100982 2015/49 k nKonw A A weldegdeg e ol n oNtoet e s eSrei r e ise s f ofro r p r&a c t hteh e nEenregryg y Etx itcrea c t i v e s G l o b a l P r a c t i c e The bottom line Promoting Solar Energy through Auctions: Uganda has just completed the first donor-subsidized competitive The Case of Uganda bidding program for grid- connected solar photovoltaic (PV) Why is this issue important? risk of criticism that the same money could be better spent on more generation in Sub-Saharan Africa. basic needs such as schools, hospitals, and roads rather than the Uganda’s GET FiT Solar Facility As technology prices drop, solar power is becoming unnecessary luxury of high-cost “green” energy. will provide a performance-based an increasingly viable option for even small-scale These concerns were also present in Uganda, where the average subsidy of USc 5.37/kWh to lower generators and consumers in Africa retail tariff was U.S. cents (USc) 16.6/ kilowatt-hour (kWh) in 2013. the cost to Ugandan consumers Government officials believed they could not justify mandating the of the electricity produced from Uganda’s recently completed auction for the right of small solar purchase of relatively expensive electricity generated by solar PV four 5 MW solar plants bid by power generators to sell electricity to the main grid is the first at prices that were likely to exceed Uganda’s projected levelized two developers at an average successfully completed auction of its kind in Sub-Saharan Africa. cost of electricity (LCOE) of USc 9/kWh for new long-run sources of price of USc 16.37/kWh. This note Notably, the auction combined price competition with explicit main-grid-connected generation. Until late 2012, the government analyzes the bidding process and “top-up” payments by donors and the offer of a World Bank partial viewed solar PV generation as sensible for only isolated mini-grid the lessons learned, for possible risk guarantee (PRG) to reduce developers’ payment risk. locations with relatively high levelized costs of supply. But in late replication in other developing 2012, the government’s policy changed: Uganda found itself facing countries in Sub-Saharan Africa Why did Uganda decide to hold a solar auction? a near-term electricity supply shortage on the country’s main grid. and elsewhere. Solar generation can help to alleviate short-term Confronted with a choice between buying electricity from expensive online thermal units at prices that were likely to exceed USc 23/ kWh power shortages versus lower-cost renewable generation, the government decided to Despite large drops in the cost of solar photovoltaic (PV) equipment encourage the construction and operation of grid-connected small René Meyer is an over the past five years, successfully implemented utility-scale solar power producers (SPPs) of solar energy through competitive bidding. independent policy projects promoted by independent power producers (IPPs) are Solar SPPs were especially appealing to the Ugandan gov- advisor for renewable still a rare phenomenon in the power markets of the region. Most ernment for three reasons. First, they had the potential to come energy. governments have been reluctant to procure privately produced online relatively quickly and alleviate Uganda’s expected supply Bernard Tenenbaum grid-connected solar energy and other forms of renewable energy shortage. Second, the European Union (EU), through the EU Africa is a consultant to the (RE) because of the expectation that they would unnecessarily Infrastructure Trust Fund (ITF), had indicated that it would be willing World Bank’s African raise the cost of generation for consumers connected to the grid. to provide €15 million in grants (known as top-up payments) to sup- Electrification Initiative. A government willing to take on the financial burden of the higher port a competitive bidding program for solar SPPs. Third, competitive Richard Hosier is a senior costs of solar generation through government subsidies or other bidding could be added as a new activity of Uganda’s existing Global energy specialist in the financial incentives (for example, preferential tax treatment) runs the Energy Transfer Feed-in-Tariff (GET FiT) program. World Bank’s Energy and Extractives Global Practice. 2 P r o m o t i n g S o l a r E n e r g y t h r o ug h A u c t i o n s : T h e Case o f U ga n d a Uganda’s GET FiT program (www.getfit-uganda.org) was initially purchase the output of all SPPs.1 In effect, this component of the designed to fast-track the development of three types of privately risk guarantee mechanism is a form of insurance to protect against financed, main-grid-connected small renewable generation delayed payments. (hydropower, bagasse, and biomass) in Uganda. The program’s Before introducing competitive bidding on solar PV SPPs announced goal was to promote private investment in about 15–17 under the GET FiT Solar Facility, the GET FiT program had already small renewable projects that would add about 170 megawatts (MW) conducted two rounds of procurement without price competition for “Ugandan officials believed to the country’s total installed capacity of 840 MW (in 2013). GET hydropower, biomass, and bagasse SPPs with capacities between 1 they could not justify FiT was launched in early 2013 as a joint initiative of the Ugandan and 20 MW. In these nonsolar procurements, developers competed mandating the purchase government, KfW (the German development bank), four European based on a system scoring their performance in three areas: financial donors (Norway, United