFC/GEF Efficient Lighting Initiative Transforming Markets for Energy-Efficient Lighting 8 Case Study 2: Mainstreaming Solar Electrification in Bangladesh 10 Case Study 3: The IFC and World Bank Facilitate the Development of Wind Energy 24 Case Study 4: Lesotho Highlands Water Project—Good Governance and Communication for Large Hydropower Investments 26 Case Study 5: India Chiller Energy Efficiency Project—Reducing Greenhouse Gas and Chlorofluorocarbon Emissions Simultaneously 28 Case Study 6: Beijing Tackles Waste…and Helps the Environment with MIGA Guarantees 46 Case Study 7: Liberia’s Better Light Solar Project: A Model for Scale 48 Case Study 8: Making Transport More Energy-Efficient in Thailand 60 List of Figures Figure 1: World Bank Group Commitments for Renewable Energy and Energy Efficiency, 1990–2009 xi Figure 2: World Map with Distribution of Renewable Energy and Energy Efficiency Projects, Fiscal 2005–09 xiii Figure 3: Share of World Bank Group Commitments for Renewable Energy and Energy Efficiency Relative to Total Energy Sector Commitments xiii Figure 4: World Oil Prices, Monthly Averages, July 2005 to June 2009 5 Figure 5: World Bank Group Energy Efficiency and Renewable Energy Commitments, FY1990–2009 30 Figure 6: Trends in Renewable Energy and Energy Efficiency Lending 31 Figure 7: World Bank Group Commitments by Region, FY2005–09 34 iv Figure 8: Distribution of World Bank Group Renewable Energy and Energy Efficiency Projects Worldwide 36 Figure 9: Commitments by Region and Type, FY2009 37 List of Tables Table 1: Renewable Energy and Energy Efficiency Commitments by Institution xii Table 2: Measuring Progress in Energy Efficiency and New Renewable Energy Lending against Bonn Commitment Targets xiv Table 3: World Bank Group Renewable Energy and Energy Efficiency Commitments, FY2009 29 Table 4: World Bank Group Renewable Energy and Energy Efficiency Commitments, FY2005–09 30 Table 5: Measuring Progress in Energy Efficiency and New Renewable Energy Lending against Bonn Targets 31 Table 6: Region-wise Distribution of Projects, FY2005–09 35 v Acronyms and Abbreviations ACORE American Council on Renew- ICLEI Local Governments for able Energy Sustainability (international AFR Sub-Saharan Africa Region association of local govern- AFREA Africa Renewable Energy Ac- ments for sustainable devel- cess Grants Program opment) AFTEG Africa Energy Unit IDA International Development ASTAE Asia Sustainable and Alterna- Association tive Energy Program IDBI Industrial Development Bank CEEP India Chiller Energy Efficien- of India cy Project IDCOL Infrastructure Development CFB-IBRD Carbon Finance Business Company Ltd., Bangladesh CFC Chlorofluorocarbon IEA International Energy Agency CFL Compact fluorescent lamp IFC International Finance Corpo- CIF Climate Investment Funds ration CPF Carbon Partnership Facility INFRA Infrastructure Recovery and DFID U.K. Department for Interna- Assets tional Development IPCC Intergovernmental Panel on DSM Demand-side management Climate Change EAP East Asia and Pacific Region IRENA International Renewable EBRD European Bank for Recon- Energy Agency struction and Development LCR Latin America and Caribbean ECA Europe and Central Asia Region Region LED Light-emitting diode EE Energy efficiency LHWP Lesotho Highlands Water EECI Energy Efficient Cities Initia- Project tive (ESMAP) MFI Microfinance institution EF Environmental Flows (policy) MIGA Multilateral Investment ELI Efficient Lighting Initiative Guarantee Agency ESCO Energy service company MLF Montreal Protocol’s Multilat- ESKOM South African electricity pub- eral Fund lic utility MNA Middle East and North Africa ESMAP Energy Sector Management Region Assistance Program NGO Nongovernmental organiza- FEMA Forum of Energy Ministers of tion Africa OECD Organisation for Economic FY Fiscal year Co-operation and Develop- GDP Gross domestic product ment GEF Global Environment Facility PPIAF Public Private Infrastructure GHG Greenhouse gas Advisory Facility IBRD International Bank for Recon- PV Photovoltaic(s) struction and Development vii RE Renewable energy SREP Scaling Up Renewable Ener- REEEP Renewable Energy and En- gy in Low-Income Countries ergy Efficiency partnership TDE Bolivia Transportadora de REN21 Renewable Energy Policy Electricidad SA Network for the 21st Century U.K. United Kingdom RERED Rural Electrification and UNDP United Nations Development Renewable Energy Develop- Programme ment Project UNEP United Nations Environment RPS Renewable energy portfolio Programme standard UNFCCC United Nations Framework SADC Southern African Develop- Convention on Climate ment Community Change SAR South Asia Region SCF Strategic Climate Funds Units of Measure SEFI Sustainable Energy Finance Initiative (UNEP) GW Gigawatt SFDCC Strategic Framework for MW Megawatt Development and Climate ppm Parts per million Change TWh Terawatt-hour SHS Solar home system Wp Watts peak viii Foreword Over the past five years, it has become increasingly clear that renewable energy and energy efficiency offer sustainable solutions to problems of energy access, climate change, and fuel price volatility. The increasing penetration of renewable energy sources in the primary energy mix of a wide variety of low-, middle-, and high-income countries demonstrates the overall desirability of low-carbon energy sources and their economic and financial viability, paving the way for them to play an even greater role in the near future. The World Bank Group is proud to have helped lead the shift towards low-carbon economies around the world through its partnerships with client countries. The World Bank Group is pleased to report that its cumulative new renewable energy and energy efficiency financing in fiscal 2005–09 reached almost US$7 billion. In these five years, the World Bank Group’s financing for renewable energy and energy efficiency expanded to 364 projects in 85 countries, many of which implemented their first alternative energy projects ever. Just in fiscal 2009, the new renewable energy and energy efficiency investments reached US$3.1 billion, a historic high. This report is the fifth in the series documenting the World Bank Group’s progress in supporting renewable energy and energy efficiency. It details the successes of, and lessons learned from, the investments made by the World Bank Group over the past five years. The case studies provide spe- cific examples of financial and technical innovations that the World Bank Group has employed for financing of energy efficiency and renewable energy projects. The World Bank Group will continue to leverage the tools at its disposal—including new financing instruments and technical and policy assistance—to aid low- and middle-income countries in harnessing renewable energy resources and benefiting from energy efficiency improvements. We thank our partner countries, other bilateral development partners and the World Bank Group staff for their hard work in this area, and especially for their highly valuable contributions and stead- fast dedication to promoting the use of renewable energy and energy efficiency around the world. Greg Radford, Director Jamal Saghir, Director Environment and Energy, Transport and Water Department Social Development Department The World Bank International Finance Corporation ix Acknowledgments The report was prepared jointly by the Energy, Transport and Water Department in the World Bank’s Sustainable Development Vice Presidency and the Environment and Social Development Department of the International Finance Corporation (IFC). The work was directed by Anil Cabraal (World Bank), with Alan Miller (IFC) and Wyfield Chow (MIGA), and was prepared under the overall guidance of Lucio Monari and Jamal Saghir. The report is issued under the auspices of the Energy and Mining Sector Board. Frederic Asseline, Anil Cabraal, Wyfield Chow, Martha Jarosewich-Holder, Jessica Lin, Alan Miller, Varun Nangia, Mudit Narain, and Ashok Sarkar are the principal authors of the chapters. Case studies were prepared by Sabrina Birner, Wyfield Chow, Charles Cormier, Jamie Fergusson, Martha Jarosewich-Holder, Zhi Liu, Varun Nangia, Katherine Steel, Kristin Stroup, Russell Sturm, and Dana Younger. The portfolio analysis was conducted by Varun Nangia with contributions from Sabin Basnyat and Joseph Skoldeberg. Photos are credited to: Vahid Alavian, Anil Cabraal, Alexandra Le Courtois, Mudit Narain, Monali Ranade, Robert Robelus, Zuhair Sadeque (World Bank), Kristin Stroup (Energy and Security Group), Russell Sturm (IFC), and the World Bank Photo Library. Printing, photograph coordination, and organization support was provided by Eileen Fredriksen, Brian Ikaika Klein, Varun Nangia, and Mudit Narain. Rebecca Kary of Alpha-Omega Services, Inc., was responsible for the editing, and Robert Reinecke of The Word Express, Inc., was responsible for the typesetting. Please address questions or comments to Anil Cabraal (acabraal@worldbank.org) or Alan Miller (amiller2@ifc.org). x Executive Summary The World Bank Group puts renewable en- ergy and energy efficiency at the heart of its “Five years ago, we thought we were stretching ourselves by promising to ex- energy agenda. Millions of people around the pand support for renewable energy and world—including some of the poorest—have energy efficiency by 20% per year. As it gained a better quality of life through World turns out, our client countries have been even more ambitious in asking us to help Bank Group investments in solar, wind, hydro, them in this area, and we’ve been able geothermal, biomass, biogas, and energy ef- to respond with robust investments to ficiency projects. help build the low-carbon economies each country is seeking. We’ve now committed to even more challenging goals on clean A Significant Success energy and carbon intensity reduction investments as we strive to make reliable energy access for all a reality.” In 2009 World Bank Group financing of renew- able energy and energy efficiency projects and —Katherine Sierra programs in developing countries increased Vice President, Sustainable Development 24 percent to reach US$3.3 billion, the highest The World Bank ever. The World Bank Group achievement for fiscal 2009 is particularly significant, because it occurred in the midst of the global financial crisis and a dip in oil prices that the International The World Bank Group share of commitments for Energy Agency (IEA) estimates will contribute to renewable energy and energy efficiency has risen a 38 percent decline in global renewable energy steadily relative to total energy commitments. It investments. Commitments since July 2004 were rose to 36 percent in the past five years compared US$9.8 billion, compared to US$2.5 billion the to 13–20 percent in the years preceding (Figure 3). previous five years. Table 1 shows World Bank Group lending on renewable energy and energy Figure 1: World Bank Group Commitments for Renewable efficiency in fiscal 2005–09. Energy and Energy Efficiency, 1990–2009 3,500 20,000 3,305 Hydro > 10 MW Since 2000, the World Bank Group has com- New renewable energy 18,000 3,000 mitted more than US$12.1 billion to renewable Energy efficiency 16,000 Cumulative commitment 2,672 energy and energy efficiency (Figure 1). Dur- 2,500 14,000 Cumulative US$ millions ing the past 5 years, the World Bank Group Annual US$ millions 12,000 approved 364 renewable energy and energy 2,000 efficiency projects in 85 countries (Figure 2). 10,000 1,500 There were 99 projects in 46 countries last year 1,245 1,355 1,433 8,000 1,174 alone. Building on the record-high financing of 1,000 1,059 1,001 6,000 the past fiscal year, the World Bank Group is 832 4,000 expanding support for renewable energy and 500 417 545 524 407 416 406 271 264 313 2,000 energy efficiency. Today the renewable energy 53 219 0 0 and energy efficiency agenda is deeply rooted FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 in the World Bank Group’s operations around the globe. Source: World Bank Group data. xi Table 1: Renewable Energy and Energy Efficiency Commitments by Institution (millions of U.S. dollars) FY 2005–09 EE Hydro > 10 MW New RE1 Total World Bank 2,689 1,635 1,872 6,197 IBRD/IDA 2,418 1,199 1,364 4,981 GEF 186 0 321 508 Carbon Finance 82 118 178 378 Others2 3 318 9 330 IFC 1,404 862 948 3,214 Own funds 1,404 862 873 3,139 GEF 0 0 5 5 Carbon Finance 0 0 69 69 MIGA 40 227 90 357 Total 4,133 2,724 2,910 9,767 FY 2009 EE Hydro > 10 MW New RE1 Total World Bank 1386 43 840 2,269 IBRD/IDA 1,311 43 804 2,157 GEF 68 0 15 83 Carbon Finance 8 0 21 29 Others2 0 0 0 0 IFC 315 135 587 1,036 Own funds 315 135 587 1,036 Total 1,701 177 1,427 3,305 1. New RE comprises solar, wind, biomass, and geothermal, as well as hydropower with capacities up to 10 MW per facility. 2. Includes Guarantees, Recipient Executed, and Special Financing; US$100 million in Clean Technology Fund funding for Turkey is not included. In FY 2009, renewable energy and energy ef- new renewable energy (all forms of renewable ficiency commitments exceeded 40 percent of energy, including hydropower up to 10 MW per total energy lending commitments. facility) and energy efficiency in fiscal 2005–09 by an average of 20 percent each year over the The Bonn Commitment Exceeded baseline of US$209 million. The investments during this period exceeded the Bonn commit- At the Bonn International Conference on Renew- ment by 277 percent, reaching more than US$7 able Energies in 2004, the World Bank Group billion, compared to an expected commitment committed itself to increasing its lending for of US$1.9 billion (Table 2). xii Figure 2: World Map with Distribution of Renewable Energy and Energy Efficiency Projects, Fiscal 2005–09 This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, EUROPE AND CENTRAL ASIA any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Commitment Amounts: Energy Efficiency: US$ 1,788 million New Renewable Energy: US$ 547 million Hydro > 10MW: US$ 383 million 10 2 ECA 1 1 2 2 1 3 8 1 2 2 2 1 4 1 2 2 MIDDLE EAST AND NORTH AFRICA 2 1 3 1 4 1 1 1 1 EAST ASIA AND PACIFIC 9 3 1 1 2 Commitment Amounts: 1 2 1 1 2 22 13 6 Commitment Amounts: 3 1 1 Energy Efficiency: US$ 99 million 3 2 1 2 1 Energy Efficiency: US$ 876 million New Renewable Energy: US$ 138 million 5 1 2 4 2 1 3 New Renewable Energy: US$ 954 million 1 1 Hydro > 10MW: US$ 40 million 2 Hydro > 10MW: US$ 554 million 4 8 1 19 17 9 2 1 1 1 2 3 1 1 3 1 1 1 2 2 2 2 2 1 3 1 1 2 2 1 1 6 2 1 1 5 1 3 2 1 2 1 1 1 2 4 1 3 5 3 1 1 1 1 2 3 4 3 4 3 4 2 4 2 2 1 2 1 3 1 2 4 2 10 10 1 LCR 1 2 1 1 2 SOUTH ASIA 1 1 1 Commitment Amounts: LATIN AMERICA AND THE CARIBBEAN 1 AFR 1 1 4 Energy Efficiency: US$ 422 million Commitment Amounts: New Renewable Energy: US$ 326 million Energy Efficiency: US$ 396 million AFRICA 1 1 Hydro > 10MW: US$ 582 million New Renewable Energy: US$ 502 million 1 6 2 3 Commitment Amounts: Hydro > 10MW: US$ 164 million Energy Efficiency: US$ 552 million New Renewable Energy: US$ 444 million Energy Efficiency Projects (total commitments US$ 4,133 million) SEPTEMBER 2009 Hydro > 10MW: US$ 999 million New Renewable Energy Projects (total commitments US$ 2,910 million) IBRD 37151 Hydro > 10MW Projects (total commitments US$ 2,724 million) Figure 3: Share of World Bank Group Commitments for Factors Contributing to the Expansion of Renewable Energy and Energy Efficiency Relative to Total Renewable Energy and Energy Efficiency Energy Sector Commitments Investments 10,000 45% 9,767 Hydro > 10 MW 40% Percent of Total World Bank Group energy lending 9,000 New renewable energy 40% During the past five years, the World Bank Energy efficiency 36% 8,000 Percent energy/renewable energy 35% Group, with support from its development 7,000 partners, worked intensively with its client 30% countries to identify opportunities for renewable 6,000 25% US$ millions energy and energy efficiency and to incorpo- 5,000 20% 20% rate such investments into Country Assistance 18% 4,000 3,272 3,305 Strategies. The World Bank Group supported 3,000 13% 15% 2,459 2,413 energy sector reforms, built capacities, funded 2,000 10% project preparation, introduced new private 1,000 5% sector business models that were better suited 0 0% for renewable energy and energy efficiency, 1990–1994 1995–1999 2000–2004 2005–2009 (Bonn 2009 and provided considerable financing. During commitment period) the same period, energy and climate change Source: World Bank Group data. steadily became issues of central importance on the international stage, as well as in the domestic policy dialogues of most countries. Thorough atmospheric concentrations of greenhouse gases analyses and consequent warnings from the (GHGs) within desirable limits. scientific community have increased awareness of climate change and emphasized the urgency Coupled with these developments were major of adopting mitigation strategies to maintain policy changes in industrial countries, such as xiii Table 2: Measuring Progress in Energy Efficiency and New Renewable Energy Lending against Bonn Commitment Targets (millions of U.S. dollars) Bonn commitment period Average FY02–04 FY05 FY06 FY07 FY08 FY09 FY05–09 Actual new RE and EE 209 463 1,105 682 1,665 3,128 7,043 Bonn commitment 251 301 361 433 520 1,866 target Hydro > 10 MW (not 538 250 751 1,007 177 2,724 in Bonn commitment) the introduction of renewable portfolio stan- Rural and urban communities, small and large dards, feed-in tariffs, and other incentives and industries, public and private institutions and, financing to promote renewable energy and most importantly, people have benefited from energy efficiency. The resulting large invest- the myriad of renewable energy and energy ef- ments in industrial countries led to economies ficiency projects supported by the World Bank of scale in production and a reduction in costs Group. While the projects have increased access (although some short-term supply bottlenecks to electricity, reduced energy consumption and did increase the prices of some components). peak loads, and improved fuelwood supplies, These projects also had an important demon- they have enhanced the economic condition strative and confidence-building effect in devel- of people, increased productivity, and reduced oping countries, creating a better understanding indoor pollution and global carbon emissions. of conditions for deployment and improved The projects have increased the ability of public operational management. Some of the largest institutions to enable markets and enhanced the developing countries, notably China and India, ability of domestic financial institutions and in- implemented targets and policies to promote dustries to deliver renewable energy and energy clean energy. Globally, investments in renew- efficiency products and services. able energy reached US$120 billion in 2008, from around US$24 billion in 2004, a fivefold Lessons Learned increase. In the same period, World Bank Group support for renewable energy increased almost A number of general lessons have emerged from sevenfold, from US$221 million in fiscal 2004 the World Bank Group’s experiences. Some may to US$1,480 million in fiscal 2008. Oil price seem self-evident, but they are too frequently rises to US$147 per barrel, and gas and coal overlooked: price increases, together with increased price volatility, gave further impetus to considering • Money alone will not bring change. Efforts energy alternatives and improvements in en- need to be focused on capacity building, ergy efficiency. The private sector and private establishment of sound policy frameworks, equity firms have shown a greater appetite for and good governance. That being said, with- investments in alternative energy, proving to be out financial resources, broader deployment a harbinger of a low-carbon growth path for the of renewable energy and energy efficiency World Bank Group’s partner countries. will not happen. Moreover, synchronization xiv Chinese villagers, whose village in Qinghai Province uses solar energy, reviewing solar electricity experiences. between investments and capacity building ficiency development. Therefore, it is neces- is needed. If timely investments do not oc- sary to engage with private sector interests, cur, the capacities already built will quickly including project developers, technology dissipate. suppliers, and entrepreneurs, to obtain their • Governments must be market enablers, perspectives on market needs. What works and they must create a favorable business in one country at one time may not be what and regulatory environment, and adopt is needed elsewhere or at another time. transparent decision-making mechanisms. • Given the immense challenges at hand, Energy sector reform is essential if invest- increased coordination at both the local ments are to pay off and be scalable and and global levels and among multilateral sustainable, and if the benefits are to flow and bilateral agencies, governments, non- to those most in need. governmental organizations (NGOs), the • The vast majority of projects supported by private sector, and community groups is the World Bank Group have been owned and imperative to avoid duplication of projects implemented by the private sector. This is a and programs. testament to the importance of the private • Ensuring financial and economic viability is sector in renewable energy and energy ef- of paramount importance, or projects will not xv be sustainable over the long term. Donors the financing resource gap in addressing the and governments should be cautious about challenge of scaling up renewable energy and introducing heavily subsidized programs. energy efficiency, World Bank Group funds will These efforts may provide a small short-term have to be complemented by new concessional boost, but may not support the long-term resources, in addition to the Global Environment development of nascent commercial mar- Facility (GEF) and carbon market finance. kets. They can often hinder entrepreneurs in developing countries from delivering One such resource is the US$6.2 billion Climate alternative energy products and services in Investment Funds (CIF), a new source of financ- a profitable and sustainable manner. ing for pilot projects to initiate transformational • Capital investments must be linked closely change toward low-carbon and climate-resilient to committing resources and building ca- development in the largest GHG-emitting de- pacities to maintain facilities and provide veloping nations. As part of the CIF, the US$5.1 reliable and useful services over the long billion Clean Technology Fund (CTF) promotes term. Too often, provision of maintenance investments in clean technologies to allow and repair is overlooked or the challenge developing countries to grow on a low-carbon underestimated. path. The very first CTF project was approved • Innovation in technology, business model in May 2009, with US$100 million of additional and financing is necessary. Given the enor- financing supporting the US$500 million lent mity of the challenge and the huge resources by the World Bank Group to encourage private needed, it is necessary to find low-cost sector renewable energy and energy efficiency ways of sustainably providing these energy investments in Turkey. services and more rapid ways of building the infrastructure and human capacity and Another part of the CIF—the Strategic Climate introducing the technology. Funds (SCF)—provides financing to pilot new • Finally, and most importantly, sustained approaches that have potential for scaled-up, commitment to action by all partners is transformational application targeting specific needed. Good intentions alone are insuf- climate change challenges or sectoral responses. ficient. For example, a program for Scaling Up Renew- able Energy in Low-Income Countries (SREP), Looking Ahead will demonstrate the economic, social, and envi- ronmental viability of low-carbon development Much of the world has yet to realize the full pathways by creating new economic opportuni- potential and transformative promise of renew- ties and increasing energy access through the use able energy and energy efficiency. At the global of renewable energy. Initially to be capitalized level, energy-related GHG emissions account at US$250 million, the SREP will be piloted in for about 70 percent of total emissions and are 5–10 low-income countries. projected to grow by about 50 percent by 2030 unless supportive and effective policy measures The establishment of two new carbon facilities in are introduced very soon. Time is not on our the World Bank—the Carbon Partnership Facil- side; delay adds to the challenge and makes ity and the Forest Carbon Partnership Facility— meeting any given goal more difficult. Meeting marks a new phase for the World Bank’s carbon developmental goals while stabilizing GHG finance business. The move reflects the World emissions will require massive investments in re- Bank’s growing focus on scaling up climate newable energy and energy efficiency. To reduce change mitigation work and deepening and xvi broadening the carbon market beyond the cur- • Increasing financing for energy efficiency rent 11 carbon funds and facilities, which have and new renewable energy by an average of a total capital value of more than US$2 billion. 