THE WORLD BANK 38577 New Renewable Energy A Review of the World Bank's Assistance THE WORLD BANK GROUP WORKING FOR A WORLD FREE OF POVERTY The World Bank Group consists of five institutions--the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID). Its mission is to fight poverty for lasting results and to help people help themselves and their envi- ronment by providing resources, sharing knowledge, building capacity, and forging partnerships in the public and private sectors. THE INDEPENDENT EVALUATION GROUP ENHANCING DEVELOPMENT EFFECTIVENESS THROUGH EXCELLENCE AND INDEPENDENCE IN EVALUATION The Independent Evaluation Group (IEG) is an independent, three-part unit within the World Bank Group. IEG-World Bank is charged with evaluating the activities of the IBRD (The World Bank) and IDA, IEG-IFC focuses on assessment of IFC's work toward private sector development, and IEG-MIGA evaluates the contributions of MIGA guarantee projects and services. IEG reports directly to the Bank's Board of Directors through the Director-General, Evaluation. The goals of evaluation are to learn from experience, to provide an objective basis for assessing the results of the Bank Group's work, and to provide accountability in the achievement of its objectives. It also improves Bank Group work by identifying and disseminating the lessons learned from experience and by framing recommendations drawn from evaluation findings. W O R L D B A N K I N D E P E N D E N T E V A L U A T I O N G R O U P New Renewable Energy A Review of the World Bank's Assistance 2006 The World Bank http://www.worldbank.org/ieg Washington, D.C. ©2006 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved 1 2 3 4 5 09 08 07 06 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. Photo credit: Wind turbines. ©Royalty-Free/Corbis. World Bank InfoShop Independent Evaluation Group E-mail: pic@worldbank.org Knowledge Programs and Evaluation Capacity Telephone: 202-458-5454 Development (IEGKE) Facsimile: 202-522-1500 E-mail: eline@worldbank.org Telephone: 202-458-4497 Facsimile: 202-522-3125 Printed on Recycled Paper Contents v Acronyms and Abbreviations vii Acknowledgments ix Executive Summary xv Résumé analytique xxiii Resumen 1 1 Objectives and Evaluation Approach 1 Evaluation Approach 3 2 The Bank's NRE Objectives 7 3 NRE Portfolio Characteristics and Trends 9 4 The Implementation Scorecard and Main Findings on Delivering the NRE Strategy 9 NRE Portfolio Performance 15 Results in Terms of Poverty Reduction 16 To What Extent Were Global Environmental Benefits Achieved? 18 Outcomes Related to PSD and Promotion of Good Governance 21 5 Main Lessons Learned and Strategic Implications for the Bank 29 6 Conclusions and Next Steps 31 Annexes 33 A: The Bank's New Renewables Portfolio 35 B: NRE Projects Selected for In-Depth Review 37 C: Cost Competitiveness of Renewable and Conventional Energy Technologies 41 D: Ratings of Closed NRE Projects 43 E: Ratings of Ongoing NRE Projects under Supervision 45 F: Project Performance Evaluation 49 G: Assessment of the NRE Portfolio's Contribution to Poverty Reduction and Good Governance N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E 55 H: An Evaluation of the Portfolio's Performance in Achieving Global Environmental Benefits 59 I: Private Sector Development in the Bank's New and Renewable Energy Projects 69 J: Impact of Analytical and Advisory Assistance 73 Endnotes 77 Bibliography Figure 5 2.1 Forecast Generating Costs for Selected Renewable and Conventional Electricity Generation: 2004 versus 2015 Tables 8 3.1 Preparation Costs for NRE Projects Higher than for Conventional Power Projects 9 4.1 Outcome Ratings for Closed NRE Freestanding Projects and Components of Blended Projects 11 4.2 Ratings for Ongoing NRE Projects Mostly Satisfactory 12 4.3 NRE Projects' Dissemination Targets 13 4.4 Characteristics of Grid-Connected and Off-Grid NRE Projects 17 4.5 Data on Reductions in Greenhouse Gas Emissions from NRE Projects 18 4.6 Energy Efficiency Measures Cost-Effective in Reducing Greenhouse Gas Emissions i v ACRONYMS AND ABBREVIATIONS AAA Analytical and advisory assistance ASTAE Asia Sustainable and Alternative Energy Program BDS Business development services CAS Country Assistance Strategy CO2 Carbon dioxide CRESP China Renewable Energy Scale-Up Program EBRS Energy Business Renewal Strategy EIRR Economic internal rate of return ERR Economic rate of return ERT Energy for Rural Transformation Project (Uganda) ESD Energy Services Delivery Project (Sri Lanka) ESMAP Energy Sector Management Assistance Programme GEF Global Environment Facility GHG Greenhouse gas ICR Implementation Completion Report ICT Information and communication technology IDCOL Infrastructure Development Company Limited IEG Independent Evaluation Group kW Kilowatts kWh Kilowatt hours M&E Monitoring and evaluation MFI Microfinance institutions MW Megawatt NGO Nongovernmental organization NOx Nitrogen oxides NRE New and renewable energy OBA Output-based assistance PDO Project development objective PRSP Poverty Reduction Strategy Paper PSD Private sector development PV Photovoltaic system RED Renewable Energy Development Project (China) RERED Renewable Energy and Rural Economic Development Project (Sri Lanka) RERM Renewable Energy in the Rural Market Project (Argentina) RET Renewable energy technology RRD Renewable Resources Development Project (India) SHS Solar home system SO2 Sulfur dioxide SPPA Small Power Purchase Agreement TA Technical assistance W Watts v Acknowledgments Fernando Manibog (lead evaluation officer) and Bank staff and external respondents who agreed Ashwin Bhouraskar (consultant) prepared this to be interviewed, for which the task team is report. Trond Augdal and Hakon Nordang grateful. The authors are also grateful for the (consultants) contributed to the literature and support of the Norwegian Ministry of Foreign portfolio reviews, respectively. The report Affairs, which funded the consultants who benefited greatly from the insights of numerous participated in this assessment. Director-General, Evaluation: Vinod Thomas Director, Independent Evaluation Group­World Bank: Ajay Chhibber Manager, Sector, Thematic, and Global Evaluation Division: Alain Barbu Task Manager: Fernando Manibog v i i Executive Summary T he purpose of this review by the Independent Evaluation Group (IEG) of the World Bank is to inform the efforts to scale up the Bank's sup- port for renewable energy by evaluating the performance of the Bank's current portfolio and the extent to which strategic objectives were achieved. At the 2004 Conference on Renewable Energy in "pillars" and operational activities relevant to Bonn, Germany, the Bank announced that it NREs (as well as other energy subsectors). would increase its lending for renewable energy and energy efficiency by an average of 20 percent Thus, following IEG's objectives-based method- per year for the five-year period fiscal 2005­09. ology, this review is keyed to the EBRS This review assesses the Bank's readiness to operational goals for NRE and the following deliver on that announcement. This assessment three pillars: (i) helping the poor directly, (ii) of "new renewables" is restricted to geothermal; promoting good governance and PSD, and (iii) solar; wind; biomass; and small, mini-, and micro- helping protect the environment. The fourth hydro energy sources. It updates and expands pillar of macro-fiscal impacts is also relevant, the renewable energy sections of IEG's 2003 given the potential of NRE to displace imported study on private sector development (PSD) for fuels; however, renewable energy still accounts the electricity sector (IEG-World Bank, IEG-IFC, for a small proportion of the energy balances of and IEG-MIGA 2003b). the developing countries where the Bank provided NRE support. The Bank's Renewable Energy Objectives Cost competitiveness of renewable energy and Strategic framework the role of the Bank The Bank's institutional objectives for new and A recent technical and economic assessment renewable energy (NRE) are contained in (Chubu Electric Power Co., Inc. and others 2005)1 strategy papers for rural energy (World Bank indicates that renewable energy technologies 1993), the environment (World Bank 2001b; IEG (RETs) are the least-cost electrification option for 2002), and the Energy Business Renewal Strategy many off-grid, mini-grid, and grid-based applica- (EBRS) (World Bank 2001a). The EBRS provides tions, on a levelized economic cost basis (see figure the most detailed list of energy development 2.1 in chapter 2). i x N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E RETs would be even more competitive today, That in turn requires continuing government given current oil prices of around US$70 per and donor support. In cofinancing projects with barrel, compared with the assumption of the Global Environment Facility (GEF), the Bank US$38­40 per barrel in the 2005 assessment study. seeks to remove the market and regulatory Costs for off-grid systems of around 300 watts (W) barriers to RETs and achieve global environmen- (pico-hydro, small wind, and photovoltaic system tal benefits by financing the incremental costs of [PV]­wind hybrids) are projected to be in the renewable energy investments. The Bank's range of 15­25 cents per kilowatt hour (kWh), or Carbon Financing Program also contributes to less than half of the 30­40 cents per kWh for the explicit valuation of the positive externality gasoline and diesel generators. Solar PV system benefits of renewable energy. costs for small power applications (50­300 W) are comparable to the diesel/gasoline alternatives. For Evaluation approach stand-alone mini-grid systems at the village level This review draws on Bank as well as IEG evalua- with loads between 5 and 500 kilowatts (kW), tions, including reviews of Implementation numerous RETs--biomass, biogas, geothermal, Completion Report (ICR) Reviews, Project wind, and micro-hydro--are potentially the least- Performance Assessment Reports, and thematic cost generation options, compared with conven- studies. The review team also interviewed Bank tional energy alternatives. staff and conducted a focused literature review that included studies by the Monitoring and For grid-connected RETs, however, conventional Evaluation Unit of GEF, the Energy Sector electricity-generating technologies--open-cycle Management Assistance Program (ESMAP), and and combined-cycle gas turbines and coal- and external publications. The Bank's new Carbon oil-fired steam turbines--remain the least-cost Finance Program is outside the scope of this options. Although biomass, hydro, and wind evaluative review and will be covered in the power can potentially compete with conventional planned IEG climate change study. power plants smaller than 50 megawatts (MW), these RETs are simply costlier than larger conven- The review's methodological approach was to tional power generating units of 50­300 MW. evaluate project outcomes and assess overall NRE portfolio progress based on project Conventional energy technologies, however, performance ratings and the extent to which the have been highly subsidized through direct, EBRS pillars of poverty reduction, PSD, and indirect, and nontransparent means. These environmental protection, as well as their means include cash transfers to producers respective operational activities specific to and/or consumers, tax exemptions, price NREs, were achieved. controls, trade restrictions, regulatory hurdles for RETs, and government failure to correct Portfolio performance--main findings market imperfections. That subsidization skews the playing field against renewable energy. Main characteristics. The NRE portfolio consists Including the cost of environmental externali- of 65 NRE projects: 56 NRE projects listed in the ties and a value for energy diversification signifi- 1990­2004 Progress Report on Renewable cantly increases the economically viable quantity Energy and Energy Efficiency (World Bank of renewable energy. 2005d), plus nine projects approved in fiscal 2005. Of the 65 projects, only 27 (42 percent) The Bank's role in renewable energy lending is have closed; 38 (58 percent) are still active. to level the playing field between renewable and conventional energy sources--renewable energy The portfolio is relatively young, as 69 percent cannot compete financially with conventional of the projects were approved after 1997. The energy because of the distortions cited above. Africa, East Asia and Pacific, and South Asia x E X E C U T I V E S U M M A R Y Regions account for almost 75 percent of the satisfactory outcomes. These were projects in total number of NRE projects. The Latin America rural electrification or energy sector reform with and the Caribbean and Europe and Central Asia a sizeable biomass component and those involv- Regions have eight projects each, and the ing a mix of NRE and energy efficiency or solid Middle East and North Africa Region only two. In waste management. fiscal 2005, the International Bank for Re- construction and Development/International For small components that were less than 15 Development Association, carbon finance, and percent of project costs and that did not have a GEF commitments to NRE amounted to $190 strong relationship with the overall project goals, million, or 10.5 percent of total lending for the the outcome ratings were only moderately energy and mining sector, of $1.8 billion (World satisfactory. Ratings for NRE components in Bank 2005a, 2005d). energy sector reform projects that were small and had little connection to the dominant From the total portfolio of 65 projects, 56 could project objectives were mixed, with three rated be evaluated, as performance data on 9 projects as unsatisfactory. that had just been approved at the time of this review were not yet available. Of those 56 projects, Ongoing projects. Compared with the mixed 46 percent are freestanding; these included the performance of closed projects, active NRE full spectrum of interventions covering technical projects show better progress toward satisfactory assistance, market development, producer and outcomes. Indeed, a few have already surpassed consumer financing, commercialization, and after- their targets for the physical installation of RETs. sales service. The East Asia and Pacific and the South Asia Regions had most of the Bank's There is also strong evidence that, over time, freestanding NRE projects. The other 54 percent many lessons learned have helped the design of of projects involve NRE components of larger ongoing projects. The latest project development power, rural electrification, and petroleum and objective ratings are all satisfactory for NRE water projects (called "blended" projects in this projects in the South Asia Region and for the review). Thirty-eight (68 percent) of the projects majority of NRE projects in the East Asia and have received GEF cofinancing. Pacific and the Latin America and the Caribbean Regions as well. But performance is weaker in the Closed projects. The outcomes of the 27 closed, Africa Region, with three projects rated unsatis- freestanding projects and separate ratings of the factory and one rated moderately unsatisfactory. NRE components of blended projects show that Components in blended projects tended to have more than half (17) had satisfactory or low ratings in project development objective, moderately satisfactory outcomes, while the implementation progress, or both. remainder had weak results. Freestanding NRE projects were generally satisfactory, except Lessons learned. The lessons from older projects those that involved geothermal energy or that have led to better designs of more recent NRE were interrupted by economic crises. projects. This has had an influence on outcomes, as the satisfactory or highly satisfactory freestand- Regarding NRE components of blended projects, ing projects were also the more recent ones. there appears to be some association between the rating and the component's size and integra- One of the key lessons is that integrating NRE tion in the larger project. Most NRE components provision with supporting inputs from social performed satisfactorily or moderately so. Yet service institutions and small and medium-size NRE components that accounted for 15 percent enterprises has enhanced development out- or more of the costs of their respective projects, comes. Another lesson is that reliable credit or that were well integrated in their projects, had services are needed to make NRE systems afford- x i N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E able to rural households. Also, a policy and Main Findings on Implementing the EBRS regulatory framework for NRE that is conducive Strategic Pillars to widespread adoption needs to be in place for NRE projects to succeed. Another key lesson is 1. To what extent did the Bank's NRE interven- the importance of building the capacity of key tions help the poor directly? stakeholders to develop the environment for NRE commercialization and ensure service quality. It is not the case that poverty-reduction goals surfaced only after the 2001 EBRS. The portfolio Finally, a practical lesson for the Bank is to review finds that the Bank has been consistently support stakeholder and community participa- pursuing poverty reduction as a major objective tion and to demonstrate that this can lead to in its NRE portfolio; that is part of its broader flexibility on project design and implementa- goal of improving energy access. In practice, the tion. To promote continuous improvement of poverty-reduction goals were integrated into NRE project designs, the scaling up of NRE project design through welfare improvements, lending should be matched by a wider dissemi- enhanced livelihoods and incomes, and/or nation and application of these lessons. promotion of rural transformation through energy development. Factors of performance. Some factors behind satisfactory and less-than-satisfactory perform- Many recent projects factor these goals into ance have emerged from IEG's review of ICRs their design, but only two closed projects and Project Performance Assessment Reports. included poverty reduction as an explicitly While not present in all satisfactory projects, stated objective. Thus, for a significant one-third good performance tends to be associated with of the closed projects, it is from the preparatory strong government commitment and effective studies, the design, and the targeted beneficiar- Bank performance in project design, supervi- ies of the NRE projects that an implied poverty- sion, and adaptive management. There are reduction objective can be discerned. additional factors unique to satisfactory NRE projects: At this stage, however, the poverty-reduction impact is largely nonevaluable, because · Extensive consultations with entrepreneurs, monitoring and evaluation (M&E) systems consumers, and nongovernmental organizations have been absent or weak among closed · Effective credit and output-based grant fi- projects. Even for recent projects, wherein nancing mechanisms that facilitate access to increased income is an explicit goal, only a few NRE technologies by the poor have M&E systems that will be able to identify · Strong institutional capacity prior to or re- the income gains attributable to increased sulting from the project energy access. None of the projects provides · Focused attention to addressing the market bar- any data on increased household income. M&E riers to NRE of gender impacts has been unsatisfactory as · Active interest from local investors and well, with little evidence available to substanti- financiers. ate the often-cited claim that women have benefited. Poor performance seems to be associated with several factors, including inadequate attention to The Bank--through ESMAP--has recently been policy and regulatory issues specific to NRE, poor developing methods and tools to better assess supervision of NRE components, weak country the socioeconomic impacts of improved energy commitment, a risk-averse private sector, insuffi- access. Some of the latest NRE projects (for cient public and private institutional capacity, and example, in Bangladesh and Uganda) are using sociopolitical or economic crises. these approaches. x i i E X E C U T I V E S U M M A R Y On balance, it is still unclear to what extent and market barriers, and focused on maximizing how the Bank's NRE assistance has reduced local impacts. Data on the local benefits of poverty. This lack of evidence is a serious Bank-GEF NRE projects have been lacking handicap in targeting the Bank's NRE lending. because of weak M&E. However, M&E systems That handicap needs to be addressed through in these projects should focus more on measur- the establishment of stronger M&E systems in ing the removal of market barriers than just ongoing and forthcoming projects, particularly on the levels of GHG reductions. The Bank's those designed with output-based assistance carbon finance operations--which are recent (OBA) components, which are especially and are outside the scope of this review--have demanding of M&E systems. implemented rigorous M&E protocols for measuring and verifying GHG reductions. 2. To what extent did the Bank's NRE projects pro- tect the environment? 3. To what extent did the Bank's NRE program promote PSD? Few of the closed NRE projects include mitiga- tion of harmful environmental effects as an The portfolio data provide strong evidence that explicit objective. From this portfolio review, the Bank has added the most value in NRE projects there is only partial evidence that NRE projects where it has supported PSD, particularly in the are achieving their targeted global environmen- areas of establishing a commercialization process, tal benefits. About a third of the closed projects building investor and consumer confidence, provide little or no data, but generally the strengthening institutional capacity, and mobiliz- greenhouse gas (GHG) emission-reduction ing private financing. However, the Bank paid targets have been achieved. Among NRE inadequate attention to creating a nondiscrimina- projects, larger-scale, grid-connected renew- tory regulatory environment for NRE--despite its ables have greater potential to reduce GHGs parallel push for broader energy sector reforms-- than small off-grid projects, such as those using with adverse effects on some NRE schemes. solar PV technology. With ESMAP assistance, recent NRE projects The Bank supports both energy efficiency and have now started to address regulatory issues. NRE, which makes the most strategic sense. On The Bank has also supported local financial one hand, a recent GEF evaluation concluded institutions and mobilized investments, often that although NRE investments can contribute to through public-private partnerships. Yet institu- preventing global climate change, greater GHG tional weaknesses and lack of readiness, experi- emissions reductions have resulted from Bank- ence, and incentives among local NRE investors GEF energy efficiency than from NRE projects. to serve rural markets have been constraining On the other hand, over the 40- to 80-year time factors. As with NREs' poverty-reduction impact, horizon where the most significant reductions in M&E for the Bank's PSD work in NRE has been GHG emissions will be required, both energy unsatisfactory. The M&E needs to be improved efficiency and NRE (along with physical and to assess the factors behind the success of the biological carbon sequestration) will need to play different delivery mechanisms, adapt and apply a role. Energy efficiency alone will not enable the the lessons when scaling up elsewhere, and desired reduction levels to be reached; the large- serve as a decision tool for effectively im- scale deployment of low-carbon and no-carbon plementing ongoing and future OBA schemes. energy sources will also be a requirement. Project experience suggests that partnerships The global environmental impacts of NRE and community involvement are essential, projects could be greater if the projects because PSD alone cannot lead to improved catalyzed the creation of NRE markets, reduced energy access. An important lesson is that private- x i i i N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E public partnerships that include nongovernmen- Good M&E systems should be established for tal organizations, the consumer communities, energy services intended to help the poor. and extensive stakeholder consultations can play Renewable energy projects with OBA com- a vital role in promoting NREs and reaching the ponents should be the first targets. Rigorous poor. Where projects relied solely on the private impact evaluations should be carried out for sector to increase energy access, achievements in selected renewable energy projects that are reaching the poor were low. closing within the next two to three years. Conclusions and Next Steps An important first step is for the Bank to include The Bank's NRE strategy is relevant to developing NRE objectives and work programs in Country country energy priorities. The Bank's NRE Assistance Strategies--which historically have given program is well anchored in the larger EBRS pillars little attention to NRE--whenever relevant. The and is properly focused on its goals of reducing Bank needs to signal the importance of NRE in poverty, promoting PSD, and contributing to country and energy sector strategies. While promot- environmental protection. As reconfirmed in ing energy sector reforms and architectures, the recent forums (including the Bank's 2006 Energy Bank needs to simultaneously address the Week), the Bank and the donor community need constraints that hinder NRE development and to help address the dire energy predicament of commercialization. The key thrusts of the Bank's developing countries by acting on all fronts, includ- NRE assistance should be economic energy pricing, ing petroleum, clean coal, hydropower, biomass, increased private financing, and effective regulation. and energy efficiency, as well as renewable energy. In sum, the Bank should do more of what has As the Bank seeks to deliver on its commitment worked, focusing in particular on its catalytic role for to increase NRE support, it needs to capitalize on PSD in NRE projects, staying flexible and innovative its demonstrated strength of creating an invest- by applying lessons learned to improve the design ment climate conducive to commercializing NRE of newer projects, and more widely disseminating and promoting PSD. The Bank needs to focus on good practices. The Bank should also address areas other strengths as well, such as building public- of past weakness, which include M&E, the private partnerships and appropriate risk- mainstreaming of NREs in Country Assistance mitigation structures. It needs to consider a series Strategies, and the internalization of "NRE business of operations and suitable lending instruments incubation" costs within the Bank's own budget. that will accommodate the long gestation periods for NREs, from institutional capacity building and In particular, the NRE portfolio should benefit policy/regulatory reform all the way to full increasingly from self- and independent evalua- commercialization. And it needs to internalize-- tions, given the strategic role that the Bank gives to in its Regional budgets and work programs--the NREs in improving energy access, particularly for operational costs of its successful "brokering" and the poor. These assessments should focus more advisory role in NREs, rather than continuing to rigorously on outcomes and impacts; differentiate depend on bilateral donor funds. the lessons more sharply among rural electrifica- tion, grid-connected NREs, and off-grid renewables The Bank's likely contributions on other as the portfolio of closed NRE projects expands; objectives are more doubtful. Experience in the and have strong feedback loops that would allow past 15 years indicates that the Bank's impact in flexibility and responsiveness in implementing the helping the poor directly, or achieving local and objectives of the Bank's NRE strategy. global environmental benefits through its NRE interventions, has been hard to measure This is a challenging task, given the current because M&E has been weak or absent. But the budget stringency. Yet it is a task that merits little evidence that has emerged suggests that serious Bank management support, given the the impact has so far been limited. Bank's global NRE commitments. x i v Résumé analytique L e Groupe indépendant d'évaluation (IEG) a réalisé cette étude pour four- nir des éléments d'information à l'appui de l'effort d'intensification de l'aide de la Banque dans le domaine des énergies renouvelables, en éva- luant les résultats du portefeuille actuel de l'institution et le degré de réali- sation des objectifs stratégiques. Lors de la Conférence sur les énergies renouve- (ENR) sont énoncés dans les documents straté- lables, organisée à Bonn, en Allemagne, en 2004, giques sur l'énergie rurale (Banque mondiale la Banque a fait savoir qu'elle augmenterait d'envi- 1993), l'environnement (Banque Mondiale ron 20 % par an pendant cinq ans (exercices 05- 2001b ; IEG 2002), et la Stratégie de refonte des 09), l'aide qu'elle consacre à la promotion des opérations dans le secteur de l'énergie (EBRS) énergies renouvelables et à la maîtrise de l'éner- (Banque mondiale 2001a). Cette stratégie fournit gie. Nous avons évalué dans quelle mesure la la liste la plus complète des « pôles » de mise en Banque est prête à atteindre l'objectif annoncé. valeur des énergies et des activités opération- Cette évaluation des sources d'énergie renouve- nelles dans le domaine des ENR (et dans les lable se limite au géothermique, au solaire, à autres branches du secteur de l'énergie). l'éolien, à la biomasse et à la mini et microhydrau- lique. Elle actualise et complète les sections sur La méthodologie de l'IEG s'organisant autour l'énergie renouvelable de l'étude que l'IEG a d'objectifs, la présente étude s'articule sur les réalisée en 2003 sur le développement du secteur objectifs opérationnels de l'EBRS en matière privé à l'appui du secteur de l'électricité (IEG- d'ENR et sur les trois pôles suivants : i) aide Banque Mondiale, IEG-Société financière interna- directe aux pauvres, ii) promotion de la bonne tionale, IEG-Agence multilatérale de garantie des gouvernance et du développement du secteur investissements 2003b). privé, et iii) aide à la protection de l'environne- ment. Le quatrième pôle, les impacts macrobud- Objectifs de la Banque en matière gétaires, a également son importance, les ENR d'énergies renouvelables pouvant se substituer aux combustibles importés. Il est toutefois à noter que les énergies renouve- Cadre stratégique lables ne représentent qu'une petite part du bilan Les objectifs institutionnels de la Banque en énergétique des pays en développement dans matière d'énergies nouvelles et renouvelables lesquels la Banque a favorisé le recours aux ENR. x v N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E Compétitivité du coût des énergies façon directe, indirecte et non transparente, par renouvelables et rôle de la Banque des transferts monétaires aux producteurs et/ou Une récente évaluation technique et aux consommateurs, des exonérations d'impôts, économique (Chubu Electric Power Co., Inc. et des mesures de contrôle des prix, des pratiques al. 2005)1 montre que, si l'on retient un coût commerciales restrictives, des obstacles économique normalisé (voir figure 2.1, chapitre réglementaires aux CER et le fait que l'État ne 2), les technologies exploitant les énergies corrige pas les imperfections du marché. Ces renouvelables ( ou convertisseurs d'énergie subventions faussent le jeu au détriment des renouvelable (CER) ( offrent la formule d'élec- énergies renouvelables. Si l'on tient compte du trification la moins coûteuse pour beaucoup coût des externalités environnementales et de la d'applications hors réseau, en miniréseau ou valeur qu'ajoute la diversification énergétique, la raccordées au réseau. quantité économiquement viable d'énergies renouvelables s'accroît sensiblement. Les CER seraient encore plus compétitifs aujour- d'hui, le prix du baril de pétrole étant d'environ Dans ses prêts à l'appui des énergies renouve- 70 dollars, contre les 38-40 dollars retenus lables, la Banque doit avoir pour rôle de placer comme hypothèse dans l'évaluation de 2005. les sources d'énergie renouvelable et classique Selon les prévisions, le coût des systèmes sur un pied d'égalité, car les distorsions citées décentralisés d'environ 300 watts (W) (picohy- plus haut font que les premières ne peuvent draulique, petit éolien et systèmes hybrides financièrement soutenir la concurrence avec les associant le photovoltaïque et l'éolien) serait secondes. Par voie de conséquence, cela compris entre 0,15 et 0,25 dollar le kilowatt- suppose une aide soutenue des pouvoirs heure (kWh), soit moins de deux fois celui des publics et des bailleurs de fonds. En cofinançant unités alimentées à l'essence ou au gazole (0,30- des projets avec le Fonds pour l'environnement 0,40 dollar). Lorsque la puissance installée est mondial (FEM), la Banque cherche à lever les faible (50-300 W), le coût du photovoltaïque est barrières réglementaires et les obstacles à comparable à celui des unités au gazole ou à l'exploitation commerciale des CER, et à amélio- l'essence. Pour les miniréseaux décentralisés où rer l'état environnemental de la planète en la puissance appelée est de 5 à 500 kW, de finançant le surcoût des investissements dans nombreux CER ( transformation de la biomasse, les énergies renouvelables. Le programme de biogaz, géothermique, éolien et microhydrau- transactions sur les crédits de réduction des lique ( sont potentiellement les formules d'élec- émissions, que conduit la Banque (programme « trification des villages les moins coûteuses, si on crédits carbone »), contribue aussi à mesurer les compare aux sources d'énergie classique. expressément la valeur des externalités positives des énergies renouvelables. En revanche, pour les installations raccordées au réseau, les moyens classiques de production Approche retenue d'électricité, à savoir les turbines à gaz à cycle Nous nous sommes appuyés sur des évaluations ouvert et à cycle combiné et les turbines à de la Banque et de l'IEG ainsi que sur des vapeur alimentées au charbon et au fioul restent examens de rapports de fin d'exécution, de les solutions les moins onéreuses. Bien que la rapports d'évaluation rétrospective de projets et biomasse, l'hydraulique et l'éolien puissent d'études thématiques. Nous avons également rivaliser avec les centrales thermiques classiques rencontré des membres des services de la de moins de 50 mégawatts (MW), ils sont tout Banque et examiné de façon sélective des études simplement moins avantageux dès lors que des du Bureau indépendant de l'évaluation du FEM, installations de 50 à 300 MW sont nécessaires. des rapports du programme d'assistance à la gestion du secteur de l'énergie (ESMAP) et des Les convertisseurs d'énergie classique, publications extérieures. Le nouveau pro- cependant, sont largement subventionnés de gramme « crédits carbone » de la Banque n'entre x v i R É S U M É A N A LY T I Q U E pas dans le champ de la présente évaluation ; il connus. Quarante-six pour cent de ces 56 sera examiné lors de l'étude que l'IEG prévoit projets sont des projets à part entière qui de consacrer au changement climatique. couvrent la gamme complète des interventions : assistance technique, développement des La méthodologie adoptée consistait à évaluer les marchés, prêts aux producteurs et aux consom- résultats des projets et à mesurer la progression mateurs, exploitation commerciale et services globale du portefeuille sur les ENR en après-vente. La plupart d'entre eux sont concen- s'appuyant sur la notation de la performance des trés sur les régions Asie de l'Est et Pacifique, et projets et en déterminant dans quelle mesure Asie du Sud. Les 54 % restants correspondent les pôles stratégiques de l'EBRS (réduction de la aux composantes ENR de plus grands projets pauvreté, développement du secteur privé, consacrés à l'électricité, à l'électrification des protection de l'environnement) et les opéra- zones rurales, au pétrole et à l'eau (les projets tions en rapport avec les ENR, propres à chacun dits « mixtes »). Trente-huit des projets (68 %) d'entre eux, avaient été mis en pratique. sont cofinancés par le FEM. Gestion du portefeuille -- Principaux résultats Projets clos. Il ressort des résultats des 27 projets de l'étude à part entière aujourd'hui clos et des composantes ENR des projets mixtes que plus Physionomie du portefeuille. Le portefeuille sur les de la moitié de ces opérations (17) sont jugées ENR se compose de 65 projets, dont 56 satisfaisantes ou marginalement satisfaisantes, énumérés