Kingdom, Germany, and the European and economic, technical and organizational, and environmental of relatively expensive Union), and the World Bank. By formal agreement, the government of and social. Developers also had to document compliance with the electricity generated by Uganda authorized KfW to act as its agent by entering into financing International Finance Corporation’s (IFC’s) Performance Standards solar PV at prices that were agreements with SPPs and hiring consultants needed to implement (PS) for Environmental and Social Sustainability.2 There was no likely to exceed the cost the program. In late 2014, the government announced that it would competition on price, which was prespecified in the FiTs (known as of main-grid-connected add competitive bidding for grid-connected solar PV generators as renewable energy feed-in-tariffs [REFiTs]) set by the regulator. The an additional component of the GET FiT program. applications were appraised and ranked on nonprice factors by an generation. But in late The European donors agreed to provide funds for “top-up” or independent expert team, and the results were submitted for final 2012, the government’s premium payments that would be added to the feed-in-tariffs (FiTs) consideration to an independent Investment Committee comprised policy changed: Uganda set by the Electricity Regulatory Authority (ERA). Donors would pay of international RE and infrastructure investment experts with expe- found itself facing a for the top-up payments, and Ugandan electricity consumers would rience in Sub-Saharan markets. This meant that the final evaluation pay for the FiTs. In addition, SPPs were offered the possibility of and selection was made by the Investment Committee and not by near-term electricity supply purchasing a World Bank PRG that could protect a developer from the multistakeholder Steering Committee, the regulator (ERA), or the shortage on the country’s three risks, including the risk of delayed payments for the electricity UETCL (the entity that would be buying the electricity from the SPPs). main grid.” sold to the Uganda Electricity Transmission Company Limited A unique feature of the GET FiT program for both solar and (UETCL), the government-owned enterprise that was designated to nonsolar projects is that donor-funded top-up payments are loaded at the front end. This means that a developer will receive a per Table 1. Feed-in-tariffs and donor top-ups for 1–20 MW of kilowatt-hour premium for the full projected 20-year output of a installed capacity, by technology plant, but these top-up payments will be totally disbursed during the first five years of the plant’s operation (table 1). To receive the first Current GET FiT Maximum 50 percent of the total top-up payment amount upon commercial REFiT tariff premium capacity factor Technology (US$/kWh) (US$/kWh) (%) operation, the plant must pass a performance test conducted by an independent expert team. The remaining 50 percent is paid in Hydro (9–20 MW) 0.085 0.014 60 annual 10 percent tranches over the first five years of operation Hydro (up to 9 MW) 0.115–0.085 0.014 60 Bagasse 0.095 0.005 0 1. The other two risks were guaranteeing commercial lenders against debt service default (a loan guarantee) and a guaran- Biomass 0.103 0.01 40 tee against termination of payments if triggered by certain specified default events (a termination of payment guarantee). Solar/PV 0.11 0.0537 0 2. The International Finance Corporation’s Performance Standards have become the international de facto “gold standard” for environmental and social impact assessments and mitigation schemes across all types of infrastructure investments. Note: Premiums calculated for 20-year payment period but disbursed in first 5 years of plant’s Many private and development finance institutions now require compliance with the IFC PS as a condition for approving operation. For solar, top-up payments calculated as the difference between the accepted bid loans or equity investments, even in the absence of IFC financing. price and feed-in tariff set by ERA. 3 P r o m o t i n g S o l a r E n e r g y t h r o ug h A u c t i o n s : T h e Case o f U ga n d a against energy delivered and production targets achieved. Hence, the approximately 10 months. The bidding was conducted without an selected developers receive higher payments during the crucial early announced price cap. Bidders were given a one-time opportunity to years of operation when they will have the added costs of making submit a sealed, written price bid. The winners were told that they interest and principal payments on loans. would be paid the price that they bid. Developer proposals were The front-loaded disbursement also has an advantage for donors. evaluated both on price bids and on various technical, financial, “The entire bidding Donors’ priorities change as their governments’ priorities change. environmental, and social parameter scores. The nonprice factors process—from the initial Consequently, most donor organizations are not able to make were similar to those used in GET FiT’s earlier nonprice competitions. credible financial commitments for a long time period. However, The bidding took place in three stages. In the first stage, request for proposals even shorter commitments—for example, seven years for the GET announced in early 2014, developers were invited to submit an to the selection of FiT program—may still be vulnerable to changes in foreign exchange expression of interest documenting their experience with solar the winners—took rates (for example, if commitments