30 percent a year, from a baseline of US$600 Acknowledging that infrastructure investments million. and maintenance were the main casualties dur- • Expanding lending to hydropower that ing and after the Asian financial crisis of the meets environmental and social safeguards late 1990s and other similar economic contrac- and is economically and financially viable. tions, the World Bank Group has launched the Infrastructure Recovery and Assets (INFRA) The World Bank’s Energy Strategy (under prepa- platform to prevent such an outcome after the ration) will provide a framework to achieve the current recession. twin objectives of (a) improving access to and reliability of energy supply, and (b) facilitating During the past two years, the World Bank Group the shift to a more environmentally sustainable launched several initiatives to build on its record energy development path. This strategy will be of growth and provide expanded support for informed by extensive global consultations with renewable energy and energy efficiency. The 2008 all stakeholders, will promote complementary board-approved paper, Development and Climate roles of the public and private sectors, will facili- Change: A Strategic Framework for the World Bank tate the use of innovative financial products and Group (SFDCC), serves to guide and support the technical assistance, and will provide renewed operational response of the World Bank Group attention to incentives for energy efficiency and to new development challenges posed by global renewable energy, as well as to subsidy and climate change. The SFDCC commits to a more pricing issues. ambitious target than the Bonn commitment to increase the share of low-carbon projects (new Going forward, the World Bank Group will renewable energy, energy efficiency, and hydro- continue to leverage its technical expertise, power) to 50 percent of total energy lending in policy advice, and financing resources to further fiscal 2011 by undertaking the following: catalyze and mainstream renewable energy and Construction of the 156 MW St. Nikola Wind Farm in the municipality of Kavarna, in the north-east of Bulgaria, on an elevated plain approximately 3km from the Black Sea (IFC project, “AES Kavarna”). The wind park comprises 52 3 MW V90 turbines, manufactured by Vestas A.S. (Vestas) of Denmark. The project includes a 33/110 kV substation, connected to the national grid through an 8 km transmission line. xvii energy efficiency applications by the public and energy, environmental, and development chal- private sectors in its client countries. Global lenges demand no less. xviii Chapter 1: Introduction and Global Context Renewable energy (RE) and energy efficiency percent of total global renewable capacity is (EE) adoption has seen a remarkable surge over now in developing countries, including large the past five years. Excluding large hydropower, hydropower. Global renewable power capacity renewable energy sources have contributed 120 is estimated to be 1,140 GW.2 In 2008, for the first GW of the new capacity installed around the time, more investments were made in renew- world, rising from 160 GW in 2004 to 280 GW able than in conventional power capacity.3 The in 2008.1 Various factors have accelerated de- capacity added from renewable sources reached ployment of these alternatives to conventional a record 25 percent of total generation capacity thermal energy generation, including growing additions in 2008.4 recognition of the urgent need to mitigate climate change (and subsequent national and interna- The growth of investments in global renewable tional policy drivers), energy security concerns, energy assets survived the economic crisis of a rapid decrease in the associated costs of such 2008, increasing 13 percent from US$103 billion technology, broader commercial availability, and in 2007 to US$117 billion in 2008. Wind and volatility in the prices of fossil fuels. The World solar accounted for US$85.3 billion, reflecting Bank Group has led and facilitated progress the increasing maturity and acceptance of these in this sector with a variety of tools, including energy sources. financing, technical assistance, and regulatory advice. This chapter will examine these various In 2008, US$36 billion was invested in sustain- drivers and their impacts on the trends in deploy- able energy in developing countries, of which ment of clean energy over the past five years. US$15.6 billion was in China, US$10.8 billion in Brazil, and US$3.2 billion in India. The share This report contains four chapters. Chapter of sustainable energy generated in developing 2 will examine the lessons learned from the countries has consistently increased, reaching implementation of renewable energy and energy 31 percent of the total global investment volume efficiency investments by the institutions of the in 2008.5 China now represents 27 percent of the World Bank Group. Chapter 3 will examine the global renewable power capacity (excluding renewable energy and energy efficiency portfo- hydropower) with 76 GW installed as of 2008, lio of the World Bank Group and ascertain the a significant share of which is in off-grid appli- dominant trends in project types, regions and cations. China has led the developing world in sectors, and achievements in analytical and wind and hydropower investments, becoming advisory activities. The concluding chapter will the largest market for such projects. examine the way forward. 1 REN21, Renewables Global Status Report: 2009 Update (Paris: Trends REN21 Secretariat, 2009). 2 Ibid. Additions to renewable energy capacity have 3 Ibid. 4 UNEP-SEFI-New Energy Finance, Global Trends in Sustain- been occurring across developed and develop- able Energy Investment 2009 (New York: UNEP, 2009). ing countries, especially in the latter. About 43 5 Ibid. 1 These investments have also attracted private ment practices, global GHG emissions manufacturers of energy equipment in large will continue to grow over the next few numbers. At the end of 2008, there were esti- decades.”8 mated to be about 70 major wind turbine manu- • “Continued GHG emissions at or above cur- facturers globally and over 450 photovoltaic (PV) rent rates would cause further warming and module makers, many of which are in China, induce many changes in the global climate India, and other developing countries.6 system during the 21st century that would very likely be larger than those observed The investments have been diverse in source, during the 20th century.” with venture capital and private equity playing • The impacts of climate change would be di- an increasingly greater role. Just in 2008, venture verse and varied in intensity, frequency, and capital and private equity funds invested more geographic distribution, and could be abrupt than US$19 billion in renewable energy and and potentially irreversible for centuries. energy efficiency firms—up 43 percent over just the previous year. Wind and solar sectors To prevent such large increases in emissions, dominated in the funding generated from pri- very large investments will be needed in the vate capital. However, this level of investment energy sectors of the largest GHG-emitting may decline at least temporarily in the near countries. term, given the recent turmoil experienced by financial markets. This rapid growth has been The Stern Review, The Economics of Climate driven by several factors, most notably climate Change, sponsored by the U.K. government, also change concerns, energy security goals, and new presents an economic case for mitigation.9 The financial incentives. review warns that “[c]limate change threatens the basic elements of life for people around the Climate Change Policy Drivers world—access to water, food production, health, and use of land and the environment.”10 It fur- Over the past five years, energy and climate ther states that “the benefits of strong, early ac- change have steadily become issues of central tion considerably outweigh the costs,” and that importance on the international stage, as well “evidence shows that ignoring climate change as in the domestic policy dialogues of most will eventually damage economic growth.” The countries. Thorough analyses and consequent report highlights the role that renewable energy warnings from the scientific community have options can play in moving to a sustainable increased awareness of climate change and growth path, noting that “stabilisation of green- emphasized the urgency of adopting mitigation house-gas concentrations in the atmosphere is strategies to maintain atmospheric concentra- feasible and consistent with continued growth.” tions of GHGs within desirable limits. The role of energy efficiency in mitigation is In 2007, the Fourth Assessment Report7 of the Intergovernmental Panel on Climate Change 6 Ibid. 7 IPCC, Climate Change 2007: Synthesis Report. Contribution (IPCC) concluded that of Working Groups I, II and III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (Geneva: • Evidence of anthropogenically induced IPCC, 2007). climate change is “unequivocal.” 8 Ibid. 9 Nicholas Stern, The Economics of Climate Change: The Stern • “…with current climate change mitigation Review (Cambridge, U.K.: Cambridge University Press, 2007). policies and related sustainable develop- 10 Ibid. 2 Synthesis Report. Contribution The Physical Science Basis. of Working Groups I, II and III to Contribution of Working Group I to the Fourth Assessment Report. the Fourth Assessment Report. Impacts, Adaptation and Mitigation. Contribution of Vulnerability. Contribution of Working Group III to the Fourth Working Group II to the Fourth Assessment Report. Assessment Report. These 2007 Intergovernmental Panel on Climate Change reports can be found at: http://www.ipcc.ch. similarly emphasized in the International En- rates, these huge investment needs would be ergy Agency’s Energy Technology Perspectives, largely or entirely offset by the corresponding which emphasizes that “[f]or all mitigation fuel savings, which are estimated to be on the scenarios, energy efficiency improvements in order of US$7 trillion during the period 2010–30. buildings, appliances, transport, industry and power generation represent the largest and least Other studies in recent years have reinforced costly savings.”11 these conclusions. With the scientific background provided by the Role of the World Bank Group Fourth Assessment Report,12 the International Energy Agency’s World Energy Outlook 200813 At the Bonn International Renewable Energies estimates that to keep carbon dioxide levels at Conference, the World Bank Group committed 550 ppm by 2030, an additional investment of to scaling up its support for renewable energy US$1.2 trillion would be required in the global power sector between 2010 and 2030, as well 11 IEA, Energy Technology Perspectives 2008: Scenarios & Strate- as US$3 trillion in energy efficiency over the gies to 2050 (Paris: IEA, 2008). baseline requirement of US$6.1 trillion. Close 12 IPCC, Climate Change 2007: Synthesis Report. Contribution of Working Groups I, II and III to the Fourth Assessment Report to a third of the additional investment, US$400 of the Intergovernmental Panel on Climate Change (Geneva: billion, would be required in developing coun- IPCC, 2007). tries. Depending on assumptions about discount 13 IEA, World Energy Outlook 2008 (Paris: IEA, 2008). 3 and energy efficiency (see Box 1) as a means of deployment in order to address climate change. advancing sustainable development in develop- A 2005 communiqué issued by the G8 at Gle- ing countries. There has been growing recogni- neagles explicitly stated that such efforts must tion that countries must accelerate clean energy include developing states. Also at Gleneagles, Parabolic trough reflectors for the WBG/GEF-financed Al-Kureimat solar thermal power plant in Egypt being assembled, March 2009. Box 1: World Bank Group Bonn Commitment 1. The World Bank Group’s strategy—through programs and policies—will aim to ensure that renew- able energy and energy efficiency are seen as economically viable and essential ingredients in the energy choices of our member nations, not marginal considerations. 2. With the aim of ensuring an institutional focus on the transition toward cleaner energy sources, the World Bank Group will commit to a target of at least 20 percent average growth annually—in both energy efficiency and new renewable energy commitments—over the next five years (FY2005–09). 3. The World Bank Group will lead a study to develop the concept of a Renewable Energy and Ef- ficiency Financing and Policy Network that will address the issues of developing countries. 4. To foster greater collaboration across national and institutional lines, the World Bank Group will commit to reporting its annual performance in renewable and energy efficiency programs. 5. The World Bank Group will aim to provide sector-specific information to better engage a wide range of stakeholders on trends regarding specific technologies, including hydroelectric, wind, solar, geothermal, and biomass. 6. The World Bank Group will increase not only its staff capacity, but also the resources at its dis- posal and the incentives within its programs, so that the it can more effectively help country and sector teams succeed in implementing renewable energy and energy efficiency projects, as well as transfer best practices across sectors and regions more rapidly. 4 the World Bank Group was tasked with pre- Figure 4: World Oil Prices, Monthly Averages, July 2005 to June 2009 paring a Clean Energy Investment Framework (US$/barrel) to allow the large emerging nations to adopt 160 low-carbon growth plans. Consequently, at the Average Oil Price, July 2005–June 2009, $/barrel UNFCCC Conference of Parties meeting in Bali 140 in December 2007, the World Bank Group led 120 discussions on financing climate change miti- 100 gation and adaptation. These discussions have continued in subsequent “Bali Breakfasts” at 80 the Spring and Annual Meetings of the World 60 Bank at the highest levels of government. These multinational events were supplemented by 40 various parallel bilateral efforts, including the 20 U.S.-China Strategic and Economic Dialogue 0 and the Indo-U.S. civilian nuclear agreement, Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 both of which included climate change mitiga- tion as a main goal. These events, declarations, Source: World Bank Group data. and efforts brought about a greater global understanding of climate change mitigation as an international issue in need of immediate global attention. New renewable energy and an already-worsening global food crisis, com- higher energy efficiency will play a crucial role pounding the impact on the poor. The volatility in this effort, supported by various financing in oil prices and increasingly higher dependence mechanisms. on imported sources of energy—even fuels like coal that have traditionally been domestically Alternative Energy and Energy Security produced—have made it evident that harness- Implications ing alternative energy sources is imperative for development. Apart from their contributions to climate change mitigation, renewable energy and energy ef- Renewable Energy and Energy Efficiency ficiency projects help diversify country energy Incentives and Experience supplies. By reducing the need for fossil fuels, renewable energy sources allow countries to In the past five years, a growing number of coun- limit their exposure to volatile international tries have enacted renewable energy programs energy prices. Between July 2005 and June to provide incentives for accelerated deploy- 2009, this volatility accelerated the need for net ment. These incentives vary across jurisdictions, importing countries to diversify their primary ranging from feed-in tariffs, production tax cred- energy mix (see Figure 4). its, and cost subsidies to portfolio standards. Eu- ropean countries have provided large renewable World oil prices experienced markedly sharp energy subsidies that have enabled a rapid scale- volatility in the middle of 2008, reaching all-time up in sales and brought global price reductions. highs of about US$140 per barrel. Internationally For example, Spain has provided incentives for traded coal has also seen price volatility, along solar power in the amount of € 0.23–0.44/kWh, with shortages in some countries. The run-up which led to the commissioning of 640 MW of to this price spike had an adverse influence on solar power in 2007. Another 55 MW of con- 5 centrating solar power was commissioned in efficient lighting to overcome issues of scale. 2008, and three more plants are expected to Such lighting technology is now widely used come online in 2009.14 Spain is now the fastest- around the world. growing market for solar power technologies. Just in 2008, 2.6 GW of new solar capacity was Developed and developing countries’ policy- installed in the country, a fivefold increase over driven incentives have created market demand, the 550 MW installed in 2007.15 Various other which has led to greater private investments in European countries, as well as Japan and the manufacturing. Correspondingly, the number United States, have also enacted renewable of publicly traded renewable energy companies energy incentives, varying by fuel, technology, increased from about 60 in 2005 to 160 in 2008.18 and mode of delivery. The energy equipment sector saw a rapid price increase between 2005 and 2007, which also af- With such large increases and cost reductions, fected renewable energy and energy efficiency newer applications, such as building-integrated prices. However, recent statistics and develop- PV and advanced thin-film cells, are being used, ments show that the renewable energy and en- complementing the PV market for off-grid elec- ergy efficiency sector has maintained its growth, trification (see Case Study 2). As prices continue while the prices of conventional power systems to decrease in 2009 and 2010, it is expected that were markedly volatile over the past year. Pri- PV will play an even greater role in the energy vate equity and investments in the alternative mixes of developing and developed countries.16 energy sector have been encouraged by policy There are already reports of module prices fall- changes and incentives targeting development ing below traditional price barriers of US$1 per of renewable energy and energy efficiency. Re- watt because of higher unused capacities, as newable energy and energy efficiency was one well as higher production volumes and new of the few areas to experience growth despite the technologies. economic slowdown of 2008, and investments in the sector’s firms grew 43 percent over 2007 fig- Renewable energy and energy efficiency incen- ures in 2008, reaching a total of US$19.3 billion. tives are not limited to developed countries. India was among the first countries to offer World Bank Group Interventions and feed-in tariffs for renewable energy, and it has Initiatives—Beyond Bonn maintained that approach for newer technolo- gies over the last few years. India and Thailand Building on experiences gained and successes were among the first countries to provide in- achieved, the World Bank Group is now mov- centives for energy efficiency. In China, incen- ing beyond the Bonn commitment. In Septem- tives for mini-hydropower have helped make ber 2008, the World Bank Group laid out its the country the leader in installed capacity for approach to sustainable growth in a climate- this energy source.17 The World Bank Group constrained world in Development and Climate has been consistently involved with energy ef- Change: A Strategic Framework (SFDCC). The ficiency interventions in both India and China, which has helped bring about a transformative change. Energy efficiency incentives can take 14 REN21, op cit. various forms in different situations, as seen in 15 Ibid. 16 “Land of the Rising Subsidy” (The Economist, August 27, the International Finance Corporation’s (IFC’s) 2009). Efficient Lighting Initiative (see Case Study 1). 17 REN21, op cit. This effort provided an impetus for high-quality 18 Ibid. 6 framework commits the World Bank Group path. The World Bank Group continues to look to having 50 percent of total energy lending for innovative financing mechanisms to facilitate for low-carbon investments by fiscal 2011, and rapid growth in alternative energy investments. also commits to increasing its support for new renewable energy and energy efficiency by 30 percent per year from a baseline of US$600 million, while continuing to support efforts in environmentally and socially sustainable hydro- power. The SFDCC calls for additional financing to assist developing countries in meeting their mitigation goals. Some of the additional required financing will be provided through the Climate Investment Funds (CIF), established in 2008. CIF comprises various targeted funds, two of which are dedicated to energy investments. The Clean Technology Fund (CTF) focuses on transformative low-carbon energy investments in middle-income countries while the proposed Scaling Up Renewable Energy Program (SREP) aims to provide access to modern energy ser- vices in low-income countries using renewable sources. These funds are intended to support in- novative projects that transform markets in ways that can be replicated in other countries, so as to help developing countries grow on a low-carbon http://beta.worldbank.org/climatechange/ 7 Case Study 1 The IFC/GEF Efficient Lighting Initiative Transforming Markets for Energy-Efficient Lighting program beyond the initial seven countries and in- crease manufacturer participation.1 The new ELI Quality Certification Institute is managed by the CSC and staffed with international experts from Asia and North and South America. The institute works with government agencies, international organizations, What are the long-term impacts of sustainable ener- manufacturers, and other stakeholders to accelerate gy market transformation projects? And what are the the adoption of energy-efficient lighting. Products benefits of long-term engagement in a sector? Some from local companies like Anhui Electron and inter- insight into these questions can be gained from a national manufacturers GE, OSRAM, and Philips are current perspective on an IFC energy efficiency proj- certified by the institute to meet high performance ect completed several years ago, the Efficient Light- and technical standards that are used as criteria for ing Initiative (ELI). Implemented between 1999 and procurement by energy service companies (ESCOs), 2003, ELI has had lasting impacts on the World Bank national electricity utilities, and projects financed by Group, its client countries, and international suppliers the World Bank Group and similar institutions. of efficient lighting products. The program has been a success story, with both ELI aimed to change consumer perception of com- short-term and long-term impacts. An evaluation of pact fluorescent lamps (CFLs), increase market avail- the program’s short-term impacts, undertaken at the ability, and improve quality while reducing price. With close of ELI, showed that the program had indeed US$15 million in grant funding from the GEF, ELI op- transformed markets. New distribution channels erated in seven countries with very different markets: brought CFLs to people who previously had no ac- Argentina, the Czech Republic, Hungary, Latvia, Peru, cess to them. Prices dropped, consumer awareness the Philippines, and South Africa. Thanks to prior ex- and understanding grew and, as a result, CFL sales perience with several programs that relied largely on increased. For example, in Peru, annual CFL sales in subsidies for short-term market stimulus, the IFC had 2003 were nearly 20 times greater than before the a good knowledge of the lighting market, relevant program began. technologies, and the challenges to consumer ac- ELI has also become a cornerstone of the World Bank ceptance that CFLs—more expensive, but also much Group’s own procurement guidelines. ELI criteria and more efficient—might face. Avoiding subsidies, the certification have been used to inform procurement ELI program concentrated on sustainably transform- for a number of large-scale CFL projects, totaling ing local markets for CFLs, which at the time were not well known or widely marketed to consumers, and were sometimes of poor quality. 1 For more information about ELI, visit http://www.efficient- In 2005, the IFC and GEF contracted with the China lighting.net/. 3 The Carbon Finance Assist program is imple- Standard Certification Center (CSC) to expand the mented by the World Bank Institute (WBI). 