AN OVERVIEW OF THE WORLD BANK GROUP ENERGY PORTFOLIO

Satellite photo of earth at night; photo: NASA

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Contents

Acknowledgments.......................................................................................................................................... i

Executive Summary....................................................................................................................................... ii

Abbreviations................................................................................................................................................vi

1. Introduction............................................................................................................................................1

1.1. Purpose of the Report..................................................................................................................1

1.2. The World Bank Group’s Role in Energy...................................................................................2

2. The Challenge of Energy Access and WBG’s contribution..................................................................4

2.1. The Current Situation of Electricity Access in Low-Income Countries......................................4

2.2. The Challenge: Achieving Universal Access..............................................................................4

2.3. The World Bank Group’s Contribution.......................................................................................5

3. Energy Portfolio Review........................................................................................................................9

3.1. Overview.....................................................................................................................................9

3.2. Renewable Energy and Energy Efficiency................................................................................12

3.3. Transmission and Distribution...................................................................................................26

3.4. Fossil Fuels................................................................................................................................30

4. Analytic and Advisory Activities in Energy........................................................................................40

4.1. Role of Trust Funds financing AAA.........................................................................................41

4.2. Sectoral versus Multisectoral Trends........................................................................................43

4.3. AAA by Subsector.....................................................................................................................44

4.4. Regional Focus..........................................................................................................................46

4.5. The IFC’s Advisory Support for Climate Change Mitigation...................................................48

5. Energy Financing Partnerships............................................................................................................49

5.1. Cofinancing Partnerships...........................................................................................................49

5.2. Partnerships in Knowledge........................................................................................................53

5.3. Other Innovative Partnerships...................................................................................................61

6. Conclusion...........................................................................................................................................63

Appendix 1: Methodology and Definitions.................................................................................................65

Appendix 2: List of Energy Projects Committed in Fiscal 2010.................................................................67

Appendix 3: List of AAA Delivered in Fiscal 2010....................................................................................76

Bibliography................................................................................................................................................79

Boxes

Box 1: Increasing Electricity Access in Vietnam..........................................................................................6Box 2: Mexico Framework for Green Growth Development Policy Loan..................................................12Box 3: India’s Ongoing Engagement in Hydropower.................................................................................14Box 4: Latin America–EURUS Wind Power Project, Mexico....................................................................16Box 5: Raising Awareness of Energy Efficiency Measures in Industry......................................................21Box 6: Latin America, Optima Energy, Mexico..........................................................................................22Box 7: Brazil Eletrobras Distribution Rehabilitation Project: Reducing Electricity Losses and Emissions

......................................................................................................................................................23Box 8: T&D Investments Helping Connect New Consumers—Kenya Electricity Expansion Project.......27Box 9: Meeting India’s Demand for Electricity: Bank Support to the National Transmission System......28Box 10: GMS Power Trade in the Greater Mekong Subregion: Building the Institutional Framework.....29Box 11: Application of Criteria for Coal Power Generation Projects: ESKOM Investment Support Project

......................................................................................................................................................32Box 12: Partial Risk Guarantees for Electricity and Gas Supply Improvements in Nigeria.......................35Box 13: The IFC and Cairn India.................................................................................................................36Box 14: Carbon Capture and Storage Trust Fund Project in Botswana.......................................................38Box 15: Bridging the Electricity Gap in Maharashtra: An Innovative Engagement with a Middle-Income

Client............................................................................................................................................41Box 16: Energy Vulnerability Assessment of Climate Change in Albania.................................................42Box 17: Power and People: The Benefits of Renewable Energy in Nepal..................................................45Box 18: Winds of Change: East Asia’s Sustainable Energy Future............................................................46Box 19: Brazil Low-Carbon Study..............................................................................................................47Box 20: EITI: Increasing Extractive Industries Transparency at the Country Level...................................51Box 21: OBA in the Energy Sector..............................................................................................................53Box 22: ESMAP Highlights This Year........................................................................................................55Box 23: Lighting Africa Recent Achievements...........................................................................................57Box 24: PPIAF Supports Rural Electrification in Senegal..........................................................................58Box 25: ASTAE Support to the Indonesia Geothermal Power Sector Program..........................................59Box 26: GGFR: Better Gas Flaring Data through Satellite Innovation.......................................................60