are made in euros, and top-up projects in developing countries and their general financial capacity. approximately 10 months. payments are promised in U.S. dollars). Developers were told that they had to demonstrate previous experience in the construction, operation, and financing of similar The bidding was conducted What were the challenges faced in Uganda’s auction solar plants in developing countries. In early May 2014, qualified without an announced developers (9 out of 24) were invited to submit technical and price price cap. Bidders for solar generation? bids. These selected developers were given three months to submit were given a one-time One key challenge was balancing the interests of their bid package in the second stage. Seven developers submitted opportunity to submit a small generators with concerns for the integrity of their bid package in late August 2014. An external team of con- sultants evaluated and scored the price and technical bids, which sealed, written price bid. overall grid capacity and service covered the project´s proposed technology and design elements as The winners were told that The ERA decided that a total of 20 MW of solar capacity would be well as predefined financial, environmental, and social parameters. they would be paid the procured through competitive bidding. This limit reflected concerns The price bids received a 70 percent weight and nonprice elements about the ability of the grid to handle a large amount of intermittent received a 30 percent weight. The selection of two winning bidders price that they bid.“ capacity as well as a donor funding limit for top-up payments ear- was announced at a press conference on December 10, 2014. marked for the GET FiT Solar Facility. Bidders were asked to submit Regarding another key challenge—maintaining a tight imple- bids for plants with a peak capacity of 5 MW and allowed to submit mentation schedule—the solar SPPs benefitted from a standardized up to two bids, for a total of 10 MW. power purchase agreement (PPA) and implementation agreement Prior to the bidding, the ERA announced a FiT of USc 11/kWh for (IA) that had been drafted and approved by the Ugandan authorities the electricity produced by the winning solar generators. This was for small hydropower SPPs. Both documents were the outcome of not ERA’s estimate of the levelized cost of producing electricity from an extensive and transparent consultation process that received solar generators. Instead, it represented the regulator’s estimate of numerous comments from both domestic and external stakeholders, a tariff that could be paid by UETCL and that would ensure limited including representatives of international RE investors. The earlier impact on its average supply costs and, in turn, on the bulk supply agreements were then adapted for solar PV SPPs relatively quickly. tariff that UETCL charges the distribution entities that purchase from In contrast to the earlier nonsolar procurement processes, the it. The GET FiT Solar Facility’s top-up payments would then cover the tender documents for the solar procurement identified preferred difference between the winning bid prices and this USc 11/kWh tariff. zones for the location of the proposed plants. These zones were Another challenge posed by auctions is the time required to defined after a review of grid capacities, local loads, and solar review bids. In the case of Uganda, the entire process—from the radiation rates. Before the prequalification stage, ERA’s and UETCL’s initial request for proposals to the selection of the winners—took technical teams analyzed the available capacities of existing power 4 P r o m o t i n g S o l a r E n e r g y t h r o ug h A u c t i o n s : T h e Case o f U ga n d a lines and substations, and simulated the operational impact of solar- What are the key lessons from Uganda’s solar auction? based generation at various locations. The tender documents also stated that projects had to be located no farther than 3 kilometers Competitive bidding can be combined with donor (km) from the grid and that all interconnection costs were to be grants keyed to the output of small power producers borne by the bidder and included in tariff bids. Under the GET FiT Solar Facility in Uganda, SPPs will receive a The appraisal of the submitted project bids and the final selection donor-funded premium payment of USc 5.37/kWh on top of a FiT of “The fact that the decisions were conducted by external consultants. Outside consul- USc 11/kWh. Hence, the donor top-up payments will account for a selection decisions of the tants were used for three reasons. First, Uganda lacked experience third of the revenues of the winning bidders and will enable Uganda Investment Committee with competitive bidding and solar PV generators. Second, the use to acquire grid-connected solar PV power with negligible impact of independent, international experts helped to ensure that selected on retail tariffs. The performance-based structure of the top-up could not be overturned by projects were technically consistent with international industry stan- payments (that is, keyed to verified electricity production) will be governmental authorities dards. Third, the fact that the selection decisions of the Investment made when the plants come online and produce electricity. After or the GET FiT Steering Committee could not be overturned by governmental authorities or the top-up grants have been paid out, it is projected that a 20-year Committee helped to the multistakeholder GET FiT Steering Committee helped to ensure