8 some 50 million CFLs distributed in countries ranging from Argentina to Bangladesh, Mali to Mexico, and Rwanda to Vietnam. Cumulatively, the ELI-certified CFL distribution projects have had a significant im- pact on reducing GHG emissions. In the longer term, the program’s success is primarily a result of four factors of broad applicability. First, the results achieved during the program period helped build national awareness of the potential for energy and GHG reductions from energy-efficient lighting. Second, ELI created and/or built the capacities of insti- tutions that have continued to be effective advocates of energy-efficient lighting beyond the conclusion of the program. Third, ELI developed and nurtured local staff who went on to become national champions for energy-efficient lighting. Finally, ELI developed an internationally accepted quality standard, allow- ing the effective aggregation of demand through the creation of a joint standard used by manufacturers and consumers of energy-efficient bulbs, as well as by financiers such as the World Bank Group. In South Africa, promotions were conducted in partnership with the Nelson Mandela Children’s Fund. Market research: Lima, Peru. 9 Case Study 2: Mainstreaming Solar Electrification in Bangladesh At a Grameen Technology Centre in rural Bangladesh, SHS packages, all of which must include war- young women sit around a table learning the parts ranties. This tight quality control has reduced of a solar home system (SHS). The young women the risk of product failures and raised consumer are being trained to install and maintain SHSs, a skill confidence in SHSs as an alternative electricity that is in high demand these days in rural Bangla- source. desh. Since 2002, 350,000 SHSs have been installed b. The project leveraged the presence of a wide in Bangladesh, and 15,000 new systems are being network of microfinance institutions (MFIs) in installed every month. Fourteen SHS dealers oper- rural Bangladesh and the social acceptance of ate across every region of the country. The success a microfinance mechanism by partnering with of the Bangladesh SHS development is rooted in the the MFIs to run the scheme. MFIs install the innovative design of the World Bank–financed Rural systems, extend microcredit to finance the sys- Electrification and Renewable Energy Development tems, provide maintenance during the repay- (RERED) Project. This project has been working with ment period, and deliver training to the house- the existing institutions to enable the development hold members on operation and maintenance of a market for SHSs. In so doing, the beneficiaries of the SHS. are not just the households that now have electricity c. The project also focused on consumer aware- from solar panels, but also the solar panel dealers, the ness, which reduced rural households’ fear of parts manufacturers, the battery manufacturers, and this new technology, and helped consumers the newly trained women technicians. embrace it quickly. For the project to succeed, local adaptation was important. Given Bangla- Solar energy for rural electrification was introduced desh’s conservative values, female technicians to Bangladesh in 1997, but it was initially slow to were trained and hired by the dealers so that take off. The RERED Project transformed the market customers could receive training in the house through careful application of subsidies and financ- even if only women were home at the time of ing, attention to quality, follow-up service, high installation. technical standards, and good communication with customers. The financing scheme comprises a small Not all of RERED’s success can be attributed to the output-based grant that amounts to only about 10 initial design. The project has adapted in many ways percent of the cost of the average-size panel (40 Wp), as new opportunities have become available, such with the remaining cost of the system paid by the as adding a carbon finance component to increase customers in monthly installments over three years. the financial returns from SHS sales. As with most As of June 2009, the average collection efficiency of elements of RERED, the success of the carbon fi- the dealers from the households was more than 98 nancing relied heavily on the implementing agent, percent. A number of factors contributed to the suc- the Infrastructure Development Company Ltd. (ID- cess of the scheme: COL). Strong local capacity in IDCOL, as well as the MFIs that sell, finance, and service the SHSs, are what a. From the start of the project, there has been an made RERED’s success possible. As other countries try active Technical Standards Committee that de- to replicate the success of RERED, it is important to termines what components can be sold in the note some of the lessons learned from this project: 10 a. The importance of adapting to the local en- vironment. RERED was built on the framework of the MFI network, but that infrastructure does not exist everywhere. For new projects, it would be useful to look where the local capacity to deliver project requirements is strong and work within that framework. b. The importance of focusing on customer satisfaction. In rural areas, experience with new technology spreads by word of mouth. Allowing poor-quality components into the market or failing to educate households on how to properly use SHSs could affect demand negatively. c. The importance of subsidizing just enough to incentivize, but not distort, the market. A sustainable project should ideally help build the customer base to a level where economies This entire rural market gets its electricity from SHS. of scale eliminate the need for subsidy. The future of renewable energy in Bangladesh looks bright. In August 2009 the World Bank approved a further US$130 million in additional financing for RERED. The project will continue to primarily fund the SHS program of IDCOL, which has a total target of 1 million systems installed by 2012. The additional financing also includes funds for development of renewable energy minigrids—primarily biomass and biogas-based electricity generation and solar PV water pumping—and a program to replace in- candescent light bulbs with energy-efficient CFLs. Bangladesh could also soon be reaping even wider economic benefits from its growing solar market, since local entrepreneurs have plans to start up local PV panel assembly plants. From these large industries down to the small rural shops that now stay open into the night, all of Bangladesh is enjoying the ben- efits of solar energy. A rural household with SHS. The panel can be seen on the rooftop. 11 Chapter 2: Lessons from a Decade of IFC and World Bank Experience This chapter focuses on the experiences and les- World Bank Group Staff on Designing Sustainable sons learned from grid-tied renewable energy Off-Grid Rural Electrification Projects: Principles and energy efficiency projects of the World and Practices, issued in November 2008. Bank Group, including work on new renewable technologies, large hydropower, and energy ef- Grid-Tied Renewable Electricity ficiency. During the past decade, the World Bank Group has implemented a large number of off- Both large- and small-scale successful grid-con- grid renewable energy projects benefiting more nected renewable energy projects have a number than 13 million people in about 30 countries (see of common features, including the following: Case Study 2, which describes a very successful off-grid electrification program in Bangladesh). 1. Governments must be effective market Lessons learned from these projects were docu- enablers and not market makers, creat- mented both in Catalyzing Private Sector Invest- ing the policy and regulatory conditions ment for a Low-Carbon Economy: World Bank Group for investment and risk-taking for a wide Progress on Renewable Energy and Energy Efficiency range of stakeholders without being overly in Fiscal 2007, and in Operational Guidance for prescriptive. Good governance leading to Panabolon Health Center, Philippines; electrified under the World Bank/GEF-assisted Rural Power Project. 13 transparency in decision making and reduc- • Establish a transparent and stable frame- tions in transaction cost and time is essential. work and rules governing competition to 2. Access to long-term investment financing, facilitate private sector involvement and as well as the introduction of risk mitiga- investment in the power sector. Competitive tion and credit enhancement instruments, wholesale markets with the active participa- must be facilitated while minimizing moral tion of private power producers have been hazard. important sources for investment in new 3. Availability of credible and long-term re- renewable energy technologies, such as source information on issues such as wind, wind and small hydropower (large hydro- hydrological, and geothermal resources is power continues to be dominated by public essential. utilities in developing countries). For an 4. Good environmental, social, and institu- illustration of how such frameworks have tional practices must be followed. enabled large-scale wind development, see Case Study 3. These are discussed in more detail in the fol- • Enact renewable energy portfolio stan- lowing sections. dards (RPS’s) or adopt other incentive mechanisms to overcome initial barriers Lesson 1: Encourage governments to become and encourage early adoption. Properly “market enablers.” In the experience of the structured, these measures can invigorate World Bank Group, the majority of renewable the renewable energy and energy efficiency energy projects have been implemented by the industry. An RPS requires that a minimum private sector—frequently the domestic private percentage of electricity sold in a given sector. To support and encourage further pri- region or service territory be met by renew- vate sector investment in renewable energy, able energy sources. RPS proposals usually governments should facilitate market reform include power trading schemes whereby and development through the following actions: retail providers may trade their renewable energy generation obligations with one an- • Reduce or eliminate energy price distor- other in the form of “green certificates,” so tions to create a level playing field. Optimal long as all meet their respective standards. levels of renewable energy will be deployed Both China and India have national goals. when conventional fuels and electricity are China adopted an RPS that aims to increase valued at their economic price devoid of the share of renewable energy in power subsidies. For example, based on an assess- generation to 15 percent of total generation ment of economic valuation of renewable by 2020; in India, the goal is 10 percent by energy vis-à-vis conventional power genera- 2012.19Another approach used in China, Ger- tion, China adopted a renewable portfolio many, India, Kenya, and Spain is a feed-in standard mandating that 15 percent of total tariff, which sets a fixed price for sales from energy generation come from renewable defined renewable energy technologies. sources by 2020. Similarly, avoided cost Typically, the feed-in tariff declines over pricing for renewable energy electricity pur- time. Countries such as Sri Lanka and Tan- chases from small renewable energy genera- tors in Sri Lanka led to the private sector’s 19 Eric Martinot, Akanksha Chaurey, Debra Lew, Jose adding nearly 150 MW of small hydropower Moreira, and Njeri Wamukonya, “Renewable Energy Mar- in 10 years and providing about 4 percent of kets in Developing Countries” (Annual Review of Energy and the total electricity generated. the Environment 27, 2002). 14 Power lines, Tajikistan. zania use feed-in tariffs that are based on the some distance away, or for sales to a third avoided cost of generation. party.20 The same approach is being used in • Provide open access to transmission and Mexico. In Brazil, reduction of wheeling fees reduce transmission bottlenecks. An open- has been credited as a boon to investments in access transmission system is essential to small hydropower. China has also proposed allow the wheeling power between buyer measures to reduce transmission bottlenecks and seller or to permit sellers to enter into that currently restrict development of wind a fair purchase agreement in the case of a resources far from population centers. single buyer. Transmission services should • Reduce transaction costs to improve project not discriminate against or give unfair fundamentals from pre-investment to com- advantage to specific types of ownership missioning. These include the processes or generation. For example, open wheel- ing policies in India have been credited with catalyzing development of the wind 20 Ajit Gupta, “Policy Approaches: The India Experience,” Proceedings of the International Conference on Accelerat- industry. In this case, industrial firms may ing Grid-Based Renewable Energy Power Generation for produce wind power in regions with good a Clean Environment, March 7–8 (Washington, D.C.: U.S. wind resources for use in their own facilities Energy Association, 2000). 15 Box 2: Taking a Cross-Sectoral Perspective in India—a River Basin Study Planning the development of a state’s river basin resources is generally the responsibility of the state government, with technical and regulatory oversight provided by the central government. When considering hydropower developments, the planning process typically focuses on individual projects rather than the entire river basin. This approach has a number of drawbacks. First of all, failing to consider other infrastructure develop- ments in the basin—which could augment the supply and thus change the price of electricity, or modify physical site conditions (for example, the level of silt in the water)—risks over- or underestimating the value of a power project. Furthermore, planners are likely to understand environmental and social impacts better—such as the cumulative impact of multiple projects on soil erosion—when projects are evaluated at the river basin level. The River Basin Study currently under way will construct a framework for efficient hydroelectric power development at the river- basin level. Whereas the project-based approach fails to capture some costs and benefits of hydropower development, this study will target those factors in order to mitigate the risk faced by individual projects and enhance public-private partnerships. involved in project development as well as capable personnel will improve the prospects standardization of contracts and procedures, and strategic value of renewable energy increasing transparency in decision making, power projects through the realization of ef- and minimization of bureaucracy. Both in fective planning and enabling policies, as well winning approval of power purchase agree- as regulatory frameworks. Coupled with the ments and in establishing physical connec- technical, engineering, business, and finance tions to the grid, bureaucratic bottlenecks capabilities they sustain market growth. have been cited as a significant hindrance Strengthening the planning process requires to market development.21 It is possible to a significant increase in funding and technical reduce transaction costs through capac- assistance for prefeasibility studies in order ity building and knowledge dissemination to develop a pipeline of high-quality projects. among the domestic financial, industry, util- ity, and engineering sectors, as well as policy Lesson 2: Increase access to long-term financing makers and consumers. Good governance and risk and credit enhancement instruments is essential, especially for small power pro- while minimizing moral hazard. ducers who rely on grid access assurance, standardized approaches that minimize All renewable energy technologies are capital- transaction costs, and fair risk sharing.22 intensive but they also typically have low opera- • Build strong institutions and human ca- pacities. Strong institutions can develop 21 Romesh Bandaranaike, “Local Developer Perspective on and implement flexible, or “smart,” systems Market Scale-Up,” Proceedings of the International Confer- that can anticipate and react to changing cir- ence on Accelerating Grid-Based Renewable Energy Power cumstances. A long-term, cross-sectoral per- Generation for a Clean Environment, March 7–8 (Washing- spective can help identify linkages between ton, D.C.: U.S. Energy Association, 2000). 22 Anil Cabraal and Steven Ferry, ESMAP Knowledge Series: energy, water, climate change, and regional Power Purchase Agreements for Small Power Producers (Wash- needs (see Box 2). Effective institutions and ington, D.C.: World Bank, November 2006). 16 tion and maintenance costs. In order to be able ecosystem components and functions, as well as to generate power at a competitive price, the environmental flows;23 to minimize creation of high capital costs must be amortized over a suf- new impacts through site selection and design, ficiently long period. Consequently, long-term including incorporation of mitigation measures debt is necessary. at the construction stage; and to monitor and respond to issues as they arise. The impact of In the current economic crisis, long-term ma- hydropower schemes on the annual migration turity debt has become largely unavailable. of significant fish species must be assessed; if This dramatic change has re-emphasized the disruption of migration routes is unavoidable, critical importance of long-term debt-financing appropriately designed fish ladders or other and other innovative financing mechanisms for mitigation strategies should be utilized to mini- renewable energy from the IFC, World Bank, mize fish mortality or injury. Protecting biodi- and others. versity and threatened species through habitat identification and conservation management is Another way to address long-term financing is an important issue for consideration in environ- to look for innovative solutions, such as addi- mental impact assessments, as well as during tional revenue from carbon financing. Although power scheme construction and management. rarely feasible for initial project financing, carbon Wind projects also sometimes adversely affect financing can provide an additional revenue flyways and require roads for maintenance that stream over time if structured as performance- may disturb animal habitats. based annual payments. An example of such a project is the PCF Sugar Bagasse Cogeneration Give high priority to social considerations. Project in Brazil. Other financial instruments, Power projects can significantly reduce poverty such as guarantees, are also effective in increas- and enhance the quality of life in the communi- ing access to long-term financing. ties they serve. The challenge is to make sure that affected communities recognize the potential Lesson 3: Promote good environmental, social, benefits that will accompany the changes in- and institutional practices. evitably brought by such projects. If community members understand the benefits of a project All grid-connected power projects require sound and participate in the planning and implemen- social and environmental stewardship, espe- tation processes, they will be more likely to cially hydropower development. support the project and appreciate the improve- ments in living conditions it might bring, such Environmental considerations: All large power as the construction of public health facilities projects have the potential to significantly im- and other social compensation measures. Dam pact their surrounding natural environments. safety is another issue of concern with hydro- This is especially true of hydropower schemes, power projects, especially protection from the which alter existing hydrological cycles and the consequences of dam failure. People who are dependent aquatic ecosystems. It is therefore likely to be displaced or otherwise affected by a critical that project developers create and abide new project should be adequately compensated, by environmentally sound and adaptive man- and their rights and needs must be addressed agement practices regarding field investigations, and negotiated during the development of the site selection, planning, design, mitigation, and monitoring. The most considerable environ- mental challenges are to adequately understand 23 http://www.eflownet.org/ 17 Create processes to engage and build partner- ships with communities and other stakehold- ers. Early, frequent, and regular communica- tion on the part of the government and project developers fosters cooperation and a sense of partnership between them and the affected com- munities (see Box 3). It is strategically intelligent to focus on transparency and communication, and to engage and consult stakeholders early in the project development cycle. Having stake- holder participation and approval can in turn strengthen financing options and further the global dialogue on sustainability. Project prepa- ration and licensing provide opportunities for stakeholder capacity building. Improvements in the enabling environment include sound policies and institutions, effective regulatory oversight, attention to governance and corruption, and reliable off-takers. In hydropower projects, poor governance and corruption have consistently been considered the “most problematic issues.”24 Increasingly, large wind and solar projects will require a commitment to open public consulta- project. The World Bank Group’s hydropower tion to avoid conflict over natural resources or investments have shown the value of collabora- disagreements about aesthetics. Sensitivity to so- tion and communication in easing the way for cial concerns, such as employment creation and large projects, as shown in Case Study 4. gender issues, can further bolster the acceptance of projects. In the case of solar home systems Support an equitable distribution of economic financed in Bangladesh under the RERED Proj- benefits. Large grid-connected power projects ect (see Case Study 2), acceptance of the system should aim to provide an equitable distribu- by women allowed greater market penetration. tion of benefits between government, project proponents, and stakeholders, such as tradi- Energy Efficiency tional resource users. Opposition to large power projects is sometimes rooted in the perception Disparities in the energy intensities of develop- that benefits flow disproportionately to project ing countries in comparison to the Organisation developers or other special interests. This is for Economic Co-operation and Development most often true of hydropower projects, despite (OECD) industrial countries are large, and they their benefits, including longevity, favorable offer short- to medium-term opportunities to energy payback periods, and value in support improve energy efficiencies in the supply and of integrated energy systems. An equitable distribution of economic benefits between the 24 Gian Casartelli, “The Role of the World Bank in Hydro- groups mentioned above should be assured at power and Water Resources Optimization: The Views of all stages of project preparation, construction, the Industry” (Washington, D.C.: Prepared for the World and operation. Bank, 2007). 18 Box 3: Responding to Stakeholder Concerns in the Nam Theun 2 Project Technical experts in the Nam Theun 2 hydropower project initially proposed resettlement halfway down the plateau because of superior soil quality. However, consultations revealed deep concern among the affected population rooted in spiritual and social values, leading to a change in the original plans. Experience suggests that the World Bank can play a vital role in this aspect of project development because of its convening power. While often acting as a magnet for international challenges, the Bank can also be instrumental in introducing principles of good practice and, through effective relationships, building lasting capacity and encouraging commitment by the Borrower. end-use sectors. Despite the promising benefits implementation of energy efficiency policies and of energy efficiency, achieving significant and measures, as well as the deployment of energy sustained efficiency gains has proven to be a efficiency technologies and best practices, lags daunting challenge in all countries. The rate of well behind the opportunities that exist for Testing of incandescent and compact fluorescent lamps at Electrogaz center in Rwanda. [When a customer returns incandescent lamps and buys CFLs, a project requirement is that both types of lighting be tested. This ensures the replacement of functioning incandescent lamps.] 19 energy savings in industry and other economic effectively conveyed to decision makers, though, sectors. Many lessons have emerged from the energy efficiency could become an attractive cross-section of projects that the World Bank option for the energy sector policies and action Group has implemented over the past several plans of many developing countries. years, some of the most important of which are described further in the following sections. Energy Efficiency Lesson 2: Shift the emphasis of scaling up energy efficiency from develop- Energy Efficiency Lesson 1: Convey the right ing technologies to delivering energy savings. message about how energy efficiency con- The energy efficiency debate must shift its focus tributes to economic prosperity, focusing on from developing energy efficiency technologies important issues other than climate change to realizing actual energy efficiency. Some sec- mitigation. In the energy sector development tors, such as industry, depend on technological agendas of most World Bank Group client innovation, which the World Bank Group sup- countries, meeting basic energy needs at afford- ports directly or through financial intermediar- able prices and in a reliable manner is the first ies (see Box 4). and foremost development priority. Therefore, promoting energy efficiency must come with Certain other sectors have a mature energy a message that emphasizes the economic and efficiency technology profile, with products social development benefits of energy efficiency. that could be made available in many develop- ing countries (see Box 5). The challenge that Energy efficiency can generate significant, energy efficiency sector development faces in relevant economic dividends, including job developing countries lies mainly in finding creation, reduced exposure to energy supply innovative ways to get appropriate technolo- volatility (fewer power cuts, less load shedding, gies into consumers’ hands, which is what will fewer industries getting closed down), reduced vulnerability to energy price fluctuations, better 25 Such as those observed in many of the household energy health systems, lower crime rates,25 and higher efficiency lighting projects (replacement of kerosene lamps, industrial and commercial competitiveness. which generate toxic fumes indoors, with efficient CFL- or However, these benefits are rarely measured or LED-based lighting systems) and energy efficiency street lighting projects (replacement of inefficient mercury vapor tracked, which has kept energy efficiency low on lamps, which produce poor-quality lights with efficient tech- the list of priorities. If these positive elements are nologies based on high-pressure sodium vapor or LED lamps). Box 4: Fostering Energy Efficiency Technology Innovation in the Industry Sector The iron and steel industry is the second largest industrial user of energy. China accounts for 45 percent of energy use, partly because of its 34 percent share in the total world steel production. The IEA estimates that if the best available steel-making technologies were applied worldwide, the total energy savings potential would be almost 4.5 exajoules (nearly 20 percent). The World Bank’s China Energy Efficiency Financing Project (IBRD, US$200 million, and GEF, US$13.5 million), approved in fiscal 2008, provides financing to two financing intermediaries in China—China Exim Bank and Huaxia Bank—that will onlend funds for energy efficiency improvements in the Chinese industrial sector, including the iron and steel industry. In addition, the US$12.9 million World Bank Carbon Finance Project approved in fiscal 2008 is aimed at helping switch China over to a more energy-efficient coke dry-quenching process in Baotou Iron and Steel Industry. 