Figures

Figure 1: WBG Energy Financing, Fiscal 2003–10.....................................................................................10Figure 2: WBG Energy Financing by Institution, Fiscal 2003–10..............................................................11Figure 3: WBG Renewable Energy and Energy Efficiency Financing, Fiscal 2003–10.............................13Figure 4: Incandescent Lightbulbs Being Exchanged for CFLs as Part of the Efficient Lighting Initiative

of Bangladesh, June 2010.............................................................................................................20Figure 5: WBG Fossil Fuel and Non–Fossil Fuel Energy Financing as a Percentage of Total Energy

Financing, Fiscal 2003–10...........................................................................................................32Figure 6: New WBG Thermal Generation Financing by Fuel Type, Fiscal 2003–10.................................37Figure 7: Number of AAA Activities in the Energy Sector.........................................................................40Figure 8: World Bank and Trust Fund Expenditure on Energy AAA.........................................................42Figure 9: Energy Sector and Multisectoral AAA.........................................................................................43Figure 10: RE AAA.....................................................................................................................................45Figure 11: Energy AAA by Region.............................................................................................................47

Maps

Map 1: WBG Energy Financing, Fiscal 2010................................................................................................9

Tables

Table 1: WBG Energy Financing by Subsector, Fiscal 2003–10................................................................10Table 2: WBG Energy Financing by Region, Fiscal 2003–10....................................................................11Table 3: Financing for Renewable Energy, Fiscal 2003–10........................................................................14Table 4: WBG Financing for Energy Efficiency, Fiscal 2005–10...............................................................20Table 5: WBG Financing for T&D Lines by Objective...............................................................................27Table 6: WBG Financing by Type of Fossil Fuel Projects, Fiscal 2003–10...............................................31Table 7: WBG Financing by Area of Intervention and Fuel, Fiscal 2003–10.............................................34Table 8: WBG Types of Fossil Fuel Efficiency Interventions.....................................................................35Table 9: New WBG Thermal Generation Financing by Fuel Type, Fiscal 2003–10..................................36Table 10: New Thermal Generation Financing by Generation Technology Type, Fiscal 2003–10............37

AcknowledgmentsThe report was prepared by the Sustainable Energy Department in the Sustainable Development Vice Presidency. The work was led by Sylvia Michele Diez under the direction of Lucio Monari. Ashok Sarkar, Gabriela Elizondo Azuela, Koffi Ekouevi, Jens Wirth, Marcelino Madrigal, Nataliya Kulichenko, Pedro Antmann, Varun Nangia, Venkata Ramana Putti, Blake Driscoll, and Sylvia Michele Diez are the principal authors of the chapters and case studies. The portfolio analysis was conducted by Varun Nangia with support from Jens Wirth, Sabin Basnyat, Victoria Zabolotnyi, Camilo Lopez, Ashaya Basnyat, and Xiaolu Yu.

This report also benefited from the contributions of several World Bank, IFC, and MIGA staff and consultants: Adriana de Aguinaga de Vellutini, Alan Miller, Ani Balabanyan, Anil Cabraal, Christopher Neal, Euan Marshall, Fanny Missfeldt-Ringius, Franz Gerner, Gevorg Sargsyan, Harikumar Gadde, Istvan Dobozi, Jane Olga Ebinger, Josef Skoldeberg, Laurent Durix, Malcolm Cosgrove-Davies, Maria Hilda Rivera, Masami Kojima, Paulo De Sa, Philippe Charles Benoit, Pierre Audinet, Ranjit Lamech, Todd M. Johnson, Xiaodong Wang, and Yogita Mumssen. Their contributions are deeply appreciated. The report was edited by Rebecca Kary.

Please address questions and comments to Sylvia Michele Diez (sdiez@worldbank.org) and Varun Nangia (vnangia@worldbank.org).

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Executive Summary1. Demand for World Bank Group (WBG) financing in the energy sector has increased sharply in recent years. The energy sector has grown in importance, given its centrality for poverty reduction, economic growth, and the need to combat climate change. After a period of emphasis on privatization and deregulation, there is also renewed commitment to a strong public sector role in energy regulation and finance. Many developing countries in Africa and Asia are still seeking to provide reliable energy access to their citizens. Many more developing countries are also seeking to expand energy services to support economic growth, but this threatens global climate because of the increasing greenhouse gas (GHG) emissions from energy use and production. This demand for energy services and the need to finance investments have become even more challenging during the current global economic and financial crisis that has greatly affected developing countries.