revenue stream of USc 11/kWh under the PPA will provide a suffi- ensure procurement procurement integrity. Uganda is not alone in its extensive use of cient incentive for developers to continue operating plants in later outside international consultants. All four rounds of the successful years. This avoids the risk of one-time investment tax credits, which integrity.” South African Renewable Energy Independent Power Producer is that developers will take the credit, stop producing, and move their Program (REIPPP) relied heavily on external expert support. solar facilities to another location. Two winning bidders were selected with an average levelized tariff The Ugandan bidding process placed considerable emphasis of USc 16.37/kWh, well below the initially anticipated levels of USc 18/ on “due diligence” to ensure that the projects were economically kWh. Both winning developers bid 10 MW in total by providing bids feasible, the project sponsors had relevant experience, and the “The donor top-up for two side-by-side 5 MW plants. As of October 2015, one SPP has projects would be able to meet the IFC PS. In addition, bidders had to signed transaction agreements and is about to achieve financial close post bid and performance bonds. The intent was to avoid selecting payments will account for in a matter of days. The due diligence review of lenders (all devel- low-ball “briefcase” developers offering proposed projects that had a third of the revenues of opment finance institutions, DFIs) are almost complete and the loan no realistic chance of coming to closure. the winning bidders and agreements ready for signing. The financing agreements with KfW Price levels. The Uganda competitive bidding process produced will enable Uganda to and the government for GET FiT support have been signed with one lower than anticipated prices: the winning average price of USc acquire grid-connected SPP . The other SPP is in the process of achieving full compliance with 16.37/kWh was well below the initially expected levels of USc 18/ investment preconditions,3 which were imposed by the Investment kWh. Yet some international stakeholders have expressed disap- solar PV power with Committee to close any remaining quality gaps for the two selected pointment with this outcome. They point to lower average winning negligible impact on retail projects. It is anticipated that both projects will start construction in bid prices in other countries: USc 6.4/kWh (June 2015) in South Africa, tariffs.” the fourth quarter of 2015—about 20 months after the start of the USc 5.98/kWh (November 2014) in Dubai, USc 8.7/kWh (November tender process. Current projections are that the projects will reach 2014) in Brazil, and USc 8/kWh (February 2014) in the state of Madhya commercial operation by the second quarter of 2016, or slightly Pradesh, India. over two years after expressions of interest were requested. If they The obvious question is: why are the winning bids in Uganda become operational in time and produce the projected amount of higher than in these other countries? We think that there are four electricity, they will achieve the government’s original goal of reducing plausible explanations: purchases from more expensive fossil-fuel units. 3. For the solar photovoltaic (PV) projects, such conditions included review of the engineering plan for joint operation of the two side-by-side 5 MW plants and completion of remaining studies required for the IFC PS. 5 P r o m o t i n g S o l a r E n e r g y t h r o ug h A u c t i o n s : T h e Case o f U ga n d a • First, the winning solar generators in these other countries are consultant-recommended price in neighboring Tanzania. (It is not much larger (for example, about 75 MW on average in South surprising that the Tanzanian regulator recently announced that Africa and 100 MW in Dubai). Uganda intentionally chose smaller- electricity purchased from future solar SPPs must be acquired sized solar generators so that the solar-produced electricity through competitive procurement rather than administratively could be accommodated on UETCL’s existing transmission and established FiTs.) distribution (T&D) system. But this meant that the “soft costs” of Financing. One disappointment is that commercial banks have This was Uganda’s preparing a bid (for example, legal reviews and studies required been unable or unwilling to provide loans to SPPs on a project-fi- first experience with by the IFC PS), which are often roughly the same for small- and nanced basis. An objective of the GET FiT program was to persuade grid-connected solar medium-sized projects, would be spread over fewer kilowatt- commercial banks, whether local or international, to provide such hours of expected production.4 loans to winning SPPs. To date, this has only been achieved for three generation. If Uganda’s • Second, the creditworthiness of the off-taker, UETCL, is relatively GET FiT–promoted hydropower projects. All other loans are being solar SPPs are successful, it given by donor-supported DFIs. weak, though it has been improving since the introduction of is likely that future projects cost-reflective end-user tariffs in 2012. Why? It is generally believed that the DFIs offer the SPPs better will be bid at lower prices. loan terms—lower interest rates, longer loan terms, and lower • Third, this was Uganda’s first experience with grid-connected collateral requirements—than commercial banks are willing or able solar generation. If Uganda’s solar SPPs are successful (that to provide. In addition, Ugandan banks generally