20 Box 5: From Energy Efficiency Technology to Delivering Energy Savings— The Missing Link Estimates show that 30–40 percent energy savings can be achieved using currently available tech- nology. For instance, 70 percent of global public and building lighting (which consumes 20 percent of total global electricity consumption) could use 50 percent less energy if current technologies were adopted, according to the IEA. More than 90 percent of streetlights around the world (including the industrial world) use technologies that are 40 percent more energy-intensive than the advanced high-pressure sodium vapor lamp, which has been commercially available for more than two decades. This technology is now being taken over by a third generation of technologies based on the efficient light-emitting diode (LED) and other high-efficiency fluorescent technologies for street lighting. On the appliances front, IEA estimates indicate that switching to the best available household appliances would save 40 percent of residential energy consumption, or US$130 billion per year in costs glob- ally. The major constraints to increased energy efficiency financing and implementation are inherently institutional in nature. actually deliver energy savings. The transport energy efficiency, especially when it comes to de- energy efficiency interventions in Thailand have mand-side energy efficiency improvements. The demonstrated the need to clearly articulate the greatest contributions come through systematic economic case for improving efficiency in a efforts to reduce the energy intensity of specific country’s energy systems (see Case Study 8). end-use sectors, and through efficiency improve- ments in technology, rational energy pricing, and The IFC’s experience with energy efficiency market liberalization. The important approaches projects has clearly shown that the challenge is to scale up energy efficiency—(a) regulations to create demand for existing energy efficiency and institutional governance structures that technologies through increased awareness and foster scale-up, (b) targeted financial incentives, consumer acceptance. Consumers at all ends of and (c) knowledge sharing and information dis- the spectrum must be familiar with the energy semination mechanisms—must be tailored to efficiency product and believe it works before meet each different market situation. they will accept an added cost risk. The ELI Ini- tiative of the IFC and the World Bank Group’s For lights, motors, and buildings, mandatory Lighting Africa program have demonstrated energy efficiency policies (such as energy ef- that marketing, consumer assurance, and some ficiency codes for building and equipment initial first-mover incentives can go a long way standards) can achieve much greater savings at when it comes to scaling up implementation a lower cost than financial incentives. This has of energy efficiency technologies (see Case not worked very well in developing countries, Study 1). although some voluntary programs using fi- nancial incentives, such as many of the Bank’s Energy Efficiency Lesson 3: Both regulatory CFL bulk purchase-based utility DSM programs, policies and financial incentives are required have had better results in visibly shifting energy to promote energy efficiency market transfor- efficiency markets. mation; appropriate emphasis and balance between the two will vary from one country to The major constraints to increased energy ef- another. There is no single model for scaling up ficiency financing and implementation are 21 inherently institutional in nature.26 A successful ordination of various monitoring and funding institutional framework for energy efficiency agencies. must take into account the country context; its technical and management capacity; new Energy Efficiency Lesson 4: Carbon finance legislation and rules to enable energy efficiency remains largely untapped as a major financial investment; the level of integration between incentive to help scale up energy efficiency energy efficiency and other clean energy and markets. Carbon finance, as an incentive clean development goals; the requirements for mechanism, has not helped the energy efficiency organizational autonomy, flexibility, and agility; agenda as much as was anticipated when flexible and funding mechanisms. mechanisms, such as CDM, were conceived un- der the Kyoto Protocol. Barriers that energy effi- Because energy efficiency financing has often ciency traditionally faces are further exacerbated involved small transaction sizes, one of the by complex and demanding CDM rules and primary lessons learned at the IFC has been to procedures, such as complex monitoring and work through financial institutions (see Box 6) verification of savings associated with energy and, where conditions are right, through mi- efficiency projects, and the earning of carbon crofinance. revenues only after the project is implemented. In all situations, however, experience shows The share of energy efficiency in carbon mar- that meeting the energy efficiency scaling-up kets needs to be augmented. First, energy ef- challenge requires strong coordination and co- ficiency initiatives in the carbon market must operation among governments at every level, gradually transition away from project-based the international community, the private sec- CDM to programmatic and sectoral crediting tor, and civil society. As in the case of the India approaches to overcome barriers such as high Chiller Energy Efficiency Project (see Case Study 5), multiple resources can be used for projects that have various benefits, such as reductions in 26 Robert P. Taylor, C. Govindarajalu, J. Levin, A. Meyer, and W. Ward, “Financing Energy Efficiency: Lessons from ozone-depleting substances, carbon emissions, Brazil, China, India and Beyond,” ESMAP (Washington, and local pollutants. Such projects need the co- D.C.: World Bank, 2008). Box 6: The IFC’s Energy Efficiency Interventions through the Financial Sector Although energy efficiency opportunities exist as embedded components of larger projects across the entire spectrum of the IFC’s core industry sector investment business, perhaps the greatest op- portunities exist as smaller discrete projects, including cogeneration systems, lighting renovations, motor retrofits, and control systems. These projects are typically too small for direct IFC investments. Since 1998, the IFC has addressed this market opportunity by partnering with financial intermediaries to develop specialized financial products for promoting energy efficiency as a profitable, sustainable banking business—for example, the Russia Sustainable Energy Efficiency Program (RSEEP) worked with eight financial institutions to introduce energy efficiency finance in the Russian market, with a collective target of US$60 million for energy efficiency lending. The efforts of one such bank, Center- Invest Bank, which disbursed a US$4 million credit line within the first three months of the project’s launch in 2005, was recognized at the 2007 Financial Times–IFC Sustainable Banking Awards. Similar initiatives are ongoing in China, Peru, and the Philippines. 22 transaction costs and complex measurement integrated upfront into the mainstream energy and verification of energy savings. Second, efficiency project financing. innovative financial engineering can be used to securitize future CDM revenue streams, in- Finally, in the case of project-based CDM, the cluding those after 2012. Although CDM will focus on monitoring, which causes enormous essentially remain a source of additional ex post burdens in demand-side energy efficiency proj- revenue in energy efficiency projects, other ex- ects that are small and dispersed, must shift to isting incentive mechanisms, such as GEF and normative approaches, such as those based on the Clean Technology Fund, can be effectively deemed energy savings. 23 Case Study 3: The IFC and World Bank Facilitate the Development of Wind Energy Wind energy is growing rapidly with more than 120 More recently, the IFC has become active in less GW now installed globally. Among developing coun- developed wind markets. In Chile, the government tries, China leads the way with more than 12.2 GW recently passed a new renewable energy law to en- installed, and India follows with about 10 GW. Other courage greater use of indigenous resources, includ- fast-growing wind markets include Brazil, Poland, and ing wind. To date, only two small wind farms that total Turkey, with countries such as Bulgaria, Chile, Mexico, 20 MW are installed and operational. Working togeth- Morocco, and Romania poised for rapid growth in er with SN Power, an established IFC client, and local the next several years. Still others are either consider- developer Centinela, the IFC has provided US$30.75 ing or have recently adopted wind tariffs, policies, or million in debt financing for the first project-financed regulatory frameworks that will promote private sec- wind farm in Chile. The IFC also syndicated US$30.75 tor–led wind development led by the private sector. million in loans from DnB NOR of Norway. The project This includes Egypt, Kenya, Pakistan, Peru, the Philip- is a US$61.5 million 46 MW wind farm that uses 2 MW pines, South Africa, Tunisia, and Ukraine. Vestas wind turbines, and it will be fully operational in 2009. The World Bank Group has proactively explored fi- nancing opportunities for wind projects. In the last Bulgaria is another country that has put a regulatory few years, China and India have been the initial focus, framework in place to support wind under its 2007 given the rapid growth and relative maturity of these renewable energy law. As a result, Bulgaria now has markets. In China, the world’s fastest-growing wind 158 MW of installed wind capacity. AES, another IFC market, the World Bank has financed more than 200 client, has developed the €270 million 156 MW St. MW of wind farms, including the provision of carbon Nikolas wind farm in Kavarna. The project, which will financing for a 100 MW project in Inner Mongolia. The be the largest wind farm in the country when fully IFC has financed a 30 MW wind farm in Fujian that commissioned, uses 3 MW Vestas wind turbines and utilizes 2 MW wind turbines manufactured locally by reached financial closure in December 2008. The IFC Vestas. worked with the European Bank for Reconstruction and Development (EBRD) and UniCredit on this trans- In India the IFC provided corporate financing to action, which was also the EBRD’s first wind project MSPL Limited, a leading mining company that is also finance transaction. a leading private wind developer, with more than 150 MW of wind projects that use mainly Suzlon wind Turkey has seen rapid growth of its wind sector from turbines. The IFC’s loan financing has helped MSPL less than 50 MW installed in 2006 to more than 500 finance 37 MW of new wind projects in Gujarat and MW at present. This growth is being fueled by the Karnataka. Also in India, the IFC provided carbon fi- country’s tremendous wind resource potential, cou- nancing to Enercon India Ltd., the Indian subsidiary pled with an attractive merchant power market driv- of the German turbine manufacturer, for a series of en by electricity supply shortages and a backstop wind farms. Wind farm financing was an important government feed-in tariff for wind. Working with component of the World Bank’s first large-scale re- the local firm Zorlu Enerji, the IFC led project financ- newable energy project, the India Renewable Re- ing for a €222 million 135 MW wind project using sources Development Project. 2.5 MW GE wind turbines to be located in Osmaniye 24 Mexico has a fully developed independent power producer (IPP) market with more than 20 projects and some 28 GW of conventional thermal power generation. The law also allows auto-generation of electricity by private firms. However, despite very sig- nificant wind potential and extensive project devel- opment efforts, Mexico’s operational wind capacity stood at only 88 MW at the beginning of 2009. Nearly all of this capacity was from the first wind project, the 83.3 MW La Venta II Project in Oaxaca, which was sup- ported by the World Bank. In Oaxaca, some 3.8 GW of private autogeneration wind projects are under de- velopment by experienced wind developers. About 300 MW of this capacity is now in construction or commissioning, but because of the global financial crisis, securing long-term project finance is now more challenging. The IFC is mobilizing up to US$15 million from the new Clean Technology Fund, administered by the World Bank to help support private wind de- velopment. The IFC has helped its client, Transportadora de Elec- tricidad SA (TDE), Bolivia’s largest electricity transmis- sion company, explore development of small- and medium-scale wind projects in Bolivia’s rural regions to supplement local minigrids or serve as a source of stand-alone power as hybrid systems, together with Construction under IFC-funded SN Power/Centinela diesel or other generation sources to provide rural wind project in Chile. electrification. However, Bolivia had no national scale wind data that allowed wind developers to identify projects based on a detailed knowledge of localized province in Southern Turkey. The IFC provided loan wind resources. The IFC and TDE, with support from financing of €55 million, along with €45 million in 3Tier Environmental Forecast Group, prepared a na- loan financing from the EBRD, and €30 million from tional wind atlas using advanced mesoscale meteo- the European Investment Bank (EIB) to guarantee rological modelling. TDE is providing local support loan financings from HSBC and Denizbank. This for data dissemination within Bolivia. This tool’s new project will increase Turkey’s installed wind capacity high-resolution wind maps should help spur wind by nearly 30 percent when commissioned later this development. year. 25 Case Study 4: Lesotho Highlands Water Project—Good Governance and Communication for Large Hydropower Investments The Lesotho Highlands Water Project (LHWP) sup- sues, government political will is important. In ports water transfer from the water-abundant high- accordance with the Southern African Develop- lands of Lesotho to the Gauteng region of South ment Community (SADC) Protocol against Corrup- Africa—the country’s industrial heartland—and tion, bribery should be criminalized and vigorously provides hydropower to Lesotho through a series prosecuted. Anecdotal evidence points to the ef- of dams and weirs, delivery tunnels, and associated fectiveness of debarment in changing the culture of infrastructure in several phases. In addition, one of corruption, particularly in relation to contracts en- Lesotho’s primary objectives regarding the LHWP is tered into by overseas corporations and agencies in to use its export revenues to alleviate poverty and developing countries, including those in the water promote economic stability. sector. However, the focus should be on preven- tion rather than prosecution. The SADC Protocol An emerging good practice in crafting sound gov- against Corruption sets out a number of preventive ernance and anticorruption strategies related to measures and mechanisms to do this. According to dam projects is to use a coalition approach dur- Transparency International, good operating practice ing their preparation and implementation. To do now requires that infrastructure (including water this, all project stakeholders need to participate sector) projects include governance improvement in different and complementary ways. The LHWP plans based on corruption risk assessments at the serves as a model of how bilateral government col- national, sectoral, and project levels. More project- laboration can strengthen political cooperation and level support is needed to develop indicators of cor- lead to mutually beneficial development of an in- ruption. For example, the World Bank has identified ternational river. It is vital to understand that devel- opment of strong political support for such projects is predicated on their acceptance as development opportunities by host communities. Community members must feel that they are full partners in the process, not simply residents of a bureaucrati- cally chosen location for water resource projects designed to meet specific sectoral needs (such as water supply). The traditional approach often failed to consider the needs and desires of the local popu- lation, instead finding it sufficient to include project components that appropriately ameliorate environ- mental and social impacts. From the perspective of governance with an em- phasis on anticorruption, the LHWP has revealed the following lessons. In addressing corruption is- Lesotho Highlands Water Project. 26 the top 10 indicators relating to project-level fraud strengthening oversight of decision making across and corruption. the program throughout its life. Effective, responsive management of complaints is a critical ingredient Another emerging good practice shows that proj- in establishing productive relationships between ect developers and proponents must adopt the project developer or sponsor and the host and good institutional governance practices. A other affected communities. Effective communica- good example is the King II Report on Corporate tion is an important ingredient in building support Governance issued by the Government of South Af- for a sustainable Environmental Flows (EF) policy. rica, which has articulated a code of good corporate Communication is perhaps even more critical in the governance that, in addition to the LHWP, is find- successful implementation of an EF policy involv- ing regional acceptance in Botswana (by the Water ing an organization’s management personnel, dam Utilities Corporation) and South Africa. In relation operators, and affected downstream communities, to the institutional sustainability of Lesotho High- particularly when high dam flow releases are in- lands Development Authority, the principal lesson volved. Radio has proven to be an effective commu- is that ongoing oversight is needed to assure that nications medium, particularly for isolated, poorer the Authority continues to act transparently and ac- communities. countably in meeting its responsibilities, particularly in relation to the environmental and social aspects Finally, the World Bank has played a vital and long- of the project. standing role in facilitating the implementation of the LHWP. In relation to the corruption issues that Effective communication in all stages of the surfaced during Phase 1A of the LHWP, the Bank project cycle is critical to the success of complex played an important role in debarring two consult- hydraulic infrastructure projects, which involves ing companies that were convicted of bribery. The many stakeholders. Communication is important Bank assumed a successful facilitating role between on several levels, including during the advocacy South Africa and Lesotho in establishing in-stream stages to develop consensus on the need and type flow requirements. Through its regular supervision of measures to prevent and detect corruption, and of the project, the Bank assured that continued at- to empower stakeholders to perform their roles. tention was paid to sensitive environmental and For example, consider nongovernmental organi- social issues through compliance with its safeguard zations (NGOs) or associations in their capacities policies. Political will at the management level is also as watchdogs, as well as their promotion of a cul- important, particularly in relation to such projects ture of disclosure, transparency, and accountability. as the Community Development Support Project, Communication is properly embedded in the LHWP, which was to support the Lesotho Fund for Commu- inclusive of all stakeholders, and is instrumental in nity Development. 27 Case Study 5: India Chiller Energy Efficiency Project—Reducing Greenhouse Gas and Chlorofluorocarbon Emissions Simultaneously The objective of the India Chiller Energy Efficiency by 20 percent by 2016–17. About 158 metric tons of Project (CEEP) is to accelerate the replacement of CFCs from 370 chillers will be phased out over a 20- centrifugal chillers with efficient non-chlorofluo- year period. rocarbon—(CFC-) based centrifugal chillers. It pro- motes the wide-scale deployment of energy-effi- This pioneering model of integrating GEF and MLF cient technologies to reduce GHG emissions and, assistance with carbon revenues obtained through at the same time, contributes to India’s commit- a programmatic CDM approach will be replicated ment under the Montreal Protocol to completely in the Philippines, where the World Bank is currently phase out new demand for ozone-depleting CFCs helping the government prepare a similar initiative by 2010 and reduce the demand for recycled or re- aimed at replacing about 250 inefficient CFC-based claimed CFCs. chillers. According to the methodology approved by the CDM executive board, the CEEP is required to Financed by GEF and Montreal Protocol’s Multilateral monitor data related to the power-output function Fund (MLF) assistance of US$6.3 million and US$1 of the old chiller to be replaced, electrical consump- million, respectively, along with estimated carbon tion of the new chiller, and cooling output in order finance of US$5.85 million (through Clean Develop- to measure the energy savings and emissions reduc- ment Mechanism (CDM) credits under the Kyoto tions that are achieved. Protocol), this innovatively structured project aims to support the replacement of 370 CFC-based inef- The third component of the CEEP is technical assis- ficient chillers used in commercial buildings and in- tance. To support project readiness and sustainabil- dustrial establishments. Under this scheme, carbon ity, this will focus on enhancing relevant stakehold- credits generated by an initial group of 215 chiller re- ers’ awareness of energy conservation measures, placements, funded through grant-based incentives improving understanding of the impact on the ser- of around 20 percent (of the total replacement cost) vicing sector of accelerating the phase-out of CFC from GEF and MLF, would be used to provide further production, and strengthening the capacity of chiller grant subsidies for another 155 chiller replacements. owners and other stakeholders to monitor the per- The main financial intermediary under CEEP, the In- formance of new chillers and to undertake refriger- dustrial Development Bank of India (IDBI), along with ant management. other domestic banks, provides the financing to chiller owners, manufacturers, and ESCOs. As a part The fourth and the final component of the project of the Programmatic Framework Project for Energy is project management. A project management unit Efficiency in India, the CEEP is estimated to reduce (PMU) will be established at a financial intermediary, energy consumption of targeted chillers by 30 per- namely the Industrial Development Bank of India cent, thereby helping the Government of India meet (IDBI), and will be responsible for implementing all its goal of increasing the overall energy efficiency activities under the CEEP. 28 Chapter 3: Portfolio Review This chapter examines the renewable energy and America and Caribbean Region. Projects in the energy efficiency portfolio of the World Bank past year have covered the spectrum of energy Group and discusses the dominant trends in efficiency and renewable energy applications in the types of projects, regional outcomes, sectoral a wide range of sectors (see Case Study 6 and impacts, and achievements in analytical and the list of projects in Annex 3). advisory activities. Total renewable energy and energy efficiency Financial Commitments commitments during the fiscal 2005–09 Bonn commitment period was a record US$9.8 billion, In fiscal 2009, the World Bank Group committed or nearly four times the commitments made in US$3.3 billion for energy efficiency and renew- the previous five years of US$2.5 billion (Table able energy projects, a 24 percent increase over 4). Energy efficiency commitments of US$4.1 the previous year and a historic high for the sec- billion were five times the commitments during tor. This cemented the World Bank Group’s role the previous five-year period. New renewable as a leading financier of clean energy in the de- energy commitments of US$2.9 billion were veloping world (Table 3). The World Bank Group nearly three times greater than in the previous committed US$1.7 billion for energy efficiency five years. Large hydropower commitments at and US$1.6 billion for renewable energy, includ- US$2.7 billion were 4.5 times the commitments ing US$177 million for hydropower projects in the preceding five-year period. where the capacity exceeded 10 MW per facility. Ninety-eight energy efficiency and renewable Since 1990, the World Bank Group has commit- energy projects in 46 countries were supported, ted US$17.9 billion for energy efficiency and re- as well as one cross-border project in the Latin newable energy—US$6.3 billion for energy effi- Table 3: World Bank Group Renewable Energy and Energy Efficiency Commitments, FY2009 (millions of U.S. dollars) EE Hydro > 10 MW New RE* Total World Bank 1386 43 840 2,269 IBRD/IDA 1,311 43 804 2,157 GEF 68 0 15 83 Carbon Finance 8 0 21 29 IFC 315 135 587 1,036 Own Funds 315 135 587 1,036 Total 1,701 177 1,427 3,305 * New RE comprises solar, wind, biomass, and geothermal, as well as hydropower with capacities up to 10 MW per facility. 