2. The WBG is leading the effort to overcome challenges in the energy sector through investments, policy advice, capacity building, and technical assistance (TA). Financing for energy is on a growth trend with more than US$44 billion committed since 2003. In fiscal 2010, the WBG financed a record US$13 billion, a 56 percent increase over the previous fiscal year, which represented 18 percent of the overall WBG commitments. In the last two years, in particular, the WBG has rapidly scaled up financing as part of crisis response programs with more than US$20 billion, which provided a foundation for rapid recovery and job creation, as well as long-term sustainable growth in the energy sector.

3. The WBG has a diverse energy portfolio. Projects in the energy sector seek to increase energy access, advise on energy policy reforms and regulation, develop renewable energy (RE) and energy efficiency (EE), and provide support to energy generation, transmission, and distribution. There is also a modest, but growing, commitment to understand and support early stage and innovative energy technologies with the potential to provide lower-cost, environmentally superior energy services. The portfolio varies across institutions. The International Bank for Reconstruction and Development (IBRD) remained the largest source of energy financing during the last eight years, representing 40 percent of the total WBG energy financing and reaching a record of US$8 billion in fiscal 2010. The IFC was the second largest financier, accounting for 26 percent of the energy financing and reaching US$2.4 billion in fiscal 2010. Through this diverse portfolio, the WBG is helping developing countries improve access to and reliability of energy, while facilitating the shift to a more environmentally sustainable energy development path.

4. The WBG has been at the forefront of international support on energy access and poverty. Achieving universal access to electricity is one of the most important goals set for the energy sector by governments in low-income countries. Energy access in Sub-Saharan Africa continues to be a priority, as is evidenced by the high level of financing in the region. The majority of the financing for electricity access has been through the extension of the electricity distribution grid. Extending national grids to remote rural areas remains a challenge, and the WBG has financed complementary off-grid solutions using RE applications that bring the benefit of electricity service to many more low-income rural households. Strategies to improve the access of poor households to modern clean fuels and other non-electricity energy services are also important. Since 2003, a total of 12 projects had the objective of improving energy access for cooking through fuelwood supply management or improved stoves dissemination initiatives. Scaling up the access agenda is essential and the WBG brings extensive experience in addressing the electricity access gap.

5. World Bank Group (WBG) support for transmission and distribution (T&D) infrastructure is a considerable share of the total energy financing. During the past eight years, financing for T&D has accounted for 21 percent of total commitments. This type of financing has increased in the last three

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years, with an annual average of US$1.8 billion, becoming the largest component of the WBG’s energy financing in fiscal 2010 with a total of US$2.2 billion. The financing is primarily targeted toward increasing access and improving reliability. In addition, transmission infrastructure for regional integration is crucial for creating the platform to exploit more efficient, less costly, and lower-carbon generation options. The increased financing for regional integration has brought success stories in the area of developing power trade. Regional integration, especially in Africa, will play an important role in bringing more supply to the region while improving the efficiency of the integrated networks.

6. In recent years, there has been a notable increase in financing for policy reforms and regulations.1 Such financing increased by more than twofold, from US$816 million in 2003 to a peak of US$2 billion in fiscal 2010. Demand for Development Policy Loans (DPL) has increased in the last two years as a result of the economic crisis. This quick-disbursing instrument aims to help the borrower achieve sustainable poverty reduction through policy and institutional actions.

7. RE and EE are rapidly increasing in importance in the WBG’s portfolio. Since exceeding the Bonn commitments, the WBG continues to scale up financing for RE and EE with a record of US$3.6 billion in fiscal 2010.2 A total of US$14 billion has been committed in 99 countries since 2003. The WBG is also engaged in hydropower, which is a critical RE resource. Financing for other forms of RE has also increased in the last few years, especially in geothermal capacity and support for grid-connected wind power. Community focused development projects account for a large portion of the RE financing. While grid-connected RE has helped many countries meet their energy needs, off-grid RE technologies have also proven to be a cost-effective and efficient way for individual communities to enhance access to energy at the local level. Such projects were the second largest form of RE in the past eight years and the largest form of RE supported in fiscal 2010 at US$635 million, accounting for a third of all RE commitments for the year. In the course of the WBG’s financing of RE projects, a number of important lessons have been learned about how best to ensure the success of RE projects.