lack project finance is, they produce their targeted electricity outputs and receive experience for RE transactions. Also, local commercial banks can timely payments), it is likely that future projects will be bid at make higher profits, with less work, and at lower risk by focusing lower prices. This has been the experience in almost every other loans on familiar sectors (such as real estate and agriculture). “One disappointment is country that has had multiple bidding rounds. Without project financing from commercial banks, SPPs will have that commercial banks • Fourth, Uganda will always have somewhat higher prices to continue to depend on loans from DFIs, which is not a commer- because it is a landlocked country with higher transportation cially sustainable long-term solution. have been unable or costs for imported equipment. Payment risk. In Africa, a major concern of SPPs selling to unwilling to provide loans government-owned buyers is that they may not get paid for the elec- to SPPs.... Without project In our view, the most relevant comparison is with signed contract tricity that they produce, or that payments will be delayed. Delayed financing from commercial prices with small-scale solar generators in other African countries. payments are also a concern for lenders who provide loans to solar For example, the USc 16.37/kWh price in Uganda is about 34 percent developers. If the developer does not receive timely payments from banks, SPPs will have to lower than the negotiated USc 25/kWh price paid for an 8.5 MW the buyer, the developer will find it difficult to make interest and continue to depend on solar PV system over 25 years in Rwanda. As a general rule, we think principal payments on the bank loan that financed the project. And loans from DFIs, which that more confidence should be placed in market tests rather than since the loans are made on a project-financed basis, the lender will is not a commercially consultants’ estimates. Consultants’ estimates generally tend to be not have recourse to a parent company’s balance sheet.5 sustainable long-term higher because their sources are often developers who know that The PRG offered by the World Bank in Uganda was meant to deal their supplied cost estimates can raise the FIT prices that they will with the issue of delayed payments. Yet, to date none of the GET solution.” receive. For example, at the same time (August 2014) that Uganda FiT SPPs have applied for the guarantee. Several explanations have received average bids of USc 16.37/kWh, a consultant recommended been given. One is that the DFIs that are offering loans to SPPs do to the Tanzanian regulator that the minimum required price for a not need the assistance of the World Bank to get their loans repaid. similarly sized solar generator should be USc 24.5/kWh. Hence, the Presumably, DFIs can apply pressure directly on the government, market price in Uganda was more than 33 percent lower than the and thus on UETCL, to ensure timely payments to the SPP borrowers. 4. One bidder estimated that its bid preparation costs were $30,000. The costs for a 5 MW and 10 MW bid did not vary 5. In Tanzania, over the last 18 months, small renewable power producers have experienced delays of 5 to 7 months in significantly. payments for the electricity that they supplied. 6 P r o m o t i n g S o l a r E n e r g y t h r o ug h A u c t i o n s : T h e Case o f U ga n d a Furthermore, the up-front $100,000 initiation fee for the PRG may be too high for SPPs. “Must take” provisions. Another developer concern is that any “must take” provision in their PPA will be ineffective unless the buyer has an explicit legal obligation to pay for power that “Uganda took a hybrid the SPP was capable of producing but the buyer approach to selecting a was not able to receive. SPPs, unlike larger IPPs, location. Tender documents usually do not receive capacity charges for being “ready” and “available to produce.” Instead, the for the solar SPPs identified revenue streams of SPPs depend primarily on preferential zones. Bidders energy (that is, kilowatt-hour) charges. To reduce were informed that they the risk that SPPs will lose revenue, certain PPA would receive additional provisions state that whenever the SPP is able points if they chose plants to produce electricity, the buyer must take or pay for this electricity even if the buyer is not in these zones. This policy willing or able to receive the SPP’s electricity. Photo: Thinkstock generated the desired Given the weaknesses of transmission systems in results: all seven project many Sub-Saharan countries, the practical issue T&D availability. New generation projects usually trigger the proposals submitted were is: what happens if the buyer is physically unable to receive the need for new investments in substations and T&D lines to safely kilowatt-hours produced by the SPP? receive electricity from the new generators. But the specific invest- within the preferred zone.” Tanzania and Uganda have taken different approaches in ments needed to strengthen the T&D systems will not be known until answering this question. In Tanzania, the Tanzania Electric Supply after the location of the generator (whether an SPP or an IPP) has Company Limited (TANESCO), the national utility, is not required been determined. This has been a problem in South Africa, China, to make any payments to SPPs if it is unable to receive the SPP’s and Brazil, where operations of renewable generators selected electricity because of delays in constructing new distribution or through competitive