29 Table 4: World Bank Group Renewable Energy and Energy Efficiency Commitments, FY2005–09 (millions of U.S. dollars) EE Hydro > 10 MW New RE Total World Bank 2,689 1,635 1,872 6,197 IBRD/IDA 2,418 1,199 1,364 4,981 GEF 186 0 321 508 Carbon Finance 82 118 178 378 Others* 3 318 9 330 IFC 1,404 862 948 3,214 Own Funds 1,404 862 873 3,139 GEF 0 0 5 5 Carbon Finance 0 0 69 69 MIGA 40 227 90 357 Total 4,133 2,724 2,910 9,767 * Includes Guarantees, as well as Recipient Executed and Special Financing. Excludes CTF financing. ciency and US$11.6 billion for renewable energy, energy lending has tripled from 13 percent in including US$6.4 billion for hydropower projects the fiscal 1990–94 period to 36 percent in the of more than 10 MW per facility (Figure 5). fiscal 2005–09 period (Figure 6). In fiscal 2009, energy efficiency and renewable energy com- The share of renewable energy and energy ef- mitments accounted for 40 percent of total ficiency as a portion of total World Bank Group World Bank Group energy commitments. These other energy commitments include traditional Figure 5: World Bank Group Energy Efficiency and Renewable thermal generation and upstream oil, gas, Energy Commitments, FY1990–2009 and coal projects, but also transmission and 3,500 20,000 distribution projects and development policy 3,305 Hydro > 10 MW New renewable energy 18,000 lending that create enabling environments 3,000 Energy efficiency 16,000 for energy efficiency and renewable energy Cumulative commitment 2,672 2,500 projects. 14,000 Cumulative US$ millions Annual US$ millions 12,000 2,000 Going Beyond the Bonn Commitment 10,000 1,500 1,245 1,355 1,433 8,000 In June 2004, at the International Conference on 1,174 1,000 1,059 1,001 6,000 Renewable Energies held in Bonn, Germany, the 832 4,000 World Bank Group promised to increase its com- 500 417 545 524 407 416 406 mitments for new renewable energy and energy 271 264 313 2,000 53 219 efficiency by 20 percent per year from a baseline 0 0 of US$209 million during the fiscal 2005–09 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 period. Hydropower plants that generate more Source: World Bank Group data. than 10 MW per facility are classified separately 30 from “new renewable energy,” since they do not Figure 6: Trends in Renewable Energy and Energy Efficiency Commitments count toward the Bonn commitment. 10,000 9,767 45% Hydro > 10 MW Cumulatively, in fiscal 2005–09, the World Bank 40% Percent of Total World Bank Group energy lending 9,000 New renewable energy 40% Energy efficiency 36% Group committed US$7.0 billion for energy 8,000 Percent energy/renewable energy 35% efficiency and new renewable energy projects 7,000 30% covered by the Bonn commitment (Table 5). 6,000 An additional US$2.7 billion was committed 25% US$ millions 5,000 for hydropower plants that exceed 10 MW per 18% 20% 20% 4,000 facility. The US$7 billion in financing achieved 3,272 3,305 15% 13% 3,000 exceeds the cumulative US$1.9 billion commit- 2,459 2,413 10% ment promised at Bonn in 2004 by 277 percent. 2,000 1,000 5% Portfolio Characterization—Technology 0 0% 1990–1994 1995–1999 2000–2004 2005–2009 2009 (Bonn commitment At US$1.7 billion, energy efficiency contributed period) the largest share to the World Bank Group’s Source: World Bank Group data. clean energy portfolio in fiscal 2009, rising 43 percent over the previous year. Even though fuel prices have fallen from recent record highs, ing Belarus’ demand for imported natural gas concerns about future price volatility and power and increasing energy security. In Nigeria, the shortages have driven worldwide interest to- US$182 million Electricity and Gas Improvement ward using energy more efficiently. Project will refurbish existing transmission and distribution lines, and reduce losses. Six of the 56 energy efficiency projects this year exceeded US$100 million in World Bank Group New renewable energy was the second largest financing. They ranged from improvements to contributor to the World Bank Group’s clean existing power plants to incentives and financing energy portfolio in fiscal 2009, tripling from the provided to encourage energy efficiency in the previous year to US$1.4 billion in new commit- private sector. For example, the US$125 million ments. The new renewable energy projects in Belarus Energy Efficiency Project will convert fiscal 2009 included projects generating energy six decades-old boilers from providing heat only from solar PV, biomass, wind and hydropower to combined heat and power plants, decreas- plants up to 10 MW in size. Table 5: Measuring Progress in Energy Efficiency and New Renewable Energy Lending against Bonn Targets (millions of U.S. dollars) RE and EE achievements and Average targets FY02–04 FY05 FY06 FY07 FY08 FY09 FY05–FY09 Actual new RE and EE 209 463 1,105 682 1,665 3,128 7,043 Bonn commitment target 251 301 361 433 520 1,866 Hydro > 10 MW (not in Bonn 96 538 250 751 1,007 177 2,724 commitment) 31 One of the largest and most innovative projects committed US$2.7 billion for energy efficiency this year, the US$103 million China Eco-Farming and US$1.9 billion for new renewable energy, Project, will enable nearly half a million rural as well as an additional US$1.6 billion for large households to use biogas from their small farms hydropower projects. In the same time frame, to cook food. Another 30,000 larger biogas di- the World Bank also offered US$330 million in gesters installed as part of the project will pro- guarantees, recipient-executed financing, and vide heating for homes and fertilizer for farms, special financing to client countries for energy leading to 60,000 fewer tons of carbon dioxide efficiency and renewable energy. US$318 million emissions per year. In Vietnam and Turkey, of this was for large hydropower plants. the World Bank Group made available US$500 million that will be lent out by local financial The IFC committed US$1.4 billion for energy institutions for small renewable energy invest- efficiency and US$950 million for new renew- ments by rural and urban communities, as well able energy during the fiscal 2005–09 period, as by small businesses seeking environmentally and financed an additional US$860 million of friendly energy for development. large hydropower projects. The IFC’s experi- ence has shown that energy efficiency and This year, the World Bank Group lent US$177 renewable energy options are increasingly million for large hydropower projects, the larg- price-competitive with traditional fuel options, est single share of which was the IFC’s US$100 and there is growing demand from the private million loan to support the privatization and sectors of client countries for the World Bank rehabilitation of Ambuklao and Binga, two hy- Group to scale up its engagement in such clean droelectric power plants in the Philippines. The energy options. combined capacity of Ambuklao and Binga will increase by 50 MW to a total of 225 MW. The two The Multilateral Investment Guarantee Agency plants will provide enough clean energy to meet (MIGA) was instrumental in providing guaran- the energy needs of 350,000 people, as well as in- tees for private investment in energy efficiency dustrial and commercial users, starting next year. and renewable energy projects during the Bonn commitment period, offering US$130 million Portfolio Characterization—World Bank for Bonn commitment-covered projects, as Group Institutions well as US$230 million for large hydropower projects. The International Bank for Reconstruction and Development (IBRD) and International Develop- The GEF and the Carbon Finance Unit are im- ment Association (IDA) continued to be the larg- portant partners and prime enablers in financing est financiers of energy efficiency and renewable energy efficiency and renewable energy projects energy, accounting for nearly two-thirds of all at the World Bank Group. During the fiscal new commitments in fiscal 2009 and increasing 2005–09 period, GEF committed US$510 million over 60 percent from the year before. The IFC for energy efficiency and new renewable energy also increased clean energy lending to more than projects, while the Carbon Finance Unit com- US$1 billion, and two out of every three dollars mitted US$260 million during the same period, invested in energy by the IFC went to an energy as well as US$120 million for large hydropower efficiency or renewable energy project. projects. From fiscal 2005, when the Bonn commitment In fiscal 2009, the Clean Technology Fund went into effect, to fiscal 2009, the World Bank approved investment plans for three coun- 32 Box 7: The First Clean Technology Fund Project In May 2009, the Board of the World Bank Group approved the Turkey Private Sector Renewable Energy and Energy Efficiency Project, a US$600 million project, with US$100 million financed by the Clean Technology Fund. Through two Turkish development agencies—the Turkish Industrial Develop- ment Bank (TSKB) and the Turkish Development Bank (TKB)—the project will offer low-cost financing to private firms in Turkey seeking to develop indigenous renewable energy sources, such as wind, solar, biomass, small hydropower plants and geothermal sources. Additionally, financing is available to both public and private institutions that want to make significant energy efficiency investments. “Turkey’s Renewable Energy and Energy Efficiency Project will help enhance energy security, support a clean energy transition, and increase private sector involvement in the development and financ- ing of clean energy and energy efficiency investments,” said Ulrich Zachau, Country Director for Turkey. “The project establishes a financial mechanism through Turkish banks that will assist Turkish entrepreneurs in leveraging their capital to economically develop renewable resources. We are very pleased to be able to support this innovative project, and we are especially happy that this project will be the first to receive low-interest funding from the Clean Technology Fund for renewable energy resource development.” tries—Egypt, Mexico, and Turkey; 12 more plans are expected to be approved soon. The Private Sector Renewable Energy and Energy Efficiency Project in Turkey, approved in fiscal 2009, received US$100 in Clean Technology Fund financing to support the US$500 financing provided by the World Bank Group. See Box 7 for further details. Region-wise Commitments Eastern Europe and Central Asia saw the great- est number of new commitments in both fiscal 2009, totaling US$1.2 billion, and over the entire fiscal 2005–09 Bonn commitment period, total- ing US$2.7 billion (Figure 7). More than half the commitment in Eastern Europe and Central Asia during the Bonn commitment period was for energy efficiency projects, such as the 2006 Electricity Generation Rehabilitation and Re- structuring in Turkey. This project overhauled one of the country’s largest thermal power plants to increase power output while bring- ing the plant into compliance with some of the strictest environmental standards ever applied Solar lanterns financed under the Lighting Africa to thermal power plants. Development Marketplace project in Liberia. 33 Figure 7: World Bank Group Commitments by Region, FY2005–09 FY2009 Commitments 3,000 1,500 New renewable energy Hydro > 10 MW 2,718 1,182 Energy efficiency 1,000 2,500 2,385 769 522 475 1,995 500 2,000 290 67 US$ millions 0 AFR EAP ECA LCR MNA SAR 1,500 1,330 1,062 1,000 500 277 0 AFR EAP ECA LCR MNA SAR Source: World Bank Group data. In East Asia and the Pacific, lending reached needed 35 MW of clean geothermal power in US$770 million in fiscal 2009 and US$2.4 billion Kenya and reduce carbon dioxide emissions for the entire Bonn commitment period. Projects by 156,000 tons per year. Other projects such such as the 2009 Vietnam Renewable Energy De- as the 2009 Mali Energy Support Project tar- velopment Project have encouraged bottom-up geted technical issues to minimize the technical development by letting communities apply for energy loss between power stations and end grants and loans from local financial institutions users. to make investments in smaller, cost-effective, renewable energy systems that directly benefit In South Asia, the World Bank Group commit- communities. ted US$480 million in fiscal 2009 for energy efficiency and renewable energy for projects In Sub-Saharan Africa, the World Bank Group such as the Coal-Fired Generation Rehabilitation committed US$520 million for energy efficien- Project (2009), which aims to increase efficiency cy and new renewable energy in fiscal 2009, at six major thermal power plants across India. and US$2 billion during the entire Bonn com- During the entire Bonn commitment period, the mitment period, with electricity access through World Bank Group committed US$1.3 billion in renewable energy taking center stage. In 2007, South Asia. The largest single project was the the 250 MW Bujagali Hydropower Project in 2008 Rampur Hydropower Project, a 412 MW Uganda drew upon resources from across hydropower plant expected to reduce carbon the World Bank Group—including financing dioxide emissions by 2 million tons per year from the IFC and guarantees from the World (compared to an equivalent thermal plant), and Bank. Projects such as the 2008 Olkaria II Geo- to provide 40 percent of the power needs of the thermal Expansion Project will add a much- Indian state of Himachal Pradesh. 34 In Latin America and the Caribbean, the World In the Middle East and North Africa, the World Bank Group committed US$290 million for en- Bank Group committed US$280 million during ergy efficiency and renewable energy projects in the Bonn commitment period, including US$67 fiscal 2009, and US$1.1 billion during the fiscal million in fiscal 2009. Projects such as the 2008 2005–09 Bonn commitment period. Renewable Egypt Kureimat Solar Thermal Hybrid Power energy has been the largest component of the Plant provide electricity with significantly less World Bank Group’s commitments in the region. of an environmental impact compared to con- The Argentina PERMER Renewable Energy fi- ventional thermal plants. nancing project, which has been active since 1999, provides small-scale renewable energy systems In fiscal 2009, 99 projects were approved in 46 that can deliver energy to rural households and countries (see Table 6). During the fiscal 2005-09 schools. Despite financial turmoil in the region in Bonn commitment period, 364 projects were sup- the first part of the decade, the project achieved ported in 85 countries. Several projects spanned its household electrification goals. In fiscal 2009, national borders, particularly in the Eastern the World Bank Group renewed its commitment Europe and Central Asia, Latin America and with a fresh US$50 million commitment that will the Caribbean, and Sub-Saharan Africa regions finance the installation of an additional 19,000 (see Figure 8). solar, wind, and mini-hydropower systems. Table 6: Region-wise Distribution of Projects, FY2005–09 (numbers of projects) FY2005–09 Regions EE Hydro > 10MW New RE Total Sub-Saharan Africa 25 14 27 66 East Asia and Pacific 28 11 27 66 Europe and Central Asia 56 10 14 80 Latin America and Caribbean 32 11 38 81 Middle East and North Africa 6 1 7 14 South Asia 26 7 24 57 Total 173 54 137 364 FY2009 Regions EE Hydro > 10MW New RE Total Sub-Saharan Africa 11 0 6 17 East Asia and Pacific 4 3 9 16 Europe and Central Asia 13 2 5 20 Latin America and Caribbean 9 2 11 22 Middle East and North Africa 1 0 2 3 South Asia 15 1 5 21 Total 53 8 38 99 35 Figure 8: Distribution of World Bank Group Renewable Energy and Energy Efficiency Projects Worldwide FY2005–09 This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, EUROPE AND CENTRAL ASIA any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Commitment Amounts: Energy Efficiency: US$ 1,788 million New Renewable Energy: US$ 547 million Hydro > 10MW: US$ 383 million 10 2 ECA 1 1 2 2 1 3 8 1 2 2 2 1 4 1 2 2 MIDDLE EAST AND NORTH AFRICA 2 1 3 1 4 1 1 1 1 EAST ASIA AND PACIFIC 9 3 1 1 2 Commitment Amounts: 1 2 1 1 2 22 13 6 Commitment Amounts: 3 1 1 Energy Efficiency: US$ 99 million 3 2 1 2 1 Energy Efficiency: US$ 876 million New Renewable Energy: US$ 138 million 5 1 2 4 2 1 3 New Renewable Energy: US$ 954 million 1 1 Hydro > 10MW: US$ 40 million 2 Hydro > 10MW: US$ 554 million 4 8 1 19 17 9 2 1 1 1 2 3 1 1 3 1 1 1 2 2 2 2 2 1 3 1 1 2 2 1 1 6 2 1 1 5 1 3 2 1 2 1 1 1 2 4 1 3 5 3 1 1 1 1 2 3 4 3 4 3 4 2 4 2 2 1 2 1 3 1 2 4 2 10 10 1 LCR 1 2 1 1 2 SOUTH ASIA 1 1 1 Commitment Amounts: LATIN AMERICA AND THE CARIBBEAN 1 AFR 1 1 4 Energy Efficiency: US$ 422 million Commitment Amounts: New Renewable Energy: US$ 326 million Energy Efficiency: US$ 396 million AFRICA 1 1 Hydro > 10MW: US$ 582 million New Renewable Energy: US$ 502 million 1 6 2 3 Commitment Amounts: Hydro > 10MW: US$ 164 million Energy Efficiency: US$ 552 million New Renewable Energy: US$ 444 million Energy Efficiency Projects (total commitments US$ 4,133 million) SEPTEMBER 2009 Hydro > 10MW: US$ 999 million New Renewable Energy Projects (total commitments US$ 2,910 million) IBRD 37151 Hydro > 10MW Projects (total commitments US$ 2,724 million) A detailed breakout of the commitments by energy and energy efficiency progress reports, region is given for new renewable energy, case studies and text boxes illustrate the many efficiency, and large hydro for fiscal 2009 in and varied ways the projects have improved Figure 9. lives. The examples given below provide a glimpse at the variety and breadth of the World Outcomes and Impacts Bank Group’s efforts to bring the benefits of renewable energy and energy efficiency to the Rural and urban communities, small and large developing world. industries, public and private institutions and, most importantly, people in general have ben- • In about 30 countries, more than 2.5 million efited from the myriad of renewable energy households, businesses, and community and energy efficiency projects supported by facilities will benefit from access to modern the World Bank Group. As they have increased electricity services from off-grid PV, small access to electricity, reduced energy consump- wind, micro-hydropower, and biomass- tion and peak loads, and improved fuelwood electric technologies. By replacing kerosene, supplies, the projects have also ameliorated the candles, and disposable batteries, these economic condition of people, increased produc- projects are improving the quality and re- tivity, and reduced indoor pollution and global ducing the cost of lighting, increasing the carbon emissions. They have strengthened the safety of people, and reducing indoor pol- capacities of public institutions and enabled lution in countries as varied as Argentina, domestic industries and financial institutions to Bangladesh, Bolivia, China, Mali, Nicaragua, deliver renewable energy and energy efficiency Papua New Guinea, and Uganda. PV for products and services more effectively and at health facilities, rural schools, community scale. Throughout this and previous renewable centers, and streetlights are improving the 36 Figure 9: Commitments by Region and Type, FY2009 Energy Efficiency Commitment by Region Energy efficiency lending grew 42 percent to US$1,701 million Total: US$1,701 million in fiscal 2009 from US$1,192 million in fiscal 2008, a new re- cord for the World Bank Group. The Eastern Europe and Central SAR AFR Asia Region saw the largest new commitments for energy effi- 355 418 ciency in fiscal 2009, representing nearly 40 percent of all World Bank Group energy efficiency commitments, with projects that MNA improved energy efficiency in both industrial and residential EAP 57 buildings, as well as in older power plants. 57 LCR 151 ECA 663 Hydro > 10MW Commitments by Region Hydropower plants with a capacity greater than 10 MW fell Total: US$177 million sharply from US$1,007 million in fiscal 2008 to US$177 million in fiscal 2009. This reflects the variation in such projects over SAR 26 time because of the “lumpy” nature of large hydropower proj- ects. The East Asia and Pacific Region accounted for almost all LCR of the projects, with more than 80 percent of World Bank Group 2 commitments for large hydropower plants. In fiscal 2009, the World Bank Group’s largest investment in hydropower was ECA 5 the IFC’s US$100 million loan to rehabilitate two hydroelectric plants in the Philippines, with the goal of expanding energy EAP output from an environmentally friendly source, while support- 145 ing the country’s efforts to privatize the power sector. New Renewable Energy Commitments by Region New renewable energy trebled to US$1,427 million in fiscal 2009, Total: US$1,427 million from US$473 million in fiscal 2008. The East Asia and Pacific Re- gion and the Europe and Central Asia Region each contributed SAR more than a third of the total portfolio. Commitments were for 94 AFR projects in biomass, hydropower with less than 10 MW per facil- MNA 103 ity, solar PV, and wind projects. 11 LCR EAP 137 567 ECA 515 delivery of critical social services in African sions of global warming gases, and earning and Asian countries. additional revenues from carbon emissions • Industrial and commercial sector energy trading and energy sales. District heating efficiency improvements are enhancing investments, especially in Europe and Cen- productivity and profitability while reduc- tral Asia, are improving living conditions, ing pollution. Waste-to-energy projects are reducing the depletion of forest resources simultaneously reducing solid waste pol- close to population centers, and reducing the lution, contributing to a reduction in emis- costs of meeting the heating needs of these 37 Children at solar-powered Hayes Mission School in Liberia. countries. Rehabilitation of power plants a high-quality program essential to bringing and reducing transmission and distribu- the best-performing lighting to developing tion losses are not only reducing the cost of countries. providing electricity services in numerous • Grid-connected renewable energy projects countries and improving the reliability of in a large number of countries are not only electricity supplies, but also reducing local increasing electricity supplies in an environ- and global pollution. mentally sound manner, but also building • Massive programs that distribute millions of new industrial capabilities, engaging local CFLs in such countries as Bangladesh, Mex- commercial banks in a new business, and ico, Rwanda, and Uganda are reducing peak creating high-technology and high-value loads and averting the need for expensive employment. The mini-hydropower projects and emergency generation. The Lighting that were financed in Sri Lanka both created Africa Program is catalyzing the large-scale a new private industrial sector—which cur- adoption of LED and other high-efficiency rently contributes more than 4 percent of and advanced lighting technologies to total electricity generation—and spawned a benefit the 500 million Africans who are population of entrepreneurs, who are now dependent on kerosene and candle lighting. investing in and building similar projects in The Efficient Lighting Initiative—born and several African countries. Geothermal proj- nurtured at the IFC—is now recognized as ects in Djibouti, Kenya, and the Philippines; 38 Hydropower plant in Thailand. wind projects in Jordan and Costa Rica; • Technical assistance and capacity build- large-scale renewable energy projects, such ing services supported by the World Bank as 100 MW wind farms in China, the 80+ Group are having tremendous catalytic MW wind farm in Mexico, the concentrating effects in scaling up the use of renewable solar power projects in Egypt, and Morocco; energy and energy efficiency. Standardized and the financing of large renewable energy power purchase agreements are reducing portfolios through financial intermediaries transaction costs and project development in Turkey, Vietnam, and elsewhere are accel- risks during the development of grid-tied erating the adoption of advanced renewable renewable energy generation projects in energy technologies in developing countries. Sri Lanka, Tanzania, Uganda, and Vietnam. • Engagement of the private sector in large- National low-carbon strategies in some of scale hydropower projects is ensuring that the highest carbon-emitting countries are the projects benefit local communities, and guiding their energy sectors in a more sus- that they are built and managed in an en- tainable development direction. Introduc- vironmentally and socially sound manner. tion of good practices through the REToolkit, The Bujagali project in Uganda, the Nam the large-scale CFL dissemination toolkit Theun 2 project in Lao PDR, and the Hidro- (forthcoming), and the operational guidance electrica La Higuera project in Chile are a on off-grid electrification project develop- few examples. ment are facilitating the wider use of such 39 technologies and improving the long-term sustainability of projects. Building efficiency standards and appliance labeling programs are further improving the built environment and living standards. These are but a snapshot of the benefits that developing countries are accruing from World Bank Group renewable energy and energy ef- ficiency projects. Going forward, the World Bank Group will build on these experiences, the strengthened capacities of client countries, and the growing confidence in deployed tech- nologies to bring economically beneficial and environmentally sustainable energy to the de- veloping world. Africa Renewable Energy Access Grants Program The Africa Energy Unit (AFTEG) of the World Bank has established a strategic plan to sup- port efforts by Sub-Saharan African countries to expand the access of their citizens to affordable, reliable modern energy services. This strate- LED lighting street vendor in Monrovia, Liberia. gic plan—the Africa Energy Access Scale-Up Plan—seeks to augment household electrification programs, provide greater and more sustainable AFREA aims to meet the energy needs of Sub- access to cleaner fuels, expand power generation Saharan African countries and widen their and transmission capacity, broaden the provision citizens’ access to energy services in an envi- of energy services to key areas of the public sector, ronmentally responsible way (see Case Study and connect households previously without elec- 7). The program improves public and private tricity service while improving access to stand- sector capacity for renewable energy projects in alone lighting services. To meet the large funding the region, catalyzes additional investment for needs projected for the strategic plan, AFTEG renewable energy, and expands access through collaborated with the Energy Sector Management these renewable energy projects. Such activities Assistance Program (ESMAP) to mobilize mul- further AFTEG’s mission by (a) directly sup- tiyear funding commitments through ESMAP’s porting or creating conditions conducive to Consultative Group members. In fiscal 2009, the increased renewable energy investments and Netherlands dedicated US$28.75 million to sup- (b) expanding access to modern energy ser- port AFTEG’s analytical and technical assistance vices in Sub-Saharan Africa. AFREA also funds programs in order to create an environment con- recipient-executed pre-investment activities ducive to the deployment of renewable energy that are intended to accelerate deployment of systems through the Africa Renewable Energy renewable energy systems based on hydro, Access Grants Program (AFREA). wind, geothermal, and solar energy resources. 