8. In fiscal 2010, the WBG committed US$1.8 billion for EE measures, of which nearly two-thirds was for reducing demand for energy, and the remainder for reducing energy wastage in the supply of energy. This was consistent with the pattern of financing for the past six years. In fiscal 2010, financing for demand-side EE increased by 25 percent from the previous year to US$1 billion, while supply-side financing slightly declined (16 percent) but remained considerably higher (US$750 million) compared to the previous four years (2005–08). The WBG has been active in financing demand-side EE services seeking to reduce demand for energy in homes, shops, factories, schools, etc. Likewise, the WBG has been effective at reducing technical losses in the production and T&D of electricity, which has increased efficiency of production and reductions in emissions per unit of energy output. Moreover, since 2003, fossil fuel–related EE projects targeting supply, as well as demand side, have accounted for 30 percent (US$1.8 billion) of overall EE-related financing, with the bulk of fossil fuel–related projects in this area targeting efficiency enhancements of coal-fired generation. Despite the progress and significant effort by development institutions and national governments in accelerating EE scale-up, the implementation complexities continue to pose a challenge for EE market transformation to achieve energy savings, particularly through demand-side EE measures.

9. The WBG has financed a variety of project types involving fossil fuels over the years. In addition to new fossil-fired thermal generation, the WBG has supported the discovery, extraction, and processing of fossil fuels, has supported EE interventions at existing thermal power plants, and has provided policy support and technical assistance. The share of commitments related to coal, gas, and oil

1 Projects where energy policy support is provided, such as Energy Sector DPLs, are categorized as “reforms and regulation” or “other energy.”2 The WBG pledged to increase its financial commitments for new RE and EE at a growth rate of 20 percent per year between fiscal 2005 and 2009.

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in the WBG’s energy financing has, however, decreased in relative terms over the last few years, as the WBG’s focus has shifted toward increasing financing for EE, RE and transmission and distribution projects. Out of US$18 billion financed since fiscal 2003, the largest share was for gas-related projects (41 percent), followed by coal (35 percent), and oil (24 percent). Fossil fuel-related projects represent 41 percent of the overall WBG energy financing during those years. Investments in new thermal generation account for the largest share (44 percent) of the overall financing for fossil fuels, with most of the financing targeting the construction of new, more efficient, and cleaner coal and gas plants. With regard to coal-fired capacity, for example, over the whole period financing for supercritical coal-fired capacity exceeded financing for subcritical coal-fired capacity by a factor of 3.8, with the ratio increasing to 4.3 for the latter half of the period from fiscal 2007 to 2010. There is a clear tendency toward cleaner, more efficient combustion technologies with regard to new thermal generation installations financed by the WBG. The WBG is exploring ways to support the deployment of advanced technologies that can substantially increase the efficiency of power and heat generation.

10. Aside from the project financing, the WBG delivers a range of analytic and advisory activities (AAA) to support developing countries’ efforts in their energy country programs. While the amount of energy AAA declined steadily from fiscal 2003 to 2006, the sector rebounded in fiscal 2007 and has shown steady growth in recent years. After delivering 49 energy products in fiscal 2006, the Bank delivered a record 96 energy products in fiscal 2010. Today, the energy sector represents 8.8 percent of Bankwide AAA, including both Economic and Sector Work (ESW) and Non-lending Technical Assistance (Non-lending TA). Delivery of Non-lending TA has increased significantly in the energy sector over the past eight years, while the number of ESW activities has steadily declined. Non-lending TA for RE, in particular, has grown considerably, becoming the largest source of Non-lending TA among the energy subsectors. Among the regions, Africa was the largest recipient of energy AAA in the last eight years, followed by ECA and EAP.