bidding were delayed because the T&D facilities transmission facilities or operational problems after the facilities necessary to receive the winning bidder’s electricity had not been have been built. Uganda has taken another approach. There, the built or expanded in time. Uganda has had somewhat more success. government has agreed to make so-called deemed commissioning Any “shallow” investments (for example, to connect to the nearest payments to SPPs if a needed distribution or transmission facility has substation) are the clear responsibility of the SPP . And the “deep” not been built in time to receive an SPP’s power. And if the facility investments that require upstream strengthening of the grid are is in place but operational problems prevent UETCL from receiving UETCL’s responsibility. But the lesson learned from other countries the SPP’s electricity, then the PPA requires UETCL to make deemed is that it is hard to know in advance where the “deep” investments energy payments if UETCL was cumulatively unable to receive the should be made if bidders have complete freedom in deciding where SPP’s electricity for more than 176 hours in a 12-month period or if it their proposed plants should be located. was the result of “political force majeure.” Such provisions, however, Uncertainty about accompanying investments in T&D is less of raise two questions that must be decided: First, was the buyer or a problem where bidders are restricted to a specific location (that seller at fault? And second, how much electricity could the SPP have is, in site-specific bidding) or are told that they will receive higher produced if the buyer had been able to receive the SPP’s electricity? scores if they locate in a preferred zone. For example, in Namibia 7 P r o m o t i n g S o l a r E n e r g y t h r o ug h A u c t i o n s : T h e Case o f U ga n d a and Rwanda, bidders were informed that they had to bid for plants • Whenever possible in the future, governments should Make further at preselected project locations where the government had already consider establishing solar parks and limiting bidding connections secured land titles and where it had been determined that adequate to these areas. The rationale here is that the government T&D capacity was available to receive an SPP’s production. An even is in a better position than private developers to acquire land Live Wire 2014/1. more proactive approach is for the government to establish “solar titles and environmental permits, and to ensure adequate “Transmitting Renewable parks” where it ensures that land titles, environmental permits, and transmission capacity for solar generators. But this presumes Energy to the Grid,” by adequate transmission capacity are in place prior to seeking bids. certain preconditions: land titles are clear and uncontested, the Marcelino Madrigal and This approach has been used successfully in the Indian states of government has the will and the budget to acquire the needed Rhonda Lenai Jordan. Gujarat and Rajasthan. land, and the land purchases can be made quickly with little risk Uganda took a hybrid approach to selecting a location. Tender of delays or inflated prices. It is not clear that these preconditions Live Wire 2014/12. “Promoting documents for the solar SPPs identified preferential zones.6 Bidders exist in Uganda or in most other Sub-Saharan African countries. Renewable Energy through were informed that they would receive additional points if they Until they are, it is probably best to continue to rely on potential Auctions,” by Gabriela locate plants in these zones. Together with the requirement of being bidders to acquire the land needed for their projects. One Elizondo-Azuela and Luiz a maximum distance of 3 km from the existing grid, this policy obvious exception would be if the needed land is already owned Barroso. generated the desired results: all seven project proposals submitted by a government-owned utility or agency. were within the preferred zone. Live Wire 2014/14. “Promoting Renewable Energy through Two recommendations. Many changes have been proposed References to achieve better outcomes (that is, faster procurement and lower Auctions: The Case of GET FiT Uganda. 2014. Annual Report 2014. Kampala, Uganda: GET prices) in future competitive SPP procurements in Uganda. We have China,” by Xiaodong Wang, FiT Uganda. http://www.getfit-uganda.org. two specific proposals: Luiz Barroso, and Gabriela IRENA (International Renewable Energy Agency) and Clean Energy Elizondo-Azuela. • Screening on nonprice factors should take place before Ministerial (CEM). June 2015. Renewable Energy Auctions: A the final bidding round. The final bidding round should be Guide To Design. Abu Dhabi: IRENA. http://www.irena.org. limited to only price bids. In Uganda, the solar bidders were ———. 2013. Renewable Energy Auctions in Developing Countries. judged on a mix of price (70 percent) and nonprice (30 percent) Abu Dhabi: IRENA. http://www.irena.org. factors in the final bid round. An alternative approach would be Mukherjee, Mohua. 