dans le Progress Report on Renew- les autres obtenant des notes inférieures. En able Energy and Energy Efficiency (Banque règle générale, les projets à part entière sont mondiale 2005d), qui couvre la période 1990- jugés satisfaisants, à l'exception toutefois de 2004, et 9 approuvés pendant l'exercice 05. Sur ceux qui font intervenir l'énergie géothermique ces 65 projets, seuls 27 (42 %) sont achevés et 38 ou qui ont été interrompus par des crises (58 %) sont en cours. économiques. Le portefeuille est relativement jeune, 69 % des S'agissant des composantes ENR des projets projets ayant été approuvés après 1997. Près de mixtes, il semble qu'il existe un lien entre la note 75 % du nombre total de projets sont concen- attribuée et la taille de la composante ou son trés sur les régions Afrique, Asie de l'Est et degré d'intégration au projet. Les résultats de la Pacifique, et Asie du Sud. Les régions Amérique plupart de ces composantes ont été jugés latine et Caraïbes, et Europe et Asie centrale en satisfaisants ou marginalement satisfaisants. comptent huit chacune, la région Moyen-Orient Cela étant, les composantes ENR qui représen- et Afrique du Nord, deux. Pendant l'exercice 05, taient au moins 15 % du coût du projet ou dont les engagements consacrés aux ENR par la le degré d'intégration était important ont Banque internationale pour la reconstruction et obtenu la note « satisfaisant ». Il s'agissait de le développement et l'Association internationale projets sur l'électrification rurale ou la réforme de développement, le programme « crédits du secteur de l'énergie comportant un carbone » et le FEM se sont élevés à 190 millions important volet « biomasse » ou de projets de dollars, soit 10,5 % du volume total des prêts combinant ENR et maîtrise de l'énergie ou au secteur de l'énergie et des mines (1,8 gestion des déchets solides. milliards de dollars) (Banque mondiale 2005a, 2005d). Les composantes qui représentaient moins de 15 % des coûts du projet et qui n'étaient pas Sur les 65 projets qui composent le portefeuille, étroitement liées aux grands objectifs de l'opéra- 56 ont pu être évalués, les chiffres sur la perfor- tion n'ont été jugées que marginalement satisfai- mance des neuf projets restants, qui venaient santes. Dans les projets de réforme du secteur juste d'être approuvés, n'étant pas encore de l'énergie, les composantes de taille limitée et x v i i N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E peu liées aux objectifs majeurs de l'opération commerciale des ENR et à assurer la qualité des ont obtenu des résultats en demi-teinte, insatis- services. faisants pour trois d'entre elles. Enfin, dans la pratique, la Banque doit associer Projets en cours. Comparés aux projets clos, dont la population locale et les acteurs concernés à le bilan est mitigé, les projets en cours semblent son action et montrer que cette participation s'acheminer vers des résultats satisfaisants. peut être gage de souplesse pour la conception Plusieurs d'entre eux ont même déjà dépassé du projet et l'exécution des opérations. Pour leurs objectifs de résultats en ce qui concerne contribuer à l'amélioration constante de la l'installation physique des CER. conception des projets, l'intensification de l'effort de prêt à l'appui des ENR doit s'accom- Plusieurs éléments montrent aussi clairement pagner d'une diffusion et d'une application plus que de nombreux enseignements tirés des larges de l'ensemble de ces acquis. projets clos ont contribué au fil du temps à la conception des opérations en cours. Les Facteurs influant sur la performance. Notre examen dernières notations de l'objectif de développe- des rapports de fin d'exécution et des rapports ment sont toutes satisfaisantes pour les projets d'évaluation rétrospective des projets met en de la région Asie de l'Est. Il en est la plupart du évidence certains facteurs influant sur la perfor- temps de même dans les régions Asie de l'Est et mance des projets, qu'elle soit satisfaisante ou Pacifique, et Amérique latine et Caraïbes. Les inférieure à satisfaisante. Bien que ce ne soit pas résultats sont toutefois moins bons dans la systématiquement le cas, les bons résultats région Afrique, où trois projets ont été jugés tendent à être liés à une forte motivation des insatisfaisants et un marginalement insatisfai- pouvoirs publics et à des prestations efficaces de sant. Les résultats des composantes des projets la Banque lors des phases de conception et de mixtes ont tendance à être médiocres pour supervision des projets, et en matière de gestion l'objectif de développement, l'état d'avance- évolutive. En outre, les facteurs suivants sont ment, voire pour les deux critères. propres aux projets de mise en valeur des ENR : Enseignements tirés des projets. Les enseigne- · Ampleur de la consultation des entrepreneurs, ments tirés des anciens projets ont contribué à des consommateurs et des organisations non une meilleure conception des projets actuels. gouvernementales Les résultats s'en ressentent, les projets à part · Efficacité des mécanismes de crédit et de fi- entière jugés satisfaisants ou très satisfaisants nancement sous forme de dons assortis d'un étant justement les plus récents. contrat de résultats pour faciliter l'accès des pauvres aux CER Lorsque le recours aux ENR se double d'un · Solidité des capacités institutionnelles pré- soutien aux apports des prestataires de services existantes ou résultant du projet sociaux et des petites et moyennes entreprises, · Adoption de mesures visant à s'attaquer aux les résultats s'améliorent. C'est là l'un des obstacles à l'exploitation commerciale des ENR grands enseignements tirés des anciens projets. · Présence d'un intérêt réel des investisseurs et On a également constaté que des services de bailleurs de fonds locaux. crédit fiables étaient nécessaires pour mettre les CER à la portée des ménages ruraux. Pour que Les mauvais résultats semblent être liés à les projets réussissent, il faut aussi mettre en plusieurs facteurs tels que le manque d'atten- place des politiques publiques et un cadre tion aux politiques et au cadre réglementaire réglementaire favorisant l'adoption à grande propres aux ENR, la médiocrité de la supervision échelle des ENR. De même, il est très important des composantes ENR, le manque de détermi- de renforcer la capacité des acteurs clés à créer nation des pays, l'aversion au risque du secteur les conditions nécessaires à l'exploitation privé, l'insuffisance des capacités institution- x v i i i R É S U M É A N A LY T I Q U E nelles publiques et privées et les crises sociopo- impacts sur la parité des sexes ne sont pas non litiques et économiques. plus satisfaisants, peu d'éléments venant confir- mer le bien-fondé de la thèse répandue selon Mise en pratique des pôles stratégiques laquelle les femmes ont bénéficié de ces projets. de l'EBRS : Principaux résultats Dans le cadre de son programme ESMAP, la 1. Dans quelle mesure les projets de mise en va- Banque a récemment mis au point des méthodes leur des ENR de la Banque ont-ils aidé les et des outils pour mieux évaluer l'impact socioé- pauvres ? conomique d'un meilleur accès à l'électricité. Certains des derniers projets (au Bangladesh et Il serait erroné de dire que les objectifs de en Ouganda, par exemple) utilisent ces réduction de la pauvreté ne sont apparus techniques. qu'après l'EBRS de 2001. Il ressort de notre étude du portefeuille sur les ENR que la lutte L'un dans l'autre, il n'est toujours pas possible de contre la pauvreté a systématiquement été une dire clairement dans quelle mesure et en quoi considération majeure de la Banque, dans le l'aide de la Banque aux ENR a fait reculer la cadre de son objectif plus large d'amélioration pauvreté. Du fait de ce manque d'éléments de l'accès à l'électricité. Dans la pratique, les probants, il est très difficile d'orienter précisé- objectifs de réduction de la pauvreté étaient ment les opérations de prêts de la Banque à intégrés à la conception des projets au moyen l'appui des ENR. Il faut remédier à cette situation de mesures en faveur de l'amélioration des par l'adoption de systèmes de suivi et d'évalua- conditions de vie, de l'accroissement des tion plus solides dans les projets en cours et à moyens de subsistance et des revenus, et/ou de venir, particulièrement dans ceux qui comportent la promotion de la transformation des zones des composantes dans lesquelles l'aide est rurales par leur électrification. assortie de contrats de résultats, une formule qui dépend beaucoup de l'existence de tels systèmes. Bon nombre de projets récents incluaient de telles mesures dans leur conception, mais la 2. Dans quelle mesure les projets de mise en va- réduction de la pauvreté n'était un objectif leur des ENR de la Banque protègent-ils l'en- explicite que dans deux des projets clos. Pour un vironnement ? bon tiers des projets clos, c'est donc à travers les études préparatoires, la conception des Parmi les projets clos, rares sont ceux qui opérations et les bénéficiaires visés que l'on comportent un objectif explicite d'atténuation peut mettre en évidence un objectif implicite de des méfaits sur l'environnement. Dans notre réduction de la pauvreté. évaluation du portefeuille, seuls quelques éléments montrent que les projets ont les effets À ce stade, une grande partie de l'impact des positifs recherchés sur l'environnement opérations sur le recul de la pauvreté ne peut mondial. Pratiquement aucune donnée n'existe toutefois être évaluée, compte tenu de l'absence pour près d'un tiers des projets clos, mais les ou de la faiblesse des systèmes de suivi et objectifs de réduction des émissions de gaz à d'évaluation dans les projets clos. Même pour effet de serre (GES) ont généralement été les projets plus récents, dans lesquels l'accrois- atteints. Les grands projets de mise en valeur sement des revenus est un objectif explicite, il d'ENR raccordées au réseau ont plus de chances est rare qu'il existe un système de suivi et de réduire les émissions de GES que les petites d'évaluation à même de faire ressortir les installations décentralisées, telles que celles augmentations de revenus résultant d'un faisant appel au photovoltaïque solaire. meilleur accès à l'électricité. Aucun des projets ne fournit de données sur l'amélioration du La Banque apporte son appui à la maîtrise de revenu des ménages. Le suivi et l'évaluation des l'énergie comme aux ENR, ce qui est stratégi- x i x N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E quement le plus logique. D'un côté, selon une renforçant les capacités institutionnelles, et en étude récente du FEM, les projets Banque-FEM mobilisant des financements privés. Bien de maîtrise de l'énergie permettent une plus qu'ayant parallèlement facilité une réforme plus forte réduction des émissions de GES que les large du secteur de l'énergie, la Banque ne s'est investissements dans les ENR, même si ces pas suffisamment efforcée de créer un cadre derniers peuvent aider à prévenir le change- réglementaire non discriminatoire pour les ENR, ment climatique au niveau mondial. De l'autre, ce qui a été préjudiciable à certains projets dans dans les 40 à 80 prochaines années, pendant ce domaine. lesquelles les réductions les plus importantes devront intervenir, la maîtrise de l'énergie, mais Avec l'aide du programme ESMAP, les projets aussi les ENR, auront un rôle à jouer (parallèle- récents prennent en compte la question du ment à la fixation biologique et au stockage cadre réglementaire. La Banque prête également matériel du carbone). Une meilleure maîtrise de son concours à des institutions financières l'énergie ne permettra pas à elle seule locales et mobilisent des investissements, d'atteindre les niveaux de réduction voulus. Un souvent au moyen de partenariats public-privé. large recours aux énergies peu ou non Toutefois, les faiblesses institutionnelles et le polluantes sera également nécessaire. manque de préparation, d'expérience et de motivation des investisseurs locaux sur les Les investissements dans les ENR pourraient marchés ruraux sont des facteurs limitatifs. Peu à avoir un plus grand impact sur le patrimoine même de mesurer l'impact des projets sur la environnemental de la planète s'ils stimulaient réduction de la pauvreté, les systèmes de suivi et la création de marchés de ces énergies, d'évaluation de la promotion du développement réduisaient les obstacles à leur exploitation du secteur privé dans les investissements de la commerciale et visaient à optimiser les effets au Banque sur les ENR ne sont pas non plus satisfai- niveau local. Le manque de systèmes de suivi et sants. Il faut améliorer ces systèmes pour évaluer d'évaluation explique l'absence de données sur les facteurs à l'origine des bons résultats de les effets positifs locaux des projets Banque-FEM différents mécanismes d'intervention, adapter et dans ce domaine. De tels systèmes devraient appliquer les enseignements tirés des projets toutefois servir davantage à mesurer le degré lorsqu'il s'agit de transposer les opérations à plus d'élimination des obstacles à l'exploitation grande échelle, et utiliser le suivi et l'évaluation commerciale des ENR que le niveau de comme un outil d'aide à la décision pour mettre réduction des émissions de GES. Les opérations efficacement en oeuvre les actuels et futurs de la Banque sur le marché du carbone, qui ont programmes d'aide assortis de contrats de démarré récemment et n'entrent pas dans le résultats. champ de notre étude, s'accompagnent de protocoles de suivi et d'évaluation pour mesurer L'expérience montre que les partenariats et la et vérifier rigoureusement ces réductions. participation des populations locales jouent un rôle déterminant, le développement du secteur 3. Dans quelle mesure le programme de la privé n'étant pas suffisant pour améliorer l'accès Banque sur les ENR aide-t-il à promouvoir le à l'électricité. Il ne faut pas non plus oublier que développement du secteur privé ? les partenariats public-privé faisant intervenir des organisations non gouvernementales, des Les données du portefeuille sur les ENR cercles de consommateurs et une vaste consul- montrent clairement que la valeur ajoutée aux tation des différents acteurs concernés peuvent projets a été la plus grande lorsque la Banque a beaucoup aider à promouvoir les ENR et à favorisé le développement du secteur privé, atteindre les pauvres. Les projets ne s'appuyant notamment en créant des mécanismes d'exploi- que sur le secteur privé pour accroître l'accès à tation commerciale, en suscitant la confiance l'électricité ne sont pas bien parvenus à toucher des investisseurs et des consommateurs, en les pauvres. x x R É S U M É A N A LY T I Q U E Conclusion et dispositions à prendre les effets positifs pour l'environnement local ou La stratégie de la Banque en matière d'ENR est mondial de ses investissements dans les ENR, du bien adaptée aux priorités énergétiques des pays fait du manque ou de l'absence de systèmes en développement. Le programme de la Banque d'évaluation et de suivi. Les rares éléments dont dans ce domaine est solidement ancré aux on dispose semblent toutefois indiquer que grands pôles stratégiques de l'EBRS et s'articule l'impact reste limité. bien sur ses objectifs de réduction de la pauvreté, de promotion du développement du De bons systèmes de suivi et d'évaluation secteur privé et d'aide à la protection de l'envi- doivent être mis en place pour les services ronnement. Ainsi que l'ont récemment énergétiques qui visent à aider les pauvres. Les reconfirmé différentes assemblées (dont la projets de mise en valeur des énergies renouve- Semaine 2006 de la Banque sur l'énergie), la lables qui comportent des composantes dans Banque et la communauté des bailleurs de fonds lesquelles l'aide est assortie de contrats de doivent aider les pays en développement à sortir résultats doivent être les premiers à en bénéfi- de leur situation très difficile au plan énergé- cier. Il faut faire une évaluation rétrospective tique en intervenant tous azimuts, c'est-à-dire rigoureuse de l'impact d'un certain nombre de sur les fronts du pétrole, du charbon propre, de projets sélectionnés deux ou trois ans avant leur l'hydraulique, de la biomasse, de la maîtrise de clôture. l'énergie, et aussi des énergies renouvelables. Pour commencer, il est important que la Banque Pour accroître son aide aux ENR comme elle s'est inclue, dans les cas voulus, des objectifs et des engagée à le faire, la Banque doit tirer parti de sa programmes de travail pour les ENR dans ses capacité avérée à créer un climat de l'investisse- stratégies d'aide aux pays, qui traditionnellement ment favorable à l'exploitation commerciale de en comportent peu. La Banque doit faire ressortir ces énergies et à la promotion du développe- l'importance des ENR dans ses stratégies-pays et ment du secteur privé. La Banque doit également dans sa stratégie sectorielle pour l'énergie. Tout s'appuyer sur d'autres atouts tels que la mise en en favorisant la réforme du secteur de l'énergie et place de partenariats public-privé et des l'adoption de l'architecture nécessaire, elle doit structures voulues d'atténuation des risques. Elle s'attaquer aux obstacles qui entravent la mise en doit examiner toute une série d'opérations et valeur des ENR et leur exploitation commerciale. d'instruments de prêt bien adaptés, qui permet- L'aide de la Banque doit être principalement axée tront de prendre en compte la longue période sur la tarification rationnelle de l'énergie, de gestation des projets de mise en valeur des l'accroissement des financements privés et l'effi- ENR, en intervenant aussi bien pour renforcer cacité du cadre réglementaire. les capacités et favoriser les réformes des politiques publiques et du cadre réglementaire En un mot, la Banque doit réitérer ce qui a que pour promouvoir la pleine exploitation donné de bons résultats, notamment en se commerciale de ces énergies. Elle doit aussi concentrant sur sa capacité à stimuler le inscrire à ses budgets régionaux et programmes développement du secteur privé dans les de travail le coût opérationnel de ses précieux projets sur les ENR, en appliquant avec services de « courtage » et de conseil à l'appui souplesse et créativité les enseignements tirés des ENR afin de ne plus être tributaire des fonds des anciens projets pour mieux concevoir les des bailleurs d'aide bilatérale. nouvelles opérations et en diffusant plus largement les méthodes ayant fait leurs preuves. La contribution possible de la Banque à la Elle doit aussi intervenir sur les questions qui réalisation des autres objectifs est plus laissent à désirer, dont le suivi et l'évaluation, la douteuse. L'expérience des 15 dernières années prise en compte systématique des ENR dans les montre qu'il est difficile de mesurer l'impact de stratégies d'aide aux pays et l'inscription à son la Banque sur l'aide directe aux pauvres ou sur propre budget des « coûts d'incubation » des x x i N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E entreprises dans le secteur des énergies réseau et leurs applications hors réseau à renouvelables. mesure que le portefeuille de projets achevés s'accroît ; et mettre en place de solides chaînes Enfin, compte tenu du rôle stratégique que la de remontée de l'information qui fourniront la Banque veut faire jouer aux énergies nouvelles souplesse et la capacité d'adaptation nécessaires et renouvelables pour améliorer l'accès à l'élec- pour s'efforcer d'atteindre les objectifs de la tricité, surtout au profit des pauvres, le stratégie de la Banque sur les ENR. portefeuille sur les ENR doit pouvoir de plus en plus s'appuyer sur des autoévaluations et des Dans un contexte d'austérité budgétaire, il s'agit études indépendantes. Celles-ci doivent cibler là d'une tâche ardue, qui mérite cependant plus rigoureusement les résultats et les impacts toute l'attention de la direction de la Banque, ; établir une distinction plus fine entre l'électrifi- compte tenu des engagements mondiaux que cation des zones rurales, les ENR raccordées au l'institution a pris dans ce domaine. x x i i Resumen E l objetivo de este evaluación realizado por el Grupo de Evaluación In- dependiente (IEG, por su sigla en inglés) del Banco Mundial es orien- tar los esfuerzos para ampliar el apoyo del Banco a las fuentes de energía renovables evaluando el desempeño de la cartera actual de proyec- tos del Banco y el nivel de logro de los objetivos estratégicos. En la Conferencia Internacional sobre Energías relación con las fuentes de energía nuevas y Renovables celebrada en Bonn (Alemania) en renovables están plasmados en documentos de 2004, el Banco anunció su intención de aumentar estrategia energética para las zonas rurales el financiamiento para las fuentes de energía (Banco Mundial, 1993), estrategia para el medio renovables y la eficiencia energética en una media ambiente (Banco Mundial 2001b; IEG 2002) y la del 20% anual para el quinquenio de 2005­2009. Estrategia de renovación del sector de la energía En el presente examen se evalúa si el Banco está (Banco Mundial 2001a). Esta estrategia consta en condiciones de asumir ese compromiso. Esta de una lista muy detallada de "pilares" para el evaluación de las nuevas energías renovables se desarrollo energético y las actividades operacio- limita a las fuentes geotérmica, solar, eólica y de nales relacionadas con las energías nuevas y biomasa, así como a las fuentes de energía hidroe- renovables (así como otros subsectores de la léctrica a escalas pequeña, mini y micro. Se energía). actualizan y amplían las secciones sobre fuentes de energía renovables del estudio realizado por el Por consiguiente, siguiendo la metodología del IEG en 2003 acerca del desarrollo del sector IEG, basada en objetivos, este evaluación se privado para el sector de la electricidad (IEG- adecua a los objetivos operacionales de la Banco Mundial, IEG-Corporación Financiera estrategia de renovación del sector de la energía Internacional, IEG-Organismo Multilateral de para las fuentes de energía nuevas y renovables Garantía de Inversiones 2003b). y los tres pilares siguientes: i) ayudar directa- mente a los pobres, ii) fomentar una buena Objetivos del Banco en relación con las gestión y el desarrollo del sector privado, y iii) fuentes de energía renovables ayudar a proteger el medio ambiente. El cuarto pilar de impactos macrofiscales reviste también Marco estratégico importancia, puesto que las fuentes de energía Los objetivos institucionales del Banco en nuevas y renovables podrían desplazar a los x x i i i N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E combustibles importados; sin embargo, esas de ciclo combinado y las turbinas de vapor fuentes siguen representando una parte alimentadas con carbón o petróleo-- sigue reducida de los balances energéticos de los siendo la opción más barata. Aunque la energía países en desarrollo donde el Banco ha pro- de biomasa, hidroeléctrica y eólica puede porcionado apoyo a las energía nuevas y competir, en principio, con las centrales eléctri- renovables. cas convencionales de menos de 50 megavatios (MW), esos sistemas son, simplemente, más Competitividad de los costos de las fuentes de caros que las unidades generadoras convencio- energía renovables y papel de Banco nales más grandes, de 50­300 MW. Una reciente evaluación técnica y económica (Chubu Electric Power Co., Inc. y cols. 2005)1 Sin embargo, la tecnología de energía conven- indica que la tecnología de energías renovables cional ha recibido muchas subvenciones por es la opción de electrificación más económica medios directos, indirectos y poco transparen- para muchas aplicaciones fuera de la red, tes. Estos medios incluyen transferencias de basadas en ella o que funcionan en minirredes, efectivo a los productores, los consumidores o sobre la base de un régimen de costos económi- ambos, las exenciones fiscales, el control de cos actualizados y anualizados (véase el cuadro precios, las restricciones comerciales, los 2.1 en el capítulo 2). obstáculos normativos a la tecnología de energías renovables y la incapacidad de las La tecnología de energías renovables sería autoridades para corregir las deficiencias del incluso más competitiva hoy, habida cuenta de mercado. Esas subvenciones inclinan la balanza los precios actuales del crudo en torno a los en contra de las fuentes de energía renovables. US$70 por barril, en comparación con la hipóte- Si se tienen en cuenta el costo de factores sis de US$38­40 por barril que se utilizó en la ambientales externos y el valor de la diversifica- evaluación de 2005. Se prevé que los costos de ción de la energía, la cantidad de energías sistemas de unos 300 vatios fuera de la red renovables económicamente viables aumenta (microgeneradores hidroeléctricos, sistemas de forma considerable. eólicos pequeños e híbridos fotovoltaicos- eólicos) ronden los 15­25 centavos por kilova- El papel del Banco en el financiamiento de las tio/hora (kWh), o menos de la mitad de los 30­40 fuentes de energía renovables consiste en centavos por kWh de los generadores de alcanzar un equilibrio entre las fuentes de gasolina y diésel. Los costos del sistema solar energía renovables y las convencionales, porque fotovoltaico para las aplicaciones de poca las distorsiones que acabamos de mencionar potencia (50­300 W), son comparables a las hacen que las energías renovables no resulten alternativas diésel/gasolina. Por lo que respecta a económicamente competitivas con las fuentes los sistemas independientes de minirred para de energía convencional. Ello, a su vez, requiere poblaciones pequeñas, con cargas de entre 5 y un respaldo continuo de los gobiernos y de los 500 kilovatios (kW), existe abundante tecnología donantes. Cuando financia proyectos con el de energías renovables--concretamente, de Fondo para el Medio Ambiente Mundial energía de biomasa, biogas, geotérmica, eólica y (FMAM), el Banco trata de eliminar las barreras microhidroeléctrica-- que constituye la alterna- comerciales y normativas a la tecnología de tiva de generación de energía potencialmente energías renovables y conseguir beneficios menos onerosa frente a otras opciones energéti- ambientales a nivel mundial financiando los cas convencionales. costos incrementales de las inversiones en fuentes de energía renovables. El programa del No obstante, con respecto a la tecnología de Banco para el financiamiento del carbono energía renovable conectada a la red, la tecnolo- contribuye, asimismo, a la valoración explícita gía convencional de generación de electricidad de los beneficios positivos de los factores --es decir, las turbinas de gas de ciclo abierto y externos de las energías renovables. x x i v R E S U M E N Planteamiento de la evaluación nuevas y renovables. Las regiones de América Este examen documental se basa en evaluacio- Latina y el Caribe y Europa y Asia central acogen nes realizadas tanto por el Banco como por el ocho proyectos cada una, y la región de Oriente IEG, incluido el examen de informes finales de Medio y Norte de África sólo dos. En el ejercicio ejecución, informes de evaluación de los proyec- de 2005, los compromisos del Banco Interna- tos y estudios temáticos. El grupo encargado del cional de Reconstrucción y Fomento/ Asocia- examen se entrevistó, además, con personal del ción Internacional de Fomento, del programa Banco y analizó diversas publicaciones específi- de financiamiento del carbono y del FMAM con cas, entre otros, estudios realizados por la respecto a las energías nuevas y renovables Unidad de Seguimiento y Evaluación del FMAM, ascendieron a US$190 millones, es decir, el el Programa de asistencia para la gestión del 10,5% del financiamiento total para el sector de sector de energía (ESMAP) y publicaciones la energía y la minería, que asciende a US$1.800 externas. El nuevo Programa de financiamiento millones (Banco Mundial 2005a, 2005d). del carbono que ha puesto en marcha el Banco queda fuera del ámbito de este examen evalua- De la cartera total de 65 proyectos, se pudieron tivo y se abordará en el estudio del IEG sobre el evaluar 56, ya que los datos de desempeño cambio climático. correspondientes a nueve proyectos que acababan de aprobarse no estaban aún disponi- El planteamiento metodológico del examen era bles cuando se realizó el presente examen. De evaluar los resultados de los proyectos y analizar esos 56 proyectos, 46% son autónomos e la evolución general de la cartera de proyectos incluyen toda la gama de intervenciones, que sobre energías nuevas y renovables en función cubre la asistencia técnica, el desarrollo del de las calificaciones de desempeño de los mercado, el financiamiento de los productores proyectos y de la medida en que se alcanzaron y los consumidores, la comercialización y los los pilares de la Estrategia de renovación del servicios posventa. Las regiones en que el sector de la energía, a saber, la reducción de la Banco realizó más proyectos autónomos pobreza, el desarrollo del sector privado y la relacionados con las energías nuevas y renova- protección ambiental, así como sus respectivas bles fueron Asia oriental y el Pacífico, así como actividades operacionales en relación con las Asia meridional. El 54% restante son proyectos energías nuevas y renovables. con componentes de energías nuevas y renova- bles vinculados con proyectos más grandes de Desempeño de la cartera: Conclusiones más energía, electrificación rural y de petróleo y importantes agua (denominados proyectos "combinados" en este examen). Treinta y ocho proyectos Características principales. La cartera de energías (68%) han recibido cofinanciamiento del nuevas y renovables está integrada por 65 FMAM. proyectos: 56 proyectos incluidos en el docu- mento Progress Report on Renewable Energy Proyectos terminados. Los resultados de los 27 and Energy Efficiency 1990­2004 (Banco proyectos autónomos terminados y las califica- Mundial 2005d) y nueve proyectos aprobados ciones separadas de los componentes sobre en el ejercicio de 2005. De los 65 proyectos, sólo energías nuevas y renovables de los proyectos 27 (42%) han concluido; 38 (el 58%) siguen en combinados revelan que más de la mitad (17) marcha. obtuvieron resultados satisfactorios o modera- damente satisfactorios, mientras que los demás La cartera es relativamente joven, ya que el 69% obtuvieron resultados insatisfactorios. Los de los proyectos se aprobó después de 1997. proyectos autónomos fueron satisfactorios en Las regiones de África, Asia oriental y el Pacífico, general, salvo aquéllos relacionados con la y Asia meridional representan casi el 75% del energía geotérmica o que se vieron interrumpi- número total de proyectos sobre energías dos por crisis económicas. x x v N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E Por lo que atañe a los componentes sobre Latina y el Caribe. Pero el desempeño es peor en energías nuevas y renovables de los proyectos la región de África, donde se han calificado tres combinados, hay indicios de la existencia de proyectos de insatisfactorios y uno de moderada- cierta relación entre la calificación y la magnitud mente insatisfactorio. Los componentes de los e la integración del componente en el proyecto proyectos combinados tienden a obtener califica- general. La mayoría de los componentes sobre ciones mediocres con respecto al objetivo de energías nuevas y renovables arrojaron resulta- desarrollo de los proyectos, los avances logrados dos positivos o moderadamente positivos. Así y en la ejecución, o ambos. todo, los que representaban el 15% o más de los costos de sus proyectos respectivos, o que Enseñanzas extraídas. Las enseñanzas extraídas estaban bien integrados en sus proyectos, de proyectos más antiguos han permitido tuvieron resultados favorables. Fueron proyec- diseñar mejor los proyectos de energías nuevas tos de electrificación rural o reforma del sector y renovables más recientes, lo cual se ha de energía con un componente considerable de reflejado en los resultados, ya que los proyectos energía de biomasa y proyectos que incluían una autónomos satisfactorios o muy satisfactorios combinación de fuentes de energía nuevas y son también los más recientes. renovables y eficiencia energética o gestión de los desechos sólidos. Una de las principales enseñanzas es que la combinación del suministro de energías nuevas Para los componentes pequeños que represen- y renovables con aportaciones de las institucio- taban menos del 15% de los costos del proyecto nes de servicios sociales y pequeñas y medianas y que no incidían de forma determinante en los empresas ha permitido mejorar los resultados objetivos generales del proyecto, las calificacio- en materia de desarrollo. Otra lección es que se nes de desempeño sólo fueron moderadamente necesitan servicios de crédito fiables para que satisfactorias. Las calificaciones de los los sistemas de energías nuevas y renovables componentes de energías nuevas o renovables sean asequibles para los hogares rurales. de los proyectos de reforma del sector de la Además, debe instaurarse un marco normativo y energía que eran pequeños y guardaban poca reglamentario para esas energías que propicie relación con los objetivos principales de los una adopción a gran escala de modo que estos proyectos fueron desiguales, ya que tres se proyectos tengan éxito. Otra importante consideraron insatisfactorios. enseñanza es la utilidad de fortalecer la capaci- dad de los principales interesados para desarro- Proyectos en curso. En comparación con el llar el entorno para la comercialización de desempeño dispar de los proyectos terminados, energías nuevas y renovables y garantizar la los proyectos de energías nuevas y renovables calidad del servicio. activos muestran una evolución más favorable hacia resultados satisfactorios. De hecho, varios Por último, una enseñanza práctica para el Banco han superado ya las metas de instalación física es la necesidad de respaldar la participación de la de tecnología. comunidad y las partes interesadas y demostrar que se puede favorecer así la flexibilidad en el Existen, asimismo, pruebas sólidas de que, a lo diseño y la ejecución de los proyectos. A fin de largo del tiempo, muchas de las enseñanzas extraí- promover la mejora continua de los diseños de das han contribuido a diseñar los proyectos en proyectos de energías nuevas y renovables, es curso. Las calificaciones más recientes relativas al necesario que el aumento del financiamiento de objetivos de desarrollo de los proyectos son todas esas energías se acompañe de una mayor satisfactorias para proyectos de energías nuevas y divulgación y aplicación de estas enseñanzas. renovables en la región de Asia meridional, así como para la mayoría de los proyectos de las Factores que influyen en el desempeño. El análisis regiones de Asia oriental y el Pacífico, y América realizado por el IEG de los informes finales de x x v i R E S U M E N ejecución y los informes de evaluación de los de renovación de 2001. El examen de la cartera proyectos ha revelado algunos de los factores revela que el Banco ha perseguido siempre la que explican los resultados satisfactorios e reducción de la pobreza como uno de los princi- insatisfactorios. Aunque no están presentes en pales objetivos de su cartera de proyectos de todos los proyectos satisfactorios, los buenos energías nuevas y renovables, que forma parte resultados tienden a estar vinculados a un de su objetivo más amplio de mejorar el acceso compromiso sólido de las autoridades y una a la energía. En la práctica, los objetivos de labor eficaz del Banco en cuanto al diseño, la reducción de la pobreza se han integrado en el supervisión y la gestión adaptable del proyecto. diseño de los proyectos mediante mejoras del Existen factores adicionales inherentes a los bienestar, el aumento de la calidad de vida y los proyectos de energías nuevas y renovables: ingresos o la promoción de la transformación rural a través del desarrollo energético. · amplias consultas con empresarios, consumi- dores y organizaciones no gubernamentales, Muchos proyectos recientes tienen en cuenta · mecanismos eficaces de crédito y de financia- estos objetivos en su diseño, pero sólo dos miento en condiciones concesionarias en fun- proyectos terminados incluyeron la reducción ción de los resultados que faciliten el acceso de la pobreza como un objetivo explícito. Así de los pobres a tecnologías de energías nue- pues, para un nada despreciable tercio de los vas y renovables, proyectos concluidos, el objetivo implícito de · una capacidad institucional sólida adquirida reducción de la pobreza se desprende de los con anterioridad o a raíz del proyecto, estudios preparatorios, del diseño de los · más atención al modo de afrontar las barreras proyectos y de los beneficiarios seleccionados. comerciales a las fuentes de energía nuevas y renovables, Sin embargo, en este momento, es prácticamente · un interés activo de los inversionistas y finan- imposible evaluar el impacto en la reducción de ciadores locales. la pobreza porque los proyectos