11. Trust funds have become an increasingly important source of funding for AAA across the Bank, especially in the energy sector. Although the Bank continues to advocate for the importance of AAAs, energy expenditure from trust funds has risen from US$5 million in fiscal 2003 to nearly US$18 million in fiscal 2010, increasing its share from 43 percent in fiscal 2003 to 63 percent in fiscal 2010. Trust funds have been especially important for advancing knowledge on RE having increasingly accounted for a larger share of the expenditures in recent years. More importantly, energy issues have also gained increasing attention in multisectoral knowledge products. A considerable share (34 percent) of the energy AAA was delivered by other sectors, in particular, the environment sector which showed an impressive rise in activities focusing on RE. Also on an upward trend, the IFC’s advisory support for RE and EE includes a diverse set of advisory services aimed at accelerating market development by promoting consumer acceptance, overcoming regulatory and other barriers.

12. The WBG has a variety of energy partnerships and global trust-funded programs that are vital to generate the body of knowledge and lessons on which Bank staff and practitioners can draw. Partnerships have increased significantly in the last few years, giving rise to programs targeting several energy subsectors, especially RE and EE. The partnerships have enabled the WBG to reinforce and expand its business in the energy sector. While the budget has remained fixed in real terms, these partnerships have played a critical role in the expansion of the WBG’s energy portfolio and knowledge. Some of the partnerships provide direct cofinancing to WBG operations, complementing or leveraging other financial resources to help client countries in their energy programs. Other partnerships are primarily responsible for generating the knowledge as a foundation for new operations.

13. The current challenges in the energy sector are still enormous. The WBG remains focused on ensuring the long-term sustainability of the energy sector. The first and foremost development priority in WBG client countries is meeting basic energy needs at affordable prices and in a reliable manner. The WBG is actively supporting these needs in a way that will ensure a sustainable growth for all. The new

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Energy Sector Strategy further the transformation of the energy sector and help developing countries reduce energy poverty and move toward a low-carbon and sustainable development path.

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AbbreviationsAAA Analytic and Advisory activitiesADB Asian Development BankAEI Africa Electrification Initiative

AFD French Development AgencyAFR Africa Region of the World Bank

ASTAE The Asia Sustainable and Alternative Energy Programbpd Barrels per day

CASM Communities, Artisanal, and Small-scale MiningCCS Carbon Capture and Sequestration

CDM Clean Development MechanismCEIF Investment Framework for Clean Energy and Development

CF Carbon FinanceCFL Compact fluorescent lampCIF Clean Investment FundsCO2 Carbon dioxide

CO2e Carbon dioxide-equivalentCSP Concentrating solar powerCTF Clean Technology Fund

Disco Distribution companyEAP East Asia and Pacific Region of the World BankECA Europe and Central Asia Region of the World Bank

EE Energy efficiencyEI Extractive industry

EIB European Investment BankEITI Extractive Industries Transparency Initiative

ESCO Energy service companyESMAP Energy Sector Management Assistance Program

ESW Economic Sector WorkFY Fiscal year

GDP Gross domestic productGEF Global Environment Facility

GGFR Global Gas Flaring ReductionGHG Greenhouse gasGMS Greater Mekong Sub-region

GPOBA Global Partnership for Output-Based AidGW Gigawatt

GWh Gigawatt-hourIBRD International Bank for Reconstruction and Development

ICB International Competitive BiddingIDA International Development AssociationIEA International Energy Agency

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IFC International Finance CorporationIGA Intergovernmental Agreement on Regional Power Trade

JICA Japan International Cooperation AgencyKfW Kreditanstalt für Wiederaufbau

kV KilovoltLCR Latin America and the Caribbean Region of the World BankLED Light-emitting diode

MIGA Multilateral Investment Guarantee AgencyMNA Middle East and North Africa Region of the World BankMVA Megavolt-ampereMW Megawatt

NGO Nongovernmental organizationNOAA U.S. National Oceanic and Atmospheric Administration

PGI Petroleum Governance InitiativePPIAF Public-Private Infrastructure Advisory Facility

PRG Partial risk guaranteePV Photovoltaic(s)RE Renewable energy

RPTCC Regional Power Trade Coordinating CommitteeSAR South Asia Region of the World BankREA Rural Energy Agency

SF Special FinancingSFDCC Development and Climate Change: A Strategic Framework for the World Bank Group

SHS Solar home systemSIDA Swedish International Development Cooperation AgencySME Small and medium enterprise