40 Some examples of major programs supported biomass energy efficiency and interfuel sub- by AFREA follow. stitution. Lighting Africa: This joint World Bank–IFC ini- Rwanda Grants: A US$3.8 million grant to tiative is funded by AFREA, ESMAP, GEF, Public Rwanda by AFREA will support the preparation Private Infrastructure Advisory Facility (PPIAF), of strategy studies on deployment of renewable and other donors. It works with the private sec- energy systems, such as PV and solar thermal tor, governments, and NGOs in Sub-Saharan technologies. Africa to develop and disseminate low-cost, clean, and efficient modern lighting solutions Africa Electrification Grants: AFREA is sup- using LED and other efficient lighting technolo- porting a US$3.3 million program in Liberia gies for the 500 million Africans who currently to establish a Rural and Renewable Energy rely on kerosene or other forms of inefficient Agency. The agency will be able to mobilize and polluting fuel-based lighting. AFREA has new renewable energy services and investment provided financing of about US$200,000 each for rural areas to meet demand in a reliable and for three of the Lighting Africa Development affordable manner. Pilot projects supported by Marketplace winners for innovative design and the agency include the construction of one run- delivery of low-cost, high-quality, non–fossil of-river micro-hydropower plant and two solar fuel–based lighting products targeting off-grid, village electrification networks that provide low-income consumers in Sub-Saharan Africa. electricity services to key public facilities, as A total of US$2.5 million has been allocated to well as households and businesses. AFREA is support components of the Lighting Africa pro- planning to offer similar financing to countries gram, including improving quality and market such as Kenya and Mali. development support. Sector-wide investment and policy prospec- Biomass Energy Initiative for Africa: AFREA is tus: AFREA is helping several governments in financing efficient, clean, and sustainable pilot Sub-Saharan Africa develop comprehensive, biomass energy projects in Sub-Saharan Africa. sector-wide access expansion programs with AFREA will provide US$1.8 million to support the use of new planning tools, such as geo- about 15 pilot projects. Additionally, this activ- referenced least-cost expansion plans. The first ity will also serve as a platform for AFTEG to Investment and Policy Prospectus, developed formulate a comprehensive, coherent, and ef- for Rwanda, resulted in US$357 million in donor fective biomass energy modernization strategy commitments to a sector-wide program. Similar for Sub-Saharan Africa. programs are in development for other Sub- Saharan African countries, including Kenya, Benin Increased Access to Modern Energy which aims to draw US$900 million in donor Project: AFREA has allocated US$2 million to commitments. support efforts that reduce deforestation and increase access to and options for renewable The Asia Sustainable and Alternative energy and cleaner fuels for households and Energy Program small and medium enterprises. The project will promote a community-based sustainable The Asia Sustainable and Al- fuelwood production and market management ternative Energy Program system covering 300,000 hectares of forests (ASTAE) was created in January in the Moyen Oueme region, and encourage 1992 with a mandate to improve 41 energy efficiency, scale up the use of renewable Institutional and Regulatory Frameworks: energy, and increase access to energy to reduce ASTAE has provided long-term support for poverty. ASTAE is currently funded by the the development of renewable energy legis- World Bank Group, the Government of the lation in China, assisted in the development Netherlands, and the Swedish International of pricing policy and regulation to support Development Agency. ASTAE currently sup- increased access to energy in Mongolia, and ports three major types of activities: introducing helped design and implement standards for innovative investment delivery mechanisms, energy efficiency in Thailand and Vietnam. developing institutional and regulatory frame- Such work is essential to ensuring that gains works that provide enabling environments to in access or low-carbon energy are sustainable scale up investment projects, and building ca- and expandable. pacity and sharing knowledge across countries and sectors. Cross-Sector, Cross-Country Capacity Build- ing and Knowledge Sharing: As a result of its ASTAE has developed a strong portfolio of tech- successful contributions to project and program nical assistance activities in the East Asia and design and implementation, ASTAE is able to Pacific region, supporting the implementation draw from a pool of experts to provide timely of large World Bank Group investment projects advice to leverage new project development in and GEF grants. In fiscal 2009, ASTAE disbursed the region. Recent support has included train- US$2.1 million, funding 25 activities in 12 coun- ing seminars for officials and policy makers tries. During fiscal 2005–09, ASTAE financed 84 in China, Indonesia, Thailand, and Vietnam; activities with a total of US$8 million. ASTAE’s South-South technical workshops between work over these five years catalyzed 1,300 MW China and Vietnam; and development of of renewable energy capacity, and nearly 6 TWh knowledge products, technical guides, and of electricity saved through energy efficiency. methodologies. Recent examples of ASTAE’s work include the following: Major Project Achievements: ASTAE’s port- folio of renewable energy projects include the Innovative Financing Mechanisms: ASTAE long-term US$600,000 China Renewable Energy has supported the development of onlending Scale-Up Program that led to the Chinese Re- guidelines for energy efficiency in China, has newable Energy Law, as well as the US$400,000 structured onlending funds for renewable Indonesia Geothermal Power Program that energy development in Vietnam, and has provided technical assistance to review, design, helped both neighboring countries adopt best and build consensus on policy reforms in the practices and business models to encourage geothermal sector, so that Indonesia could reach energy efficiency financing from one another. its goal of 6,000 MW of geothermal capacity by ASTAE also helped introduce risk guarantees 2020. ASTAE also supported the US$900,000 for private sector financing of access expansion China Energy Conservation I and II and China projects in the Pacific Islands and private sector Energy Efficiency Financing I and II projects to energy efficiency projects in Thailand. ASTAE’s help create an energy service industry, establish support for these financing mechanisms has energy efficiency business lines in Chinese opened new avenues for donors to contribute to banks supported by partial risk guarantees, increasing access and promoting a low-carbon and create a financing facility through which growth path for the countries of East Asia and Chinese commercial banks might pool their the Pacific. funds to finance energy efficiency. 42 The Energy Sector Management velopment of a quality assurance program for Assistance Program advanced off-grid lighting technologies, five Development Marketplace Recipients (each with The Energy approximately US$200,000 in funding), and the Sector Manage- first International Conference on Off-Grid Light- ment Assistance ing held in 2008 in Accra, Ghana. Program (ESMAP) is a global knowledge and technical assistance partnership administered by Renewable Development and Market Reform the World Bank and sponsored by bilateral of- in the Philippines: Recognizing that renewable ficial donors since 1983. ESMAP’s mission is to energy will play a major role in achieving en- help clients from low-income, emerging, and ergy security and meeting its growing energy transitional economies secure energy require- demand, the Government of the Philippines ments for equitable economic growth and pov- enacted a renewable energy law in October erty reduction in an environmentally sustainable 2008. The Renewable Energy Law lays out a way. ESMAP activities are executed by its clients framework to accelerate the development and and/or by World Bank staff. utilization of renewable energy resources and, in parallel, establishes an institutional framework ESMAP follows a three-pronged approach and a series of mechanisms fulfill its mandate. to achieve its mission: think tank or horizon- ESMAP is providing support to the Energy scanning, operational leveraging, and knowl- Regulatory Commission of the Philippines to edge clearinghouse functions. The last includes develop a sound regulatory framework that generating and disseminating new knowledge; will encourage the sustainable development of holding training and learning events; orga- renewable energy sources. nizing and facilitating workshops, seminars, conferences, and roundtables; maintaining a Hydropower in Peru and Nepal: In Peru, website; and publishing a newsletter and other ESMAP is funding the development of a work. ESMAP focuses on three global thematic framework for hydropower investments. The energy challenges: expanding energy access for project will assess the role of hydropower in the poverty reduction, enhancing energy efficiency country’s energy mix and develop an appropri- for energy secure economic growth, and deploy- ate operational framework to facilitate public- ing renewable energy systems for a low-carbon private investment in the hydropower sector. global economy. It will help build consensus on the appropriate role of the public sector in hydropower develop- ESMAP supports regional activities to provide ment and will propose appropriate mechanisms better services—as well as cutting-edge research for public sector involvement. Nepal is seeking and global projects—to individual developing to assess the longer-term strategic options and countries. The program also supports collabora- attendant risks for the efficient development tion across the energy sector and shares ideas, of its hydropower potential. ESMAP has initi- good practices, and project experiences across ated a study to identify barriers to hydropower regions. Some highlights of fiscal 2009 follow. development in Nepal and to propose recom- mendations to remove or reduce the impact of Lighting Africa: ESMAP is a major contributor these barriers, so as to contribute to efforts to to the Lighting Africa Program. It has supported realize the economic benefits that might come off-grid lighting market research in five African with development of the country’s huge hydro- countries, quality testing of solar lanterns, de- power potential. 43 German Trust Fund for Scaling Up Energy Ef- Carbon Finance ficiency: In fiscal 2009, the German Trust Fund financed 34 energy efficiency activities. These The World Bank Carbon Finance Unit uses funds activities covered multiple sectors ranging from contributed by governments and companies in policy and regulation reform to strategy and OECD countries to purchase project-based GHG toolkit development. This work will enhance emission reductions in developing countries the capacities of ESMAP’s clients, inform the and countries with economies in transition. The design of sound energy efficiency strategies, emissions reductions are purchased on behalf and scale up energy efficiency improvements. of the contributor through one of the Carbon ESMAP funded a study to examine energy Finance Unit’s carbon funds, within the frame- intensity and explore options to boost energy work of the Kyoto Protocol’s Clean Develop- efficiency in the Middle East and North Africa ment Mechanism or Joint Implementation. region. It is expected that the World Bank Group will support lending projects generated by this Unlike other World Bank development prod- initiative. Additional energy efficiency studies ucts, the Carbon Finance Unit does not lend or were carried out in Brazil, China, Egypt, Ne- grant resources to projects, but rather contracts pal, Syria, Vietnam, and the countries of the to purchase emissions reductions similar to Western Balkans, including Albania, Bosnia- a commercial transaction, paying for them Herzegovina, Kosovo, Macedonia, Montene- annually or periodically once they have been gro, and Serbia. verified by a third party auditor. The selling of emissions reductions—or carbon finance—has Energy-Efficient Cities Initiative. Cities are been shown to improve the financial viability an important engine for economic growth and of projects by adding an additional revenue socioeconomic development, and rapid ur- stream in hard currency, which reduces the risks banization will lead to massive requirements of commercial lending or grant finance. Thus, for new energy supplies. ESMAP launched its carbon finance provides a means of leveraging Energy-Efficient Cities Initiative (EECI) to help new private and public investment to projects scale up energy efficiency improvements in de- that reduce GHG emissions, thereby mitigating veloping country cities around the world. The climate change while contributing to sustainable EECI includes support for (a) analytical work, development. including tools; (b) city grants; (c) a project data- base and innovation awards; (d) project support During the entire Bonn commitment period of for Bank investment lending; and (e) outreach fiscal 2005–09, the Carbon Finance Unit com- and partnerships. The EECI is leveraging World mitted US$380 million for energy efficiency and Bank lending and pursuing global partnerships renewable energy projects. In fiscal 2009, the in order to help cities grow in a more sustain- Carbon Finance Unit committed US$29 million able manner. The program was launched at the for energy efficiency and renewable energy proj- ICLEI Local Government Climate Session side ects in East Asia and the Pacific, South Asia, and event at COP-14 in December 2008 (Poznan, Sub-Saharan Africa. Projects such as the US$15 Poland) following a Practitioners Roundtable million Thailand Bioenergy Sugar Ethanol co-hosted by ESMAP and the Urban Anchor Wastewater Management Project generate en- of the World Bank, an event that brought to- ergy from the waste ethanol resulting from sugar gether client cities, potential partners, and other production. In cooperation with the GEF and practitioners to share experiences and identify the Multilateral Fund for the Implementation of remaining gaps. the Montreal Protocol, the Carbon Finance Unit 44 also helped finance a landmark project in India. chillers in India, decreasing demand for energy This project, now being replicated in other client and reducing emissions of ozone-destroying countries, sought to increase the efficiency of CFCs. 45 Case Study 6: Beijing Tackles Waste…and Helps the Environment with MIGA Guarantees The Chinese government has placed an increasing struction in order to achieve this target. MIGA helped priority on tackling GHG emissions, because while secure financing for the first plant with US$25 million rapid development in China has fueled economic in investment insurance for Golden State Waste Man- and urban growth, it has not come without costs agement Corporation. to the environment. A large source of pollution is household waste. Landfills that treat waste produce Beijing accounts for some 11,000 tons of trash a day, methane, a primary GHG, estimated to be 21 times 60–70 percent of which goes into methane-emitting more harmful than carbon dioxide. That is why Chi- landfills. “This project is sending 1,600 tons of gar- na is encouraging landfills to capture methane, al- bage from Chaoyang District to the incinerator to though local communities often lack the capacity to generate electricity,” said Lawrence Shi, Vice President do so. At the same time, the global energy squeeze is of Golden State Waste Management Corporation. prompting officials to consider new ways of generat- “This will reduce pollution to the environment and to ing electricity. underground water, as well as help save the land that is used for landfills.” Converting Waste to Energy As Beijing’s first incineration plant, the investment is As part of this effort, the city of Beijing aims to con- serving as a model for other waste treatment projects vert 40 percent of its waste into energy by 2010, with planned by the government. “This project is key for four waste-to-energy treatment plants slated for con- Beijing during the Olympics, but it’s also important “China also has an ambitious program to develop renewable energy sources and to increase their role in the overall energy mix.” David Dollar, former World Bank Country Director for China 46 The city of Beijing is planning to build four waste-to-energy treatment plants by 2010. MIGA is supporting the first of the four plants. to meet our long-term environmental goals,” said Xu “Addressing climate change is central to the World Jin Xin, Director of Chaoyang District Administrative Bank Group’s development and poverty reduc- Committee. “It’s also very necessary because right tion agenda,” said Moina Varkie, former Director of now there is no waste management, and it is through External Outreach and Partners in MIGA. “We are the incineration process that we convert waste into pleased to be associated with a project that not a resource and help improve the environment. An- only reduces carbon emissions, but also helps to other benefit is that the power plant is turning waste conserve scarce landfill capacity in the face of bur- into a resource to provide people with electricity.” geoning urban growth—while generating elec- tricity from a renewable resource. This is truly a “Although the main goal of the project is to manage win-win-win situation.” waste, rather than generating power, the electricity produced by the plant can supplement power gen- “The biggest plus from MIGA is the confidence MIGA’s erated by coal and fossil fuels,” Shi added. insurance gives to investors, especially international investors,” according to Charles Shen, Deputy Finan- MIGA Helps Investors Overcome Risks cial Controller with GSE Investment Corporation. “We know that political risk is not an issue for us since we MIGA’s political risk insurance helps mitigate the risks have been in this market for 20 years. But for inter- that typically affect infrastructure projects, such as national investors, they don’t have such knowledge, breaches in contract. MIGA’s work is helping devel- such experience.” oping countries onto a lower-carbon path by exploit- ing renewable energy resources, supporting energy conservation, and increasing efficiency. 47 Case Study 7: Liberia’s Better Light Solar Project: A Model for Scale The AFREA-supported Catalyzing New Renewable Ener- time as conditions improve, so the taa bora can also gy in Rural Liberia Program and the Lighting Africa Pro- be modified into a simple home lighting system us- gram are building on grassroots developments, such as ing the same basic components. the taa bora lanterns, to expand the widespread avail- ability of low-cost, high-efficiency, and environmentally The school lighting system installed in Paynesville friendly lighting solutions as alternatives to kerosene takes the taa bora to a larger scale. It uses a series of lights and candles. connected 1.5-watt solar panels to increase capac- ity, has larger batteries, and requires more sophisti- In September 2009, the King Gray Public Elementary cated engineering. Nonetheless, this system’s costs School in Paynesville, Liberia, took part in a lighting are only about a tenth of a traditional solar system, experiment that introduced a new, innovative, and which makes it affordable to school associations and low-cost solar lighting solution to Liberia’s schools communities and frees it from dependence on donor that allows for expanded evening education classes funding. for youth and adults, and replaces the use of costly diesel fuel. The lighting system was assembled locally The taa bora was introduced to Liberia as a portable by a women’s enterprise group and installed by a lo- light and desk lamp in November 2008. Five enter- cal solar engineer. prises were set up around the country with staff trained both to assemble the light and install the sim- The school system is based on a small light called ple home system. One group, the Charity Prayer Band the taa bora—“better light” in Swahili—that was in Paynesville—a prayer, empowerment, and susu invented by a United States–based entrepreneur (savings and loan) club made up of 50 women—far after a visit to rural Tanzania in 2003. His aim was to outshone the rest. Their sales were consistent, mar- create a modern, environmentally friendly lighting keting was enthusiastic, and quality of work was high. solution that would replace candles and kerosene, They were the obvious choice for partnership when a cost less, last considerably longer, and could be as- group of international and local organizations came sembled by local villagers. The result—a portable together with the taa bora inventor and decided to light that with a simple adjustment becomes a desk re-imagine the taa bora for application in Liberia’s lamp for studying—is made up of a recycled plastic schools. water bottle, rechargeable AA batteries, LED bulbs, and simple electronic components that are assem- Simultaneous with installation of the school lighting bled without the need for electricity. The light lasts system, a new enterprise group from the King Gray a minimum of three years and is charged by a 1.5- community was established, with members trained watt solar panel. in the assembly and sale of the taa bora portable lights, as well as upkeep of the school lighting sys- The genius of the taa bora is that it is both high-tech- tems. A taa bora rental program was initiated at the nology and grassroots in nature—it is an indigenous school; small rental fees pay for upkeep of the school commodity. It represents the bottom rung of the lighting system. In that way, the school and enter- energy ladder and was intended for people whose prise will together be able to sustain the project long primary energy need is light. Needs will change over after the original funding is exhausted. 48 Although the project is still in its early stages, the prin- cipal of the school has already noticed some results. The school offers accelerated learning classes, where grades 1–6 are taught to older youth and adults who missed out on education during Liberia’s civil war or because—in the case of women—they were kept home by chores or children. Prior to installation of the lighting system, enrollment in these classes was low because of timing constraints; they could only be of- fered in the afternoon while the sun was still up. Now modern lighting allows for evening classes, meaning that adults can come at the end of their work days. Currently, a large number of students fill four class- rooms. The principal notes that enrollment has par- ticularly increased among women, who now make up the majority of the classes. A taa bora made from a recycled plastic water bottle, rechargeable AA batteries, and an LED bulb. With a slight modification, it doubles as a desk lamp for studying. Evening adult education classes by the light of the school system developed from the taa bora concept. The Paynesville-based Charity Prayer Band women’s enterprise assembling taa boras 49 Chapter 4: Looking Forward The World Bank Group’s Past Efforts to energy and energy efficiency investments in the Expand the Renewable Energy and Energy global energy portfolio. Recognizing the multi- Efficiency Portfolio dimensional development benefits of promoting renewable energy and energy efficiency, all three The World Bank Group has rapidly expanded agencies of the World Bank Group—the World its support for renewable energy and energy Bank (IBRD and IDA), IFC, and MIGA—have, in efficiency in order to promote sustainable and addition to augmenting their low-carbon invest- low-carbon energy development. In addition ments, employed a host of related policy, regula- to contributing to GHG mitigation, application tory, technical, financial, and risk mitigation tools of these clean energy technologies has helped to enhance incentives for client countries. The advance the development goals of World Bank World Bank Group acknowledges that advance- Group client countries by reducing oil imports ments and innovations in renewable energy and and total energy costs and improving economic energy efficiency need to go hand in hand with competitiveness. The World Bank Group has effective planning, transparent decision-making also been able to respond quickly to its clients’ mechanisms, suitable business and regulatory growing demand, partly driven by the volatility environments, and successful commercialization of oil and other conventional energy prices, con- in order to fully take advantage of the unique cerns about reliable access to adequate energy characteristics of these technologies, especially supplies, greater concern about climate change, the wealth of development benefits they can and cost reductions and technology maturation bring. Many of these issues must be addressed lo- in renewable energy and energy efficiency. cally, consistent with market conditions, resource availability, and policy environment difference. Technology development and financing will The IFC is also expanding backwards into the be critical to scale up the share of renewable renewable energy supply chain (see Box 8). Box 8: IFC Investments in the Manufacture of Renewable Energy Technology As the global renewable energy market has become larger and more mature in recent years, com- mercial investment opportunities have also expanded rapidly. Adding to its portfolio of investments in wind, biomass, geothermal, and small hydro for power generation, the IFC has invested in the manufacture of renewable energy materials and equipment, based partly on opportunities for export to policy-based markets in industrial countries, but also in the interest of creating a base for domes- tic expansion. The large demand within OECD markets has been beneficial insofar as it has allowed greater investment and economies of scale. However, supply bottlenecks and shortages have kept prices high with adverse effects. The IFC is now extending the scope of its clean energy interests with an allocation of resources for early-stage clean technology investments, bringing new risks and opportunities for accelerating market development. 