concluidos carecían de sistemas de seguimiento y evaluación Los malos resultados parecen guardar o éstos eran deficientes. Incluso entre los proyec- relación con diversos factores, entre ellos la tos recientes, en que uno de los objetivos explíci- insuficiente atención prestada a los aspectos tos es lograr el aumento de los ingresos, son normativos y reglamentarios inherentes a las pocos los que disponen de sistemas de energías nuevas y renovables, la supervisión seguimiento y evaluación que permitan determi- deficiente de los componentes de energías nar las mejoras en el ingreso atribuibles a un nuevas y renovables, un compromiso nacional mayor acceso a la energía. Ninguno de los proyec- escaso, un sector privado con aversión al riesgo, tos ofrece datos sobre el aumento de los ingresos una capacidad institucional pública y privada de los hogares. El seguimiento y la evaluación de insuficiente y crisis sociopolíticas o económicas. las repercusiones de género han sido también poco satisfactorios, pues se disponen de pocas Principales conclusiones sobre la pruebas que corroboren la frecuente afirmación ejecución de los pilares estratégicos de de que las mujeres se han beneficiado. la Estrategia de renovación del sector de la energía Recientemente, el Banco --a través del ESMAP-- ha estado desarrollando métodos e 1. ¿En qué medida favorecieron directamente a instrumentos para evaluar mejor las repercusio- los pobres las intervenciones del Banco en ma- nes socioeconómicas de un mayor acceso a la teria de energías nuevas y renovables? energía. Algunos de los proyectos de energías nuevas y renovables más recientes (por ejemplo, Los objetivos de reducción de la pobreza no han en Bangladesh y Uganda) están usando esos aparecido precisamente después de la estrategia planteamientos. x x v i i N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E En cualquier caso, sigue sin estar claro en qué de gases, tanto la eficiencia energética como las medida y de qué modo el apoyo del Banco a las fuentes de energía nuevas y renovables (junto energías nuevas y renovables ha reducido la con el secuestro físico y biológico del carbono) pobreza. La falta de pruebas es un serio inconve- tendrán un papel que desempeñar. La eficiencia niente a la hora de encauzar su financiamiento a energética por sí sola no permitirá alcanzar los esas fuentes. Esta dificultad debe abordarse niveles deseados de reducción; será también mediante el establecimiento de sistemas de necesario un despliegue a gran escala de fuentes seguimiento y evaluación más sólidos en los de energía que reduzcan o eliminen las emisio- proyectos actuales y futuros, en especial en los nes de carbono. diseñados con componentes de asistencia basada en resultados que necesitan particular- Las repercusiones ambientales mundiales de los mente sistemas de seguimiento y evaluación. proyectos de energías nuevas y renovables podrían ser mayores si éstos catalizasen la 2. ¿En qué medida protegieron los proyectos de creación de mercados de energías nuevas y energías nuevas y renovables del Banco el renovables, redujeran las barreras comerciales y medio ambiente? se concentraran en maximizar los efectos a nivel local. No se dispone de datos sobre los benefi- Pocos proyectos de energías nuevas y renova- cios locales de los proyectos de energías nuevas bles terminados tienen la atenuación de los y renovables del Banco y el FMAM porque el efectos perjudiciales para el medio ambiente seguimiento y la evaluación han sido deficientes. como objetivo explícito. Este examen de la Sin embargo, los sistemas de seguimiento y cartera sólo ha hallado pruebas parciales de que evaluación de estos proyectos deberían cen- estos proyectos están logrando los beneficios trarse más en cuantificar la eliminación de las ambientales mundiales previstos. Aproximada- barreras comerciales en lugar de limitarse a mente el tercio de los proyectos concluidos no medir los niveles de reducción de gases de efecto proporciona datos o proporciona muy pocos, invernadero. Las operaciones de financiamiento pero, en general, se han alcanzado las metas de del Banco en relación con el carbono --que son reducción de las emisiones de gases de efecto recientes y quedan fuera del ámbito de este invernadero. Entre los proyectos, los relativos a examen-- han aplicado protocolos rigurosos de las energías renovables a gran escala y conecta- seguimiento y evaluación para medir y verificar das a la red tienen más posibilidades de reducir las reducciones de las emisiones de gases. las emisiones de gases que los proyectos pequeños fuera de la red, como los que emplean 3. ¿En qué medida permitió el programa del tecnología solar fotovoltaica. Banco fomentar el desarrollo del sector privado? El Banco respalda tanto la eficiencia energética como las fuentes de energía nuevas y renovables, Los datos relativos a la cartera apuntan lo cual tiene mucho sentido desde el punto de claramente a que el Banco ha obtenido mejores vista estratégico. Por un lado, en una evaluación resultados con los proyectos de energías nuevas reciente del FMAM se llegó a la conclusión de y renovables que han apoyado el desarrollo del que, aunque las inversiones en energías nuevas y sector privado, en especial en relación con el renovables pueden contribuir a evitar el cambio establecimiento de un proceso de comercializa- climático, se han obtenido mayores reducciones ción, el fortalecimiento de la confianza de los de emisiones de gases de efecto invernadero inversionistas y los consumidores, el fortaleci- gracias a la eficiencia energética propugnada por miento de la capacidad institucional y la movili- el Banco y el FMAM que a los proyectos de zación de financiamiento privado. Sin embargo, energías nuevas y renovables. Por otro lado, en el Banco no ha prestado suficiente atención a la un horizonte de 40 a 80 años, donde se necesita- creación de un marco normativo no discrimina- rán las reducciones más notables de emisiones torio para las fuentes de energía nuevas y x x v i i i R E S U M E N renovables --a pesar del impulso que ha dado prioridades energéticas de los países en desarro- paralelamente a reformas más amplias en el llo. El programa de fuentes de energía nuevas y sector de la energía-- con efectos negativos para renovables del Banco está sólidamente anclado algunos planes relativos a esas fuentes. en el marco más amplio de los pilares de la Estrategia de renovación del sector de la energía Gracias a la asistencia del ESMAP, algunos y se centra adecuadamente en sus metas de proyectos recientes sobre energías nuevas y reducir la pobreza, fomentar el desarrollo del renovables han comenzado a abordar ya las sector privado y contribuir a la protección del cuestiones normativas. El Banco ha apoyado, medio ambiente. Como se ha confirmado una asimismo, a instituciones financieras locales y vez más en foros recientes (incluida la Semana movilizado inversiones, a menudo mediante de la Energía organizada por el Banco en 2006), asociaciones entre el sector público y el privado. el Banco y la comunidad de donantes deben Sin embargo, las deficiencias institucionales y la abordar la crítica situación energética que viven falta de preparación, experiencia y motivación los países en desarrollo interviniendo en todos entre los inversionistas locales para atender a los frentes, incluido el petróleo, el carbón mercados rurales han sido factores limitadores. limpio, la energía hidroeléctrica y de biomasa y Al igual que ocurre con el impacto de las la eficiencia energética, así como las energías energías nuevas y renovables en la reducción de renovables. la pobreza, el seguimiento y la evaluación de la labor de desarrollo del sector privado del Banco A fin de cumplir su compromiso de aumentar el en este ámbito han sido insatisfactorios. Es apoyo a las fuentes de energía nuevas y renova- necesario mejorar ambas actividades para bles, el Banco necesita aprovechar su capacidad analizar los factores que explican el éxito de los probada para crear un clima de inversión distintos mecanismos de ejecución, adaptar y propicio para la comercialización de fuentes de aplicar las enseñanzas extraídas cuando se energía nuevas y renovables y el fomento del amplíe el alcance de los proyectos en otros sitios desarrollo del sector privado. El Banco ha de y disponer de instrumentos de decisión para centrarse también en otros puntos fuertes, poner eficazmente en práctica planes presentes como el fortalecimiento de las asociaciones y futuros de asistencia basada en resultados. entre el sector público y el privado y estructuras apropiadas de reducción del riesgo. Habrá de La experiencia derivada de los proyectos considerar una serie de operaciones e instru- sugiere que las asociaciones y la participación mentos crediticios adecuados para responder a de la colectividad son fundamentales, porque los largos periodos de gestación de los sistemas el desarrollo del sector privado no basta para de energías nuevas y renovables, desde el propiciar un mejor acceso a la energía. Una fortalecimiento de la capacidad institucional y la enseñanza importante es que las asociaciones reforma normativa y reglamentaria hasta la entre el sector público y el privado con partici- plena comercialización. Y deberá incorporar -- pación de organizaciones no gubernamentales en sus presupuestos y programas de trabajo y comunidades de consumidores, y las amplias regionales-- los costos operacionales de su consultas a los interesados pueden desempe- satisfactoria "intermediación" y su papel consul- ñar un papel capital para fomentar las energías tivo, en lugar de seguir dependiendo de fondos nuevas y renovables y llegar a los pobres. de donantes bilaterales. Cuando los proyectos dependían únicamente del sector privado para aumentar el acceso a la Las eventuales contribuciones del Banco a otros energía, apenas se lograba llegar a los pobres. objetivos son más dudosas. La experiencia de los últimos 15 años indica que los resultados de los Conclusiones y pasos siguientes esfuerzos del Banco para ayudar directamente a La estrategia sobre energías nuevas y renovables los pobres o lograr beneficios ambientales del Banco es congruente con las prioridades las locales o mundiales a través de sus intervencio- x x i x N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E nes en materia de energías nuevas y renovables desarrollo del sector privado en proyectos de han sido difíciles de medir porque el energías nuevas y renovables, permaneciendo seguimiento y la evaluación han sido deficientes flexible e innovador aplicando las enseñanzas o inexistentes; ahora bien, la pocas pruebas de extraídas para mejorar el diseño de nuevos que se dispone indican que, hasta la fecha, el proyectos, y dando una mayor divulgación a las impacto ha sido limitado. buenas prácticas. El Banco debería, asimismo, abordar ámbitos que en el pasado han sido Habría que establecer buenos sistemas de deficientes, como el seguimiento y la evalua- seguimiento y evaluación de los servicios ción, la integración de las energías nuevas y energéticos destinados a asistir a los pobres. Los renovables en las estrategias de asistencia a los primeros objetivos deberían ser los proyectos países y la inclusión de los costos de "incuba- sobre fuentes de energía renovables con ción de negocios de energías nuevas y renova- componentes asistencia basada en resultados. bles" en el presupuesto del propio Banco. Habría que realizar evaluaciones rigurosas del impacto de algunos de los proyectos sobre En particular, la cartera de proyectos de energías energías renovables que concluirán en los nuevas y renovables debería beneficiarse cada próximos dos o tres años. vez más de evaluaciones tanto internas como independientes, dado el papel estratégico que Un primer paso importante es que el Banco atribuye el Banco a esas fuentes en la mejora del incluya objetivos y programas de trabajo relacio- acceso a la energía, especialmente para los nados con las energías nuevas y renovables en las pobres. Esas evaluaciones deberían centrarse de estrategias de asistencia a los países --que históri- manera más rigurosa en los resultados y los camente han prestado poca atención a esas impactos, en diferenciar más radicalmente las fuentes de energía-- siempre que sea pertinente. enseñanzas de la electrificación rural, de las El Banco necesita señalar la importancia de la fuentes de energía nuevas y renovables conecta- fuentes de energía nuevas y renovables en las das a la red y de las energías renovables fuera de estrategias nacionales y del sector de la energía. la red a medida que se amplía la cartera de Cuando fomente las reformas y arquitecturas del proyectos terminados en este campo, así como sector de la energía, el Banco deberá abordar en un sistema sólido de intercambio de informa- también las limitaciones que obstaculizan el ción que permitiría tener flexibilidad y capaci- desarrollo y la comercialización de energías dad de respuesta en la ejecución de los objetivos nuevas y renovables. Las principales orientacio- de la estrategia del Banco sobre energías nuevas nes de la asistencia del Banco en este ámbito y renovables. deberían ser la fijación de precios económicos para la energía, el aumento del financiamiento Se trata de una tarea difícil habida cuenta del privado y una reglamentación eficaz. rigor presupuestario actual. Sin embargo, es una tarea que merece un apoyo firme de la adminis- En resumen, el Banco debe seguir tomando las tración del Banco, dados sus compromisos medidas que han funcionado, centrándose en mundiales en materia de fuentes de energía particular en su papel catalizador para el nuevas y renovables. x x x 1 Objectives and Evaluation Approach T he main objective of this Independent Evaluation Group (IEG) review is to assess prospectively how the implementation performance out- comes of the Bank's new renewable energy (NRE) portfolio could in- form the strategic goal of expanding the Bank's NRE support. This assessment is important in view of the Bank's 2004 commitment to increase its lending for NRE by an annual average of 20 percent during fiscal 2005­09. Whereas IEG has conducted a study related to project and strategic levels. At the project level, the 1998 Fuel for Thought Strategy1 and the review considered the objectives as stated in evaluated the private sector development (PSD) project Staff Appraisal Reports or Project outcomes resulting from the 1993 electric Appraisal Documents. At the strategic level, the power lending policy, the Bank's NRE portfolio review assesses the extent to which the Energy has not been independently evaluated before. Business Renewal Strategy (EBRS) pillars of Similarly, given IEG's evaluation of the extractive poverty reduction, PSD, and environmental industries (IEG-World Bank, IEG-IFC, IEG-MIGA protection, as well as the relevant lines of action 2003a) and the large number of external studies under each, were achieved. and regional self-evaluations of large hydro (more than 10 megawatts [MW]), this assess- Second, the NRE portfolio is also highly diverse; ment is restricted to geothermal, solar, wind, that is, the Bank's Regions focused on distinct biomass, and hydro energy sources of less than renewable energy technologies2 and demonstrate 10 MW. The review also expands on the NRE sharply contrasting institutional and governance sections of IEG's widely disseminated 2003 frameworks. Consequently, the study focused on study on PSD in the electric power sector (IEG- deriving findings (rather than thematic lessons) World Bank, IEG-IFC, IEG-MIGA 2003b). and on assessing the Bank's performance, with a view to informing the NRE scale-up efforts and Evaluation Approach priority business lines in the coming years. There are three main aspects to this review's evaluation approach. First, IEG's evaluation Third, in its strategy for the electric power methodology is objectives based. Thus, the sector, the Bank's support is predicated on assessment of NRE project outcomes was country commitment to improving sector conducted vis-à-vis objectives at both the efficiency through policy reforms and sector 1 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E restructuring. Therefore, at the country level, NRE projects in the total portfolio (annex A),3 27 this review also takes into account the energy are closed;4 the 38 that are ongoing are from the sector reform context wherein the NRE projects last seven years. The study reviewed in greater were implemented. depth 12 of these 56 projects, with 5 closed and 7 ongoing "full-spectrum" projects that have the Project ratings used greatest value for deriving evaluative findings For the project-level review, portfolio results are with potentially broad applicability (annex B). reported for both completed and ongoing By "full spectrum," the review means the operations. following: For completed projects, the rating catgories · These projects pursued the full range of ac- include outcome (comprised of relevance to tivities, including technical assistance (TA) country-sector objectives, efficacy, and efficiency); and studies, market development, PSD, con- sustainability; institutional development impact; sumer and producer financing, commercial- and Bank and borrower performance during the ization, and after-sales service. Most were project design, implementation, and completion approved recently and are in the East Asia stages. and Pacific and the South Asia Regions, plus a few in the Africa and the Latin America and For ongoing projects, the review uses Project the Caribbean Regions. Nearly all the activities Status Report ratings--Achievement of the focus on electricity access; a few focus on Project Development Objective (PDO), Global household energy. Outside this subset, the Environmental Objective, and Implementation NRE components consist mainly of studies Progress--as one source of data among others, or pilot activities. with the caveat these ratings have not been · The projects are major lending vehicles with independently validated. NRE components in significant Bank and GEF financing, or they "blended" projects were rated separately. are rural electrification projects that have in- cluded a large NRE component. Documents reviewed The evaluation draws on several elements: (i) Bank Given the constraints of this review (mainly the project documents, particularly Implementation small number of closed and full-spectrum NRE Completion Reports (ICRs), supervision reports, projects that were reviewed) and the still- and aide-memoires; (ii) IEG products, including expanding and mostly young NRE portfolio, it ICR Reviews, Project Performance Assessment was premature to draw generalized, evidence- Reports, and energy-environment thematic based findings and lessons that distinguish studies; (iii) Bank staff interviews; and (iii) a among rural electrification, grid-connected NRE, focused literature review covering the Global and off-grid NRE interventions, which do have Environment Facility (GEF), the Energy Sector different objectives, characteristics, and Management Assistance Program (ESMAP), and expected outcomes, as noted in the report (see external studies selected for their data and insights chapter 4). This level of disaggregation should on NRE's poverty-reduction impacts, evaluative be possible as more NRE projects close and content, and applicability to the countries that further self- and independent evaluations are received Bank NRE support. This review also draws carried out in the coming years. from the recently completed ESMAP self- evaluation (ESMAP 2004b). Specific examples to The Bank's relatively recent carbon finance illustrate ESMAP's contributions to project design operations were also outside the scope of this and preparation are provided in the report. review, as few if any lessons can be derived from the still mostly active portfolio. The Carbon Portfolio reviewed Finance Program, however, will be part of the The NRE portfolio is relatively recent: out of 65 IEG's climate change study planned for fiscal 2008. 2 2 The Bank's NRE Objectives E nergy is a vital input to economic growth and human well-being. The rapid growth in consumption and global economic dependence on oil, natural gas, and electric power has deepened the geopolitical im- portance of these commercial energy resources. Meanwhile, traditional fuels such as firewood, products and electricity) has traditionally agricultural residues, and animal wastes continue attracted large investment resources from to be the only energy resources used by almost private, bilateral, and multilateral financiers. one-third of the world's population to meet their Traditional fuels, while extremely important to cooking, heating, and other basic needs. Among large segments of the world's population, have these consumers are the world's poorest people, received much less support. For new for whom commercial energy (particularly grid- renewables, the 1990s witnessed growth in the based electricity) is unaffordable or is not promotion of NRE technologies to meet rural economical to deliver. About 1.6 billion people energy needs and mitigate greenhouse gas are without electricity access today. Renewable (GHG) emissions and thus achieve both local energy from solar and wind resources was initially and global environmental benefits. promoted as a way to reach these isolated consumers, but renewable energy technologies Through its advice and project lending in all (RETs) have been harnessed recently to feed into three areas--commercial, traditional, and electricity grids or provide off-grid, decentralized renewable energy--the Bank has responded power supply solutions at the village level. strategically and operationally to the dire and challenging energy predicament of its client For people in developing countries, the most countries. The energy sector accounted for critical energy issue is lack of access to either about 8 percent of total International Bank for commercial or traditional energy sources. The Reconstruction and Development/International Millennium Development Goals for reducing Development Association commitments of poverty, hunger, and disease and for expanding $22.3 billion in fiscal 2005. In the past five years, education and achieving gender equality will not NRE lending has grown rapidly, from $20 million be met without accessible, affordable, and in fiscal 2001 to $190 million in fiscal 2005. In the reliable energy services (UN 2005). The latter year, NRE lending accounted for 10 commercial energy subsector (petroleum percent of total Bank energy lending. More than 3 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E half of the Bank's NRE projects have been market and regulatory barriers to NRE as well cofinanced with grants from GEF. as achieve global environmental benefits by financing the incremental costs of renewable The Bank's strategic framework for NRE energy investments. includes (i) two institutional papers in 1993 on energy efficiency and rural energy (World Bank The Bank aims to play a crucial role in leveling the 1993), where the Bank's commitment to NRE playing field between renewable and conventional was first stated,1 and (ii) three formal strate- energy sources. Although RETs largely remain gies--the Electric Power Lending Policy (1993), financially noncompetitive with conventional Fuel for Thought (World Bank 1998), and the energy sources for electricity generation, a EBRS (World Bank 2001a). The Bank's most recent Bank assessment (Chubu Electric Power recent action was to announce at the May 2004 Co., Inc. and others 2005) indicates that RETs are Conference on Renewable Energy in Bonn, the least-cost electrification option for many off- Germany, that it planned to increase lending for grid, mini-grid, and grid-based applications, as renewable energy and energy efficiency by 20 shown in annex C and figure 2.1--on a levelized percent per year for the 5-year period fiscal economic cost basis, and assuming the availabil- 2005­09. ity of the renewable energy resource.2 The assessment characterizes current (2004) and The EBRS articulates the Bank's objectives and future (2015) commercial prospects for RETs and planned actions to support NRE. The three EBRS fossil fuel-fired electricity generation technolo- pillars (out of four) for which specific NRE lines gies in these applications and compares levelized of action have been identified are as follows: (i) generation costs using a consistent economic help the poor directly, (ii) promote governance methodology differentiated according to deploy- and PSD, and (iii) protect the environment. ment conditions and plant size ranges.3 (Although NREs have the potential to displace imported petroleum, their macrofiscal impact-- For off-grid (or stand-alone) systems, pico- the fourth EBRS pillar--is limited, because NREs hydro (300-watt [W]­1-kilowatt [kW]), small are presently a small contributor to the overall wind (300 W), and photovoltaic system energy supply of the Bank's country clients.) (PV)­wind hybrid (300 W) technologies are Specific activities were established under each projected to be in the range of 15­25 cents per of these objectives: kWh, or less than half of the 30­40 cents per kWh for gasoline and diesel generators. Solar · To help the poor directly, the Bank sought to PV system costs for small power applications facilitate access to modern fuels and electric- (50­300 W) are comparable to these conven- ity, including NRE; ensure that energy subsidies tional energy alternatives. For mini-grid were targeted toward and reached the poor; systems at the village or district levels not and create energy service enterprises run by the connected to the grid and with loads between poor, such as rural energy services provision 5 and 500 kW, numerous RETs--biomass, based on NRE. biogas, geothermal, wind, and micro-hydro-- · To promote good governance and PSD, the are potentially the least-cost generation Bank aimed to create objective, transparent, options, compared with diesel gasoline alterna- and nondiscriminatory regulatory mechanisms tives. Biogas digesters and biomass gasifiers are that level the playing field between NRE and especially promising given their high capacity conventional energy. The Bank also sought to factors and the flexibility of matching their size strengthen local financial institutions to provide to the mini-grid load. long-term financing for NRE businesses. · To protect the environment, the Bank, often For grid-connected RETs, however, conventional in partnership with GEF, sought to remove electricity-generation technologies--open-cycle 4 T H E B A N K ' S N R E O B J E C T I V E S Figure 2.1: Forecast Generating Costs for Selected Renewable and Conventional Electricity Generation: 2004 versus 2015 (cents/kWh) Off grid 0 10 20 30 40 50 60 70 80 90 Solar PV 50 W 2004 (CF = 20%) 2015 Wind 300 W 2004 (CF = 30%) 2015 Pico hydro 300 W 2004 (CF = 30%) 2015 Diesel/gasoline generator 300 W 2004 (CF = 30%) 2015 Mini grid 0 5 10 15 20 25 30 35 40 45 50 55 60 Solar PV 25 KW 2004 (CF = 20%) 2015 Wind 100 KW 2004 (CF =3 0%) 2015 Biomass gasifier 100 KW 2004 (CF = 80%) 2015 Micro hydro 100 KW 2004 (CF = 30%) 2015 Diesel generator 100 KW 2004 (CF = 80%) 2015 Grid connected (5­50 MW) 0 5 10 15 20 25 Wind 10 MW 2004 (CF = 30%) 2015 Solar thermal without storage 30 MW 2004 (CF = 20%) 2015 Solar thermal with storage 30 MW 2004 (CF = 54%) 2015 Mini hydro 5 MW 2004 (CF = 45%) 2015 Diesel generator (base) 2004 5 MW (CF = 80%) 2015 Diesel generator (peak) 2004 5 MW (CF = 10%) 2015 Source: Chubu Electric Power Co. Inc. and others 2005. Note: Cents/kWh, based on crude oil prices of US$38/bbl (blue barrel) base case in 2004 and US$63/bbl high case in 2015. 5 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E and combine-cycle gas turbines and coal- and oil- than those for conventional power generation fired steam turbines--remain the least-cost and, on a levelized basis, are the least economi- options. For these conventional sources, site- cal cost option for such applications. specific considerations such as the load profile, demand growth, and interfuel cost differentials Inclusion of the cost of environmental and determine which specific conventional technol- global externalities increases significantly the ogy is the lowest cost. For power plant sizes less economically viable quantity of renewable than 50 MW, geothermal, biomass, hydro, and energy. If, in addition, a value for energy diversi- wind power are potentially as economical as fication is added, the economically viable conventional power plants, but these RETs simply quantity of renewable energy increases even cannot compete with larger conventional power- more. The Bank has conducted studies to generating units of 50­300 MW. determine this economically viable optimum quantity of renewable energy in China, Croatia, Conventional energy technologies, however, Mexico, and South Africa in the context of RET have been highly subsidized through direct, projects. indirect, and nontransparent means, such as cash transfers to producers and/or consumers, The Bank's role in renewable energy lending is tax exemptions, price controls, trade restric- to level the playing field between renewable and tions, regulatory hurdles for RETs, and govern- conventional energy sources, because the ment failure to correct market imperfections. distortions cited above make renewable energy This has all skewed the playing field against financially uncompetitive with conventional renewable energy. For example, in 2004, for the energy sources in both developing and United States and Europe combined, govern- developed countries. These distortions ment support for renewable energy was roughly therefore continue to require government and US$10 billion. donor support. The Bank, often with cofinanc- ing from GEF, seems to remove the market and In contrast, total global energy subsidies for regulatory barriers to RETs and achieve global fossil fuels are reported to be between $150 and environmental benefits by financing the $250 billion per year. Some studies show that incremental costs of renewable energy invest- with environmental externalities considered, ments. The Bank's Carbon Financing Program is the economic costs of RETs--particularly wind, also contributing to the explicit valuation of the mini-hydro, and biomass electric for off-grid and positive externality benefits of renewable potentially mini-grid applications--are lower energy. 6 3 NRE Portfolio Characteristics and Trends S ince 1990, the Bank has financed 65 NRE projects or projects with NRE components,1 of which 56 could be evaluated for this review. Performance data on nine projects that had just been approved at the time of the re- view were not yet available from the Bank's data systems. This chapter on portfolio characteristics is based one project was approved in the Middle East and on the overall 65 projects, while the next chapter North Africa Region. on performance evaluation is based only on the 56 projects with available performance data. Of The Africa and the South Asia Regions have been the 65 total projects, 27 have closed (42 percent) implementing NRE projects since the 1980s and and 38 are still ongoing (58 percent).2 Moreover, have increased their lending pace over time. The 26 are freestanding (12 closed and 14 ongoing), other Regions, however, became active only in and 39 are "blended" (15 closed and 24 the mid-1990s. In Latin America and the ongoing); that is, the NRE activities are Caribbean, most projects were approved after components of larger power, petroleum, or 1999. In all the Regions, it was not until after the rural development projects. Most of the NRE mid-1990s that freestanding NRE projects began projects were approved after 1997, and 28 (43 to be implemented. percent) received Board approval in fiscal 2002 or later. Thus, the Bank's NRE portfolio is After starting mainly with solar PVs, the Bank now relatively young. supports a wide range of RETs. Initially, solar PVs were promoted in all Regions, except Europe and NRE projects are unevenly distributed across the Central Asia. The Africa Region had a strong Bank's Regions.3 The Africa Region has had the biomass focus and all the freestanding fuel wood highest number of NRE projects, mainly as projects. Geothermal projects were implemented relatively small components. Although the East in the 1990s in the East Asia and Pacific and Asia and Pacific and the South Asia Regions have recently in the Europe and Central Asia Region. In fewer projects, they have most of the Bank's the East Asia and Pacific Region, a shift away from main freestanding ones in solar PV and hydro. geothermal to solar PV and small and mini-hydro The Latin America and the Caribbean and the projects has taken place. In the South Asia Region, Europe and Central Asia Regions have small, mini-, and village hydropower have been implemented few projects since 1990, and only among the primary RETs. In addition, most of the 7 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E projects supported TA (90 percent), studies (70 was less costly and polluted more and a more percent), and pilot activities (60 percent). In many costly, more environmentally friendly option. cases, the NRE component consisted of just these activities. This is particularly true of the closed The average costs of preparing NRE projects, which projects in the Africa Region. were historically higher than conventional energy projects, have decreased in recent projects. The NRE portfolio had a strong rural focus. About 55 Although, as table 3.1 illustrates, preparation percent of the Bank's NRE portfolio targeted costs were higher for the initial NRE projects, rural areas. Bank projects sought to reach areas follow-up projects have cost much less--7­12 where NRE technologies (such as small hydro) times less in three countries that have been foci could be connected to the grid, as well as having of the Bank's NRE assistance (India, Indonesia, off-grid small-/mini-hydro and PV applications. and Sri Lanka). Nonetheless, the "stigma" of Rural households, public service centers such as high processing costs still seem to affect NRE schools and clinics, and, more recently, small projects at the conceptualization stage and may businesses have been the intended recipients. be a factor in the relatively weak emphasis on Rural electrification in particular has been an NRE in programming country assistance (as area where the Bank promoted NRE. Twelve discussed later in the report). The supervision projects have featured grid-connected RETs, but of NRE projects may also require more resources these have also been used to provide electricity and intensity to ensure that project implementa- in areas that the power grid cannot access for tion proceeds successfully. physical or cost-effectiveness reasons. The Bank's broader energy sector reform work in the More than half the NRE portfolio was cofinanced 1990s largely orphaned NRE, despite the clear need by GEF. GEF cofinanced more than 38 projects (68 to integrate regulatory, pricing, and planning percent), with the objective of removing market issues specific to NRE in the Bank's country- barriers to NRE commercialization (GEF 1996). sector dialogue (see chapter 5). In addition to costs, this has also contributed to marginalizing GEF funds the incremental or additional costs NRE when mapping out country and sector associated with transforming a conventional assistance. As a result, the earlier NRE projects energy project with national benefits into an NRE were seen as "boutique" operations that project with global environmental benefits. GEF pioneering Bank staff made possible only grants reduce market barriers by covering the through arduous championing and mobilization difference or "increment" between an option that of external funds. Table 3.1: Preparation Costs for NRE Projects Higher than for Conventional Power Projects Electric power NRE Preparation cost Average (US$ thousands) 393 461 Median value (percent of total commitment) 0.3% 0.4% Range (US$ thousands) 63­1900 77­1,215 Project size Average (US$ millions) 161 95 Range (US$ millions) 5­485 11­224 Sample size 80 10 Source: Cabraal 2004. 