SREP Scaling Up Renewable Energy Program for Low Income CountriesT&D Transmission and distribution

TA Technical AssistanceTWh Terawatt-hour

WBG World Bank Group

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1. Introduction

1. Demand for WBG financing in the energy sector has sharply increased in recent years. The energy sector has grown in importance, given its centrality for poverty reduction, economic growth and the need to combat climate change. Many developing countries in Africa and Asia are still seeking to provide reliable energy access to their citizens. Many more developing countries are also seeking to expand energy services to support economic growth, but this threatens the global climate because of the increasing GHG emissions from energy use and production. This demand for energy services and the need to finance investments has become even more challenging during the current global economic and financial crisis that has greatly affected developing countries.

2. The current challenges in the energy sector are enormous. On the energy access and poverty front, an even stronger focus on electricity access is necessary to meet the needs of the poor and overcome this constraint on development. Although considerable progress has been made in some regions, significant challenges remain. The number of people without access to energy in Sub-Saharan African countries is projected to rise in 2030 despite the current progress. The economic crisis has also impacted developing countries. The credit crunch reduced the investments and brought limitations on the flow of liquidity across all sectors, including energy. Countries have been recovering, but the lack of liquidity caused by the recession continues to affect energy infrastructure financing. On top of these challenges, it is essential to reduce the impact of the energy sector on the climate. Carbon dioxide emissions associated with energy use are projected to double globally between 2007 and 2050 in the absence of new energy and climate policies (IEA 2010). Meeting the energy needs of developing countries in an environmentally sustainable manner is an urgent challenge.

1.1. Purpose of the Report3. This report examines closely the energy portfolio and analytical activities financed by the WBG. The report is a result of increasing demand by energy practitioners to understand better the energy deliverables by the WBG institutions, given its growing leadership in the energy sector. It will replace and expand on the previous Annual Progress on RE/EE series of reports, and include a more comprehensive review of all the energy subsectors financed by the WBG. This report primarily reports on fiscal 2010 energy deliverables (projects and analytical pieces) and describes the trends in each of the subsectors. The trend analysis is especially important to the fossil fuel, transmission and distribution (T&D), and policy reform projects, since these are being published for the first time as part of the entire energy portfolio. This holistic view of the sector is essential to have a broader and strategic understanding of the WBG’s role in the energy sector, which will eventually inform future strategies or actions that may be developed. This effort will be undertaken once a year to update the energy community on the new developments in the sector and new trends that may emerge. This report reflects the Bank’s Access to Information Policy and its commitments to transparency.

4. The report has three main objectives: (a) to review the composition of the energy portfolio through a subsector and historical lens, (b) to review the key features of the analytical and advisory work carried out by the WBG, and (c) to highlight the main partnerships in the energy sector. An introductory chapter focusing on energy access demonstrates the WBG’s commitment toward expanding electricity access in developing countries and features recent examples of energy access projects.

5. The financing for energy is determined by disaggregating the project components. A database of energy projects from the World Bank, IFC, and MIGA was developed based on sector codes of the current WBG’s tracking system (see Appendix 1 for details). The database was further refined to

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identify individual project components and equivalent cost of such components, avoiding any possible double counting. (For example, if a project has multiple components, the database will include multiple lines for that project, with the commitment amount prorated in accordance with the defined project type categories.) A regular review of available project documentation provides accurate reporting of commitment figures and increased granularity in reporting.

1.2. The World Bank Group’s Role in Energy6. From a low level of financing in the 1990s, the energy sector has seen a remarkable recovery through several initiatives. In the mid-1990s, infrastructure was seen as a “sunset” sector in the Bank, with the belief that the large volumes of private investments would not decrease. Infrastructure and the energy sector were placed back in the center of the Bank’s agenda in 2003 with the launch of the Infrastructure Action Plan and later with the Sustainable Infrastructure Action Plan, which was a renewed commitment to client countries to improve infrastructure service delivery in a sustainable manner through increased financial and analytical support and leverage. The energy financing has been re-energized since then. The Investment Framework for Clean Energy and Development (CEIF), formulated in 2006, also brought a renewed momentum to scale up financing for energy access and mitigation of GHG emissions. Moreover, the Development and Climate Change: A Strategic Framework for the World Bank Group (SFDCC) has guided the energy sector to the new development challenges posed by climate change. The energy sector committed to increase financing for EE and new RE by an average 30 percent a year, from a baseline of US$750 million in average annual commitments during fiscal 2005–07 and expand lending to hydropower, with the share of low-carbon3 projects rising from 40 percent in fiscal 2006–08 to 50 percent in fiscal 2011. Along with this commitment, the IFC intends to increase its climate-related investment activity to at least 20 percent of its energy commitments by fiscal 2013. All these initiatives contributed to the dramatic increase in energy financing in recent years.