51 Global Challenges for Scaling Up Renewable Climate Change: A Strategic Framework for the Energy and Energy Efficiency World Bank Group (SFDCC), serves to guide and support the operational response of the World Much of the world has yet to realize the full Bank Group to new development challenges potential and transformative promise of re- posed by global climate change. Some of the newable energy and energy efficiency. At the major initiatives have been embedded within global level, energy-related GHG emissions the SFDCC to grow our clean energy portfolio account for about 70 percent of total emissions more proactively, with emphasis on attaining and are projected to grow by about 50 percent more ambitious goals. Under the SFDCC, the by 2030 unless supportive and effective policy World Bank Group will increase financing for measures are introduced very soon. Meeting energy efficiency and new renewable energy by developmental goals while stabilizing GHG an average of 30 percent a year, from a baseline emissions will require massive investments of US$600 million, and expand lending to hy- in renewable energy and energy efficiency. As dropower, with the share of low-carbon projects studies by the International Energy Agency (new renewable energy, energy efficiency, and (IEA), IPCC, McKinsey27 and other sources have hydropower) rising from 40 percent in fiscal indicated, in order to limit GHG emissions to 2006–08 to 50 percent in fiscal 2011. This com- 450 ppm by 2030, energy efficiency and renew- mitment comes on the heels of, and as a logical able energy measures (including biofuels) will extension of, the attainment of the World Bank have to contribute 54 percent and 23 percent of Group renewable energy and energy efficiency potential GHG reductions, respectively.28 While 2004 Bonn commitment. The full impact of this these clean energy options are cost-effective lending goes well beyond the direct amount compared to traditional supply-based measures of loans provided, since the market impact is in the longer term and on a lifecycle cost basis, typically many times larger. they will require additional upfront investments of US$9,300 billion during the period 2010–30, The World Bank’s Energy Strategy29 (under prep- including US$5.7 trillion for energy efficiency aration) will provide a framework to achieve the measures, according to the IEA. If cost-saving twin objectives of (a) improving access to and efficiency measures are neglected or delayed, reliability of energy supply, and (b) facilitating the effective cost for emissions reductions the shift to a more environmentally sustainable increases many times over. Although finding financing to manage the investment costs will be daunting, in many cases the more challenging 27 The World Development Report 2009 (Washington, D.C.: World Bank), chapter 4, and the IEA World Energy Out- task is creating a receptive market and policy look 2009 (Paris: IEA, 2009), to be released November 10 environment. (highlights released the week of October 13–16, 2009, at the Bangkok UNFCCC meeting). 28 According to IEA analysis, taking into account the eco- The World Bank Group’s Continued nomic downturn and some recent announcements of climate Commitment into the Future: SFDCC and policy commitments, the global energy system is roughly Energy Strategy on track to stay within a target of 550 ppm, but substantial additional policies and shifts in investment will be required to reduce emissions sufficiently to stay within 450 ppm (IEA, During the past two years, the World Bank World Energy Outlook 2009 (Paris: IEA, 2009)). However, Group launched several initiatives building there is increasing concern that even this target will not be on its continued and expanded support for adequate to avoid dangerous climate changes and that more aggressive reduction goals may be required. renewable energy and energy efficiency. The 29 See the World Bank Energy Strategy Consultation at 2008 Board-approved paper, Development and http://www.worldbank.org/energyconsultations 52 energy development path. This strategy will be On the technologies front, ongoing activities informed by extensive global consultations with include disseminating knowledge for key all stakeholders, promote complementary roles emerging technologies (such as carbon capture of the public and private sectors, facilitate the and storage, concentrating solar power, and use of innovative financial products and techni- smart grids); working with GEF on acceleration cal assistance, and provide renewed attention to of pre-commercial clean energy technologies incentives for energy efficiency and renewable for developing countries; and contributing energy, as well as subsidy and pricing issues. to United Nations Development Programme (UNDP) efforts regarding technology needs as- Going forward, the World Bank Group will sessments. The IFC/GEF Earth Fund, with an continue to leverage its technical expertise, initial commitment of US$60 million, is promot- policy advice, and financing resources to further ing private sector–based clean technology and catalyze and mainstream renewable energy and solar projects. As these technologies become energy efficiency applications by the public and increasingly commercial, the IFC is committing private sectors in its client countries. To achieve resources from its own balance sheet to both the new, ambitious goals under the SFDCC, a direct investments and early-stage “clean tech” multi-track approach will be adopted across the funds in developing countries. World Bank Group. Mobilizing Additional Resources for Strategically identify renewable energy and Renewable Energy and Energy Efficiency energy efficiency opportunities and expand portfolio. The World Bank Group will identify To reduce the financing resource gap in address- new opportunities across all sectors (through ing the challenge of scaling up renewable energy methods such as the screening of all upcom- and energy efficiency, the World Bank Group’s ing energy projects to identify feasible energy own funds will be complemented by new con- efficiency opportunities); provide support for cessional resources, in addition to the GEF and low-carbon growth country studies (see Box 9); carbon market finance. The Climate Investment promote energy efficiency across other sectors Funds (CIF) are a new source of financing for (including urban and transport) through the pilot projects to initiate transformational change Energy Efficient Cities initiative of ESMAP; and toward low-carbon and climate-resilient devel- engage clients during early stages (for example, opment. The CIF funds, to be disbursed as grants, the Country Assistance Strategy stage) on re- highly concessional loans, and/or risk mitigation newable energy and energy efficiency support instruments, are administered through the prospects. See Case Study 8 for an example from multilateral regional development banks and Thailand. the World Bank Group for quick and flexible implementation of country-led programs and The IFC adopted a similar approach a few years investments. CIF consists of the Clean Technol- ago to identify, promote, and finance energy ef- ogy Fund with donor commitments of US$5.2 ficiency and other cleaner production opportuni- billion, and the Strategic Climate Fund (SCF). ties (for example, water and materials efficiency) The Clean Technology Fund promotes scaled-up in its investments portfolio. A new facility has demonstration, deployment, and transfer of low- been created at the IFC with US$120 million, carbon technologies in the power and transport with the objective of streamlining processing sectors, as well as energy efficiency in buildings, for cleaner production audits, technical support, industry, and agriculture. Explicit provision has and associated financing. been made for private sector participation as part 53 Box 9: Low-Carbon Growth Country Studies Program Studies in China, India, Indonesia, Mexico, Poland, and South Africa have reinforced some broad mes- sages (for example, the need for renewable energy and energy efficiency support) and also returned some surprises (for example, low-cost transport options and cogeneration investments). As a global public good, the wealth of knowledge generated by these efforts is being used to develop strategies and direct GHG reduction investments being pursued in the Clean Technology Fund program. Among other things, the studies have engendered in-country ownership of mitigation strategies and pro- vided two extremely valuable outputs: (a) a process for establishing low-carbon strategies; and (b) a growing, useful knowledge and data set that can be used both to help other countries reduce their GHG emissions and to decrease the cost of mitigation. The work currently underway is constructing models for low-carbon development strategies in emerging economies. Some highlights are as follows: • Mexico’s study provides a body of knowledge about prospective low-carbon “wedges,” specific low-carbon projects, and the continuing policy reform agenda. The primary energy savings iden- tified arise from cogeneration and energy efficiency improvements in industry. Also, the forestry sector has untapped mitigation potential. • Brazil’s Low Carbon Study focuses on new models for land use, land use change, forestry, and energy planning. The detailed sector methodologies are already in use, yielding useful techni- cal results which will potentially be incorporated into new investment programs. The study has enhanced linkages between technical research groups and corresponding government ministries and agencies relevant to climate change, increasing useful information exchange. • South Africa’s study is helping to create an environment for implementing energy efficiency and DSM. • India’s study reveals that the country has a relatively low-carbon economy. The priority remains to meet energy demand and sustain high economic growth despite energy shortages, problems with access, and poverty concerns. • The Indonesian study provides insight into fiscal and financial policy instruments—as well as tax and spending policies—used to promote movement toward a lower-carbon economy, to consider strategic investment approaches and financing sources, and to improve fiscal incentives in forestry. • China’s study provides policy support to understand renewable energy and energy efficiency targets and low-carbon growth better. For more details, see Low Carbon Growth Country Studies—Getting Started: Experience from Six Countries, ESMAP 2009. of an overall emphasis on market transformation. development paths, primarily through the ex- Three projects were approved for Clean Technol- panded use of renewable energy and energy ogy Fund funding in fiscal 2009 by the CIF Trust efficiency. Fund Committee for Egypt, Mexico, and Turkey. The Turkey project was approved by the World Recognizing that infrastructure investments Bank board in May 2009. and maintenance were the main casualties during and after the Asian financial crisis of One of the proposed SCF funds, Scaling Up the late 1990s and other similar recessions, Renewable Energy in Low-Income Countries, the World Bank Group has launched the In- is under development. Targeted at low-income frastructure Recovery and Assets (INFRA) countries, this US$250 million fund will assist platform to prevent a similar outcome after this low-income countries transition to low-carbon recession. From this platform, staff will lead 54 and coordinate the World Bank Group’s efforts future carbon emissions mitigation mechanisms to enhance investments in ongoing projects that whenever possible. are at risk of losing their financing, as well as in projects near closure whose financing has The establishment of two new carbon facilities in collapsed. INFRA will also provide dedicated the World Bank—the Carbon Partnership Facil- resources to maintain the current infrastruc- ity and the Forest Carbon Partnership Facility— ture spending for new assets and regular marks a new phase for the World Bank’s carbon maintenance of assets, investments that garner finance business. The move reflects the World higher returns than end-of-term renovation or Bank’s growing focus on scaling up climate rehabilitation. change mitigation work and deepening and broadening the carbon market beyond the cur- CIF and other facilities will complement the rent 11 carbon funds and facilities, which have existing GEF support at the global level, which a total capital value of more than US$2 billion. has already helped countries make US$8 billion This work also reflects the important role of the investments in more than 2,000 environmental World Bank Group in addressing methodologi- projects over the last 18 years, including many cal issues and measurement and verification in the area of renewable energy and energy ef- barriers to expanding the carbon market to ficiency. Through a programmatic approach, the include more programmatic approaches in the CIF’s, GEF’s, and World Bank Group’s funds will land use and forestry sectors. The IFC is increas- be combined with carbon finance through the ingly seeking to incorporate carbon finance as Clean Development Mechanism (CDM) and any a source of added value whenever relevant to The WBG/GEF-financed Al-Kureimat solar thermal power plant in Egypt, under construction, March 2009. 55 Uzbekistan its investments, and in so doing is promoting energy investment in developing countries will greater awareness of climate change risks and be a major objective. opportunities among its clients. In addition, the IFC helps companies get more value for Support enhanced capacity for clean energy their carbon credits by offering two financial in client countries. The climate convention services not readily available in the market: a and GEF have identified increased institutional Carbon Delivery Guarantee to buyers of Kyoto capacity and a supportive enabling environment credits in developed countries, and the option as critical requirements for successful technol- of structuring loans against future revenues ogy transfer. The World Bank Group supports from such credits. this objective through projects that focus on the development of good energy policies. Recently, Going forward, a critical question will be the the World Bank Group, as host of the InfoDev outcome of ongoing international climate ne- program, together with the U.K. Carbon Trust gotiations, especially the convention in Copen- and the U.K. Department for International hagen in December 2009. Two of four “pillars” Development (DFID), established a support discussed in these negotiations are technology program for Climate Technology Innovation and financing. While the institutional arrange- Centers. In projects such as Lighting Africa, ments, use of funds, and new donor commit- the World Bank Group also promotes favorable ments are still to be agreed, there is a strong market environments through quality assurance, expectation that support for accelerating clean consumer awareness, knowledge creation and 56 Tunisia dissemination, and product testing in order to building a foundation on which to base efforts catalyze the introduction of advanced electric to scale up the World Bank Group’s clean energy lighting technologies to African populations investments. The Energy Strategy process will currently dependent on fuel-based lighting. consider additional ways to enhance the role of the World Bank Group as a source of both tech- Incentivize and build staff capacities and nical information and policy advice supporting capabilities. The World Bank Group intends clean energy. to continue with specialized staff recruitment, including a Senior Advisor for Renewable Establish robust monitoring and reporting Energy and Energy Efficiency to the Sustain- mechanisms. Many new lessons are emerging able Development Network at the World Bank. from among the projects in the World Bank The development of operational tools (such as Group’s clean energy portfolio. As clean energy the REToolkit, PV for community service ap- continues to grow as a share of the World Bank plications, and the Energy Efficient Lighting Group’s overall energy investments, the qual- Toolkit), advanced technology assessments, ity of associated projects will improve as they provision of institutional development and build on past lessons learned. The World Bank capacity building for various stakeholders, and Group also acknowledges that it is important targeted knowledge products (such as those to step back and do an adequate assessment relating to carbon capture and storage, energy of each country’s present infrastructure and efficiency, and concentrating solar power) are environment in order to understand what best 57 practices are applicable, as well as which ap- onto the path of economic development. On the proaches could be adapted and incorporated other hand, climate change policies and actions into broader strategies as World Bank Group must be integrated into this development plan. client countries move onto low-carbon develop- Renewable energy and energy efficiency have ment paths. The World Bank Group is preparing long been pursued as important policy tools in systems and guidelines for better monitoring addressing vulnerability to volatile oil prices, and reporting of outcomes and impacts from its to enhancing the security of energy supplies, energy investments. avoiding the use of traditional supply options that are dependent on long supply chains, and Expand engagement with external partners. cost-effectively reducing energy and power The World Bank Group continues to engage shortages as global energy demand has rap- with other global and regional stakeholders, idly grown. At the same time, adopting these such as the United Nations, IEA, REN21, measures can also contribute to mitigating the REEEP, Forum of Energy Ministers of Africa global growth of GHG emissions. Thus, from (FEMA), private sector actors, and the newly an energy sector development perspective, established International Renewable Energy it is imperative that the significant potential Agency (IRENA), as a collective and coordinat- for expanding renewable energy and energy ed effort is needed at all levels. With 1.6 billion efficiency projects in developing countries be people still without access to electricity—and exploited at a rapid pace. Massive investments an equal number dependent on traditional in- in this sector should be made, with supportive efficient and polluting use of biomass fuels for policy and regulatory measures introduced, heating and cooking—there remains much to be especially in developing countries. done to improve access to modern energy. The UNFCCC and the Bali Action Plan emphasized In partnership with other agencies, the World the responsibility of developed countries not Bank Group has already been building on syner- only to reduce their own emissions, but also to gies between climate action and development, assist developing countries with necessary and working on energy security and energy effi- appropriate investments to reduce the growth ciency, and promoting renewable energy in our in their GHG emissions. The negotiations client countries. The World Bank Group has far leading to the Copenhagen climate meetings surpassed the commitment it made at the Bonn in December 2009 focus on both finance and International Renewable Energies Conference technology for clean energy technologies, and in 2004. This rapid expansion in support for re- will have important implications for the World newable energy and energy efficiency has been Bank Group. driven by the increased priority given to the sec- tor by the World Bank Group, as well as by the Helping the World Move toward a Cleaner favorable response from developing countries Energy Future and reinforcing trends in energy markets and technology. For many reasons—energy resource costs, climate change and other environmental con- The momentum for promoting low-carbon straints, and health and other social issues—the growth in the World Bank Group’s client coun- global energy system must undergo a radical tries, which has increased over the last several transformation in the near future. On the one years, is expected to continue growing in the hand, growing development energy needs future under the SFDCC framework and the must be met in order to usher billions of people forthcoming World Bank Group Energy Strat- 58 egy. The effective synergies between DCSSF, development. These new initiatives will provide the Energy Strategy, and emerging World Bank strategic coherence and enhance the operational Group programmatic innovations supported by impact of the World Bank Group’s renewable the GEF, CIF, and carbon markets will continue energy and energy efficiency activities, and up- to facilitate the increase in renewable energy and hold the institution’s role as an enabler of global energy efficiency investments by addressing the dialogue on shifting energy development to a critical interdependence of climate change and cleaner, more sustainable pathway. 59 Case Study 8: Making Transport More Energy-Efficient in Thailand The Thailand Country Development Partnership in land do not impose extraordinary requirements on Infrastructure study addresses the question of how transport. Other factors—mainly the high level of Thailand’s transport sector can become more energy motorization, heavy dependence on road transport, efficient. It assesses the performance of the transport and lack of fuel economy standards—contribute to sector in energy utilization, analyzes where inefficien- the high level of transport energy intensity. Road cies lie, and proposes options to improve sector en- transport overwhelmingly dominates freight and ergy efficiency. passenger transport markets, while rail plays a very small and declining role. The majority of Thailand’s Improved energy efficiency is imperative for Thai- vehicles use diesel, and fuel economy standards are land’s national energy security and continued eco- not applied to gasoline- or diesel-powered vehicles. nomic prosperity. Historically, Thailand has not per- The truck fleet is on average quite old and fuel-in- formed well in terms of energy efficiency. Total energy efficient. Because of low taxes, fuel prices are rela- intensity, defined as total final energy consumption tively low compared to those in Japan and Western per unit of gross domestic product (GDP), is high European countries. The estimated fuel efficiency of compared to other countries and at least twice that Thailand’s passenger vehicle fleet today is approxi- of Germany, Japan, and the United States. Moreover, mately 25–30 percent lower than the levels found in Thailand’s total energy intensity has remained more Japan and Western Europe. Traffic congestion in the or less the same over the past three decades, in sharp Bangkok Metropolitan Region (BMR) also contributes contrast to many other countries that have reduced significantly to Thailand’s high transport energy in- their energy intensity over the same period. This tensity. implies that Thailand has great potential to achieve lower energy intensity. As a policy option, pricing fuels on the basis of their long-run marginal costs is expected to have a sig- At present, two sectors—manufacturing and mining nificant and sustained effect on the improvement of and transport—account for 70 percent of total energy transport energy efficiency in Thailand. However, rec- use in Thailand, with each constituting approximately ognizing the political difficulties in implementing a an equal share. Petroleum products account for half comprehensive fuel pricing policy in the short to me- of total final energy consumption in Thailand. Seven- dium term, the study also examined 16 other policy ty-two percent of petroleum products are used in the and technology options. These are grouped into the transport sector, which derives almost all its energy following five categories: from this source. The road sector consumes seventy- six percent of transport energy. With little fuel diver- 1. Fuel efficiency and fuel switching. Upgrade sification and only a small amount of energy coming engine technologies for buses and trucks, and from renewable sources, the security of Thailand’s use natural gas selectively in vehicle fleets, energy supply is highly vulnerable to possible future especially commercial vehicles. fossil fuel supply constraints or rapid price increases. 