2014. “Private Participation in the Indian Solar to set minimum thresholds on the nonprice factors in the earlier Sector.” In Private Participation in the Indian Power Sector: stages. Any developer that achieves the minimum thresholds on Directions in Development, chapter 5. Washington, DC: World nonprice factors would then be asked to submit a price-only bid Bank Group. https://openknowledge.worldbank.org. in the final round. This modification of the existing bidding system World Bank. 2014. Uganda—Series of International Development has two advantages. First, it continues to ensure that bids will be Association (IDA) Partial Risk Guarantees for Renewable Energy received from credible, experienced bidders whose projects are Development Program Project. Washington, DC: World Bank screened for potential environmental or social damage. Second, Group. http://www.worldbank.org. a price-only bid in the final round is likely to lead to lower bid prices. The authors thank Mohua Mukherjee and Luiz Maurer for reviewing an early draft of this note and offering very helpful suggestions. The success of the solar competitive bidding initiative greatly benefited from the ideas and actions of Dr. Benon Mutambi of Uganda’s Electricity Regulatory Agency and Stephanie Rieger of Germany’s KfW. 6. This was different from the approach used in South Africa. In South Africa, bidders of renewable generation were allowed to locate proposed plants anywhere in the country. Get Connected to Live Wire Live Wires are designed for easy reading on the screen and for downloading The Live Wire series of online knowledge notes is an initiative of the World Bank Group’s Energy and self-printing in color or “Live Wire is designed and Extractives Global Practice, reflecting the emphasis on knowledge management and solu- black and white. tions-oriented knowledge that is emerging from the ongoing change process within the Bank for practitioners inside Group. For World Bank employees: and outside the Bank. 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Once a year, the Energy and Extractives Global Practice takes stock of all notes that appeared, reviewing their quality and identifying priority areas to be covered in the following year’s pipeline. Please visit our Live Wire web page for updates: http://www.worldbank.org/energy/livewire e Pa c i f i c 2014/28 ainable energy for all in easT asia and Th 1 Tracking Progress Toward Providing susT TIVES GLOBAL PRACTICE A KNOWLEDGE NOTE SERIES FOR THE ENERGY & EXTRAC THE BOTTOM LINE Tracking Progress Toward Providing Sustainable Energy where does the region stand on the quest for sustainable for All in East Asia and the Pacific 2014/29 and cenTral asia energy for all? in 2010, eaP easTern euroPe sT ainable en ergy for all in databases—technical measures. This note is based on that frame- g su v i d i n had an electrification rate of Why is this important? ess Toward Pro work (World Bank 2014). SE4ALL will publish an updated version of 1 Tracking Progr 95 percent, and 52 percent of the population had access Tracking regional trends is critical to monitoring the GTF in 2015. to nonsolid fuel for cooking. the progress of the Sustainable Energy for All The primary indicators and data sources that the GTF uses to track progress toward the three SE4ALL goals are summarized below. consumption of renewable (SE4ALL) initiative C T I V E S G L O B A L P R A C T I C E ENERGY & EXTRA • Energy access. Access to modern energy services is measured T E S E R I E S F O R T H EIn declaring 2012 the “International Year of Sustainable Energy for energy decreased overall A KNO W L E D G E N Oand 2010, though by the percentage of the population with an electricity between 1990 All,” the UN General Assembly established three objectives to be connection and the percentage of the population with access Energy modern forms grew rapidly. d Providing Sustainable accomplished by 2030: to ensure universal access to modern energy energy intensity levels are high to nonsolid fuels.2 These data are collected using household Tracking Progress Towar services,1 to double the 2010 share of renewable energy in the global surveys and reported in the World Bank’s Global Electrification but declining rapidly. overall THE BOTTOM LINE energy mix, and to double the global rate of improvement in energy e and Central Asia trends are positive, but bold Database and the World Health Organization’s Household Energy for All in Eastern Europ efficiency relative to the period 1990–2010 (SE4ALL 2012). stand policy measures will be required where does the region setting Database. The SE4ALL objectives are global, with individual countries on that frame- on the quest for sustainable to sustain progress. is based share of renewable energy in the their own national targets databases— technical in a measures. way that is Thisconsistent with the overall of • Renewable energy. The note version energy for all? The region SE4ALL will publish an updated their ability energy mix is measured by the percentage of total final energy to Why is this important ? spirit of the work initiative. (World Bank Because2014). countries differ greatly in has near-universal access consumption that is derived from renewable energy resources. of trends is critical to monitoring to pursue thetheGTF in 2015. three objectives, some will make more rapid progress GTF uses to Data used to calculate this indicator are obtained from energy electricity, and 93 percent Tracking regional othersindicators primary will excel and data sources that elsewhere, depending on their the while the population has access le Energy for All in one areaThe goals are summarized below. balances published by the International Energy Agency and the the progress of the Sustainab respective track starting progress pointstowardand the three SE4ALL comparative advantages as well as on services is measured to nonsolid fuel for cooking. access. Accessthat they modern to are able to energy marshal. United Nations. despite relatively abundant (SE4ALL) initiative the resources and support