8 4 The Implementation Scorecard and Main Findings on Delivering the NRE Strategy R atings of closed projects are mixed. Based on a review of the 27 closed projects in the Bank's NRE portfolio, the number of closed, free- standing projects and NRE components in blended projects that per- formed well was slightly higher than the number of those for which performance was weak, as table 4.1 shows. NRE Portfolio Performance Table 4.1: Outcome Ratings for Closed NRE Among the freestanding NRE projects, the ones Freestanding Projects and Components of Blended in Chad, Mauritius, Tunisia, and India had Projects moderately satisfactory or satisfactory out- comes. The Senegal and Sri Lanka projects Overall scorecard: earned high satisfactory outcomes (the Sri Satisfactory performance, but a high level of Lanka project received the IEG Best Practice unsatisfactory outcomes Award for 2005). Rating No. Projects Highly satisfactory 2 2 freestanding (Sri Lanka, Senegal) All three freestanding geothermal projects, Satisfactory 8 3 freestanding, 5 components however, had unsatisfactory outcomes. The outcomes of NRE components that are blended Moderately satisfactory 7 1 household wood fuel, with larger projects in Burundi, the Philippines, 6 components Rwanda, and Uganda were unsatisfactory or Moderately unsatisfactory 3 2 freestanding, 1 geothermal moderately so. This would suggest that component freestanding projects have generally performed Unsatisfactory 6 1 freestanding, 2 geothermal, better than projects where NREs are only a 3 components component. This requires further field study, Not rated/not available 1 1 freestanding however, as some local factors may be involved. Total 27 Out of the total 65 NRE projects in this review, Source: Implementation Completion Report Reviews and Project Performance Assessment Reports. 9 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E 38 are still ongoing. The detailed ratings for their projects were quite mixed, with three rated closed NRE projects are in annex D. as unsatisfactory. As table 4.1 illustrates, freestanding projects Results to date of ongoing projects are mostly were generally rated as satisfactory, unless they satisfactory, a few far surpass their targets, and involved geothermal energy or were interrupted lessons learned have led to better project design. by an economic crisis in the country. The The portfolio review and interviews of Bank staff projects rated satisfactory or highly satisfactory show that the design of ongoing NRE projects were also the more recent of the freestanding benefited from applying the lessons from closed projects, which may be associated with the and active projects (a full discussion of the strong lesson learning between older and newer lessons learned is in chapter 5). projects that is discussed in chapter 5. The review also found that the supervision Regarding NRE components of blended ratings for ongoing projects are predominantly projects, each of which were separately rated for satisfactory or moderately satisfactory; that is, this assessment (see annex E), there appears to less than one-fourth of the projects are rated as be some association between the outcome moderately unsatisfactory or unsatisfactory, as rating and the component's size and integration shown in table 4.2. This compares favorably with in the larger project. NRE components that the Bank-wide figure of 79 percent of projects constituted a significant share of their respective receiving moderately satisfactory or higher projects (15 percent or higher) or that were well ratings for development outcome.1 integrated in the larger projects despite their small size had satisfactory outcomes. These It is worth noting that the implementation were projects in rural electrification and energy progress rating in the first few years is not a sector reform with a sizeable biomass predictor of whether the projects will have component and those involving a mix of NRE satisfactory final outcomes, because new NRE and energy efficiency. However, for components projects take time to build momentum as that were small (generally less than 15 percent) institutional capacities are built (for example, in and that did not have a strong relationship with the India Renewable Resources Development the other aims of the larger projects, the [RRD] Project, Sri Lanka Energy Services outcome ratings were only moderately Delivery [ESD] Project, Argentina Renewable satisfactory. Energy in the Rural Market [RERM] Project, and China Renewable Energy Development [RED] In terms of regional performance, the South Asia Project). The detailed ratings for ongoing NRE Region's projects were either satisfactory or projects are presented in annex E. moderately so. In the Africa Region, the experi- ence is mixed, with satisfactory and unsatisfac- In terms of achieving PDOs, the latest PDO tory projects and components. ratings are all satisfactory for NRE projects in the South Asia Region, and the majority of East Asia The performance of projects in the East Asia and and Pacific and Latin America and the Caribbean Pacific Region is similarly quite mixed. Biomass Region projects as well. In the Africa Region, projects or components have all shown satisfac- PDO ratings are mixed but mainly poor, with tory or moderately satisfactory ratings (except three projects rated unsatisfactory and one one project in Mali). NRE components in irriga- project moderately unsatisfactory. Blended tion or rural electrification projects have all projects tend to have low ratings in PDO, shown either satisfactory or moderately satisfac- implementation progress, or both. tory ratings as well. NRE components in energy sector reform projects that were small and had Some NRE projects are making significant achieve- little connection to the dominant objectives of ments in disseminating NRE technologies, while 1 0 T H E I M P L E M E N TAT I O N S C O R E C A R D A N D M A I N F I N D I N G S Table 4.2: Ratings for Ongoing NRE Projectsa Mostly Satisfactory No. of projects Highly Moderately Moderately (N = 27) satisfactory Satisfactory satisfactory unsatisfactory Unsatisfactory Project development objective 21b 11 6 1 3 Implementation progress 22c 9 8 4 1 Global environment objective 16d 1e 6 6 2 1 Source: Implementation Status Reports. a. Based on the latest Implementation Status Report for each project. Four projects closed between June 2004, when the initial portfolio evaluation was conducted, and the end of June 2005, bringing the active portfolio from 33 to 29. b. A PDO was not applicable for two GEF-only projects in Mexico (methane gas capture and rural electrification for agriculture), not available for two GEF medium-size projects (Hungary Rehabilitation and Expansion of Small Hydro and Uruguay Landfill Methane Recovery Demonstration Project), and not provided for three projects (Philippines Rural Power; Vietnam Sys- tem Efficiency Improvement, Equitization, and Renewables; and India Second Rural Electrification). c. An implementation progress rating was not applicable or not available for the GEF medium-size projects in Hungary and Uruguay and was not provided for four projects (Philippines Rural Power; Vietnam System Efficiency Improvement, Equitization, and Renewables; India Second Rural Electrification; and Mexico Methane Gas Capture). d. For eight projects, including the GEF medium-sized projects in Hungary and Uruguay, a global environmental objective was not applicable. The supervision documents for three proj- ects did not provide a rating for the achievement of this objective. e. GEF only: Mexico Methane Gas Capture. others are making only minor progress, if any. As closing dates were extended. This uneven table 4.3 shows, the major ongoing and recently performance has implications for their ultimate closed NRE projects present a contrasting poverty-reduction impact. picture in terms of performance. The evidence that the Bangladesh project will far surpass its Grid-connected projects are not necessarily easier original target has led to the establishment of an to implement than off-grid NRE projects. NRE even higher goal for solar home system (SHS) projects that supply power to the grid are connections. The China RED project has already sometimes assumed to be relatively easier to gone beyond its target for PV systems, and the design and implement than off-grid projects. Sri Lanka Renewable Energy for Rural Economic However, this is not necessarily the case, partic- Development (RERED) Project is on track to ularly when the overall energy sector regulatory meet its installation goals. As a result of the first framework and tariff structure are taken into India RRD project, the NRE share of total genera- account (see chapter 5). tion grew from 0.4 percent in 1995 to 3.4 percent by 2001, for which the RRD project was Grid-connected RETs exhibit different character- a significant contributor. Similarly, in Sri Lanka, istics than off-grid technologies (see table 4.4), NRE grew from zero percent prior to the ESD which need to be taken carefully into account project to 124 MW either commissioned or during project design and supervision to yield under construction by September 2005 successful outcomes. A review of the latest (compared with total generation capacity of supervision reports for six NRE projects (two about 2,000 MW). China has more than 30,000 closed and four ongoing) in Sri Lanka, India, MW of small hydro and plans to increase NRE China, and Uganda show that both grid and off- share of total generation to 15 percent by 2020. grid components had satisfactory ratings (moderately satisfactory in Uganda) for In contrast, the Argentina, India Second Rural implementation progress and PDOs.2 Electrification, Nicaragua, and Uganda projects have been lagging behind in meeting their PV Delivering off-grid NRE services has been a system sales or small-hydro development challenging course for the Bank, given that the objectives. The first two projects have chroni- requirements, costs, and benefits of those cally lagged behind to the point that their services are quite different from those of 1 1 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E Table 4.3: NRE Projects' Dissemination Targets Country (and fiscal year approved) RET Target (in PAD) Achieved Closing date Argentina (1999) Solar PV for households 65,000 households 1,900 householdsa Original: 9/30/2005 Solar PV for public 1,100 public Revised: Revised: 12/31/2006 institutions institutions 30,000 Small wind off-grid 3,500 house-holds/ households systems for households institutions and institutions Bangladesh (2002) Solar PV 64,000 households 53,000 householdsb 6/30/2008 (revised to 200,000) (Baseline = 250) Bolivia (2003) Solar PV 15,000 systems 0c 12/31/2007 China RED (1999) Wind 2,618 GWh 685 GWh/year electricity 6/30/2007 generated from (baseline = 526) Solar PV 10 MWp 7.8 MWpd 353,000 units 356,000 unitsd India Second Rural Small hydro 200 MW 69.4 MWe Original: 3/31/2006 Electrification (2000) Revised: 3/31/2007 Lao PDR (1998) Solar PV and micro-hydro 4,600 households 6,097 households Closed 12/2004 Nicaragua (2003) Mini- and micro hydro-based 2 MW total installed capacity 0f 12/31/2008 independent grids Solar PV 100 kW of installed PV 7.6f capacity--all types of users Solar PV or mini-grid 7,000 new connections 104f Sri Lanka RERED Grid-connected small-hydro, Additional 85 MW installed An additional 85 MW 6/30/2008 (2002) wind, and biomass capacity (baseline = 31 MW) operating or under constructiond Solar PV and village hydro Electricity access to an An additional 83,773 SHSs; additional 100,000 households 4,594 households served and 1,000 SMEs and public by village hydrod institutions (baseline = 22,685 households) Uganda (2002) Hydro 15-MW capacity installed or 14 MW under 8/31/2006 under installation constructiong Solar PV 320,000 cumulative Wp sales 19,000 Wp installedg of PV systems to households/ institutions Source: Implementation Status Reports and Project Appraisal Documents. Note: PAD = Project Appraisal Document, SME = small and medium-size enterprises, GWh = gigawatt hour, MWp = peak megawatt, Wp = peak watt, SHSs = solar home systems. Notes below indicate Implementation Status Report dates. a. November 9, 2005. b. December 5, 2005. c. November 21, 2005. d. December 31, 2005. e. January 24, 2006. f. February 7, 2006. g. December 21, 2005. 1 2 T H E I M P L E M E N TAT I O N S C O R E C A R D A N D M A I N F I N D I N G S Table 4.4: Characteristics of Grid-Connected and Off-Grid NRE Projects Criteria Grid-connected Off-grid Cost to financing institution Moderate Substantial­high (Sri Lanka ESD mH: US$ 963.5/kW; (Sri Lanka ESD PV:11/Wp; vH: $2,060/kW; India RRD SH: $990/kW, wind: $1,150/kW) India RRD PV: $4.8-$14.2/Wp) Regulatory requirement Substantial­high Low­moderate (predictable, supportive environment, ("light-handed" regulation, tariff such as sector reform, tariff rationalization, determination for low-income areas) and small power purchase agreement) Social requirement (community Low High and NGO participation) Institutional requirements Substantial High for financing (public-private partnerships, commercial (public agencies, private banks, banks, medium-large firms) village cooperatives, microfinance institutions) Capital needs High Substantial (large up-front investments, (grants for system affordability, long repayment periods) working capital for private firms) Pace and magnitude of Substantial­high Moderate increased energy provision (faster pace, wider coverage) (slower pace, less coverage) Service reliability Substantial Moderate­substantial (higher energy levels, more (low energy levels, hours of availability) limited hours of availability) Economic rate of returna High Low­high (Sri Lanka ESD mH: 26%b (Sri Lanka ESD vH: 61%, PV: 42.6%b India RRD SH: 28­33%)c India RRD PV: 14­108%) Source: Implementation Completion Reports, Project Appraisal Documents, and Project Performance Assessment Reports. Note: NGO = nongovernmental organization, mH = mini-hydro, SH = small hydro, vH = village hydro, Wp = peak watt. a. Includes environmental benefits, such as GEF support for off-grid renewable technologies, and consumer surplus, unless otherwise noted. b. The calculation is for avoided cost only. c. Does not include global environmental benefits or consumer surplus. providing grid-connected NRE. Despite a face as a result of legislative changes at the possible impression that the implementation state level. There has been a request from both of grid-based NRE poses less difficulty, it private and public stakeholders for assistance should be noted that creating policy and to determine prices for power from re- regulatory environments that support grid- newables, and the Bank has offered its help. connected renewables has remained a signifi- However, not all the borrower agencies have cant challenge. been cooperative. The importance of a conducive environment In Uganda, grid-connected and bagasse-based at the national level can be seen from the energy generation has taken longer to imple- experience of some of the ongoing projects. A ment than expected largely because of the time factor that has adversely affected the India required to negotiate a power purchase Second Renewable Energy Project is the agreement. But with the approval of agreements, regulatory uncertainty that private developers investment has been increasing significantly. 1 3 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E In Sri Lanka's case, a small power purchase Economic rates of return (ERRs) for closed NRE agreement (SPPA) was developed during the projects vary considerably but are generally first project, Energy Services Delivery, and had favorable. In the India RRD Project (1992), rates notable positive impact on mini-hydro invest- of return for small hydro and solar PV systems ments for the grid. But while the follow-up were 28 to 33, and 14 to 108 percent, respec- RERED project has been proceeding well, the tively. The ERR for wind energy was 14 percent3 lack of explicit policy support for renewables in (these figures include the GEF cofinancing for the country places the sustained growth of the wind and solar PV). subsector in question. In the Sri Lanka ESD Project (1997), ERRs for Some supportive policy decisions have been village hydro and solar PV were 61 and 42.6 made for NRE, often in response to lobbying by percent, respectively, while for wind energy the sector groups. However, these are likely to have ERR was only 3.9 percent (these figures include limited impact, as they have not been given any the GEF cofinancing for all three technologies financial support and have gone unimple- and consumer surplus for village hydro and PV). mented. These decisions, moreover, have been Annex F provides additional details on ERRs for made without taking into account a broader the projects in India, Sri Lanka, and two other vision and policy for the sector. countries. As the portfolio grows in size and more NRE An important observation is that ERRs at project projects close, the differences in objectives, completion tended to be higher than appraisal outcomes, and impacts between rural electrifi- estimates, suggesting that costs were lower or that cation, off-grid NRE, and grid-connected NRE benefits were higher than estimated at appraisal. interventions should be closely evaluated. Rural If the benefits to consumers were higher, further electrification interventions focus more on study is merited, and the importance of strength- poverty reduction and broad improvement of ening monitoring and evaluation (M&E) in NRE the quality of life of consumers. Grid-connected projects is further underscored. NRE projects, in contrast, have a stronger potential for reducing GHG emissions and The GEF funds for off-grid projects were contributing to energy security. Off-grid NREs provided for barrier removal and offered on the remain a subset of rural electrification and have basis of performance. In the economic analyses their own specific challenges, such as the of these projects, the GEF funds were used as a effectiveness, efficiency, transparency, and proxy to value the global externality. With GEF targeting of subsidies, and better integration support, NRE electricity-generation schemes with the larger rural electrification program. can provide substantial economic returns, especially when consumer surplus benefits are Larger-scale, grid-connected NRE projects, included, as they are in the figures for solar PV however, are concerned more with the overall and for small hydro in Sri Lanka. However, full enabling environment (policy, regulations, commercialization of NRE has not yet been pricing, and financing), because, given an achieved, and the rates of return would be signif- adequate tariff regime as well as transparent and icantly lower in some cases in the absence of predictable regulations, many NREs can be financial incentives or subsidies. competitive without subsidies. Therefore, future assistance strategies may differ, depending on the It is important to note that subsidies for conven- type of NRE intervention. That makes it important tional energy-based electricity, such as lifeline to continuously derive findings and lessons from rates, are a generally accepted practice. The the NRE portfolio, with a view to adapting the absence of a level playing field between NRE and Bank's NRE assistance strategy to be more respon- conventional energy remains a contentious sive to country client needs. issue in the Bank's energy practice, as the 1 4 T H E I M P L E M E N TAT I O N S C O R E C A R D A N D M A I N F I N D I N G S interviews and literature review for this assess- Results in Terms of Poverty Reduction ment have found. The poverty-reduction impacts of the Bank's NRE projects are largely nonevaluable, mainly Some potential factors of performance have emerged because of weak or absent M&E. Partial in selected NRE projects. Satisfactory NRE evidence, however, suggests highly mixed outcome ratings tend to be associated with poverty-reduction outcomes. This is because several elements: strong government commit- some ongoing and closed projects have ment; effective Bank performance, including exceeded their installation targets, while others adaptability based on high-quality supervision; have only made minor progress, if any. The extensive consultation and participation with review also found that the poorest of the poor entrepreneurs, consumers, and nongovernmen- have been unable to benefit because the costs of tal organizations (NGOs); effective credit and energy delivery remain prohibitive for them. See output-based (GEF) grant-financing mechanisms annex G for the detailed review. for the private sector; efficient credit arrange- ments for grid NRE financing and consumer Although the EBRS strategy anchors the Bank's access to off-grid NREs; strong capacity before support for NRE partly on poverty reduction, the project or as a result of its activities; focused only one closed NRE project included poverty attention to addressing the market barriers to reduction as a stated objective. This said, by renewables; and strong interest from local pursuing the improvement of energy access, investors and financiers. Recent freestanding poverty reduction was a major implied objective (NRE only) and rural electrification (grid and off- in NRE assistance through welfare improve- grid) projects, which aimed at commercialization ments, enhanced livelihoods and incomes, through the private sector, exhibit these factors and/or promotion of rural transformation. and performed well. As shown in table 4.3 on the pace of RET instal- In contrast, neglect and lack of commitment led lations in ongoing and closed projects, the to unsatisfactory performance. Projects that poverty-reduction outcomes of the Bank's NRE have performed poorly tend to be associated interventions are highly mixed, based on the with inadequate attention to ensuring a degree to which installation targets have been conducive policy and regulatory environment achieved. For example, through NRE power for NRE, weak country or implementing agency provision, the Argentina, Nicaragua, and commitment, a private sector that is hesitant to Uganda projects have sought to reduce poverty take risks, weak Bank performance, insufficient by implementing quality-of-life improvements, capacity of public and/or private institutions, fostering small businesses, and spurring rural and sociopolitical or economic crises in the transformation, respectively. But their poverty country. impacts have been small because of the minor progress being made to date in NRE Poor supervision may also be part of the installation. reason small NRE components in conventional energy or water sector reform projects did not Weak M&E for poverty-reduction outcomes in achieve their objectives, as unsatisfactory the Argentina and Nicaragua projects will make outcomes for the components tended to occur it difficult to assess whether these projects have at the same time as unsatisfactory ratings for contributed to reducing poverty. Targets for Bank performance. However, if the Bank is to small hydro in the Sri Lanka and India NRE scale up NRE components in nonenergy projects were exceeded, but solar home systems sectors (for example, education and health) in five projects fell short of their targets by signif- where NRE solutions can provide important icant amounts. energy services, other factors may be involved that need closer study. The poverty-reduction impact of NREs, however, 1 5 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E has multiple dimensions and needs to be In recent years, the Bank, through ESMAP, has assessed beyond the level of household incomes. been developing methods and tools to better This need underlines the importance of assess the socioeconomic impacts of improved adequate M&E. The activities of NRE entrepre- energy access. The methodology developed by neurs, service providers, and investors can have ESMAP is not technology specific; it is outcome significant poverty-alleviation outcomes. based. Where applicable, ESMAP used the consumer surplus methodology, thus enabling it For example, the China RED Project supports 34 to capture the impact of technological change. companies that are selling 120,000 PV systems Although these approaches are being employed with a gross value of about $24 million annually. in some of the latest NRE projects, such as those These companies have set up about 12 rural in Bangladesh and Uganda, they are quite retail outlets each and employ 60­90 staff each. recent, so it is still unclear if the Bank's In addition, more than 100 companies are assistance to improve access through renewable supplying goods and services to these 34 energy has reduced poverty to any significant companies. degree. This is a major analytical gap. Address- ing this data vacuum is critical in mapping out In Sri Lanka, 13 solar PV companies, through and targeting the Bank's expanded NRE lending. more than 100 rural outlets, are selling 24,000 solar PV systems, with $10 million equivalent in To What Extent Were Global gross revenues annually. Moreover, 35 private Environmental Benefits Achieved? hydro development companies have invested in about 115 MW of private generation (with gross The global environmental benefits of most Bank NRE revenues of about $15 million/year), and 10 projects have generally met expectations, but M&E financial institutions are lending for NRE. is weak or absent in many cases. Together with GEF financing, the Bank pursued the EBRS India now has a robust and growing renewable objective of protecting the environment by energy manufacturing, design, and engineering removing market barriers to renewables. As operation and maintenance capability compared table 4.5 shows (see also annex H), out of five with the conditions in 1993 (details are in closed projects, three met or nearly met their section 4.5 of the ICR). Similar experiences are appraisal targets and one exceeded its estimated emerging from the Latin America and the reductions. Caribbean and the Africa Regions. One project in Indonesia, which fell far short of Compared with decentralized power systems its target, was severely affected by an economic based on NRE, wood fuel supply projects were crisis in the country, as is the ongoing project in more likely to have reached households at all Argentina. Because of weak M&E, data on the income levels because they involved whole projects' environmental impacts are limited: communities in forest management and the about a third of the closed projects provide little wood fuel trade. It should be noted, however, or no data. Overall, the limited evidence from that evaluating the impacts at the household NRE project documents shows that targets for level for these electricity-supply projects is the reduction of GHG emissions were largely difficult, because M&E systems in the projects not met. However, although many GEF projects have been absent or weak. None of the have not implemented well-structured M&E projects, for example, provides data on protocols, reductions in GHG emissions have household income. Although increased become a less-important measure over time in income is a goal for recent projects, only a few the GEF framework. Rather, what counts are the have M&E systems that will be able to identify reductions of market barriers, which is what the income gains attributable to increased the M&E systems in GEF projects should try to energy access. measure. 1 6 T H E I M P L E M E N TAT I O N S C O R E C A R D A N D M A I N F I N D I N G S Table 4.5: Data on Reductions in Greenhouse Gas Emissions from NRE Projects (metric tons) Project Targeted reduction Actual reduction Argentina (closing 2006) 25,000 310 Bangladesh (closing 2008) 257,664 (over 15-year life, by replacing Not reported kerosene, through grid & off-grid) Bolivia (closing 2007) 14,000 0 China RED (closing 2007) Targets (MT) Baselines (MT) Not estimated at midterm CO2: 38.6 CO2: 11.1 SO2: 4.41 SO2: 1.57 NOx: 0.119 NOx: 0.035 TSP: 0.213 TSP: 0.076 Indonesia SHS (closed) 1.3 million (over 15 years) 9,000 (over 15 years) India RRD PV component (closed) 116,000 (over 10 years) 94,000 (over project lifetime) Lithuania Geothermal Demo (closed) 52,000 46,000 Nicaragua (closing 2008) 10,000 Not reported Sri Lanka ESD (closed) 140,000 (excluding reductions from mini-hydro) 514,000 (total including hydro) Sri Lanka RERED (closing 2008) 1,250,000 900,000 Tunisia Solar Water Heating (closed) 18,000 25,000 Source: Implementation Completion Reports for closed projects and latest available Implementation Status Report for ongoing projects. Note: CO2 = carbon dioxide, SO2 = sulfur dioxide, NOx = nitrogen oxides, MT = metric tons, TSP = total suspended particulates. Regarding the Bank's carbon finance operations, catalyze the creation of NRE markets and reduce the Bank pioneered the design and implemen- market barriers--or, at the local level, if they tation of rigorous M&E protocols to measure focus more on addressing beneficiaries' and verify GHG emissions. The Carbon Finance environment-related concerns. There can be Program, which is relatively new, is outside the win-win solutions that address both local and scope of this review and will be covered in the global environmental issues; for example, clean planned IEG climate change study (fiscal 2008). fuels for urban transport could significantly reduce urban air pollution and the negative Addressing both energy efficiency and renewables health impacts on the poor. makes sense. According to a recent evaluation of the GEF Climate Change Program (GEF 2004), However, preliminary evidence gathered by the the direct contribution renewables have made GEF study suggests that increased energy and will be able to make to global climate change efficiency may be more effective in reducing prevention is not substantial. PV systems, which GHG emissions. Table 4.6 shows the greater feature heavily in the Bank's off-grid electricity cost-effectiveness GEF has achieved in energy provision and rural electrification projects, have efficiency projects compared with those in a low impact on GHGs. renewable energy for preventing climate change. Energy efficiency projects have been In the NRE subsector, the systems that have had found to yield greater net economic benefits the largest effect in reducing carbon emissions than NRE projects. and that have the potential to make the largest contribution in the future are grid-connected The study concludes that more emission ones. The global environmental impact of NRE reductions have resulted, and will result, from projects is likely to be greatest when projects Bank-GEF energy efficiency projects than from 1 7 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E Table 4.6: Energy Efficiency Measures Cost-Effective in Reducing Greenhouse Gas Emissions Cluster GEF, US$ per ton CO2 GEF, US$ per ton carbon Energy efficiency 0.21 0.77 Renewable energy 0.63 2.29 Source: GEF 2004. NRE projects (GEF 2004). It is anticipated that Outcomes Related to PSD and Promotion ongoing energy efficiency projects will better of Good Governance reduce GHGs than those in any other energy The Bank's effectiveness in facilitating PSD in its subsector, accounting for two-thirds of the total NRE portfolio has been substantial, and particu- lifetime reductions of 1.7 billion tons of CO2.4 In larly high in recent projects. (See annex I for the contrast, the renewable energy subsector, which evaluation of the portfolio's PSD performance.) contains a larger number of projects than energy efficiency, will produce only a quarter of the Bank-financed projects have helped remove overall GHG impact (GEF 2004). market barriers and establish processes for NRE commercialization in several ways. They have The foregoing findings, however, have been the consistently promoted PSD through a flexible subject of much debate and should not necessar- approach of supporting various NRE technolo- ily suggest that the Bank should focus on energy gies and business models for their delivery. They efficiency instead of NRE. In weighing energy have developed NRE policies, involved diverse efficiency versus NRE, it is important to consider stakeholders, and strengthened local financial timescale. Over the 40- to 80-year time horizon institutions to provide long-term financing for where the most significant reductions in GHG rural energy businesses. The business models emissions will be required, both energy have been sales based and have involved efficiency and NRE (along with physical and consumer credit (dealer or end-user credit; biological carbon sequestration) will need to play lease or hire-purchase schemes) and fee-for- a role. Energy efficiency alone will not enable the service approaches, with the credit model desired reduction levels to be reached; the large- performing better than service fees for solar PVs. scale deployment of low-carbon and no-carbon The NRE policies developed have included energy sources will also be a requirement. those for standards and certification, as well as the standardization of SPPAs to reduce investor Moreover, although there are cost-effectiveness risk and boost their confidence. differentials as cited in the GEF report, both GEF energy efficiency and GEF renewable energy The Bank has also supported local financial interventions are highly cost-effective by any institutions and mobilized investments, often measure under the Kyoto Protocol. Finally, through public-private partnerships. In Sri unlike the Bank's Carbon Finance Program, the Lanka, the Bank was especially successful in GEF's role is to remove market barriers in order promoting the role of local commercial and to leverage considerably more NRE investments development banks in financing private beyond a particular project. For example, under developers. As a result, subsidy-free NRE the follow-up to the China RED Project, the commercialization has begun to appear. government is planning a village electrification program to provide off-grid PV services to For promoting biofuels and greater efficiency of inhabitants of 20,000 villages. According to the traditional wood fuel use, the Bank has helped government, this will require up to 200 MW of develop the private sector, involving firms in the PV, or 20 times the capacity to be installed under creation of ethanol-based gel fuel and improved the earlier project. cookstoves and bringing wood fuel markets 1 8 T H E I M P L E M E N TAT I O N S C O R E C A R D A N D M A I N F I N D I N G S under improved regulation and governance. have explicitly sought to boost consumer This has benefited rural communities that act as support and demand for renewables by improv- private entities in supplying wood fuel. ing the technical performance of RETs. In the design of successful NRE projects, the OBA appears to have helped increase consumer Bank has employed complementary interven- confidence in the private provision of NRE, tions to help commercialize NRE technologies, although concrete evidence is limited because as follows: of the lack of M&E for private sector activities. Some progress is being made in a few NRE · Promoting private competition projects, such as the M&E reports by the Indian · Encouraging cost-effectiveness through Renewable Energy Development Agency and economies of scale the NGO Dian Desa in Indonesia, as well as · Mobilizing financial resources through public- surveys done in Sri Lanka. private partnerships · Providing output-based aid (OBA) for gradual However, M&E remains a major gap that needs phase-out to be addressed if the Bank is to build on its PSD · Verifying and improving the technical per- successes, as OBA approaches are particularly formance of NRE systems to ensure quality M&E-intensive--especially so in the highly standards in the market and boost consumer decentralized NRE projects. Worth noting is the confidence innovative approach of the Bolivia NRE project, · Demonstrating the commercial viability and wherein the private sector operators will be utility of NRE collecting social and economic data annually · Using sales models for the delivery of renew- from the consumer households during their able energy technology required technical visits. · Involving the beneficiary communities. The Bank's effectiveness was modest with respect Most of the electricity-oriented NRE projects to the EBRS goal of promoting good governance have used several of these interventions as and creating regulatory environments conducive components that complement one another. to NRE (as discussed immediately below). More recent projects, however, and ESMAP assistance OBA,5 financed through GEF grants, was used in have started to address the issue. In some cases, selected projects as a mechanism to ensure that institutional weaknesses have been constraining RET installation and service met dissemination factors. Public partners have been weak, and volumes and quality standards. Some projects private investors lacked experience and readiness. 