2. Better vehicle standards. Establish and pro- gressively raise the fuel economy standards of The study found that the economic structure and passenger vehicles to match European stan- spatial distribution of economic activities in Thai- dards, and improve logistical practices in the 60 road-based freight transport sector, better gasoline and improving Bangkok’s air quality in the matching truck sizes to their tasks and operating 1990s provides many relevant lessons for application environments. to the implementation of the transport energy effi- 3. Rail investment and reform. Reform and ciency agenda. modernize the rail sector, expand the role of rail in freight transport and long-distance passenger services, expand mass rail transit and improve its integration with bus services, and improve the accessibility and walkability of bus stops and mass rapid transit stations. 4. Better urban bus services. Increase the speed and quality of bus services through expansion of bus rapid transit and investment in a new fleet, which will bring improved passenger comfort, better fuel efficiency, and lower emissions. 5. Policy and pricing measures. Upgrade the vehicle registration system and associated charges that reflect actual vehicle use, improve traffic management, and promote more efficient bus services through reforms that encourage competition and new investment. These options are essential elements in any effi- cient transport sector strategy. Most of them are win-win options in both transport performance and energy efficiency. A simple quantitative assess- ment of these options indicates that if all options are successfully implemented in Thailand, about one-third of the total annual transport energy use can be reduced in 2025 compared to the “business as usual” scenario. The savings would be more sub- stantial if a comprehensive fuel pricing policy is also enacted. Implementing the above options requires strong commitment and serious effort on the part of the government, especially in overcoming political and institutional impediments that protect the status quo. Thailand’s own success in phasing out leaded 61 Annex 1: Institutional Support for Renewable Energy and Energy Efficiency This annex describes the various World Bank IDA Group institutions and units, as well as the role that each plays in contributing to renewable Contributions to IDA (International Develop- energy and energy efficiency. It also provides ment Association) enable the World Bank to definitions of renewable energy and energy ef- provide approximately US$6–9 billion a year in ficiency. Last, it discusses the methodology used highly concessional financing to the world’s 80 to compute the data in this report. poorest countries (home to 2.5 billion people). IDA’s interest-free credits and grants are vital Roles of the Institutions because these countries have little or no capac- ity to borrow on market terms ( http://www. The World Bank Group worldbank.org/ida). In this report, the World Bank Group refers to IFC four closely associated World Bank institutions that directly support renewable energy and The IFC’s (International Finance Corporation’s) energy efficiency activities: the IBRD, IDA, IFC, mandate is to further economic development and MIGA. There are six operational regions un- through the private sector. Working with busi- der the IBRD and IDA. The report disaggregates ness partners, it invests in private enterprises in the commitments made by these regions and developing countries and provides long-term institutions. In addition, the World Bank Group loans, guarantees, and risk management and ad- is an implementing agency for the GEF. This visory services to its clients (http://www.ifc.org). report provides information on GEF projects ad- ministered by the World Bank. The World Bank MIGA Group’s Carbon Finance Business is reported separately because it is a unique business line MIGA (Multilateral Investment Guarantee that purchases emissions reductions and does Agency) provides political risk insurance against not directly invest in projects. noncommercial risks to eligible foreign investors and commercial banks for qualified investments The IBRD in developing member countries (http://www. miga.org). The IBRD (International Bank for Recon- struction and Development) aims to reduce Carbon Finance poverty in middle-income and creditworthy poorer countries by promoting sustainable Both the IBRD and IFC have Carbon Finance development through loans and guarantees Units that leverage public and private invest- and, in the nonlending area, analytical and ment for projects that reduce GHG emissions. advisory activities (AAAs; http://www.world- This helps to grow the market by extending bank.org/ibrd). carbon finance to both developing and transi- tional economies. The funds are provided by 63 private companies and governments seeking to the global environment and promote sustainable purchase emissions reductions to learn how to livelihoods in local communities. The GEF is initiate transactions in this complex emerging the World Bank Group’s largest partner in the market. The Carbon Finance Business (CFB- area of renewable energy and energy efficiency IBRD) is divided into separate business lines— investments (http://www.thegef.org). the IBRD CFU (http://carbonfinance.org/) and IFC CFU (http://www.ifc.org/carbonfinance). Definitions ESMAP Following are the definitions used for reporting on the World Bank Group’s activities. Commit- ESMAP (Energy Sector Management Assistance ment amounts used in the report were prorated Program) is a global technical assistance pro- to include only those project components that gram and knowledge partnership sponsored by clearly fall into one of the following categories. a group of donors, including Canada, Denmark, Finland, Germany, the Netherlands, Norway, New Renewable Energy Sweden, the United Kingdom, the United Na- tions Foundation, the United Nations Develop- Projects or project components were classified as ment Programme, and the World Bank. ESMAP new renewable energy if support was provided is managed by the World Bank (http://www. for solar energy for heat or power, wind energy worldbank.org/esmap). for mechanical or electrical power generation, geothermal or biomass energy for power genera- ASTAE tion or heat, hydropower of 10 MW or less per installation, and waste-to-energy operations, if In 1992, the World Bank and donor partners they generate electrical power or heat for pro- established ASTAE (Asia Sustainable and Alter- ductive uses. native Energy Program) to support the transition to environmentally sustainable energy use in Energy Efficiency developing countries in Asia. ASTAE supports upstream economic and sector work, much like Energy efficiency covers both demand-side ef- ESMAP, and also provides assistance in the ficiency and supply-side efficiency components. identification, preparation, and supervision of renewable energy and energy efficiency projects • Demand-side efficiency includes improve- (http://www.worldbank.org/astae/). ments in efficiency resulting from load management, demand response programs, The GEF and direct load control; improvements in end-use energy efficiency in the residential, The Global Environment Facility (GEF), estab- commercial, industrial, public-municipal, lished in 1991, helps developing countries fund agricultural, and transport sectors; and projects and programs that protect the global en- energy conservation. Also included are vironment. GEF grants support projects related energy efficiency improvements through in- to biodiversity, climate change, international stitutional development, regulatory reforms, waters, land degradation, the ozone layer, and and improvements in utility management persistent organic pollutants. GEF is an indepen- performance; introduction of improved dent financial organization that provides grants building codes, appliance energy efficiency to developing countries for projects that benefit standards, and labeling systems; retrofits to 64 meet new standards; energy audits; waste tural, health, or power project. In such blended heat recovery; improved fuel-efficiency projects, sometimes it is not easy to specify pre- standards for automobiles; use of drip irri- cisely what the size of each sectoral component gation or irrigation pumping in agricultural is. In this report, as far as possible, great care systems; municipal water pumping; energy has been taken to show only the commitment efficiency financing through financial inter- amount associated with new renewables, energy mediaries; and implementation of consumer efficiency, or hydropower greater than 10 MW. awareness programs. For example, in a particular project, the total • Supply-side energy efficiency encompasses commitment made by the IBRD and IDA may transport systems (including modal shifts be US$100 million. This project may have three from cars to mass transit systems); district different sectoral components: agro-industry, 50 heating enhancements; improved power percent; health, 30 percent; and new renewables, transmission and distribution, including 20 percent. In such a case, only US$20 million enhanced metering systems, capacitors, has been included as the project’s contribution and substation rehabilitation; power system to renewable energy. optimization; plant rehabilitation (includ- ing plants that offset conventional fuels Different Reporting Styles and the installation of supercritical boilers); improved operation and maintenance; and The various World Bank institutions have dif- combined heat and power plants. fering styles of reporting their data because of their different modes of business. For example, The projects or project components for energy MIGA provides guarantees to projects against efficiency include investments in rehabilitation various kinds of risks, whereas the IBRD and of transmission and/or distribution networks IDA provide project finance and guarantees. only when the share of energy efficiency im- Purchases of emissions reductions through provements in such projects can be clearly carbon finance are a revenue stream. The IFC disaggregated from other objectives, such as provides both equity and loan financing, as well network expansion and load increase. Inter- as guarantees. For the purposes of this report, ventions in Development Policy Loan com- and to arrive at an estimate of the World Bank mitments are included only when the share Group’s total commitments toward renewable attributable to energy efficiency can be clearly energy and energy efficiency, we have added demarcated. commitments made by each World Bank Group institution. The following distinctions should be Hydropower Greater Than 10 MW kept in mind when reading this report. The World Bank considers hydropower, regard- The IBRD and IDA less of scale, to be renewable energy. However, for reporting purposes, hydropower projects in For IBRD- and IDA-assisted projects, com- which the installed capacity at a single facility mitment amounts toward renewable energy, exceeds 10 MW are listed separately. energy efficiency, or both for each project have been used to estimate the cumulative total for The World Bank Group supports projects that the World Bank Group. Only those project may be cross-sectoral in nature. For example, components that could clearly be attributed to a renewable energy and energy efficiency com- renewable energy and energy efficiency category ponents may be embedded within an agricul- were counted. 65 IFC MIGA The report shows IFC net investments from its MIGA reports the maximum liability of its own account for renewable energy and energy guarantee and the foreign direct investment that efficiency investment. Previous IFC assessments the guarantee has leveraged. For the purposes referred only to stand-alone projects whose sole of arriving at a cumulative total for the World focus was energy efficiency or renewable energy, Bank Group, this report added together only the thus missing the full scope of investment in MIGA maximum liability. sustainable energy undertaken as a component of larger investments in various sectors. The Carbon Finance IFC has since revised its methodology so that it now identifies renewable energy and energy For purposes of this report, to compare carbon efficiency investments in commitments it has asset purchases and regular project financing, made in other sectors, such as agriculture, this report considered signed Emission Reduc- water supply, industry, and transport, and in tions Purchase Agreements to be the appropriate corporate loans to financial intermediaries. The measure and added those amounts to arrive methodology assesses the percentage of IFC at the total commitment—that is, the Carbon investment in proportion to the full project cost Finance Business equivalent of board approval and applies that proportion to the full renew- for World Bank loans. able energy or energy efficiency project value. This methodology has been used to update the The GEF IFC’s renewable energy and energy efficiency commitment amounts since fiscal 2005. For more For approved GEF projects, this report uses the details, see Choices Matter: 2005 Sustainability commitment amounts for each project. Report (Washington, D.C.: IFC, 2006) at www.ifc. org/SustainabilityReport. 66 Annex 2: Annual Renewable Energy and Energy Efficiency Commitments from Fiscal 1990 to Fiscal 2009 Annual Table 1: WBG Renewable Energy and Energy Efficiency Commitments (US $ millions) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Grand Total New Renewables 53 2 56 227 300 59 47 336 15 239 444 26 169 206 138 246 344 421 473 1,427 5,227 Energy Efficiency — 265 54 10 59 148 380 56 356 26 295 193 67 177 92 217 761 262 1,192 1,701 6,307 Hydropower (greater — 150 161 938 186 317 819 15 461 — 320 — 181 23 83 538 250 751 1,007 177 6,376 than 10 MW) Grand Total 53 417 271 1,174 545 524 1,245 407 832 264 1,059 219 416 406 313 1,001 1,355 1,433 2,672 3,305 17,911 Annual Table 2: WBG Renewable Energy and Energy Efficiency Commitments (US $ millions) by Institution or Unit 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Grand Total GEF — — 3 36 56 35 10 78 28 56 111 14 37 55 46 100 51 128 145 83 1,073 GEF-IFC/TF — — — — — — 37 33 — 30 5 — 19 28 1 1 — — 4 — 156 IBRD Carbon — — — — — — — — — — — 2 8 10 21 39 40 144 126 29 419 Finance IBRD/IDA 53 392 196 1,113 303 452 1,108 146 534 137 691 197 340 200 245 506 756 549 1,340 2,157 11,413 IFC — 25 72 26 186 7 36 135 206 15 1 6 13 113 — 255 492 450 906 1,036 3,978 IFC Carbon Finance — — — — — — — — — — — — — — — 10 13 7 39 — 69 MIGA — — — — — 30 35 15 65 26 252 — — — — 91 2 155 110 — 780 Special Financing — — — — — — 20 — — — — — — — — — — — 3 — 23 Total Commitment 53 417 271 1,174 545 524 1,245 407 832 264 1,059 219 416 406 313 1,001 1,355 1,433 2,672 3,305 17,911 67 Annual Table 3: WBG New Renewables Commitments (US $ millions) by Institution or Unit 68 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Grand Total GEF — — 3 26 30 10 7 39 6 56 66 9 36 6 14 47 48 121 90 15 629 GEF-IFC/TF — — — — — — 30 30 — 14 — — — 10 1 1 — — 4 — 90 IBRD Carbon — — — — — — — — — — — 2 4 10 10 8 19 68 62 21 205 Finance IBRD/IDA 53 2 20 201 270 19 8 132 10 128 127 9 128 165 114 128 253 70 117 804 2,757 IFC — — 33 — — — — 135 — 15 — 6 1 15 — 51 9 154 72 587 1,077 IFC Carbon Finance — — — — — — — — — — — — — — — 10 13 7 39 — 69 MIGA — — — — — 30 2 — — 26 252 — — — — — 2 — 88 — 401 Total Commitment 53 2 56 227 300 59 47 336 15 239 444 26 169 206 138 246 344 421 473 1,427 5,227 Annual Table 4: WBG Energy Efficiency Commitments (US $ millions) by Institution or Unit 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Grand Total GEF — — — 10 26 25 3 39 22 1 45 5 1 49 33 53 4 7 55 68 444 GEF-IFC/TF — — — — — — 7 3 — 16 5 — 19 18 — — — — — — 66 IBRD Carbon — — — — — — — — — — — — — — 3 6 18 10 40 8 86 Finance IBRD/IDA — 265 54 — 33 123 350 14 328 9 244 188 35 34 56 3 433 49 621 1,311 4,152 IFC — — — — — — — — 6 — 1 — 12 75 — 155 306 156 473 315 1,497 MIGA — — — — — — — — — — — — — — — — — 40 — — 40 Special Financing — — — — — — 20 — — — — — — — — — — — 3 — 23 Total Commitment — 265 54 10 59 148 380 56 356 26 295 193 67 177 92 217 761 262 1,192 1,701 6,307 Annual Table 5: WBG Hydropower (> 10 MW) Commitments (US $ millions) by Institution or Unit 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Grand Total IBRD Carbon — — — — — — — — — — — — 4 — 8 25 3 66 24 — 129 Finance IBRD/IDA — 125 122 912 — 310 750 — 196 — 320 — 177 — 76 374 70 430 601 43 4,505 IFC — 25 39 26 186 7 36 — 200  — — — — 23 — 49 177 140 361 135 1,403 MIGA — — — — — — 33 15 65 — — — — — — 91 — 115 21 — 339 Total Commitment — 150 161 938 186 317 819 15 461 0 320 0 181 23 83 538 250 751 1,007 177 6,376 Annual Table 6: WBG Renewable Energy and Energy Efficiency Commitments (US $ millions) by Region 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Grand Total AFR — 127 73 203 — 3 12 30 201 7 124 — 78 104 40 96 196 735 447 522 2,995 EAP 51 — 121 410 310 367 400 145 123 139 513 8 124 28 61 459 231 143 782 769 5,183 ECA — 290 — — 33 140 381 14 238 15 68 186 75 155 155 235 642 117 543 1,182 4,468 LCR 2 — 75 340 199 10 2 41 186 79 219 6 30 51 34 127 229 133 283 290 2,338 MNA — — — — 2 4 — — — — — — — — 0 10 12 121 67 67 283 OTH — — — — — — 32 148 — 25 — 12 1 10 — — — — — — 228 SAR — — 2 222 — — 419 29 85 — 135 7 108 58 22 75 46 183 550 475 2,416 Grand Total 53 417 271 1,174 545 524 1,245 407 832 264 1,059 219 416 406 313 1,001 1,355 1,433 2,672 3,305 17,911 Annual Table 7: WBG New Renewables Commitments (US $ millions) by Region 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Grand Total AFR — 2 18 3 — 3 8 30 5 6 124 — 16 104 33 41 27 20 252 103 794 EAP 51 — — — 300 49 — 112 2 139 — 3 18 — 56 127 144 93 23 567 1,685 ECA — — — — — — 7 — 9 6 6 2 — 3 44 10 9 12 515 624 LCR 2 37 2 — 3 2 20 — 78 204 6 26 31 5 53 135 100 77 137 918 MNA — — — — — 4 — — — — — — — — — 1 5 65 56 11 142 OTH — — — — — — 30 145 — 10 — 12 1 10 — — — — — — 209 SAR — — 2 222 — — — 29 — — 110 2 108 58 — 13 24 131 65 94 856 69 Grand Total 53 2 56 227 300 59 47 336 15 239 444 26 169 206 138 246 344 421 473 1,427 5,227 Annual Table 8: WBG Energy Efficiency Commitments (US $ millions) by Region 70 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Grand Total AFR — — — — — — 4 — 1 1 — — — — 6 3 10 79 41 418 564 EAP — — 54 10 10 8 — 33 121 — 193 5 1 28 5 75 65 24 654 57 1,341 ECA — 265 — — 33 140 374 14 229 9 62 183 65 144 51 54 632 97 341 663 3,357 LCR — — — — 14 — — 6 — 1 15 — 0 5 22 63 36 24 123 151 459 MNA — — — — 2 — — — — — — — — — 0 9 6 16 11 57 101 OTH — — — — — — 2 3 — 15 — — — — — — — — — — 19 SAR — — — — — — — — 6 — 25 5 1 — 7 13 11 21 21 355 466 Grand Total — 265 54 10 59 148 380 56 356 26 295 193 67 177 92 217 761 262 1,192 1,701 6,307 Annual Table 9: WBG Hydropower (> 10 MW) Commitments (US $ millions) by Region 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Grand Total AFR — 125 55 200 — — — — 196 — — — 62 — — 51 159 636 153 — 1,637 EAP — — 67 400 — 310 400 — — — 320 — 105 — — 257 22 26 105 145 2,156 ECA — 25 — — — — — — — — — — 10 8 61 170 — 7 202 5 487 LCR — — 39 338 186 7 — 15 186 — — — 4 15 8 11 58 10 83 2 961 MNA — — — — — — — — — — — — — — — — — 40 — — 40 SAR — — — — — — 419 — 79 — — — — — 15 49 11 32 464 26 1,095 Grand Total — 150 161 938 186 317 819 15 461 0 320 0 181 23 83 538 250 751 1,007 177 6,376 Annex 3: Fiscal 2009 Projects RE or EE Component Financing Financing No. Country Project Name Energy Type Sources (USD millions) Africa Region 1 Benin GEF Energy Efficiency Program EE GEF 1.82 2 Benin Increased Access to Energy Project EE IDA 48.91 Biomass 13.55 3 Central African Emergency Power Response Project EE IDA 8.00 Republic 4 Côte d’Ivoire Urgent Electricity Sector Rehabilitation Project EE IDA 44.00 5 Gambia Coco Ocean New Renewable Energy IFC 0.20 6 Ghana Ashesi University New Renewable Energy IFC 0.05 7 Kenya Kenya Agriculture Productivity & Agribusiness Project Small Hydro, Biomass, Wind, Solar IDA 2.00 8 Mali Mali Energy Support Project EE IDA 112.00 9 Mali HEURA Additional Financing Project EE IDA 2.30 Hydro, Solar, Wind 30.30 10 Nigeria Electricity and Gas Improvement Project EE IDA 182.00 11 Senegal Rural Lighting Efficiency Project EE Carbon Finance 1.80 12 Tanzania Green Resources New Renewable Energy IFC 7.71 13 Togo Emergency Infrastructure Rehabilitation & Energy Project EE IDA 3.00 14 Togo Togo Efficient Lighting Program EE GEF 1.82 15 Uganda Energy for Rural Transformation APL2 Solar IDA 40.40 GEF 9.00 16 Uganda Umeme Limited EE IFC 12.78 East Asia & Pacific Region 17 China Asia Environment Partners New Renewable Energy IFC 25.00 18 China China Environment Fund III EE IFC 10.50 19 China China Environment Fund III New Renewable Energy IFC 4.50 20 China Thermal Power Efficiency Project EE GEF 7.68 21 China Eco-Farming Project Biogas IBRD 103.41 22 China Jiangxi Shihutang Navigation & Hydropower Project Hydro > 10MW IBRD 40.00 23 China Suntech New Renewable Energy IFC 50.00 24 China Xinao Solar New Renewable Energy IFC 60.00 25 China Yaohua Glass EE IFC 25.34 26 China Zhongda Hydro II Hydro > 10MW IFC 4.90 27 Indonesia P.T. South Pacific Viscose EE IFC 13.70 28 Philippines Ambuklao – Binga Hydropower Project Hydro > 10MW IFC 100.00 29 Philippines Energy Development Corporation New Renewable Energy IFC 83.50 30 Philippines Additional Financing for RPP Project Solar IBRD 20.00 (continued on next page) 71 (continued from previous page) 31 Thailand Small Scale Livestock Waste Management Project Biogas Carbon Finance 6.39 32 Thailand Bioenergy Sugar Ethanol Wastewater Management Project Biomass Carbon Finance 15.00 33 Vietnam Renewable Energy Development Project Small Hydro, Wind, Biomass IDA 199.20 Europe & Central Asia Region 34 Belarus Energy Efficiency Project EE IBRD 125.00 35 Bulgaria AES Kavarna New Renewable Energy IFC 51.80 36 Croatia CMC Sisak EE IFC 12.98 37 Kyrgyz Republic Emergency Energy Assistance Project EE IDA 9.70 38 Lithuania Renewable Energy Mezzanine Facility New Renewable Energy IFC 13.40 39 Macedonia, FYR Municipal Development Project EE IBRD 5.00 40 Moldova Energy II Additional Financing Project EE IDA 10.00 41 Moldova SIF 2 Additional Financing Project EE IDA 0.75 42 Montenegro Energy Efficiency project EE IBRD 9.40 43 Russian Kronostar III New Renewable Energy IFC 3.70 Federation 44 Russian Federa- Kuaz Energy Efficiency EE IFC 20.00 tion 45 Russian MDM Bank EE IFC 35.00 Federation 46 Russian Nitol Solar New Renewable Energy IFC 50.00 Federation 47 Tajikistan InfraVentures – Lake Sarez Hydropower Project Hydro > 10MW IFC 2.00 48 Tajikistan PAMIR Additional Financing Project Hydro > 10MW IDA 2.50 49 Turkey Ynna Asment EE IFC 4.68 50 Turkey Private Sector RE and EE Project EE IBRD 200.00 51 Turkey Private Sector RE and EE Project Small Hydro, Wind, Geothermal, IBRD 300.00 Biomass, Solar 52 Turkey Programmatic Electricity Sector DPL Project EE IBRD 200.00 53 Turkey Rotor Elektrik Uretim A.S. New Renewable Energy IFC 71.51 54 Turkey Trakya Cam VI EE IFC 30.02 New Renewable Energy 24.67 Latin America & Caribbean Region 55 Argentina Aceitera General Deheza S.A. New Renewable Energy IFC 2.05 56 Argentina PERMER Renewable Energy Additional Financing Project Solar, Wind IBRD 50.00 57 Brazil Bauducco NE EE IFC 0.59 58 Brazil Estre Ambiental New Renewable Energy IFC 10.24 59 Chile Norvind S.A. New Renewable Energy IFC 30.75 60 Colombia Avianca EE IFC 50.00 61 Colombia Cartones America, S.A. EE IFC 0.80 62 Colombia Century Caruquia New Renewable Energy IFC 7.65 63 Colombia Century Guanaqui New Renewable Energy IFC 7.85 64 Colombia Riopalia New Renewable Energy IFC 14.76 (continued on next page) 72 (continued from previous page) 65 Guatemala Bioethnol New Renewable Energy IFC 5.88 66 Guatemala Panteleon S.A. II New Renewable Energy IFC 2.21 67 Honduras Dinanat, S.A. New Renewable Energy IFC 2.40 68 Honduras Power Sector Efficiency Enhancement Project EE IDA 8.90 69 LCR Region *Sustainable Transport and Air Quality Project EE GEF 0.15 70 Mexico **MX Sustainable Rural Development Project EE IBRD 46.58 GEF 4.79 71 Mexico Hipotecaria Vertice, S.A. EE IFC 25.00 72 Nicaragua InfraVentures – El Salto Project Hydro > 10MW IFC 2.00 73 Nicaragua Monte Rosa New Renewable Energy IFC 3.27 74 Paraguay UABL, Ltd. EE IFC 13.98 Middle East and North Africa Region 75 Jordan Energy Efficiency Project Wind GEF 6.00 76 Morocco Ynna Asment EE IFC 1.78 77 Tunisia Energy Efficiency and Renewable Investment Project EE IBRD 55.00 78 Yemen, Rep. Rural Energy Access Project Solar IDA 4.65 South Asia Region 79 Afghanistan NSP II Additional Financing Project New Renewable Energy IDA 11.25 80 India Allain Duhangan II Hydro > 10MW IFC 25.94 81 India **Chiller Efficiency Project EE Carbon Finance 5.85 GEF 6.30 82 India Coal-Fired Generation Rehabilitation Project EE GEF 45.40 IBRD 180.00 83 India Dishman Pharmaceuticals and Chemicals Ltd. EE IFC 0.29 84 India Granules India Limited EE IFC 1.00 85 India Hikal Limited EE IFC 0.30 New Renewable Energy 1.43 86 India Himadri Chemicals & Industries Limited EE IFC 3.63 87 India Jain II New Renewable Energy IFC 16.40 88 India Jain Irrigation New Renewable Energy IFC 8.43 89 India JK Paper Ltd. EE IFC 3.00 90 India Lanco Infratech New Renewable Energy IFC 12.79 91 India Modern Dairy EE IFC 0.91 New Renewable Energy 1.09 92 Maldives Addu Investments Private Limited EE IFC 1.46 93 Nepal Buddha Air EE IFC 10.00 94 Nepal Nepal Power Additional Financing Project EE IDA 60.12 Small Hydro 29.09 95 Pakistan Engro Energy Pvt. Ltd. EE IFC 2.79 96 Pakistan Global Trade & Finance Program – Pakistan EE IFC 34.00 97 Sri Lanka Padgo Risk Share New Renewable Energy IFC 13.51 * This project financed activities in more than one country in the Latin America and Caribbean region. ** These projects received funding from multiple sources and are internally reported with multiple project identification numbers. However, they are reported as a single entry above. 73 The World Bank Group 1818 H Street, NW Washington, DC 20433 www.worldbank.org www.ifc.org www.miga.org This publication is printed on recycled paper.