Energy with an electricity connection Elisa Portale is an l Year of Sustainable Energy for To sustain percentage of by the momentum forthe the population achievement of the SE4ALL 2• Energy efficiency. The rate of improvement of energy efficiency hydropower, the share In declaring 2012 the “Internationa energy economist in with access to nonsolid fuels. three global objectives objectives, andathe means of charting percentage of the population global progress to 2030 is needed. is approximated by the compound annual growth rate (CAGR) of renewables in energy All,” the UN General Assembly established the Energy Sector surveys and reported access to modern universalAssistance The World TheseBank and data are the collected International using household Energy Agency led a consor- of energy intensity, where energy intensity is the ratio of total consumption has remained to be accomplished by 2030: to ensure Management Database and the World of theenergy intium of 15 renewable international in the World Bank’s Global agencies toElectrification establish the SE4ALL Global primary energy consumption to gross domestic product (GDP) energy the 2010 share of Program (ESMAP) relatively low. very high energy services, to double Database. measured in purchasing power parity (PPP) terms. Data used to 1 t ’s Household provides Energy a system for regular World Bank’s Energy the global rate of improvemen and Extractives Tracking Framework Health (GTF), which Organization in the energy intensity levels have come and to double the global energy mix, Global Practice. (SE4ALL 2012). based on energy. of renewable The sharepractical, rigorous—yet energy given available calculate energy intensity are obtained from energy balances to the period 1990–2010 global reporting, Renewable down rapidly. The big questions in energy efficiency relative setting by the percentage of total final energy consumption published by the International Energy Agency and the United evolve Joeri withde Wit is an countries individual mix is measured Data used to are how renewables will The SE4ALL objectives are global, economist in with the overall from renewable energy when every resources. person on the planet has access Nations. picks up a way energy that is consistent 1 The universal derived that isaccess goal will be achieved balances published when energy demand in from energy their own national targets through electricity, clean cooking fuels, clean heating fuels, rates the Bank’s Energy and countries differ greatly in their ability calculate this indicator are obtained to modern energy services provided productive use and community services. The term “modern solutions” cookingNations. again and whether recent spirit of the initiative. Because Extractives Global rapid progress and energy for Energy Agency and the United liquefied petroleum gas), 2 Solid fuels are defined to include both traditional biomass (wood, charcoal, agricultural will make more by the refers to solutions International that involve electricity or gaseous fuels (including is pellets and briquettes), and of decline in energy intensity some t of those of efficiency energy and forest residues, dung, and so on), processed biomass (such as to pursue the three objectives, Practice. depending on their or solid/liquid fuels paired with Energy efficiency. The rate stoves exhibiting of overall improvemen emissions rates at or near other solid fuels (such as coal and lignite). will excel elsewhere, rate (CAGR) of energy will continue. in one area while others liquefied petroleum gas (www.sustainableenergyforall.org). annual growth as well as on approximated by the compound and comparative advantages is the ratio of total primary energy respective starting points marshal. where energy intensity that they are able to intensity, measured in purchas- the resources and support domestic product (GDP) for the achievement of the SE4ALL consumption to gross calculate energy intensity Elisa Portale is an To sustain momentum terms. Data used to charting global progress to 2030 is needed. ing power parity (PPP) the International energy economist in objectives, a means of balances published by the Energy Sector International Energy Agency led a consor- are obtained from energy The World Bank and the SE4ALL Global Energy Agency and the United Nations. Management Assistance agencies to establish the the GTF to provide a regional and tium of 15 international for regular This note uses data from Program (ESMAP) of the which provides a system for Eastern Tracking Framework (GTF), the three pillars of SE4ALL World Bank’s Energy and Extractives on rigorous—yet practical, given available country perspective on Global Practice. global reporting, based has access Joeri de Wit is an will be achieved when every person on the planet The universal access goal heating fuels, clean cooking fuels, clean energy economist in 1 agricultural provided through electricity, biomass (wood, charcoal, to modern energy services The term “modern cooking solutions” to include both traditional and briquettes), and Solid fuels are defined the Bank’s Energy and use and community services. biomass (such as pellets 2 and energy for productive petroleum gas), and so on), processed fuels (including liquefied and forest residues, dung, involve electricity or gaseous at or near those of Extractives Global refers to solutions that overall emissions rates other solid fuels (such as coal and lignite). with stoves exhibiting Practice. or solid/liquid fuels paired (www.sustainableenergyforall.org). liquefied petroleum gas