7. Since 2003, WBG financing has scaled up with more than US$44 billion committed in the energy sector. More importantly, the energy sector has survived the economic crisis and committed over US$21 billion during crisis years (2009–10). The boost in financing was influenced by the Infrastructure Recovery and Assets Platform and the Infrastructure Crisis Facility launched by the WBG in response to the global financial and economic crisis. In fiscal 2010, the WBG financed a record US$13 billion, a 56 percent increase over the previous fiscal year, representing 18 percent of overall WBG commitments. The WBG has a diverse energy portfolio composition supporting financing, policy advice, TA, and capacity building in several energy subsectors, including RE, EE, T&D, thermal generation, and upstream and midstream oil, gas, and coal.

8. The WBG is one of the leading lenders for RE and EE. Financing for such projects has sharply increased in recent years. In the period 2003–10, RE and EE commitments accounted for 40 percent of the overall energy commitments, increasing from a low of US$400 million in fiscal 2003 to US$3.6 billion in fiscal 2010. This excludes a large portion of the portfolio that could be considered clean or climate-related in the areas of T&D, policy reforms and regulation. The Cancun Agreement brings great potential to scale up climate finance even more with the possible creation of the Green Fund.

9. In support of the mitigation agenda, several low-carbon financing vehicles have been created. The Climate Investment Funds, for example, include important partnerships, such as the Clean Technology Fund (CTF), that aim to promote investments to initiate a transformational shift toward clean technologies, and the Program for Scaling Up Renewable Energy in Low-Income Countries aiming to demonstrate the economic, social, and environmental viability of low-carbon development pathways in the energy sector by creating new economic opportunities and increasing energy access through the use of

3 CEIF definition: Low Carbon projects include renewable energy projects, energy efficiency projects, and projects that support increased use of cleaner fuels to displace more carbon intensive ones.

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RE. Carbon finance, the Global Environment Facility (GEF), and the Green Bonds are additional sources of financing that continue to actively promote mitigation interventions.

10. The WBG’s upcoming new Energy Sector Strategy will bring additional momentum to scale-up financing in the energy sector. The new strategy will be a major milestone in transforming the energy sector with its efforts to reduce energy poverty and move countries toward a low-emissions path. The overarching goal of the new energy business focuses on the objectives and reliability of improving access to modern energy services; and facilitating the shift to an environmentally sustainable energy development path.

11.

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2. The Challenge of Energy Access and WBG’s contribution

2.1. The Current Situation of Electricity Access in Low-Income Countries12. Achieving universal access to electricity is one of the most important goals set for the energy sector by governments in low-income countries. Sustainable provision of good electricity services is a necessary condition for spurring economic growth and ensuring human development. Certain basic activities—such as lighting, refrigeration, running household appliances, and operating equipment—cannot easily be carried out using other forms of energy. Sustainable electricity supply can free large amounts of time and labor and promote better health and education, helping to achieve economic and social objectives.

13. The International Energy Agency (IEA) estimates that 1.4 billion people lacked access to electricity in 2010, more than one-fifth of the world’s population. Some 85 percent of those without electricity live in rural areas. There are large variations in electrification rates across and within regions. Transition economies and countries belonging to the Organisation for Economic Co-operation and Development (OECD) have virtually universal access. North Africa has an access rate of 99 percent, Latin America 93 percent, East Asia and the Pacific 90 percent, and the Middle East 89 percent. By contrast, South Asia has an electrification rate of 60 percent and Sub-Saharan Africa only 29 percent. About 83 percent of the total world population without electricity lives in these two regions. Sub-Saharan Africa has by far the lowest urban and rural access rates at 58 and 12 percent, respectively (IEA 2010).