1 9 5 Main Lessons Learned and Strategic Implications for the Bank T he Bank's NRE interventions are anchored in the larger EBRS pillars and are well focused on its goal of reducing poverty, promoting PSD, con- tributing to global environmental protection, and improving macro-fiscal balances. The Bank's NRE strategy is relevant to developing Bank scales up its NRE involvement, it is country energy priorities. As reconfirmed during important to ask whether the newer projects the Bank's 2006 Energy Week, the Bank and the have benefited from applying the lessons of donor community need to help address the dire earlier projects. energy predicament of developing countries by acting on all fronts, including petroleum, clean The interviews and portfolio review showed that coal, hydropower, biomass, energy efficiency, important lessons of experience emerged from and renewable energy. The 2006 Energy Week earlier, major projects--notably the India RRD also highlighted the need to diversify supply and Project (fiscal 1993­2002), the Indonesia SHS how NRE is a part of the supply diversification Project (fiscal 1997­2001), and the Sri Lanka ESD strategy that leads to least-cost supply.1 Project (fiscal 1997­2003)--and that more recent projects drew on them to develop improved Although the NRE strategy continues to be designs. The five main lessons learned over the relevant, there are important implications with span of the NRE portfolio are described below. respect to its implementation, based on the lessons learned from older NRE projects (which · Lesson One: To enhance development out- have had a mixed performance) as well as more comes, NRE provision needs to be accompa- recent projects (which to date have mostly been nied by supporting inputs and services from performing satisfactorily). These lessons, what social service institutions and small and is working and what is not, and their strategic medium enterprises. implications are discussed below. Drawn initially from the experience of the Sri Lessons learned in older projects have led to better Lanka ESD project, this lesson has continued to NRE project designs; the scaling up of NRE lending influence the design of several later NRE should be matched by broader lesson learning to projects, in Argentina, Bangladesh, Bolivia, ensure continuous design improvement. As the Nicaragua, Sri Lanka (for the follow-on RERED 2 1 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E project), and Uganda. These projects have · Lesson Three: A policy and regulatory frame- sought to support business, microfinance, work conducive to NRE needs to be in place social, and information and communication for widescale adoption to be successful. (ICT) services alongside NRE provision. This lesson was present in the ICRs of all the At a broader level, this learning is reflected in the earlier projects in India, Sri Lanka, and Indone- evolution of the Bank's approach from primarily sia. In the Sri Lanka ESD project, the successful, supporting welfare enhancement by disseminat- standardized SPPA was developed based on ing NRE systems to households to also promoting similar work that the Bank supported earlier in wider-scale social development by making NRE Indonesia under the second NRE project. In available to clinics and schools; income generation later projects in Argentina, Bolivia, and through a connection with productive uses; and Nicaragua and the China Renewable Energy the supply of other services, such as ICT or Scale-Up Program (CRESP), policies and regula- business development, to encourage broader rural tions supportive of NRE had been established transformation and larger-scale poverty reduction. prior to the project. Internal and external research on the possible contributions of NREs to poverty reduction also In Latin American countries, ESMAP assistance informed this shift in the Bank's design approach. helped create appropriate and coherent frameworks for tariff setting, quality of service, · Lesson Two: Reliable credit services are needed technical standards, and delivery service to make NRE systems affordable to rural obligations. It also helped improve regulatory households. enforcement and supervision before the projects became effective. The CRESP is per- This lesson has also significantly shaped the haps the most successful example of this design of the Bank's NRE projects. In the Sri approach, as it includes a mandated market Lanka and Indonesia projects, PV dealers had share for renewable energy, for which the Bank difficulty providing credit services, and large invested considerable time during project financial institutions in the case of mini-hydro preparation. schemes are averse to supporting such schemes. As an adaptation, the Bank gave NGOs with · Lesson Four: Building the capacity of key stake- strong capacity to provide microcredit services holders is an important factor in developing the an important role in NRE dissemination. environment for NRE commercialization and ensuring service quality. This lesson significantly shaped the design of the Bangladesh project and the Sri Lanka RERED The designs of the more recent NRE projects projects, which included microfinance NGOs have incorporated strengthening the capacity from the start. Part of the value of partnering with of stakeholders (private dealers, public such NGOs was found in the lower financial agencies, and financial institutions) to foster incentive these organizations required to serve NRE commercialization and enhance service remote, low-income areas compared with private quality. In the Indonesia SHS project, institu- firms. This lesson was also learned in the tional capabilities were developed to technically Argentina project, where large concessionaires certify and establish national components were reluctant to serve poor areas but coopera- standards for SHS. In the Sri Lanka ESD project, tives and public agencies offered to do so. As a capacity development for the private sector, result, a later project in Bolivia was designed to government agencies, and NGOs was support different kinds of contractual arrange- undertaken, first on a piecemeal basis but later ments, including those with local cooperatives on a scaled-up basis. This provided knowledge and NGOs for off-grid areas, where the market on the RETs and for risk analysis, implementa- attractiveness may be low. tion, and monitoring. 2 2 M A I N L E S S O N S L E A R N E D A N D S T R AT E G I C I M P L I C AT I O N S F O R T H E B A N K Based on these successes, a number of later of SHS dealers, and creation of new mechanisms projects have pursued broad-scale capacity for consumer financing. development. The Uganda Energy for Rural Transformation Project, for example, has Similarly, in the design of the Sri Lanka RERED provided training for public agencies, NGOs, project, stakeholders have been given a strong business development, and social service voice on the use of TA funds so that innovations agencies to coordinate other inputs, and for the for a sustainable renewable energy market may monitoring of development impacts. Capacity develop. Moreover, a community participation development in the China RED Project has approach was used to give households a strong targeted the technical, policy, and institutional say in decisions regarding the choice of NRE issues related to wind energy; it has also sought systems, financing, tariffs, system maintenance, to improve the abilities of solar PV companies in and other issues. marketing, sales and service network develop- ment, after-sales service, financial management, An important lesson of this evaluation is that and system testing and certification. PSD alone cannot lead to improved energy access. Public-private partnerships that in- · Lesson Five: To promote project ownership tegrally involve NGOs and the consumer and rapid market development, the Bank communities are essential for promoting NRE should support stakeholder and community and reaching the poor. participation and demonstrate that this can lead to flexibility in project design and Growing evidence points to the private sector's implementation. effectiveness in delivering rural energy services--but only through public-private Another feature of recent projects is the Bank's partnerships that include community organiza- wider consultation with stakeholders, which tions and consumer groups. Household energy has led to support for community participation projects, in particular, have sought to engage and an associated flexibility in project design rural communities as private actors in the supply and implementation. One of the major reasons of wood fuels to urban consumers. However, the for the success of the Sri Lanka ESD project was private sector working alone cannot directly that management was adaptive, enabling it to improve energy access for the poor. Where try new approaches to resolve the difficulties it projects relied solely on the private sector to encountered. For example, faced with low sales increase energy access, achievements in of SHSs and a lack of credit for rural house- reaching rural communities were poor. In the Sri holds, the project expanded the role of Lanka ESD Project (1997), for example, involve- microcredit institutions in servicing rural areas. ment of a key NGO became necessary for PV system consumers to receive financing, which This flexible approach can be seen in the private solar companies were unable to provide. Bangladesh and follow-up Sri Lanka projects. According to the design of the former, one of The Bank's "brokering" and advice helped promote the implementing agencies will solicit requests NRE and led to improved project design. In 1992, the for proposals from consumers, communities, Bank and donor partners established the Asia and companies on how to respond to market Sustainable and Alternative Energy Program conditions and develop ideas for this purpose. (ASTAE) to support mainly the identification and The off-grid market development program will preparation of NRE projects, and to a lesser extent be prepared in consultation with representatives their implementation and evaluation. By the of microcredit institutions, consumers, other period 1998­2000, ASTAE had succeeded in facili- agencies, and stakeholder communities and tating the inclusion of alternative energy in the include support for activities such as public Asia Region's energy lending program, reaching information campaigns, capacity development 12 percent of power lending during that period. 2 3 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E In 2002, ASTAE's goals were refocused toward the Because AAA is an important tool of quality achievement of the Millennium Development assurance, the Bank should internalize its costs, Goals, and in 2004­2006, its business plan was particularly those that directly affect project reoriented away from inputs (dollar lending) design and implementation and are therefore toward outputs. Examples of outputs include an part of the Bank's own work. This step would be increase in the number of households with access in contrast to depending mainly on bilateral to energy, installation of NRE-generating capacity, donor grants and trust funds, which are avoidance of conventional electricity-generating intended to benefit the country clients and not capacity, establishment of energy service substitute for the Bank's internal budget. These companies, and reduction of CO2 emissions. external funding sources include the consor- tium of ASTAE and ESMAP, project preparation ASTAE's 2005 Annual Report (World Bank funds from the GEF or Japan's Policy and Human 2005b) provides information on the positive Resources Development Fund, and various results to date, which include the enactment of bilateral donor trust funds. This heavy reliance the Chinese Renewable Energy Law and the on external funding has created disconnects and establishment of the first three energy service time lags between meeting the country clients' companies in China. ASTAE's experience in needs quickly and fulfilling the procedural and China is having an important demonstration fiduciary requirements of mobilizing external effect in other countries. ASTAE has also funds. pioneered the funding of three resident staff in China, Indonesia, and Vietnam and the prepara- ASTAE's role of "NRE business incubator" has tion and launching (jointly with ESMAP) of six now matured through the increasing number of national programs2 under the Global Village Bank-GEF projects, and these activities could be Energy Partnership. mainstreamed into the Bank's own budget as part of its core business. In addition, ASTAE's Effective analytical and advisory assistance funding could instead increasingly focus on (a) (AAA)--a large amount of it under the donor- improving M&E, particularly in NRE projects with funded ESMAP--has also been an important OBA components; (b) conducting two or three factor of performance in successful Bank NRE rigorous impact evaluations, possibly for the projects. Almost all NRE projects had AAA closed China, India, and Sri Lanka projects; and associated with their preparation and appraisal. (c) strengthening local capacity in these areas. This assistance ranges from market assess- ments to the development of standardized The Bank should also strengthen M&E considerably, SPPAs or workshops for stakeholders and including carrying out rigorous impact evalua- practitioners. tions for selected projects, because of the continuing debate surrounding the benefits of The direct, positive impact of AAA on NRE NRE provision. promotion is substantial, and country benefici- aries have been diverse, based on the literature On one hand, it is widely accepted in the review and a small survey. Many examples of international community that the provision of ESMAP's AAA for NRE projects were provided modern energy is an intrinsic requirement of earlier in this report. development. Hence, the allocation of re- sources should really not be framed as a choice But the Bank needs to internalize AAA and brokering between energy or other (social) sectors; energy costs. Many challenges remain in ensuring that is a complementary input to investments in the Bank's AAA keeps pace with new issues as those sectors. However, research also shows the NRE portfolio is scaled up. A complex AAA that the impacts from electricity investments, in agenda lies ahead for NRE. terms of the number of people brought out of 2 4 M A I N L E S S O N S L E A R N E D A N D S T R AT E G I C I M P L I C AT I O N S F O R T H E B A N K poverty, are less than those from investments in as was experienced by private small hydro education, road infrastructure, agricultural developers in India (IEG 2003a). research and development, and telecommunica- tions (Fan, Hazell, and Thorat 1999; Fan, Zhang, Even today, the key regulatory and pricing and Zhang 2002). ingredients for successful NRE promotion have deteriorated in some states in India; for The literature survey carried out for this review example, legislative changes and regulatory shows that the research is inconclusive on uncertainty have adversely affected the second whether NRE investments achieve poverty NRE project. With ESMAP assistance, NRE reduction. While electricity access has, overall, projects have now started to address regulatory led to quality-of-life improvements and has issues. Institutional weaknesses and lack of made some, but not major, contributions to readiness, experience, and incentives among incomes, in some cases it has had no effect. In local NRE investors to serve rural markets have others it has had an adverse one on the poorest also been constraining factors. (Cook and others 2004). In many areas of the developing world, the poverty impact of Regulatory improvements conducive to NRE renewables has been minimal. commercialization have been the orphans of energy reforms. This works against the Bank's According to literature on NRE in rural China, own NRE goals, because privatization and some of which was produced as inputs into competition in power markets tend to weaken Bank project preparation, household PV system interest in serving rural markets, lead to a prefer- use in remote areas of China has had little, if any, ence for petroleum-based fuels, and shorten impact on poverty (van der Linden and others time horizons for fuel choices. The Bank focused 2003). These systems--or rather the electricity on the reform of large utilities and paid insuffi- they produce--are desired by rural households cient attention to the critical issue of reforming because they end the sense of social exclusion regulatory and policy environments for NRE, in a country that is more than 90 percent electri- particularly during the early to mid-1990s. fied (IDS 2003). The electricity from PV systems does provide some intangible gains, such as the The Bank did this to create objective, transpar- ability to gain information from TV and in some ent, and nondiscriminatory regulatory mech- cases to study at night (though one author has anisms aimed at creating an energy market in reported that the quality of lighting is too poor which renewable energy could be competitive. to allow this [van der Linden and others 2003]). But renewable energy competes--and is These gains may in turn bring livelihood stunted--in markets with distorted prices for improvements in the distant future. conventional energy sources, often through government subsidization of petroleum The Bank's NRE program needs to be better products. Additionally, where privatization and integrated with the Bank's work on energy sector unbundling of the energy sector has not reforms. Integration of NRE with larger sector occurred or is incomplete, the true costs of grid- reforms--particularly on transparent and based rural electrification remain hidden predictable regulation, as well as economic because of implicit cross subsidies. Thus, the pricing of alternative petroleum fuels--has been potential cost-effectiveness of off-grid NRE neglected by the Bank. Early in the EBRS systems is hard to demonstrate without broader implementation, the Bank paid inadequate energy sector reforms that integrate renewable attention to creating a nondiscriminatory regula- energy promotion. tory environment for NRE--despite its parallel push for energy sector reforms in general. This Neglecting NRE in the design and implementa- caused adverse effects on some NRE schemes, tion of energy reforms can have important 2 5 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E negative consequences that are difficult to the regulatory frameworks for rural electrifica- reverse. This can be seen in the second India tion, as is evident in Argentina, Bolivia, and NRE project, which has sought to commercialize Nicaragua. This assistance has helped put in small hydro. place appropriate and coherent regulatory frameworks regarding off-grid electrification. It When the first project was approved in 1992, the covers tariff setting, quality of service, delivery prevailing regulations and tariff guidelines were service obligations, technical standards, and adequate to support grid-connected NRE. other matters. The assistance has also helped However, after the Electricity Act was promul- regulatory agencies to enforce and supervise off- gated in 2003 and regulatory authority was grid rural energy policies and develop detailed moved to the state level, uncertainties started regulations in the context of national energy affecting the second NRE project, which had legislation. These are being incorporated into begun in 2001. the design and implementation of rural electrifi- cation projects in these countries. For the second project, the impact of the regula- tory uncertainties stemming from the inconsis- An additional feature of this ESMAP assistance is tencies between national and state-level that it has involved and promoted the exchange frameworks, the reform backsliding in some of information and experience among policy- states, and the absence of a clear policy makers of different countries. framework and future plans for NREs was not sufficiently addressed. Consequently, small Focusing on getting the regulatory and hydro development was adversely affected, as incentives framework right has proven more continuing government policy shifts and uneven useful for getting project results than trying to state adoption of national legislation deterred get governments to enunciate a national private actors from investing in NRE systems. renewable energy policy. This portfolio review This Bank inaction is partly due to the sharp found that the performance of an NRE project is division between the "sector reform team" and not sensitive to whether the government has the "renewables team" in the Bank's energy established a policy promoting renewables or practice, and the weak coordination between not. For example, although policy support for them. renewables existed in India when the satisfac- tory RRD Project (1992) was approved, no The Bank did not begin to pay more attention to explicit government support for NRE existed in promoting policy and regulatory environments Sri Lanka when the highly satisfactory ESD that are conducive for its NRE projects until Project (1997) was implemented. Adequately about 2000. Since then, the Bank has had several addressing the regulatory and market barriers to successes in helping resolve regulatory and private sector involvement is a factor of good policy uncertainties. In the Sri Lanka ESD performance, as is country commitment (what a project, a standardized SPPA was developed government does), but a formal NRE policy under the project (based on similar work that (what a government says) is not. the Bank supported in Indonesia under the second NRE project) and employed with the NRE has only recently been mainstreamed in the participating firms to resolve a tariff determina- Bank's Country Assistance Strategies (CASs) and tion issue between the Ceylon Electricity Board operations. The Bank's support for NRE has been and developers. As a result of the agreement, hindered by its limited mainstreaming in CASs. there was significant growth in the number of Based on a review of 24 CASs since 1995 for 8 mini hydro investments. countries where major NRE projects evaluated in this report were implemented (Argentina, In recent years, ESMAP--through its advisory Bangladesh, China, India, Indonesia, Nicaragua, and analytical assistance--has helped establish Sri Lanka, and Uganda), only 10 mention NRE 2 6 M A I N L E S S O N S L E A R N E D A N D S T R AT E G I C I M P L I C AT I O N S F O R T H E B A N K development as a goal--and four of those were reportedly increased from 19 in the 1980­1990 for India. period to 72 in the 1990­2005 period. It would be important to assess whether this biomass Despite comprehensive and innovative NRE work meets the energy-poverty goals that the projects implemented recently in Nicaragua, Sri Bank is pursuing. The Energy Sector Board Lanka, and Uganda, there was no mention of needs to monitor and take stock of these activi- NRE in the CASs for these countries. However, ties to facilitate the integration of biomass energy the situation has improved in recent years, with within the NRE portfolio. a much larger number of CASs and Poverty Reduction Strategy Papers (PSRPs) in fiscal 2005 Overall, the Bank's support has led to increased making a substantive reference to renewable country commitment to NRE, but strategic issues and energy. challenges remain. Country commitment to NRE has grown where NRE projects have been The fiscal 2005 Renewable Energy and Energy implemented, often with GEF cofinancing. Efficiency Progress Report (World Bank 2005d) Borrower countries such as Sri Lanka and India, indicates that 60 percent of CAS and PSRPs in which full-scale NRE projects were im- issued in fiscal 2004, and 74 percent of those plemented, have engaged in follow-up projects, issued in fiscal 2005, have specific references to demonstrating their growing interest in NRE. In renewable energy and energy efficiency. This these and a growing number of countries, the momentum needs to be maintained, as it is clear governments have played more of a market- that the Bank's ability to deliver on its global enabling than a market-making role. NRE commitments is predicated on support from the Bank's country units through clear Many developing countries, however, still see strategic and budgetary signals to Bank staff. the energy sector as having a narrow purpose and still do not consider energy a priority. The crisis in traditional biomass fuels remains the Energy is generally given inadequate importance main energy issue for the world's poor. The heavy (and NRE even less so) in national development global dependence on traditional wood fuels is frameworks and is viewed only within the projected to grow; hence, biomass production context of large-scale infrastructure projects. on a renewable basis remains the top priority in The issue of energy access is usually absent from meeting the energy needs of the poor. those frameworks. This is most evident in Sub-Saharan Africa, Furthermore, development strategies tend to which is dependent on traditional fuels for more focus only on electricity and ignore rural energy than 60 percent of its energy supplies. In 2000, needs. A United Nations Development Pro- about half of the population in developing gramme study of 80 Millennium Development countries relied on traditional biomass for Goal country reports found that only 5 percent cooking and heating. Global evidence shows discussed plans to expand new and renewable that poor people allocate most of their energy energy. In those few reports, the discussion was expenditure on cooking fuels. In 2003, it was only in the context of the goal of environmental estimated that 2.6 billion people will continue to sustainability, not poverty alleviation. Only 5 rely on biomass despite efforts to substitute percent discuss the link between energy, poverty, other fuels for it. and rural development. In contrast, many more reports--25 percent--discuss energy efficiency According to the Bank's Energy and Water for environmental sustainability (UNDP 2005). Department, the Bank has done significant work on rural forestry, which is classified under Several strategic questions arise for the Bank as community/ rural forestry projects rather than as it tries to meet its commitment to scale up its energy projects. Community forestry projects NRE lending. 2 7 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E · Will certain regions and countries be priorities, among a much larger number of projects to and if so, which ones and under what criteria? fund mainly TA and market-development as- · If spreading out NRE assistance would no sistance, even though this may significantly longer be possible under the new GEF Re- defer the energy service delivery that is re- source Allocation Framework, would the Bank's quired to achieve consumer/investor confi- NRE work still be consistent with its poverty- dence and market expansion? reduction goal, as GEF resources move toward · If the strategy to increase support for NRE is to a much smaller number of (likely large) ben- be largely country driven, how will the Bank en- eficiary countries than before? sure that a 20 percent increase will result each · Will the selected NRE projects support the full year, when the main focus of many borrowing spectrum of NRE commercialization and service countries continues to be on conventional delivery, or will investments be distributed fuels? 2 8 6 Conclusions and Next Steps T he Bank's NRE strategy is relevant to developing country energy priorities. Its NRE interventions are anchored in the EBRS pillars--reducing poverty, promoting PSD, contributing to global environmental protec- tion, and improving macro-fiscal balances. As reconfirmed during the Bank's 2006 Energy The Bank helped remove market barriers by Week, the Bank and the donor community need developing NRE policies (including on standards to address the dire energy predicament of and certification) and various business models developing countries on all fronts. This includes for NRE technology delivery (with sales models petroleum, clean coal, hydropower, biomass, involving consumer credit performing better energy efficiency, and renewable energy, which than fee-for-service ones). The Bank has played should be pursued, because it can be financially a key role in leveling the playing field between viable and sustainable if barriers are removed. NRE and conventional energy technologies, and With respect to renewable energy specifically, subsidy-free NRE commercialization has started the much improved design and performance of to materialize. recent NRE projects augurs well for the Bank's readiness to deliver on its Bonn commitments Therefore, the Bank should focus on its to increase its NRE support. strengths in building public-private partner- ships. It should consider a series of operations As the Bank scales up its NRE assistance, and appropriate lending instruments to however, it would do well to focus on its accommodate the long gestation periods for demonstrated strengths in creating an invest- NREs, from institutional capacity building and ment climate conducive to commercializing NRE policy/regulatory reform all the way to full and promoting PSD through public-private commercialization. It should internalize--in its partnerships and appropriate risk-mitigation regional budgets and work programs--the structures. The Bank has a satisfactory scorecard operational costs of its successful "brokering" in consistently promoting PSD, and it has been and advisory role for NREs. flexible in its approaches. Its stakeholders and the NRE technologies it supported also have The Bank's performance on other EBRS been highly diverse. objectives has been weaker: experience in the 2 9 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E past 15 years indicates that the Bank's impact in Inter-American Development Bank, the Asian helping the poor directly or achieving global Development Bank, and the African Develop- environmental benefits through NRE promotion ment Bank lend much less for NREs, about 1­2 has been hard to measure because M&E has percent of their total lending for the energy been notoriously weak or absent. But the little sector. evidence that has emerged suggests that this impact is limited. But the Bank also needs to do a better job of integrating its NRE program within its own work Good monitoring and impact evaluation on energy sector reforms and architectures. To systems should be established for energy achieve this, the Bank's country units need to services intended to help the poor. Renewable strengthen their support for the mainstreaming energy projects with output-based aid com- of NRE in the Bank's CASs and operations (a goal ponents should be the first targets. Rigorous that the new ESMAP Renewable Energy impact evaluations should be carried out for Thematic Group could pursue further); assign selected renewable energy projects that are due importance to traditional biomass fuels in closing within the next two to three years. addressing the needs of the world's poor; and integrate biomass projects better within the NRE An important first step would be for the Bank to portfolio. include NRE objectives and work programs in CASs, which historically have given little Moreover, Bank management needs to give attention to NRE. Bank management needs to priority and resources to address the serious clearly signal the relevance of NRE in country lack of M&E in its NRE projects, especially and energy sector strategies. As the Bank because the Bank is promoting OBA approaches pursues its energy sector reform agenda, it that do require intensive monitoring of perform- needs to simultaneously address issues that ance data. The Bank needs to internalize the hinder NRE development and commercializa- costs of NRE "business incubation" as part of its tion. The key thrusts of the Bank's NRE core business. To this end, the Bank and the assistance should be economic energy pricing, donors may also consider reorienting ASTAE's increased private financing, and effective work program toward a stronger focus on regulation. capacity building to integrate M&E systems in NRE projects and rigorous impact evaluations Moving forward, the Bank could do more of what for the NRE projects series in India, Sri Lanka, works, which includes its strong lesson-learning, and China. "brokering," and advisory record that has positively influenced recent NRE project design. The NRE portfolio should benefit increasingly As the Bank scales up its NRE assistance, it needs from self- and independent evaluations, given to foster innovation and flexibility by also dissem- the strategic role that the Bank gives to NREs in inate more widely the lessons learned, with a improving energy access, particularly for the view to achieving continuous improvement in poor, as well as its joint global commitments the design and implementation of newer NRE with other donors. These assessments should projects. The Renewable Energy Toolkit released focus rigorously on outcomes and impacts in 2006 is a step in that direction. (while differentiating more sharply among rural electrification, grid-connected NREs, and off- Wider dissemination of good NRE practices also grid renewables as the portfolio of closed presents (vis-à-vis other NRE financiers) a global projects expands) and have strong feedback leadership opportunity for the Bank, which loops that would allow flexibility and respon- distinguishes itself as being the largest financier siveness in implementing the objectives of the of NRE (World Bank 2005c). For example, the NRE strategy. 3 0 ANNEXES ANNEX A: THE BANK'S NEW RENEWABLES PORTFOLIO IBRD/IDA GEF Approved (project or NRE co- Region/ (fiscal Energy component, financing country year) Project type US$ millions) (US$ millions) South Asia Region Afghanistan 2005 Emergency National Solidarity--Supplemental Renewable 5.6 Bangladesh 2002 Rural Electrification and Renewable Energy Development SPV, H 17.19 8.20 India 1993 Renewable Resources Development/Alternate Energy W, SPV 190.00 26.00 India 2000 Second Renewable Energy H 110.00 India 2001 Rajasthan Power Sector Restructuring Renewable 1.80 India 2002 Uttar Pradesh Water Sector Restructuring H 1.49 Nepal 1993 Sunsari Morang Headworks H 5.60 Nepal 1997 Irrigation Sector H 0.79 Nepal 2003 Power Development H 22.68 Sri Lanka 1992 Second Power Distribution and Transmission H 1.50 Sri Lanka 1997 Energy Services Delivery W, SPV 23.23 5.90 Sri Lanka 2002 Renewable Energy for Rural Economic Development W, SPV, H, BM 74.25 8.00 Middle East and North Africa Region Tunisia 1995 Solar Water Heating ST 4.00 Yemen, Rep. of 2005 Rural Electrification and Renewable Energy RE 0.55 Latin America and the Caribbean Region Argentina 1999 Renewable Energy in Rural Markets SPV, W 26.70 10.00 Bolivia 2003 Decentralized Infrastructure for Rural Transformation SPV 6.80 Ecuador 2002 Power and Communications Sector Modernization and Rural Services Renewable 2.84 Honduras 1992 Energy Sector BM, W, Solar, H 3.54 Mexico 2000 Renewable Energy for Agricultural Productivity W 8.90 Mexico 2001 Methane Gas Capture and Use and Landfill BM/BG 6.27 Nicaragua 2003 Off-grid Rural Electrification SPV, H 8.88 4.02 Uruguay 2000 Landfill Methane Recovery Demonstration BM/BG 0.98 East Asia and Pacific Region Cambodia 2004 Rural Electrification and Transmission ST, H 3.20 5.75 China 1999 Renewable Energy Development W, SPV 100.00 35.00 China 2004 Fourth Inland Waterways H 13.65 China 2005 Renewable Energy Scale-Up Program Wind, BM 87.0 40.22 Indonesia 1995 Second Rural Electrification GT, H 19.40 Indonesia 1997 Renewable Energy Small Power BM, H 63.74 4.00 (Continues on the following page.) 3 3 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E IBRD/IDA GEF Approved (Project or NRE co- Region/ (fiscal Energy component, financing country year) Project type $US millions) ($US millions) Indonesia 1997 Solar Home Systems SPV 20.00 24.00 Lao, PDR 1998 Southern Provinces Rural Electrification SPV 1.04 0.74 Philippines 1990 Energy Sector GT 50.70 Philippines 1994 Leyte Luzon Geothermal GT 213.38 30.00 Philippines 1994 Leyte Cebu Geothermal GT 56.97 Philippines 2004 Rural Power SPV, H 5.00 9.00 Vietnam 2002 System Efficiency Improvement, Equitization and Renewables H 13.50 4.50 Europe and Central Asia Region Croatia 2005 Renewable Energy Resources RE 5.5 Latvia 1998 Solid Waste Management BM/BG 3.74 5.12 Lithuania 1996 Klaipeda Geothermal GT 6.90 Macedonia, FYR 2000 Mini-Hydropower H 0.75 Moldova 2005 Renewable Energy from Agricultural Waste BM 0.68 Poland 2000 Podhale Geothermal District Heating and Environment GT 5.40 Turkey 2004 Renewable Energy H 50.51 Hungary 2003 Small Hydro H 0.42 Africa Region Benin 2005 Energy Service Delivery APL BM 5.70 Burundi 1991 Energy Sector Rehabilitation BM/BG, H 1.60 Cape Verde 1999 Energy/Water Sector Reform W, SPV 1.23 4.70 Chad 1998 Household Energy BM 0.85 Ethiopia 1998 Energy II BM, H 4.00 Ethiopia 2003 Energy Access SPV, BM, H 21.71 4.93 Guinea 2003 Decentralized Rural Electrification SPV, H 3.50 Kenya 2005 Energy Sector Recovery Geothermal 31.50 Kenya 1997 Energy Sector Reform GT 20.00 Madagascar 1996 Energy Sector Development BM / BG, H 7.82 Madagascar 2004 Environment Program III BM 4.00 Mali 1995 Household Energy Renewable 2.50 Mali 2004 Household Energy and Universal Rural Access W, SPV, BM/BG, H 17.83 3.50 Mauritius 1992 Sugar Energy Development/Sugar Bio-Energy Technology BM/BG, H 15.00 3.30 Mozambique 2003 Energy Reform and Access SPV, H 1.82 2.09 Niger 1988 Energy Rwanda 1993 Energy Sector Rehabilitation SPV, ST, H 2.60 Rwanda 2005 Urgent Electricity Rehabilitation SIL H 4.70 Senegal 2005 Rural Electric Service BM 4.10 Senegal 1998 Sustainable and Participatory Energy Management BM 5.20 4.70 Uganda 2000 Power III Supplemental H 16.50 Uganda 2002 Energy for Rural Transformation SPV, H 3.90 12.10 Total commitments 1,375.44 301.46 Source: World Bank Group Progress Reports. Note: The table is fully consistent with the World Bank Group Progress Reports on Renewable Energy and Energy Efficiency for 1990­2004 and fiscal 2005 (World Bank 2005d), except for seven projects: South Africa Concentrating Solar Power for Africa; Honduras Energy Sector Adjustment (Ref 2); Mexico Solar Thermal Integrated Cycle Project; Brazil Itaparica Sup- plemental; Egypt Integrated Solar Thermal; Guinea Rural Energy; and China Passive Solar Rural Health Clinics. Information was either not available for these projects, or they are still at the proposal stage. BG = biogas; BM = biomass; GEF = Global Environment Facility; GT = geothermal; H = hydro; ST = solar thermal; SPV = solar PV; W = wind. 3 4 ANNEX B: NRE PROJECTS SELECTED FOR IN-DEPTH REVIEW The study reviewed 65 new and renewable energy the report focused especially on those closed and (NRE) projects, of which 27 are closed and 38 are ongoing NRE projects, as listed below, that are ongoing. The complete list of closed projects, most indicative of the Bank's performance, given along with their Independent Evaluation Group the project's size, level of financial commitment, (IEG) ratings, are presented in annex C. In terms innovativeness, range of objectives, scope of of in-depth evaluation (including IEG Project components and activities, country significance, Performance Assessment Reports in some cases), and importance given to renewable energy. Bank approval GEF IBRD/IDA Region/ (fiscal year)/ ($US ($US country Project NRE type closing millions) millions) South Asia Region India Renewable Resources Development/ Alternate Energy (GEF) W, SPV, H 1993/2001 26.00 190.00 India Second Renewable Energya H 2000/Ongoing N.A. 110.00 Sri Lanka Energy Services Delivery W, SPV, H 1997/2002 5.90 23.23 Sri Lanka Renewable Energy for Rural Economic Development W, SPV, H 2002/Ongoing 8.00 74.25 Bangladesh Rural Electrification and Renewable Energy Developmenta SPV, H 2002/Ongoing 8.20 17.19 Latin America and the Caribbean Region Argentina Renewable Energy in the Rural Market SPV, W 1999/Ongoing 10.00 26.70 Nicaragua Off-grid Rural Electrificationa SPV, H 2003/Ongoing 4.02 8.88 East Asia and Pacific Region Indonesia Solar Home Systems SPV 1997/2001 24.30 20.00 China Renewable Energy Development W, SPV 1999/Ongoing 35.00 100.00 Africa Region Uganda Energy for Rural Transformationa SPV 2002/Ongoing 12.10 3.90 Mali Household Energy BM 1995/2000 2.50 N.A. Senegal Sustainable and Participatory Energy Management BM 1998/2004 4.70 5.20 Source: Project Appraisal Documents and World Bank Operations Portal. Note: BM = biomass; H = hydro; SPV = solar PV; W = wind. a. Projects with large NRE components. The rest are freestanding projects. 3 5 ANNEX C: COST COMPETITIVENESS OF RENEWABLE AND CONVENTIONAL ENERGY TECHNOLOGIES The Bank aims to play a crucial role in leveling the of petroleum products (thus resulting in playing field between renewable and conventional massive drains in their fiscal resources), which energy sources. The economics of renewable cancel out any margin of competitiveness that energy are driven mainly by the operational costs NREs might have had. of using alternative fuels, such as kerosene or diesel in the decentralized power applications that Consequently, with the exception of a few are the subject of this review. technologies, renewable energy in both developing and developed countries remains Capital cost differentials between NREs and financially uncompetitive with conventional fossil fuels play a relatively small role, as over the energy sources and therefore continues to past two decades the costs of NRE technologies require government and donor support (REN21 have been decreasing, but those of conventional Renewable Energy Policy Network 2005). Yet as energy technologies have decreased as well, as table C.1 below shows, for off-grid applications, illustrated by major advances in wind turbines a range of renewable energy technologies and combined gas cycle technology. While solar, (RETs) are economically competitive with gaso- wind, and hydro resources are free in nature, line generators. For mini-grid applications, petroleum is a global commodity; hence, what micro hydro and biomass gasifiers are lower-cost really drives comparative NRE versus conven- options, compared with diesel generation, and tional energy economics are international crude wind power is marginally competitive. For grid- oil and petroleum product prices, whose rates connected applications less than 50 megawatts of increase could offset decreases in costs result- (MW), wind, mini-hydro, and geothermal ing from technological progress. For large-scale (where available) are lower-cost options than electricity generation, fuel price may constitute diesel for peaking load and can be competitive 46­87 percent of the total levelized economic with diesel for base load. Above 50 MW and up cost of electricity (Chubu Electric Power Co., to 300 MW, coal-fired generation remains the Inc. and others 2005). least-cost option, but wind power is not far behind. Off-grid, solar photovoltaics (PV) can be In economic terms, what used to be the competitive with gasoline generators but are hypothetical upper bound of $50­$70 per barrel uncompetitive in grid-connected applications. of crude oil in many studies on renewable energy economics has now become a daily In table C.1, costs are not inclusive of subsidies reality, making NREs economically competitive, and other policy incentives, or of all environ- at least in principle. This upper bound is even mental externalities. Cost figures are based on underestimated, because global petroleum use assumptions regarding capacity, capacity factor, entails negative environmental externalities and and life span specific for each technology, and should command an "energy security premium" they include capital plus operating costs, that is not captured in world prices. In financial expressed on a levelized basis, using a 10 terms, however, most developing countries percent real discount rate over the economic life continue to domestically adopt "social pricing" of the plant, in constant 2004 US$. Assessments 3 7 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E Table C.1: Renewable and Conventional Energy Costs 2004 2015 Rating (watts) US¢/kWh US¢/kWh Off grid Solar PV 50­300 40­75 35­65 Wind 300 22­39 20­34 PV-wind hybrid 300 24­37 21­31 Pico hydro 300 11­19 10­18 Pico hydro 1,000 10­16 9­15 Gasoline generator 300 49­79 47­77 Mini grid Solar PV 25 44­58 37­47 Wind 100 14­23 12­19 PV-wind hybrid 100 16­24 14­20 Geothermal (binary) 200 13­16 13­16 Biomass gasifier 100 8­10 7­9 Biogas 60 6­7 5­7 Micro hydro 100 9­13 9­13 Diesel generator 100 15­25 15­25 Micro turbines 150 27­33 27­33 Fuel cells 200 23­29 21­26 Central generation (<50 MW) Solar PV 5 37­49 29­40 Wind 10 5­9 4­7 Solar thermal (no storage) 30 15­21 13­18 Solar thermal (w/storage) 30 11­15 10­12 Geothermal (binary) 20 6­8 6­8 Biomass (gasifier) 20 7­8 6­8 Landfill gas 5 5­7 5­6 Mini-hydro 5 5­8 5­8 Diesel, base load 5 7­12 7­12 Diesel, peaking 5 14­20 14­20 Fuel cells 5 11­16 9­14 Central generation (50­300 MW) Biomass (steam) 50 6­7 6­7 Geothermal (flash) 50 4­5 4­5 Wind 100 4­8 3­6 Large hydro 100 4­7 4­7 Hydro (pumped storage), peaking 150 29­39 28­39 Oil/gas combined cycle (1100 C class) 150 9­15 9­14 Oil/gas combined cycle (1300 C class) 300 4­7 3­7 Coal steam 300 3­5 3­5 Coal IGCC 300 4­6 3­5 Coal AFB 300 3­4 3­4 Oil steam 300 5­10 5­10 Source: Chubu Electric Power Co., Inc. and others 2005. Note: kWh = kilowatt hour. 3 8 A N N E X C : C O S T C O M P E T I T I V E N E S S O F R E N E WA B L E A N D C O N V E N T I O N A L E N E R G Y T E C H N O L O G I E S are based on the approach and formulas in the Euros 29 billion (EEA 2004). Subsidy levels for Electric Power Research Institute's Renewable renewable energy even in the European Union, Energy Technical Assessment Guide (EPRI where renewable energy has received strong 2004). Average fuel prices for 2004 and 2015, support, are low in comparison with other based on World Bank forecasts, are assumed to forms of energy. For the United States and be, respectively, $38/bbl and $31/bbl for oil; Europe combined, government support for $54/ton and $34/ton for coal; and $4.9/MMBTU renewable energy in 2004 was roughly US$10 and $4.0/MMBTU for natural gas. billion. In contrast, total global energy subsidies for fossil fuels are reported to be in To simplify estimations, all capital and operating the range of US$150­$250 billion per year costs were calculated on the basis of one power (REN21 Renewable Energy Policy Network plant's construction in India. Adjustments were 2005). To help level this playing field, Global made for labor costs, the largest variable Environment Facility (GEF) financing present accounting for costs between locations. Capital in many Bank NRE projects seeks to remove the and operating cost calculations assume all market and regulatory barriers to NRE as well generating equipment is designed under World as achieve global environmental benefits by Bank environmental guidelines and therefore financing the incremental costs of renewable include costs for typical environmental impacts, energy investments. from normal operations and standard emissions control measures. Deriving the true costs of renewable and conventional energy technologies is challenging Yet not all environmental and social externalities because of the difficulties encountered in are included. Costs in 2015 are calculated by determining the environmental externalities, considering future price decreases due to both values for energy security, and the subsidies technological innovation and mass production. involved. However, some studies show that, Key uncertainties including fuel costs, future considering environmental costs and assessing technology cost and performance, and resource more rigorous technology and capital and risks are addressed using a probabilistic approach. generation costs, the economic costs of RETs-- In the case of solar PV, wind, and PV-wind hybrids particularly wind, hydropower, geothermal, and in a mini-grid area or off-grid configuration, total biomass-electric for grid applications--are lower costs include battery or backup generator costs to than those for conventional generation. On a smooth stochastic variations in the available levelized basis, RETs are the least-cost option for resource and provide a reliable output. such applications. Conventional energy technologies, though, Several RETs are potentially the least-cost option have been highly subsidized through a variety of for mini-grid applications as well (Chubu Electric direct as well as indirect and nontransparent Power Co., Inc. and others 2005). For remote means, such as cash transfers to producers areas, conventional versus NRE cost compar- and/or consumers, tax exemptions, price isons may serve little purpose, because off-grid controls, trade restrictions, regulatory hurdles technologies constitute the only option and are for NREs, and government failure to correct far more economical than grid extension to market imperfections. These subsidies skew the these areas. Table C.2 illustrates that for playing field against renewable energy. European Union member countries, renewable energy can in fact be more competitive than An estimate of energy sector subsidies in the fossil fuels when environmental and social European Union in 2001 was calculated at externalities are taken into account. 3 9 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E Table C.2: External Cost Figures for Electricity Production in Selected European Countries for Existing Technologies (Euro cents per kWh) Country Coal and lignite Peat Oil Gas Nuclear Biomass Hydro Wind Austria 1­3 2­3 0.1 Belgium 4­15 1­2 0.5 Germany 3­6 5­8 1­2 0.2 3 0.05 Denmark 4­7 2­3 1 0.1 Finland 2­4 2­5 1 France 7­10 8­11 2­4 0.3 1 1 Greece 5­8 3­5 1 0­0.8 1 0.25 Ireland 6­8 3­4 Italy 3­6 2­3 0.3 Netherlands 3­4 1­2 0.7 0.5 Norway 1­2 0.2 0.2 0­0.25 Portugal 4­7 1­2 1­2 0.03 Spain 5­8 1­2 3­5a 0.2 Sweden 2­4 0.3 0­0.7 United Kingdom 4­7 3­5 1­2 0.25 1 0.15 Source: Martinot 2005. Note: Subtotal of quantifiable externalities (such as global warming, public health, occupational health, material damage). a. Biomass cofired with lignites. 4 0 ANNEX D: RATINGS OF CLOSED NRE PROJECTS Institutional development Bank Borrower Project Outcomea Sustainability impact performance performance Blended Burundi Energy Sector Rehabilitation U (U) UN N U U Niger Energy Project MS (S) L SU S S Kenya Energy Sector Reform and Power Development S (U) L SU S U Rwanda Energy Sector Rehabilitation MU (MS) NE M U S Uganda Power III Supplemental MU (S) UN N U U Indonesia 2nd Rural Electrification S (MS) UN M S S Lao PDR Southern Provinces Rural Electrification S (S) L SU S U Philippines Energy Sector S (U) UNC M U U Honduras Energy Sector Adjustment Loan MS (MS) UNC M S U Latvia Solid Waste Management & Landfill Gas Recovery S (S) L SU S S Macedonia Mini-Hydropowerb S (S) NA NA NA NA Poland Podhale Geothermal District Heating & Environment MU (MU) L M U U Nepal Sunsari Morang Headworks S (MS) UNC SU S S Nepal Irrigation Sector MS (MS) UN M S S Sri Lanka 2nd Power Distribution and Transmission MS (MS) L M S U Freestanding Chad Household Energy MS NE H U S Mali Household Energy MU NE SU U S Mauritius Sugar Energy Development S L SU U S Senegal Sustainable and Participatory Energy Management HS HL SU S S Indonesia Solar Home Systems U L SU HS S Indonesia Renewable Energy Small Power NR NR NR NR NR Philippines Leyte Cebu Geothermal U UN N S S Philippines Leyte Luzon Geothermal U UN M U U Lithuania Klaipeda Geothermal Demonstration MU NE SU S S Tunisia Solar Water Heating S NE SU S S India Renewable Resources Development S L M S S Sri Lanka Energy Services Delivery HS L H HS HS Source: Implementation Completion Report Reviews and Project Performance Assessment Reports. Note: HS = highly satisfactory; S = satisfactory; MS = moderately satisfactory; MU = moderately/marginally satisfactory; U = unsatisfactory; L = likely; UN = unlikely; H = high; SU = sub- stantial; M = modest; N = negligible; UNC = uncertain; NA = not available; NE = nonevaluable; NR = not rated. a. Closed projects as of end of fiscal 2005. For blended projects, the outcome rating in parentheses is of the NRE component. b. Ratings for certain criteria not available (GEF medium-size grant project). 4 1 ANNEX E: RATINGS OF ONGOING NRE PROJECTS UNDER SUPERVISION Freestanding Achievement Implementation Global env. or of PDO progress objective Country and project blended Previous Latest Previous Latest Previous Latest Cape Verde Energy and Water Sector Reform and Development B U U U U U U Ethiopia Energy Access/Renewable Energy B U U S S NP S Ethiopia Energy II B U U S S NA NA Guinea Decentralized Rural Electrification B MU MS S MS MU MU Madagascar Energy Sector B MU MU MU MU NA NA Madagascar Environment III B S MS MS MS S S Mali Household Energy and Universal Access FS S MS S MS S MS Mozambique Energy Reform and Access B S MS S MS S MS Uganda Energy for Rural Transformation B MS MS MS MS MS MS Cambodia Rural Electrification and Transmission B S S S MS S MS China Fourth Inland Waterways B S S S S NA NA China Renewable Energy Development FS S S S S S S Philippines Rural Power B MS NP S NP S NP Vietnam System Efficiency Improvement, Equitization and Renewables B S NP S NP S NP Hungary Rehab. and Expansion of Small Hydro (GEF med.- size project) FS NAV NAV NA NA NA NA Turkey Renewable Energy FS S S S MS NA NA Argentina Renewable Energy in the Rural Market FS MS MS MU MU MS MS Bolivia Decentralized Infrastructure for Rural Transformation B S S MS S NA NA Ecuador Power and Communications Sector Modernization and Rural Services B S S MS MS MS MS Mexico Methane Gas Capture and Use at a Landfill (GEF only) FS NA NA HS NP HS HS Mexico Renewable Energy for Agriculture (GEF only) FS NA NA S S S S Nicaragua Off-Grid Rural Electrification FS MS MU MS MU MS MU Uruguay Landfill Methane Recovery Demonstration Project (GEF med.-size project) FS NAV NAV NA NA NA NA Bangladesh Rural Electrification and Renewable Energy Development B S S S S S S India Rajasthan Power Sector Restructuring B S S S S NA NA India Second Renewable Energy FS S NP NP NP S NP India Uttar Pradesh Water Sector Restructuring B S S MU MU NA NA Nepal Power Development B S S U MU NA NA Sri Lanka Renewable Energy for Rural Economic Development FS S S S S S S Source: Latest Implementation Status Reports for projects. Note: Updated active NRE project ratings, February 2006. PDO = project development objective; B = blended; FS = freestanding; S = satisfactory, MS = moderately satisfactory, MU = moderately unsatisfactory, U = unsatisfactory, NA = not ap- plicable, NAV = not available, NP = not provided. 4 3 ANNEX F: PROJECT PERFORMANCE EVALUATION Closed Projects one-quarter of the subset of projects that are the focus of this study. That makes lesson The outcomes of closed projects have been mixed. learning a challenge. Based on the IEG ratings from Implementation Completion Report (ICR) Reviews and Project Freestanding projects performed better than projects Performance Assessment Reports, the scorecard where NRE is only a component. The closed portfo- for closed projects reflects both weak and good lio is marked by solid achievements. Excluding performance, as shown in annex C. Among the geothermal projects, freestanding NRE projects free-standing projects, the ones in Chad, performed well, better than blended projects Mauritius, Tunisia, India, and Sri Lanka had (table F.1). The outcomes for the projects in moderately satisfactory or satisfactory outcomes India and Mauritius were satisfactory, and that (highly satisfactory in the case of Sri Lanka). for Sri Lanka was highly satisfactory. While not However, all three freestanding geothermal performing as well, the projects for household projects in the Philippines and Lithuania had energy (sustainable wood fuel management) unsatisfactory outcomes.1 achieved moderately satisfactory outcomes (the outcome of Mali's household energy project, The outcomes of the NRE components in energy though, was moderately unsatisfactory). projects in Burundi and the Philippines were unsatisfactory.2 In only three projects were the The potential also existed for even better overall NRE components satisfactory, while six of them performance. The two projects in Indonesia were moderately satisfactory. The Niger Energy received either a poor rating or were not rated Project (1988), of which the NRE component was at all because projects were canceled after the for wood fuels and was 16 percent of the project, is East Asia financial crisis. Project documents one of them: wood energy markets in the country indicate, however, that the conditions for are still functioning, according to IEG's project success existed for both projects. evaluation (IEG 2005). The efficiency of closed, "full-spectrum" NRE It is important to note that in two of the projects has been generally substantial. An analysis countries for which the NRE component was of the efficiency of four closed NRE projects unsatisfactory or moderately unsatisfactory-- found that the recalculated economic internal Burundi and Rwanda--civil conflict disrupted rates of return (EIRR) at project completion the projects and was the main reason for their were higher than those estimated at appraisal inability to meet their objectives. Four others for almost all RETs. Hydro and solar have been adversely affected or canceled components--the most common across the because of conflict and/or economic crises: projects--met or exceeded their target EIRRs. NRE projects in Argentina, Bolivia, and The exceptions were wind and geothermal Indonesia (two projects).3 Four of these six energy, although wind energy holds consider- canceled projects are closed and constitute able potential (World Bank 2004a). 4 5 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E Table F.1: Overall Ratings for Closed Freestanding Projects and Projects with NRE Components Overall ratings Institutional development Bank Borrower Projects Outcome Sustainability impact performance performance Freestanding (12) Mixed: Mixed: Substantial or high Mixed: Satisfactory 6 moderately to 5 likely (except 3) 7 satisfactory or (except 1) highly satisfactory (1 highly likely) highly 5 moderately unsatisfactory 6 unlikely or satisfactory or unsatisfactory nonevaluable 4 unsatisfactory With NRE components (15) Mixed: Unlikely Modest Mixed: Mixed: 11 satisfactory or or uncertain (except 5 9 satisfactory 6 satisfactory moderately satisfactory (except 4) substantial, 5 unsatisfactory 8 unsatisfactory 4 unsatisfactory or 2 negligible) moderately unsatisfactory Note: The Indonesia Renewable Energy Small Power Project (1997), which was canceled, was not rated. Table F.2 provides the EIRR figures for these entrepreneurs, consumers, and nongovernmen- closed projects (a more detailed analysis is in tal organization (NGO); effective credit and annex C). The EIRR calculations include the GEF output-based (GEF) grant-financing mechanisms grants intended to remove market barriers to for the private sector; efficient credit arrange- NRE by financing the incremental costs incurred ments that facilitated access to RETs by the poor; in shifting from conventional to renewable strong capacity prior to the project or as a result energy sources. Calculations done for the India of its activities; focused attention to addressing and Sri Lanka projects show that, without GEF the market barriers to renewables; and strong assistance, project completion EIRRs would still interest from local investors and financiers. be marginally higher than appraisal estimates. Recent freestanding (NRE only) and rural electri- As GEF subsidies are phased out, it is important fication (grid and off-grid) projects that aimed at to monitor the economic performance and commercialization through the private sector commercialization prospects (without sub- exhibit these factors and performed well. The sidies) of several Bank-GEF projects that will importance of the factors of performance close in the next few years. discussed above for a selected group of success- ful projects is presented in table F.3. Factors of Performance A focus on getting the regulatory and incentives Good performance requires significant resources framework right has proven more useful to maximizing and maturation periods. Based on the experience project results than trying to get governments to of closed projects with satisfactory outcome enunciate a national renewable energy policy. An ratings from IEG's ICR Reviews, key factors that examination of the successful projects in table F.3 tend to be associated with good performance shows that the performance of an NRE project is were identified. Although these factors are not not sensitive to whether the government has present in all projects, those projects that have established a policy promoting renewables or not. performed well generally have strong govern- For example, while policy support for renewables ment commitment; effective Bank performance; existed in India when the satisfactory Renewable extensive consultation and participation with Resources Development Project (1992) was 4 6 A N N E X F : P R O J E C T P E R F O R M A N C E E VA L U AT I O N Table F.2: Economic Internal Rates of Return for Selected NRE Projects (percentages, with GEF grants for incremental costs) Country/project Appraisal Actual Sri Lanka Energy Services Delivery Grid-connected mini-hydro 18 26 Off-grid village hydro 12 18 Solar home systems 12 42.6 Wind farm 14 3.9 India Renewable Resources Development Small hydro (dam-toe)a 13­65 28 Small hydro (canal and run of river)a 12­29 33 Wind farm 12 14 Solar PV lanterns 33 Solar PV home systems 108 Solar PV power packs 14­14.6 21 Solar PV village power 19 Solar PV water pumping 43 Tunisia Solar Water Heating Solar 34 42 Philippines Leyte-Luzon Geothermal Geothermal 10.5 7.5 Source: Implementation Completion Reports. a. EIRR figures are without GEF grant. Table F.3: Factors of Performance in Successful NRE Projects Solid institutional Good Bank Efficient and/or Attention performance: credit technical to project Involve- mechanisms capacity addressing Strong design, AAA, ment of enabling at entry regulatory Solid IEG country supervision, all Effective the poor or as a and private outcome commit- and stake- GEF grants access result of market sector Closed projects rating ment adaptability holders and OBA to RETs project barriers interest Sri Lanka ESD Highly satisfactory India RRD Satisfactory Mauritius Satisfactory Senegal Highly satisfactory Note: A checkmark indicates that the factor was evident in the project. The absence of a checkmark indicates that the factor was not relevant to the project and/or there was little re- porting provided on it in the ICR or supervision documents. AAA = analytical and advisory assistance; OBA = output-based assistance. 4 7 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E approved, no explicit government support for These ratings are also associated with poor NRE existed in Sri Lanka when the highly satisfac- supervision of NRE components in a larger tory Energy Services Delivery Project (1997) was conventional energy or water sector project, implemented. As table F.3 shows, adequately weak country or implementing agency commit- addressing the regulatory and market barriers to ment, a private sector hesitant to take risks, private sector involvement and NRE scale-up is a weak Bank performance, insufficient capacity of factor of good performance, as is country commit- public and/or private institutions, and sociopo- ment (what a government does). A formal NRE litical or economic crises in the country. policy (what a government says) is not. The influence of these factors in unsuccessful Neglect and lack of commitment easily lead to bad projects is shown in table F.4. Small NRE performance. Projects that received unsatisfac- components in conventional energy or water tory outcome ratings tend to be associated with sector reform projects generally did not achieve inadequate attention to ensuring a conducive their objectives, mainly because of poor policy and regulatory environment for NRE. supervision. Table F.4: Factors of Performance in Unsuccessful NRE Projects Poor Weak Insufficient supervision country or institutional Socio- Inadequate of NRE imple- capacity political attention components menting Risk- Weak (despite or to policy and in a agency averse Bank capacity- IEG outcome economic regulatory larger commit- private perform- building Closed projects rating crisis framework project ment sector ance activities) Philippines Leyte Luzon Geothermal Unsatisfactory Mali Household Energy Moderately unsatisfactory Burundi Energy Sector Rehabilitation Unsatisfactory Rwanda Energy Sector Rehabilitation Moderately unsatisfactory 4 8 ANNEX G: ASSESSMENT OF THE NRE PORTFOLIO'S CONTRIBUTION TO POVERTY REDUCTION AND GOOD GOVERNANCE Poverty reduction is a major objective of NRE increased hours of lighting will generate projects that was mostly implied but not stated. longer-term positive impacts on livelihood, Reducing poverty by increasing energy access education, and social development. for the rural poor has been an important objective of the NRE projects that the Bank has A more recent approach is to focus on increas- pursued from the early 1990s to the present, and ing incomes of the poor through electricity poverty reduction is often an implicit objective provision, such as the Sri Lanka Renewable in the design and target beneficiaries of the Energy for Rural Economic Development Bank's NRE projects. Thus, a key question is (RERED) Project (2002). This project seeks to whether the Bank's financial assistance and increase nonfarm incomes by targeting electric- advice contributed to achieving this objective. ity supply to household-based enterprises and small and medium-size enterprises. The Senegal Although this has been at least an implied Sustainable and Participatory Energy Manage- objective in NRE projects judging from the ment Project (1997) also sought to generate components and activities, the portfolio review revenue for villages by having them participate found that of the Bank's 27 closed NRE in the trade of sustainably managed wood fuels. projects,1 only two--the Mali Household Energy Project (1995) and the Senegal Sustainable and Cross-sectoral rural transformation has been Participatory Energy Management (1997)-- the third and latest Bank approach to link explicitly stated a poverty reduction objective. energy access and poverty reduction. By provid- In seven other projects, livelihood improvement ing electricity and information and communica- was an implied goal.2 tion technology (ICT) links to rural enterprises (considered as catalysts for rural sector transfor- The Bank sought to reduce poverty through three mation) and to public service institutions, the approaches: improving welfare, enhancing in- Bank is striving to generate broad-based comes, and initiating rural transformation. The economic growth, which will in turn reduce welfare improvement approach generally poverty levels. The Uganda Energy for Rural reflected in the Bank's NRE projects in the Transformation Project (2001) is the best 1990s3 sought to increase the welfare of the example of this approach. It aims to induce rural poor through household lighting, which indirect and long-term effects from economic would provide more time for study and chores growth, such as increased employment, income and improve comfort and safety. The Argentina generation, and improved health care and Renewable Energy in the Rural Market (RERM) education; these effects will increase the rural Project (1999) is an example of this approach; standard of living. it seeks to make electricity accessible to dispersed households for lighting and small The three approaches have not been applied in appliances, as well as to schools and public the portfolio exclusive of each other. While in health clinics in poor, rural areas. Beyond some projects only welfare improvement or immediate benefits, it is expected that the income enhancement has been pursued, in 4 9 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E others two or even all three of the approaches levels achieved at the end of its projects--in itself are reflected. a measure of sustainability. This increased dissemination through a well-functioning market In tackling poverty through NRE provision, the Bank's could improve livelihoods on a larger scale. recent areas of emphasis are to improve livelihoods and incomes and establish a sustainable process for Of the Bank's physical targets for renewable energy the full commercialization of renewables. Improv- installations, some have been surpassed, while ing livelihoods and incomes as key goals of others are making minimal progress. Except for renewable energy provision is evident in many hydro in Sri Lanka and India, where targets were of the most recent ongoing projects, such as in exceeded, physical targets for RET installations the Bolivia Decentralized Infrastructure for have not been met (see table 4.3). Each of the Rural Transformation Project (2003) and five closed projects involving the installation of Bangladesh Rural Electrification and Renewable solar home systems (SHS), which were mainly Energy Development Project (2002). intended for poor households, fell short of achieving their dissemination targets, in some As in the Uganda project, the goal of the Bolivia cases by a significant amount. Even in a project project is to promote the growth of the rural and with a highly satisfactory IEG rating, the Sri micro-enterprise sector through electricity and Lanka Energy Services Delivery (ESD) Project ICT provision, thus expanding employment and (1997), the SHS component did not do as well income-earning opportunities. Electricity access as the grid/off-grid hydro ones because, for rural schools and clinics is also intended to although the project surpassed its target for SHS improve primary education and preventive installation, the target had been revised health services. Availability or electricity for poor downward from its original figure. households will increase safety and time for study and chores. Monitoring and evaluation (M&E) systems in NRE projects have been mostly absent or weak, despite In an effort to raise levels of social development the goal of poverty reduction consistently stated in and economic growth in rural areas, the Country Assistance Strategies (CASs) of countries Bangladesh project seeks to support rural initia- with NRE projects. As a result, there are no active tives for the productive use of electricity, such as performance indicators, so evaluating the in agriculture, to increase income and improve subsidy-targeting and poverty-reduction im- the delivery of health and education services. pacts of improved access is difficult. For Increased access of households to reliable example, the Mali Household Energy Project supplies of electricity would enable more direct (1995) intended to improve the living standards gains; greater convenience, safety, and ability to of residents in 250 villages by employing them as operate small appliances; and indoor air quality suppliers in the firewood trade. The project also improvement from the elimination of kerosene planned to provide benefits for low-income smoke. urban wood fuel consumers in five towns by supplying them with cost-saving, improved The Bank has also sought to establish a multistake- charcoal stoves. However, no monitoring indica- holder commercialization process for NRE technolo- tors or systems were established to assess the gies. The Bank has done this by removing the income effects on the villagers and urban barriers to viable and sustainable renewables households. That makes an evaluation of the markets, building the confidence of investors project's impact impossible at this stage. and consumers, strengthening institutional capacity, and mobilizing private financing. As a The Senegal Sustainable and Participatory result of this process, an environment is likely to Energy Management Project (1997) was an emerge that will enable the development of NRE improvement over the Mali project in terms of in the Bank's borrower countries beyond the determining the economic benefits of the 5 0 A N N E X G : A S S E S S M E N T O F T H E N R E P O RT F O L I O ' S C O N T R I B U T I O N project on the villages, but it had important initiation and one year before its expected weaknesses. The project was designed to closing, the Bank and the borrower decided that generate revenue for low-income rural villages a monitoring system would be designed and by involving them in both the sustainable supply implemented to understand the socioeconomic of wood fuel to towns and various agriculture impacts of the different NRE technologies. and other natural resource-based activities. In terms of lack or absence of M&E, an exception But based on supervision documents, in is the Sri Lanka ESD Project (1997). Based on tracking the income the villages received, the detailed interviews with beneficiaries, the project made no distinction between income project conducted an evaluation of the social from the wood fuel component and income and economic impacts of electricity access from non-energy-related activities. How much through solar home systems and off-grid village the wood fuel component contributed to hydro schemes. The evaluation found the poverty reduction is therefore difficult to following improvements in the quality of life of measure. customers: Furthermore, although the project intends to · Women could do household work at night. benefit low-income urban households by · Children could study longer hours, and it was providing improved cookstoves, there was no felt their educational performance had indication that the cookstove component was improved. being monitored, and no information is available · Entertainment hours were extended, and fam- on whether the component benefited users. ily interaction was enhanced. Capacity building for monitoring and evaluation · A feeling of safety was increased. (M&E) design was provided in the project, and · Health conditions improved with the elimina- an M&E plan was developed on schedule. But it tion of kerosene lamp fumes. is not clear in light of the above what the plan's purpose was and what indicators were The survey, however, showed little evidence that monitored. electricity access from the NRE systems increased economic or income-generating The lack of effective M&E systems to determine activities apart from the seasonal employment poverty impacts is also found among the each village hydro scheme provides to 30­60 projects that have sought to improve electricity people in construction (IEG 2004). access. In the Argentina RERM Project (1999), performance indicators that were developed at Though gender impact has been a focus in the social start to assess welfare improvements included development goals of many renewable energy hours of lighting, study, and socializing and the projects,4 there is little evidence to support the claim extent of population migration. Yet no annual that women have benefited. The lack of proper target levels that could serve as benchmarks M&E of the impact on women is significant, were developed for these indicators. given the finding of some studies that women often lose when a wood fuel market is The project's implementation design also did established (IEG 2003b). The Mali Household not include steps for monitoring these indica- Energy Project claims to have benefited women tors or evaluating the impact of electricity access in both urban and rural areas substantially. In on poor households. Only the number of urban areas, women allegedly gained because of households and public centers connected to a the cleaner indoor environment and reduction renewable energy system were to be counted. in energy expenditures that improved stoves Although the steps to develop a complete allowed. Rural women supposedly benefited monitoring system were eventually taken, these from the creation of wood fuel markets and came rather late. Four years after the project's improved charcoaling techniques because they 5 1 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E tend to be major actors in the wood fuel chain. and enhanced income in rural areas through Yet no monitoring was done to determine electricity provision. It seeks to do this by whether the project actually benefited urban supporting the delivery of services by microfi- and rural women. nance (MFI) services for connection to electric- ity systems and of business development Increasing the income of women through their services (BDS) to rural enterprises. But no key involvement in wood fuel management and performance indicators exist under the project marketing and other income-generating activities for poverty reduction or welfare improvement. was a specific aim of the Senegal Sustainable and The project indicators consist only of those Participatory Energy Management Project (1997); regarding the implementation of MFI services training for women in these activities was included and BDS, such as the number of households in the project. However, it did not delineate how using MFI services to access electricity and the the welfare impacts on women were to be use of BDS by rural enterprises. The project determined. While the project claimed to have includes the development of a participatory achieved "gender development," it has provided M&E system to assess the project's ultimate no data to support this claim. The Argentina RERM results. But a year after approval, it was still Project, as the one in Senegal, identified women unclear what the M&E plan consists of and how as well as children as groups that would benefit the impact on the poor is to be evaluated. particularly from the project, but it too has not tracked their welfare for most of the project. Although late, the Bank has been developing approaches and tools recently to better assess the Increased income is a goal of nearly all of the recent socioeconomic impacts of improved energy access. freestanding projects (2001­present).5 But thus far, The Energy Sector Management Assistance supervision records do not provide data on Programme (ESMAP), for example, is pioneering increased household incomes. Only a few projects new methods and instruments. In 2002, ESMAP have M&E systems to determine the contribu- published Rural Electrification and Develop- tion of improved energy access to incomes. The ment in the Philippines: Measuring the Social goal of the Sri Lanka RERED Project (2002) is to and Economic Benefits, a study that offers a increase incomes of the rural poor by providing practical approach to qualitatively and quantita- electricity for nonfarm-productive activities. Yet tively assessing the effects of electricity access in the Project Appraisal Document, there is no on education, health, comfort and protection, description of an M&E plan or of the data- productivity, and other areas and discusses its collection methods that would be used. application in the Philippines. The study, which includes a measurement of the effects of The project's M&E system is not sufficiently electricity access in monetary terms, also offers developed to assess the project's specific contri- evidence that rural electrification has a positive bution to poverty alleviation. It does not capture impact on the poor and thus is an important the various income effects or distinguish element for development. between the income gains that are or are not attributable to energy access. For household ESMAP also recently released Guidelines for income, the only performance indicator is Designing Energy Modules in Multi-Topic measurable increases in incomes of households Household Surveys (2004) to help the Bank that gain access to electricity. integrate energy modules into its Living Standard Measurement Studies and other The Nicaragua Off-Grid Rural Electrification multitopic household surveys. The guidelines Project (2003) also illustrates the absence of were developed under the reasoning that with rigorous M&E found among many of the recent energy modules, surveys will be able to provide NRE projects. The project's main development more extensive and reliable data on household objective is to generate welfare improvements energy use. These data would enable not only 5 2 A N N E X G : A S S E S S M E N T O F T H E N R E P O RT F O L I O ' S C O N T R I B U T I O N better policy making for poverty-targeted rural empowerment through improved education for energy provision, but together with other girls and better access to information; income household information, the surveys provide benefits from the reduced cost of electricity M&E of the impacts of improved energy access from NRE; enhanced rural productivity and on living standards. development opportunities, and poverty reduction--and for each of these a specific set Some of the latest NRE projects are using these new of indicators to assess whether the objectives methods and tools to help the development have been achieved. community better understand the impacts of energy access. The Uganda Energy for Rural Transfor- By providing technical assistance to the M&E mation (ERT) Project (2001) will be the first cell of the public Rural Electrification Board, the project to use a variety of approaches and project also seeks to establish an institutional advanced analytical tools to rigorously quantify system for measuring and documenting the the various indirect impacts of electricity impacts of electricity provision and building provision on the different dimensions of rural borrower capacity for M&E. As with the Uganda poverty and growth. project, this one in Bangladesh aims to collect baseline data, resurvey households on a regular The M&E program will do several things: basis after electrification, and use the results to assess the performance of the rural electrifica- · Document services in energy, water, health, tion program in terms of socioeconomic education, and roads, and economic and social outcomes. welfare, in a sample of communities before project implementation to obtain baseline The recent initiatives to improve monitoring methods information. and instruments are too recent to be evaluated. On · Track welfare in these communities, includ- balance, it is still unclear whether the Bank's ing its distribution within the household and assistance to improve access through NRE has with respect to gender, to identify the changes significantly contributed to poverty reduction. It has that project implementation has brought. been often accepted that NRE supplying grid · Distinguish between the impacts on connected and off-grid energy has reduced poverty and and unconnected entities. brought about overall improvements in welfare · Compare project with nonproject communities and had positive economic impacts at the to distinguish the impacts from other society- national level. Yet the lack of evidence on wide changes. whether the Bank's NRE portfolio has made a significant contribution to poverty reduction is a As most of the impacts on poverty will be major analytical gap. This is consistent with indirect, the M&E plan's goal is to identify these IEG's finding that there is little hard evidence to effects and help draw lessons to maximize the date on the poverty-reducing impact of project's contributions in subsequent phases. community development projects (IEG 2005), The program builds on ESMAP's monitoring which include many NRE projects. work and was designed with reference to Uganda's poverty survey systems. The Bank's credibility is at stake when it adopts "helping the poor directly" as an institutional The Bangladesh Rural Electrification and mandate in its energy assistance without Renewable Energy Development Project (2002) knowing whether such an impact is being is another recent project that gives M&E more achieved. Addressing this information gap is emphasis. The project includes several socioe- especially critical for mapping the Bank's conomic development objectives--enhanced expanded lending for NRE. The Bank's lack of education; improved quality of life from greater leadership in promoting good M&E systems safety, comfort, and convenience; women's works against its catalytic role for poverty- 5 3 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E targeted NRE development in the long run. That baselines and setting indicators for future is because the Bank loses the opportunity to projects. It is hoped that the Bank's M&E work build critical monitoring capacity in its client in its Uganda and Bangladesh NRE projects will countries, which is essential for measuring lead the way. 5 4 ANNEX H: AN EVALUATION OF THE PORTFOLIO'S PERFORMANCE IN ACHIEVING GLOBAL ENVIRONMENTAL BENEFITS Together with GEF financing, the Bank pursued the able extraction of wood fuel energy for Energy Business Renewal Strategy (EBRS) objective household use to conserve forests. (Three of protecting the environment by removing market projects in the closed portfolio--in Chad, Mali, barriers to renewables. The environmental and Niger--and one ongoing project in Senegal objectives of the EBRS are twofold: protect the focused on the sustainable supply of wood fuel environment by removing the market and energy for household cooking and forest regulatory barriers to renewables and achieve conservation.) global environmental benefits. Excluding wood fuel projects, the Bank's NRE The Bank and the GEF have sought to achieve portfolio has been centered on electricity or the first objective by catalyzing impacts beyond heat provision through the use of solar, wind, direct, project-related ones and by using differ- hydro, biomass, and geothermal resources. Six ent strategies. These strategies have included projects involved renewables-based heating. using business models appropriate to the local Three were implemented in the Philippines and context and making financing available through one in Lithuania. Tunisia was the recipient of one various mechanisms. This annex focuses on the solar water heating project. effectiveness of the Bank-GEF in generating environmental benefits by examining closed In terms of achieving global environmental benefits NRE projects, which are the only ones with through NRE projects, the Bank's effectiveness was information on final impacts. generally satisfactory. Projects that aimed to reduce GHG emissions generally met their Out of the total of 27 closed projects (as of June targets, and wood fuel projects achieved their 2005), the GEF cofinanced 13. However, a total environmental objectives and had positive local of 17 projects included mitigating harmful impacts. Based on an assessment of the five environmental effects or the provision of an closed projects that sought to reduce GHG environmentally clean form of energy as a emissions and for which some data are available, project development objective. The 10 that did three projects met or nearly met their appraisal not were conventional energy or irrigation targets, and one project, in Tunisia, exceeded projects in which NRE constituted only a them. The one project that failed to achieve the component, although two geothermal energy expected reductions and fell far short of doing so projects in the Philippines were among them. Of (in Indonesia) was severely impacted by the the ongoing projects, 20 are GEF cofinanced. Asian economic crisis of the 1990s (see table 4.5). The Bank has sought to make energy use more The Sri Lanka ESD Project reduced GHG environmentally sustainable in two ways: (i) by emissions by a total of 514,000 tons. Although reducing the emissions of CO2 and other this is greater than the appraisal figure of 140,000 greenhouse gases (GHGs) through the substitu- tons, it did not include the targeted reduction tion of NRE for conventional ones and (ii) by from mini-hydro projects. The Indonesia SHS establishing management plans for the sustain- Project sought to mitigate GHG emissions by 5 5 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E replacing household kerosene and diesel use the Tunisia project had unqualified success, as it with PV systems. Due partly to the economic surpassed its targets for carbon reductions. crisis the country experienced, the number of SHSs installed was far below the level targeted at The four projects for sustainable wood fuel appraisal. As a result, though the goal was to management and forest conservation, unlike reduce fossil fuel use by about 546,000 kiloliters, those that sought to reduce GHG emissions, only about 3,700 kiloliters were conserved. were successful overall in meeting their environ- mental objectives. For the India Renewable Resources Develop- ment (RRD) Project, the carbon emissions Evidence on the environmental performance of the avoided were estimated at about 5.4 million, 1.1 portfolio is partial. Owing to poor M&E systems in million, and 94,000 tons over the lifetime of the the projects, more than a third have either insuffi- subprojects for small hydro, wind, and PV, cient or no information on the achievement of their respectively. The emission reductions achieved environmental objectives. Fifteen of the 27 closed for solar PV were below predictions (appraisal projects examined included a component for documents did not present emission-reduction RET installation or improvement.1 However, target figures for each of the RETs separately, but nine of these either failed to provide informa- provided a figure for wind and PV combined). tion on their environmental impacts or did not have clear targets for GHG or wood fuel use The Lithuania Geothermal Project also failed to reductions, or both. In most cases, neither reach the level of carbon reduction set at targets nor specific impacts were provided.2 appraisal. However, the project surpassed its The evidence thus far indicates that the quality targets for reducing SO2 and NOx. Table H.1 of environmental impact monitoring across helps explain the gap between targeted and the portfolio was quite uneven and that actual reductions in GHG emissions, in that the adequate M&E is required to know the full physical installations of RETs achieved in several extent of the environmental benefits from NRE key projects also fell below their targets. Only projects. Table H.1: Global Environmental Goals and Achievements of Wood Fuel Management Projects Project Environmental goals Achievements Chad Household Energy · Bring 300,000 ha of forest under sustainable · 500,000 ha brought under sustainable community wood fuel management. management. Niger Energy · Promote a more effective management of natural forest · Conserved the forest resource base, developed cover and firewood conservation. rural wood fuel markets, and established a sustainable supply of wood to urban areas. Mali Household Energy · Reduce wood fuel consumption by 330,000 tons/year. · Wood fuel consumption decreased by 400,000 · Cover 720,000 ha of forest with sustainable tons/year. management. · Only 320,000 ha brought under sustainable management. Senegal Sustainable and · Annual sustainable wood fuel production · Sustainable wood fuel production of 400,000 Participatory Energy of 300,000 tons/year. tons/year. Management Project · Reduce wood fuel-related deforestation by · Wood fuel-related deforestation reduced by 20,000 ha/year. 29,000 ha/year. · Reduce CO2 emissions by 500,000 tons. · CO2 emissions reduced by 1.2 million tons. Note: ha = hectares. 5 6 A N N E X H : A N E VA L U AT I O N O F T H E P O RT F O L I O ' S P E R F O R M A N C E According to the GEF Climate Change Program the largest contribution in the future are grid- Study (GEF 2004), the contribution re- connected ones. newables have made and will be able to make to global climate change prevention is not The global and local impacts of NRE can be greater substantial. For the Bank to expect the direct in the long term if projects catalyze the creation of impacts of its NRE projects to play a major role sound markets for NRE, as the environmental in reducing GHG emissions is unrealistic. benefits will come not so much from the number Photovoltaic systems, which feature heavily in of systems that projects install, but indirectly and the Bank's off-grid electricity provision and in the future from the instruments they create. rural electrification projects, have a low impact Considering this, it is important to recognize that on GHGs. In the renewables subsector, the the Bank has achieved its greatest emission systems that have had the largest effect on reductions from its GEF-cofinanced investments carbon emissions and the potential to make in energy efficiency (GEF 2004). 5 7 ANNEX I: PRIVATE SECTOR DEVELOPMENT IN THE BANK'S NEW AND RENEWABLE ENERGY PROJECTS The Bank's effectiveness in pursuing the EBRS also a key strategy in a number of active projects objective of promoting private sector development in Argentina, China, and Uganda.1 (PSD) was substantial overall and high in recent projects. In practice, the Bank focused on The Argentina project, for example, has required commercializing NRE technologies; involved that private concessionaires compete for the diverse public, private, and civil society exclusive rights to serve an entire province with stakeholders; and was flexible in its approach to SHS, off-grid mini-hydro, and small wind units. strengthening local financial institutions to The project's goal has been to involve a small provide long-term financing for rural energy number of large and capable private actors, businesses. Most of the electricity-oriented NRE given that a conducive regulatory environment projects used complementary interventions to largely exists from prior energy sector commercialize NRE technologies as follows: unbundling and privatization at the federal level. · Promoting private competition Together with fostering competition, the Bank also · Encouraging cost-effectiveness through laid the groundwork for promoting economies of economies of scale scale to achieve greater cost-effectiveness in NRE · Mobilizing financial resources through public- provision. The Argentina project is a good private partnerships example of this approach. By providing · Providing output-based aid for gradual phase- exclusive rights over a province to a few private out concessionaires with the necessary organiza- · Verifying and improving the technical per- tional and financial resources, the project has formance of NRE systems to ensure quality expected them to achieve reductions in standards in the market and to boost con- equipment, transaction, and operation costs. sumer confidence The project also promoted scale economies to · Demonstrating the commercial viability and ease public sector administration and regula- utility of NRE tion, cover a large and dispersed population · Using sales models for RET delivery effectively, serve consumers over a long period, · Involving the beneficiary communities. and enable good private sector investment returns with minimal subsidies. Other projects Most of the electricity-oriented projects have using economies of scale to serve a large used several of these interventions as population and meet institutional and produc- components that complement one another. tive needs are the Uganda Energy and Rural Transformation Project and the Sri Lanka Encouraging private competition has been a charac- RERED Project. teristic of the NRE portfolio in general. Among closed projects, it was most evident in the The Bank supported the creation of public-private Indonesia SHS Project, the Sri Lanka ESD partnerships to mobilize financing for RETs. In India, Project, and the Sri Lanka RERED Project. It was where the Bank has made some of the largest 5 9 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E investments for renewable energy, a public- with a limited time subsidy, channeled through private partnership was created to mobilize the consumer and used to pay the tariffs, after the financing for RETs. The India RRD Project sought concessionaires have financed the costs of to strengthen the capacity of a specialized public equipment and installation on their own. institution, the Indian Renewable Energy Development Agency, to finance private OBA appears to have played a role in increasing developers of wind energy, solar PV, and small consumer confidence in the private provision of NRE, hydro. This strengthening aimed to support although evidence is limited because of the lack NRE commercialization. of M&E on private sector activities. Some projects have explicitly sought to boost The follow-up Second Renewable Energy Project consumer support and demand for renewables has continued this strategy of strengthening the by improving the technical performance of RETs. agency to promote private investments in small In the China Renewable Energy Development hydro (IEG 2003a). These partnerships are also Project, support has been provided to improve evident in the Sri Lanka ESD Project, discussed SHSs. As well, the technology standards the in several places elsewhere in the report. project has set have already had the effect of increasing consumer and investor attraction for Output-based assistance (OBA), financed through these systems and have raised competition and GEF grants, was used to ensure that RET installation reduced prices. Improving the technology and service met dissemination volumes and quality standards of SHSs was also an important standards. This review focused on the Bank's component of the Indonesia SHS project. contribution to creating an investment climate conducive to NRE commercialization and the While pursuing the installation of RETs, the Bank mechanisms to bring this about, instead of on has also sought to demonstrate the commercial the rationale for subsidies, which have been the viability and long-run economic potential of NRE subject of much previous analysis. technologies through pilots. For example, in the Sri Lanka ESD Project, a pilot grid-connected GEF subsidies are being phased out in Bank/ wind energy component was implemented. GEF-cofinanced projects such as those in India and Sri Lanka. In these projects, the GEF grant To encourage private investment and minimize has been provided after independent verifica- notions of risk, developers have also been tion, audits, and performance monitoring. The provided with market information on re- specific arrangements, however, have varied newables. At the same time, RET demonstrations across projects. In the Indonesia SHS Project, a and promotional campaigns have been relatively early one in the portfolio, SHS dealers conducted for rural consumers, as was done in received a small grant for each unit sold and the Argentina project for wind energy, to educate installed. Modifying the use of OBA, later rural residents on the benefits of NRE technolo- projects were designed for the phase-out of gies and thus increase demand for them. subsidies to place the private actors on an independent footing and encourage the To deliver RETs to consumers through the private development of a fully commercialized NRE sector, Bank projects have used different sales models. market. Projects have employed PV sales models using either cash sales or various forms of credit, such as The Sri Lanka ESD Project, for instance, included dealer credit, end-user credit, and lease or hire- a one-time grant to developers to reduce their purchase schemes. Examples are Indonesia SHS, capital and planning costs for off-grid RETs (IEG China Renewable Energy Development (RED), 2004). To limit private sector dependence, the India RRD, Sri Lanka ESD, and Uganda Energy for Argentina RERM Project provides concessionaires Rural Transformation (ERT). In the Indonesia SHS 6 0 ANNEX I: PRIVATE SECTOR DEVELOPMENT IN THE BANK'S NEW AND RENEWABLE ENERGY PROJECTS project, dealer credit was used--private well, such as the Sri Lanka ESD Project and enterprises sold SHSs and extended credit to rural Bangladesh Rural Electrification and Renewable consumers through hire-purchase schemes. The Energy Development Project. PV dealers accessed credit on normal commercial terms from participating local commercial banks, The private sector has been involved in the develop- which refinanced their loans from the Bank. ment of renewable fuels, and private firms have participated in efforts to create improved A smaller number of projects have explored cookstoves. The Bank, in partnership with a firm concessional, fee-for-service models, but these in Zimbabwe, developed a low-cost, biomass- have been less successful than sales models. based ethanol gel fuel as an alternative to Regulated concessions, using fee for service, petroleum-based products and has conducted have been part of the Argentina RERM Project consumer tests and market assessments in and Cape Verde Energy and Water Sector Reform Ethiopia, Malawi, Mozambique, Senegal, and and Development Project (1999). Although the Zimbabwe. For more efficient use of wood fuels likelihood of reaching more poor is greater with and to shift use to conventional household fuels, this model, the approach has been problematic such as liquefied petroleum gas, the Bank has in Argentina, and very few PV systems have been involved private firms in the Niger Energy installed there. Project (1988), Mali Household Energy Project, Senegal Sustainable and Participatory Energy In China, a fee-for-service model was considered Management Project, and Chad Household unworkable and was rejected early in the project Energy Project for the development and dissem- design, partly because no appropriate authority ination of improved cookstoves and interfuel existed in the electric power or agricultural/rural substitution. sector to regulate concessions. The Sri Lanka ESD Project demonstrated the failure of a fee- The Bank's effectiveness was modest with respect to for-service model in that country. It was found the EBRS goal of good governance and creation of that monthly collection expenses under the regulatory environments conducive to NRE. More scheme were too high. Experience with fee-for- recent projects and ESMAP assistance have service models is still insufficient to point to real started to address the issue. Regulatory successes (GEF 2004). improvements conducive to NRE commercial- ization have been the orphans of energy The Bank involved rural communities in household reforms, and this works against the Bank's own energy projects aimed at commercializing wood NRE goals. That is true because privatization and fuels. All of the household energy projects competition in power markets tend to weaken sought to engage rural communities as private interest in serving rural markets, lead to a prefer- sector actors in the supply of wood fuels to ence for petroleum-based fuels, and shorten urban consumers: the Niger Energy Project time horizons for fuel choices. (1988), Mali Household Energy Project (1995), the Senegal Sustainable and Participatory The Bank focused on the reform of large utilities Energy Management Project (1997), and the and gave inadequate attention to the critical Chad Household Energy Project (1998). issue of reforming regulatory and policy environments for NRE, particularly during the These projects were designed so that the system early to mid-1990s, to create objective, transpar- of regulated wood fuel markets and village- ent, and nondiscriminatory regulatory based, sustainable forest management benefits mechanisms aimed at leveling the playing field the communities and thus provides them with for renewable energy. Renewable energy the incentive to participate. Electricity-centered competes--and is stunted--in markets with dis- projects have sought to engage communities as torted prices for conventional energy sources, 6 1 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E often through government subsidization of strengthen certain aspects of the regulatory and petroleum products. policy framework for RETs. The planned framework is innovative in that the goal is to vary Additionally, where privatization and un- tariffs by region according to consumers' ability bundling of the energy sector have not occurred to pay and to be higher for less-viable areas. or are incomplete, the true costs of grid-based Furthermore, smaller grid projects will come rural electrification remain hidden because the under lighter regulation. implicit cross-subsidies in the electricity subsec- tor are not transparent. Thus, the fact that off- The Bank has had some early successes in resolving grid NRE systems can be more cost-effective regulatory and policy uncertainties. In the Sri does not emerge. Leveling the playing field for Lanka ESD project, a standardized Small Power renewables within the broader energy sector Purchase Agreement (SPPA) was developed therefore becomes important for renewable under the project and employed to resolve a energy promotion. tariff determination issue between the Ceylon Electricity Board and developers. As a result of Neglecting NRE while energy sector reforms are the agreement, there was significant growth in being designed and implemented can have important the number of both mini-hydro and wind power negative consequences that are slow and hard to developers (IEG 2004). reverse. This can be seen in the India RRD Project, which, while seeking to commercialize Prior to the SPPA, purchasing energy from small small hydro, did not address the regulatory power producers often required lengthy uncertainties. The project could not do so bureaucratic processes and involved high costs, because of inconsistencies between national which ultimately made these arrangements and state-level frameworks, reform backsliding unviable. The SPPA was a standardized, legally in some of the states, and the absence of a clear binding agreement between the national utility, policy framework and future plans for renewable the Ceylon Electricity Board and small energy energy. Consequently, the small hydro develop- producers (<10 MW). It involved a non- ment was adversely affected (IEG 2003a). negotiable, formula-based tariff structure, based on avoided cost for the Energy Board, the lack When the India Second Renewable Energy of which had impeded small grid-connected Project was designed, the Bank was slow to learn power development. The SPPA eliminated the lesson from the RRD Project and did not market uncertainty and created transparency. pursue a nondiscriminatory regulatory environ- Furthermore, the SPPA included transmission, ment for NRE. As a result, the continuing distribution, and performance obligations, thus government policy shifts and uneven state helping normalize the participation of small adoption of national legislation deterred private power producers in the electricity sector. actors from investing in renewables. The contribution of the SPPA to the project was Only in the late 1990s did the Bank begin to seen directly in the significant growth it brought emphasize the promotion of policy and regulatory in both mini-hydro and wind power developers. environments that are conducive for its NRE projects. The experience of the project illustrates that even The design of the Argentina RERM Project, for when renewable energy by small power produc- example, took into account the opportunities ers is profitable and long-term financing is provided by the country's advanced privatiza- available, an SPPA and a predictable purchase rate tion in the energy sector and had a sound regula- are essential elements of a successful renewable tory framework. In the Uganda ERT Project, the energy development program (Ferrey 2004). Bank took this one step further. In its first phase, before major private sector investments were The Bank's analytical and advisory assistance solicited, the project aimed to develop and (AAA) in the Mauritius Sugar Energy Develop- 6 2 ANNEX I: PRIVATE SECTOR DEVELOPMENT IN THE BANK'S NEW AND RENEWABLE ENERGY PROJECTS ment Project (1992) helped establish a policy development banks in financing private framework for private sector involvement there developers, as was evident in the Sri Lanka ESD as well, in bagasse-based power generation. The Project. As a result, private sector involvement project supported the policy of private power grew significantly, and a strong NRE industry in generation based on bagasse as a substitute for the country now exists. In 2004, there were 11 imported fuels. mini-hydro developers, 9 accredited solar companies, and 20 active village hydro develop- There was a strong general consensus among ers. A large number of consultants and trainers both private and public evaluation respondents have also emerged. that, although the Bank's contribution solely in financing terms was small and its involvement Through using innovative financing mech- by completion minimal, its advisory and "honest anisms, the project illustrated that the risks broker" role was critical in facilitating the launch involved in NRE are manageable and was able to and implementation of the country's Bagasse make the local financial institutions more Energy Development Program. The Bank's responsive to the market. Another outcome was nonfinancial AAA during supervision missions the growth in the number of financial institu- related to PSD--as well as the economic and tions interested in lending for NRE. In the sector work on the theory and best practices for follow-up project, a higher number of participat- energy pricing based on the avoided-cost ing credit institutions are involved, and several principle--were often cited by stakeholders as that are not involved are financing renewable specific examples of the value the Bank added. energy subprojects as well. Finally, the ESD project also engaged and strengthened a In recent years, ESMAP--through its AAA--has microfinance NGO to make SHSs more afford- helped establish the regulatory frameworks for able to rural consumers (IEG 2004). rural electrification, as has been evident in Argentina, Bolivia, and Nicaragua.2 This AAA has The India RRD Project helped change the public helped establish appropriate and coherent sector dominance in NRE financing to one regulatory frameworks regarding off-grid electri- characterized by PSD and more private develop- fication; it covers tariff setting, quality of service, ers. As a result, competition has improved and delivery service obligations, technical standards, additional multilateral and bilateral support for and other matters. The project also assists commercializing NRE was mobilized (IEG regulatory agencies enforce and supervise off- 2003a). grid rural energy policies and develop detailed regulations in the context of national energy But in some cases, institutional weaknesses have legislation. been constraining factors. Public partners have been weak, and private investors lacked experi- The results of the project are being incorporated ence and readiness. Following the India RRD into the design and implementation of the rural Project, the Indian Renewable Energy Develop- electrification projects in these countries. An ment Agency still lacked financial strength and additional feature of this ESMAP assistance is institutional capacity to promote NRE commer- that it has involved and promoted the exchange cialization on a sustainable, cost-recovery basis. of information and experience among policy It continued to accumulate nonperforming makers in these countries. assets and have higher financial risks, limited capital availability (because it is not a financially The Bank's effectiveness was substantial in pursuing competitive institution), and noncompetitive the EBRS goal of supporting local financial institu- terms and processes. The agency also lacked the tions for RET commercialization and establishing management and operational principles and markets for renewables. The Bank successfully practices to meet clients' needs and simultane- promoted the role of local commercial and ously mitigate risks. The agency had not been 6 3 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E fully effective in facilitating NRE development low. The risks that the private sector will and had only partial support of the various consider--that (i) Phase One incentives are not stakeholders (IEG 2003a). These weaknesses significant, (ii) the Renewable Energy Fund will affected its performance at the start-up of the not function effectively, and (iii) the new regula- India Second Renewable Energy Project. tory framework will not work properly--remain as substantial as they were at project initiation. Argentina's economic crisis had a significant adverse impact on the RERM Project. But the Growing evidence points to the private sector's lack of success in transferring rural electricity effectiveness in delivering rural energy services-- provision to the private sector has also been due but only through public-private partnerships that in large part to an insufficient number of include community organizations and consumer qualified firms bidding for concessions. groups. The private sector working alone cannot Moreover, the performance of provincial bodies directly improve energy access for the poor. In in regulating the NRE systems has been unsatis- the Sri Lanka ESD Project, solar companies were factory. This is despite the country's prior to receive financing to provide credit to experience with privatization at the national consumers. Yet they were unwilling or unable to level, the privatization of provincial markets, and offer this service, so market development for training provided in the project on regulation. SHS was initially slow. Adapting to the situation, (An insufficient number of qualified firms and an the project at the midterm review designed and inability to transfer energy provision to the implemented a microfinance model with a key private sector were seen as substantial risks at NGO3 to expand the reach of the SHS the onset of the project.) component in low-income, rural areas by making the units more affordable. Meetings that The Uganda ERT Project (2001) sought to the project held with the full range of stakehold- ensure that the public and private entities ers also helped develop an arrangement for the involved have the necessary capacity to NGO to assist in financing a few small electricity undertake their respective roles before substan- cooperative societies to build, own, and operate tial investments are made in subprojects. village hydro projects (IEG 2004). Business development services will be made available to private sector firms, while technical The India RRD Project (1992) relied solely on assistance will be provided to public regulatory the private sector to increase energy access to agencies. the rural poor. But it was unclear at the outset how to work with which private investors. However, major delays in these activities have Although the Indian Renewable Energy unfortunately delayed the establishment of a Development Agency accredited a number of process to commercialize NRE. Some of these rural credit organizations, its credit policy delays have been in (i) preparing the proposed tended to favor larger enterprises and assisted renewable energy development framework, smaller-scale entrepreneurs only to a limited which has contributed to uncertainty over the extent, despite these entrepreneurs being better regulatory environment, particularly tariff suited to serve the rural poor. Also, the agency's setting; (ii) establishing a renewable energy complex procedures and requirements discour- database for the private sector; (iii) having aged small to medium-size start-up companies, capacity-building activities for the public sector which could have played an important role in on the regulatory framework; and (iv) establish- the introduction of SHS. ing the financing institution (that is, the Renewable Energy Fund). The Bank exacerbated this bias by preferring to finance consumers directly instead of providing As a result, private sector investments to meet direct working capital loans to public or private the project's Phase One initial targets have been developers. As a result, the project did not 6 4 ANNEX I: PRIVATE SECTOR DEVELOPMENT IN THE BANK'S NEW AND RENEWABLE ENERGY PROJECTS adequately facilitate energy access, particularly (IDCOL) have been serving as the two through SHSs, for the rural poor (IEG 2003a). implementing agencies. While the Electrification Board provides SHSs on a fee-for-service basis, The Argentina RERM Project has not been able IDCOL's role has been as a financial intermedi- to involve the private sector in providing energy ary to make longer-term refinancing and grants services to the rural poor to the degree available to NGOs, MFIs, and SHS suppliers, so expected, largely because the provincial regula- that these entities can provide financing to tory authorities and concessionaires have had consumers for SHS purchases. difficulty reaching participation agreements for serving the dispersed market. Concessionaires In mid-2004, there were nine participating have been reluctant to serve rural areas because organizations, and they have installed roughly of the uncertainties that a freeze instituted on 19,700 systems--nearly twice the number tariffs for the concentrated electricity market targeted for this year at appraisal. Furthermore, raises for their contracts. the collection of consumer installments by the organizations has been quite good. What have The result is that two years before project made this component successful are the quality closure, fewer than half the concession management of IDCOL and, most likely, the long contracts targeted for serving dispersed markets experience of many NGOs and MFIs in with NRE systems were in effect. This has led to Bangladesh with micro-lending to the rural poor. doubts that provinces with important dispersed markets will be served through the project. It In Uganda, village banks were given a revolving has also led to a substantial risk that the transfer fund, which they use to lend to consumers at of rural electricity service to the private sector reduced rates with flexible repayment sched- will not be accomplished. ules. This mechanism was developed after it was discovered that dealer and consumer credit that While private concessionaires have lacked the development banks offered reached only the incentive to serve dispersed, rural areas, cooper- wealthiest households. atives and public distribution utilities have shown interest, even during the economic crisis, The Household Energy Projects in Niger (1988), in serving the rural market. On the borrower's Mali (1995), Senegal (1997), and Chad (1998) suggestion, the project was amended to allow demonstrate that where low-income rural these institutions to apply as concessionaires for communities constitute the private sector, in the the installation and maintenance of NRE case of these projects in the wood fuel trade, systems. Moreover, the Ministry of Education PSD was most successful. The significant level of offered additional financing to support PV instal- community engagement can be attributed to the lation in rural schools. The Bank showed flexibil- incentives the projects offered to the villages of ity and supported the participation of these new gaining economic benefits. institutions. This outlook has the potential to improve the project's level of achievement in The final outcome of full NRE commercialization with reaching poor, rural areas. no subsidies has not yet materialized. But if the Bank's desired interim outcome is to mainstream and Learning on the part of the Bank that NGOs can scale up a process in that direction, the scorecard is play vital roles in private sector-led renewable satisfactory overall, particularly in recent years. energy provision also appears to be reflected in the Bangladesh Renewable Energy and Rural Market penetration of NRE technologies has Economic Development and Uganda ERT proj- been more successful in projects that combine ects. To promote the use of SHSs in rural areas, elements of policy, finance, and business the Rural Electrification Board and the development, such as the Sri Lanka ESD Project. Infrastructure Development Company Limited In general, however, the creation of a sustain- 6 5 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E able market for NRE faces a number of obstacles, financial, institutional, price, and technological especially where NRE (in cases where it is the barriers to large-scale commercialization have economically least-cost option) remains been removed. financially more expensive and less accessible than conventional energy sources. Building on the RED project's pilot wind energy component, the preparatory work for the Nevertheless, increased use of NRE is emerging proposed China Renewable Energy Scale-Up in countries with more developed renewable Program is being implemented to facilitate wind energy policy environments and financing energy scale-up. The project also provided much capacities. Although major target groups, such of the information for the drafting of the as the very poor, still cannot afford PVs (or Renewable Energy Law, which would require that conventional grid electricity unless very low a certain amount of China's energy be supplied by lifeline tariffs and household connection renewables. This case illustrates a new attention subsidies are offered), some PV-oriented on the Bank's part to ensuring an environment projects have been successful in niche markets, conducive to renewable energy.4 such as clinics, schools, and high-value applica- tions, and where households have disposable Regulatory uncertainties in India and the income. Grid-connected renewable energy uneven nature of the frameworks across the systems might be viable where adequate policy states have kept NRE commercialization from and regulatory support is available. reaching its full potential. However, in some states real achievements have been made. These The recent China RED Project has been quite can be attributed to the stakeholder consulta- successful in helping establish a process for NRE tion and negotiations processes that the first two commercialization. This project has led to the projects (the RRD Project and the Second emergence of a sustainable market for SHSs in Renewable Energy Project) set in motion. One the western region. OBA has been helping PV issue was tariffs: there was discord between companies meet working capital needs and tariffs set at the national level and those finance consumers. Moreover, in some cases, PV proposed by the states, and lower state levels companies have invested in strengthening their provided a disincentive to NRE developers. In financial management and human resources and Tamil Nadu and Karnataka states, however, the developing products and distribution networks. state electricity boards and private developers have reached a mutually acceptable agreement A key component of the project is support for on tariffs. It will enable electricity supply from technology improvements and standards being renewables despite this tariff level being lower set to increase performance and reduce costs. than the national figure.5 These improvements have had a direct positive impact on market development: new products M&E of PSD outcomes in renewable energy projects have been developed, greater competition has needs to be improved soon and significantly, particu- emerged, and prices have decreased. Most market larly for projects with OBA components that link participants recognize the project's standards as financial incentives to delivery of specific perform- being a key factor in the market's development. ance indicators. The Bank's renewable energy projects even up to the late 1990s have been Twenty-five companies are now competing (up somewhat experimental. As the Project Appraisal from 16 at project commencement), and Document of the Argentina RERM Project states, additional companies, mostly small and "...as more international experience in... differ- medium-size enterprises, are in the process of ent delivery mechanisms is obtained, it is antici- qualifying. In terms of physical targets, 410,000 pated that not one but several delivery SHSs have been sold (compared to 363,000 at mechanisms will be found effective, depending appraisal). But more importantly, the main on the particular country context." 6 6 ANNEX I: PRIVATE SECTOR DEVELOPMENT IN THE BANK'S NEW AND RENEWABLE ENERGY PROJECTS However, it is too early for any conclusions to be operations to make this conclusion. Effective made on the success or failure of different M&E of projects with OBA components is commercialization approaches because M&E of especially critical, given the rapid increase in the impact of Bank interventions has been performance-based operations and the inadequate overall. For example, in the India importance of enabling comparisons across RRD Project, M&E within the implementing and projects to sift through what works and what financing body was weak, but the Bank did not does not in OBA schemes. make the necessary effort to strengthen the institution's capacity (IEG 2003a). Similarly, M&E of NRE commercialization and PSD in although capacity building in M&E of the private project- and country-specific contexts are sector was one of the activities in the Argentina essential for learning what type of private actors RERM Project, there is little evidence from the to involve, determining and revising subsidy project documents on whether the M&E that was levels and OBA mechanisms, and mitigating conducted provided information on the success investor risk in the renewable energy subsector. of the concessionaire approach that was used. The results would also provide signals to investors whether transparency and predictabil- Another example is the Indonesia SHS Project. ity in the regulatory framework for renewables Although the Bank claims that a lesson from the are being achieved. M&E systems will need to be project is to scale down performance-based strengthened if the Bank is to (i) learn from the grants to facilitate the transition of companies to successes and shortcomings of its NRE commercial operations, there is insufficient approaches in diverse contexts and (ii) derive information available from project documents from these lessons the basis for scaling up its regarding the effect of the OBA on private support for NRE. 6 7 ANNEX J: IMPACT OF ANALYTICAL AND ADVISORY ASSISTANCE The relevance and efficacy of the Bank's new and ture review and a small survey. A number of renewable energy AAA is high. Effective AAA has Bank-GEF projects have contributed directly to been a key factor of performance in successful NRE the development of renewable energy policies projects. Almost all NRE projects had AAA associ- by drafting or revising national renewable ated with their preparation and appraisal. AAA is energy strategies and action plans: in Indonesia defined broadly to include NRE-related studies, (1997), China (1999), India (1992), Sri Lanka technical assistance, training, workshops, pilot (1997), Uganda (2001), and Argentina (1999). activities, and study tours. However, very few of the projects explicitly focused on power sector reform. In some cases, formal economic and sector work also addressed NRE issues. Throughout the NRE Another area where Bank-GEF AAA and projects portfolio, it was evident that AAA played an have been successful is in establishing standards, important role in supporting both project codes, testing, and certification related to PV design and implementation by addressing a systems. China has adopted a national standard wide range of issues, including the following and testing procedures for SHSs, which the Bank (among others): project helped to develop. The standard has played an important part in improving the quality · Pre-investment assessments, market assess- and reliability of PV systems to the benefit of the ment surveys, feasibility studies market and consumers. Other projects (for · Selection and strengthening of the project im- example, Argentina) also aim to develop plementing agency standards. In Indonesia, the project helped · Technical design of project components develop a domestic testing and certification · Development of standardized SPPAs laboratory that has obtained international · Design of financial intermediation mechanisms accreditation for PV component testing. · Analysis of economic pricing and tariff-setting options Examples of AAA for specific projects are shown · Implementation action plans, road maps for in table J.1. In several documented cases, the AAA scaling up interventions were instrumental in resolving · Technical standards serious project implementation issues. The Sri · Practitioners' workshops (for example, quality Lanka and Mauritius cases illustrate problems that processes and control) were resolved through AAA at the critical juncture · Analysis of regulatory requirements for NRE of the midterm review. commercialization · Monitoring and evaluation methodologies and In addition to the NRE community of practice associated country case studies. within the Bank, target audiences have included government officials, private companies The direct, positive impact of AAA on NRE promotion interested in NRE investments, commercial is substantial, and country beneficiaries have been banks and MFIs, the academic and research diverse. This conclusion is based on the litera- community, NGOs, and energy consumers. 6 9 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E Table J.1: Examples of Analytical and Advisory Assistance/Economic and Sector Work in NRE Projects Project AAA/economic and sector work activities Sri Lanka Energy Services Delivery · Development of an SPPA that resolved the tariff issues between developers and the Ceylon Electricity Board and was a key factor in mini-hydro growth · Prefeasibility studies for the project's mini and micro-hydro components to prepare a pipeline of subprojects · Wind prefeasibility study · Survey of residential and commercial energy-consumption patterns · A 250-system pilot project implemented for the solar PV component · Technical specifications developed for the solar and micro-hydro components India Renewable Resources Development · A review of the government program on nonconventional energy sources and follow-up preinvestment studies. The review's conclusions that power generation from grid-connected mini-hydro and windfarm systems, and from solar PV, offer commercialization opportunities served as the rationale for the project. · A study on independent power producers helped bring about an important shift in the government's approach to renewable energy development. · Technical studies for the various components Mauritius Sugar Energy Development · Research on sugar bioenergy and the policy framework requirements, and an energy sector review · Bank facilitation of public-private consultations and eventual partnerships Argentina Renewable Energy for the Rural Market · Helped countries establish appropriate and coherent regulatory frameworks for tariff Bolivia Decentralized Infrastructure for setting, quality of service, delivery service obligations, and technical standards in Rural Transformation off-grid electrification Nicaragua Off-Grid Rural Electrification · Assisted regulatory agencies with enforcement and supervision of off-grid rural energy (under the ESMAP project Regulatory Issues of policies and with developing detailed regulations in the context of national energy Off-Grid Energy Services Delivery as Part of legislation National Rural Electrification Strategies) · Results of AAA project have been incorporated into the design and implementation of the Bank's rural electrification projects. · Promoted the exchange of information and experience among policy makers in these countries Uganda Energy for Rural Transformation · Conducted a rural electrification strategy study (assessing demand and supply of electricity in rural and peri-urban areas), which served as a basis for the project · The Uganda project plans to develop detailed regulations under the Electricity Act. China Renewable Energy Scale-Up Program · The program includes the development of a mandated market share for renewable energy. (proposed) Cost efficiency has not been established. Although without permitting any comparability, only points relevant and effective, the cost-efficiency of NRE- to a very wide range of costs for an equally highly related AAA has not been studied to date in a diverse set of AAA outcomes. methodologically rigorous manner that com- pares alternative AAA delivery systems for the Many challenges remain in ensuring that the Bank's same stream of knowledge- or capacity-building AAA keeps pace with new issues as the NRE portfo- benefits. The available data consist of absolute lio is scaled up. As a key tool of quality assurance, cost figures for each AAA intervention, which, the Bank should internalize the costs of AAA 7 0 A N N E X J : I M PA C T O F A N A LY T I C A L A N D A D V I S O RY A S S I S TA N C E instead of depending mainly on bilateral donor would attract commercial private investor grants and trust funds. A complex AAA agenda financing? lies ahead for NRE, as the scaling up of the Bank's NRE portfolio has resulted in the need The Bank has depended in large part on external for AAA to address new and more multifaceted funding to cover AAA costs. Funding sources, issues. This statement is based on interviews and although varied, have come mainly from a small survey. external donors. The Bank's NRE-related AAA has been funded by donor consortium of Three issues (among others) have immediate ESMAP; project preparation funds from GEF or relevance to developing countries, but little or the Policy and Human Resources Development no analysis has been done to date for them: Fund from the government of Japan; various bilateral donor trust funds; and, to a limited · What is the economic and security rationale to extent, project financing. This has created move away from the centralized utility model disconnects and time lags between meeting the (large power stations supplying the traditional country clients' needs quickly and fulfilling the residential, commercial, and industrial sectors) procedural and fiduciary requirements of toward the distributed utility concept (a con- mobilizing external funds, which are intended trol center dispatching power supplies from to benefit the country clients and not substitute distributed sources, including conventional for the Bank's internal budget. and decentralized renewable energy options)? · In planning energy mixes, what are the trade- To maintain its comparative advantage in the offs in adopting a portfolio approach, that is, global knowledge market, the Bank should adding the fixed costs of renewable energy tech- internalize the costs of AAA, particularly those nologies to a fossil fuel­based generating mix? that directly affect project design and implemen- · What is the scope for innovations in power tation and are therefore part of the Bank's own purchase agreements and tariff regimes that work. 7 1 ENDNOTES Executive Summary even earlier, to 1980, with the establishment 1. The World Bank's Energy and Water Depart- of the Renewable Energy Unit in the then- ment commissioned this study. centralized Energy Department. However, for- mal institutional strategies started only in 1993. Résumé analytique 2. The analysis was conducted on an economic 1. Étude réalisée à la demande du Département basis, excluding transfer payments such as énergie et eau de la Banque mondiale. taxes, duties, interest payments (including interest during construction), and subsidies. Resumen Physical contingencies are included, but price 1. Este estudio fue realizado por encargo del contingencies are not. The cost comparisons Departamento de Energía y Agua del Banco were done in real 2004 U.S. dollars. Mundial. 3. The cost ranges shown are the result of sensi- tivity analyses that were applied to the various Chapter 1 leveled generating cost components using a 1. This 1997/98 study by the Operations Evalu- Monte Carlo approach. The generating cost is ation Department (now the Independent Eval- the sum of the capital, operating, and fuel uation Group) evaluated the application of the costs, leveled over the economic life of the environmental guidelines in the energy port- plant, using a 10 percent real discount rate folio at the time when the Fuel for Thought that is assumed to be the opportunity cost of paper (that is, the energy-environment strat- capital. egy) was being finalized (World Bank 1998). 2. Generally speaking, the Africa Region focused Chapter 3 on biomass energy, the South Asia Region on 1. This is in line with the portfolio identified in small and mini hydro, and the Latin America the Energy and Mining Sector Board's De- and the Caribbean Region on wind energy. cember 2005 report (World Bank 2005e), as 3. A total of 65 projects are listed in the Bank fis- well as the immediately preceding report cov- cal 2004 and 2005 reports on renewable en- ering 1990­2004. ergy and energy efficiency, but the Bank's 2. The figures are (closed + ongoing): Africa, project databases do not yet provide infor- 22 (9 + 13); East Asia and Pacific, 13 (7 + 6); mation on nine projects that were approved South Asia, 12 (6 + 6); Latin America and the in fiscal 2005. Hence, the study focused on 56 Caribbean, 8 (1 + 7); Europe and Central Asia, projects that have performance data avail- 8 (4 + 4); Middle East and North Africa, 2 able, although information was still insuffi- (1+1). cient for about a third of these. 3. In descending order, the number (and per- 4. As of June 2005. centage share) of NRE projects in each re- gion are: Africa, 22 (34 percent); East Asia Chapter 2 and Pacific, 13 (20 percent); South Asia, 12 (19 1. The Bank's involvement in NRE dates back percent); Latin America and the Caribbean, 8 7 3 N E W R E N E WA B L E E N E R G Y: A R E V I E W O F T H E W O R L D B A N K ' S A S S I S TA N C E (12 percent); Europe and Central Asia, 8 (12 Annex F percent); and Middle East and North Africa, 1. This includes the Philippines Leyte Luzon Ge- 2 (3 percent). othermal Project (1994), Philippines Leyte Cebu Geothermal Project (1994), and Lithua- Chapter 4 nia Klaipeda Geothermal Project (1996). 1. Based on the Annual Review of Portfolio Per- 2. These projects were Uganda Power III Sup- formance for fiscal 2005, prepared by the plemental Project (2000), Philippines Energy Quality Assurance Group. The 79 percent fig- Sector Project (1990), Rwanda Energy Sector ure is without any weighting by disburse- Rehabilitation Project (1993), and Burundi ments. With weighting, 83 percent of projects Energy Sector Rehabilitation Project (1991). were rated satisfactory or higher. 3. These were Indonesia Renewable Energy 2. India Second Renewable Energy Project, aide Small Power Project (1997), Indonesia Solar mèmoire, supervision mission, October 18­26, Home Systems Project (1997), Argentina Re- 2005; Uganda Energy for Rural Transforma- newable Energy in the Rural Market Project tion Project, aide mèmoire, supervision mis- (1999), and Bolivia Decentralized Infrastruc- sion, May 23­27, 2005; Sri Lanka Renewable ture for Rural Transformation Project (2003). Energy for Rural Economic Development Pro- ject, aide mèmoire, supervision mission, Sep- Annex G tember 5­16, 2005. 1. As of June 2005. 3. The figures for small hydro and wind are av- 2. In its evaluations, IEG views a project's ob- erages based on a sample of projects. jectives as encompassing both the project de- 4. According to the GEF Climate Change Study, velopment objectives (PDOs) stated in project half of the emission reductions of the energy documents as well as key associated outcome efficiency cluster will be contributed by the targets. This means that whenever the PDOs Bank-supported China Efficient Industrial stated in project documents are so broad Boilers Project alone. Four other Bank- and/or generally worded as to preclude any financed energy-efficiency projects in China, meaningful evaluation, intended project ob- together with seven mostly energy-efficiency jectives are inferred by the evaluator from projects in China supported by other imple- key associated outcome targets (and/or proj- menting agencies, will account for about 75 ect design features as relevant). percent of the energy efficiency subsector's 3. Some recent projects, such as the Nicaragua future reductions. Off-grid Rural Electrification Project (2003), are 5. OBA consists of using explicit performance- also characterized by this strategy. based subsidies to support the delivery of 4. According to the Project Assessment Docu- services to complement or replace user fees. ments of nine NRE projects--Mali (House- It involves third parties, typically private firms, hold Energy and Household Energy and but in some cases NGOs, delivering services Universal Access), Ethiopia (Energy Access), under contracts that tie disbursements of pub- Argentina, Senegal, Nicaragua, Uganda, lic funding to services or outputs actually de- Bangladesh, Sri Lanka (RERED), and Bolivia-- livered. the delivery benefits in terms of quality of life or income to women is an important goal. Chapter 5 5. Increasing the incomes of RET users is a goal 1. Notably, the work on risk-adjusted valuations of the following projects approved in or after of energy undertaken by Shimon Awerbuch fiscal 2001, according to their Project Assess- and others (Awerbuch 2006). ment Documents: Sri Lanka RERED; 2. Laos, Cambodia, Indonesia, Mongolia, Philip- Bangladesh, Nicaragua, Uganda, and Mali pines, and Vietnam. Household Energy and Universal Access; Bo- 7 4 E N D N O T E S livia and Ethiopia Energy Access. These con- Development, Philippines Leyte Cebu Geo- stitute most of the freestanding projects in the thermal and Energy Sector, Burundi Energy Sec- fiscal 2001 to present period, except for Turkey tor Rehabilitation, Nepal Irrigation Sector and Renewable Energy (fiscal 2004) and Hungary Sunsari Morang Headworks, and Niger Energy. Small Hydro (fiscal 2003), as well as some blended projects, in which the NRE component Annex I is significant. 1. Argentina Renewable Energy in the Rural Mar- ket; Uganda Energy for Rural Transformation; Annex H China Renewable Energy Development. 1. Rwanda Energy Sector Rehabilitation, Kenya 2. The ESMAP project is entitled Regulatory Is- Energy Sector Reform and Power Develop- sues of Off-Grid Energy Services Delivery as ment, Honduras Energy Sector Adjustment Part of National Rural Electrification Strategies. Loan, and Sri Lanka Second Power Distribution 3. Sarvodaya Economic Enterprise Development did not involve renewable energy installation. Services. Though the Indonesia Renewable Energy Small 4. Communication with Richard Spencer, Task Power Project did involve installation, it was ter- Manager, China Renewable Energy Develop- minated after a year because of the economic ment, February 25, 2005. crisis the country experienced. 5. Communication with Antonie de Wilde, Asia 2. 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Washington, DC. Bank's Role. Washington, DC. 7 9 IEG PUBLICATIONS Study Series 2004 Annual Review of Development Effectiveness: The Bank's Contributions to Poverty Reduction Addressing the Challenges of Globalization: An Independent Evaluation of the World Bank's Approach to Global Programs Agricultural Extension: The Kenya Experience Assisting Russia's Transition: An Unprecedented Challenge Bangladesh: Progress Through Partnership Brazil: Forging a Strategic Partnership for Results--An OED Evaluation of World Bank Assistance Bridging Troubled Waters: Assessing the World Bank Water Resources Strategy Capacity Building in Africa: An OED Evaluation of World Bank Support The CIGAR at 31: An Independent Meta-Evaluation of the Consultative Group on International Agricultural Research Country Assistance Evaluation Retrospective: OED Self-Evaluation Debt Relief for the Poorest: An OED Review of the HIPC Initiative Developing Towns and Cities: Lessons from Brazil and the Philippines The Drive to Partnership: Aid Coordination and the World Bank Economies in Transition: An OED Evaluation of World Bank Assistance The Effectiveness of World Bank Support for Community-Based and ­Driven Development: An OED Evaluation Evaluating a Decade of World Bank Gender Policy: 1990­99 Evaluation of World Bank Assistance to Pacific Member Countries, 1992­2002 Financial Sector Reform: A Review of World Bank Assistance Financing the Global Benefits of Forests: The Bank's GEF Portfolio and the 1991 Forest Strategy and Its Implementation Fiscal Management in Adjustment Lending IDA's Partnership for Poverty Reduction Improving the Lives of the Poor Through Investment in Cities India: The Dairy Revolution Information Infrastructure: The World Bank Group's Experience Investing in Health: Development Effectiveness in the Health, Nutrition, and Population Sector Jordan: Supporting Stable Development in a Challenging Region Lesotho: Development in a Challenging Environment Mainstreaming Gender in World Bank Lending: An Update Maintaining Momentum to 2015? An Impact Evaluation of Interventions to Improve Maternal and Child Health and Nutrition Outcomes in Bangladesh The Next Ascent: An Evaluation of the Aga Khan Rural Support Program, Pakistan Nongovernmental Organizations in World Bank­Supported Projects: A Review Poland Country Assistance Review: Partnership in a Transition Economy Poverty Reduction in the 1990s: An Evaluation of Strategy and Performance The Poverty Reduction Strategy Initiative: An Independent Evaluation of the World Bank's Support Through 2003 Power for Development: A Review of the World Bank Group's Experience with Private Participation in the Electricity Sector Promoting Environmental Sustainability in Development Putting Social Development to Work for the Poor: An OED Review of World Bank Activities Reforming Agriculture: The World Bank Goes to Market Sharing Knowledge: Innovations and Remaining Challenges Social Funds: Assessing Effectiveness Tunisia: Understanding Successful Socioeconomic Development Uganda: Policy, Participation, People The World Bank's Experience with Post-Conflict Reconstruction The World Bank's Forest Strategy: Striking the Right Balance Zambia Country Assistance Review: Turning an Economy Around Evaluation Country Case Series Bosnia and Herzegovina: Post-Conflict Reconstruction Brazil: Forests in the Balance: Challenges of Conservation with Development Cameroon: Forest Sector Development in a Difficult Political Economy China: From Afforestation to Poverty Alleviation and Natural Forest Management Costa Rica: Forest Strategy and the Evolution of Land Use El Salvador: Post-Conflict Reconstruction India: Alleviating Poverty through Forest Development Indonesia: The Challenges of World Bank Involvement in Forests The Poverty Reduction Strategy Initiative: Findings from 10 Country Case Studies of World Bank and IMF Support Uganda: Post-Conflict Reconstruction Proceedings Global Public Policies and Programs: Implications for Financing and Evaluation Lessons of Fiscal Adjustment Lesson from Urban Transport Evaluating the Gender Impact of World Bank Assistance Evaluation and Development: The Institutional Dimension (Transaction Publishers) Evaluation and Poverty Reduction Monitoring & Evaluation Capacity Development in Africa Public Sector Performance--The Critical Role of Evaluation All IEG evaluations are available, in whole or in part, in languages other than English. For our multilingual selection, please visit http://www.worldbank.org/ieg THE WORLD BANK