14. The extension of the electricity distribution grid has been the predominant approach, followed both by developed and emerging countries, to reach new consumers and achieve current access rates, which in many cases represents universal coverage. Off-grid technologies—minigrids or individual systems—have been adopted in developing countries to supply populations living in areas far from the existing grid (often as an interim option) and/or with demand too small to make extension of the grid economically feasible. While a purely economic assessment of grid extension or an off-grid solution in a specific case could easily be carried out, governments’ decisions on expanding electrification are based on many country-specific political, social, and economic factors, including equitable regional development. As a result, between 80 and 95 percent of the currently unserved communities in most countries are targeted to receive electricity supply through grid extension.

2.2. The Challenge: Achieving Universal Access15. Scaling up the access agenda is essential. The estimates presented above show that, although considerable progress has been made in some regions, significant challenges remain. Achieving sustainable universal electricity access by 2030 may be very difficult in many countries. An even stronger focus on electricity access is needed to meet the needs of the poor and overcome this constraint on development.

16. The financing gap is huge. The IEA estimates that, with appropriate policies, universal access to modern energy services could be achieved by 2030 with additional annual investments of US$36 billion (IEA 2010). This is less than 3 percent of the global energy investment projected in the New Policy Scenario to 2030 incorporated by the agency in its World Energy Outlook 2010. The added investment would be needed mostly in Sub-Saharan Africa and South Asia (IEA 2010). These figures are far above the current levels of investment. There is, therefore, a large financing gap that will be very difficult to close, particularly in low-income countries where the electrification effort competes with other pressing social and infrastructure needs.

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17. Growth in primary energy demand and the resulting increase in carbon emissions from universal access would be modest, even if a significant shift to RE is not achieved. According to IEA estimates, by 2030 global oil demand would have risen less than 1 percent, and carbon dioxide emissions would be only 0.8 percent higher, compared with the New Policies Scenario. In Africa, where the added electricity generation would be the greatest, carbon dioxide emissions would increase by 13 percent by 2030.

18. Extending access is particularly challenging for low-income countries with low electrification rates. Analyzed experiences show that, once a country reaches a medium level of electrification and a certain income level—for example, 50 percent electrification and an average per capita income above US$3,000 (valued at purchasing power parity)—it becomes easier to achieve universal access. An increasing critical mass of taxpayers and electricity consumers that is able to provide the funds needed to make electrification financially sustainable (Rysankova and others 2009; Mostert 2008) leads to a virtuous circle leading to universal access. The challenge is tougher in low-income countries, where available resources and the numbers of consumers and taxpayers capable of contributing to subsidies tend to be limited. This situation is often aggravated by poorly performing utilities and regressive pricing policies subsidizing those who can afford to pay cost-reflective tariffs. This often results in systematic deterioration of the operational and financial state of the power sector and its institutional capacity. Its consequence is a perverse situation, in which higher-income consumers receive benefits they do not need (through subsidized rates and/or unbilled consumption), leaving few or no resources to expand access. However, outstanding cases of success among low-income countries, such as in Bangladesh and Vietnam, clearly illustrate that it is possible to overcome these difficulties.

2.3. The World Bank Group’s Contribution19. Through its increasing portfolio, the WBG has been actively contributing to the goal of achieving universal access to electricity in the developing world. In the last eight years, the WBG committed over US$44 billion in the energy sector, providing support across the spectrum from off-grid and grid solutions (for a more reliable energy service), including generation, T&D, to EE interventions and support for policy reforms and regulations. Energy financing comes from across the World Bank Group (WBG), including both public and private financing.

20. Electricity access financing varies across regions. Among the WBG Regions, Africa is responsible for the largest share of electricity access commitments. Although to a lesser extent, the East Asia and Pacific and South Asia regions have also greatly benefited from the WBG’s support in this important area. Access financing for Eastern Europe and Central Asia and for Latin America and Middle East are particularly low, since most investments in these regions are focused on improving service quality rather than on connecting new customers. Overall, support for electrification programs has followed the upward trend in investments of the energy sector and has contributed to expanding electricity service to many people in the regions showing the lowest access rates.

21. Africa has begun to make infrastructure a priority for financing. The challenges in scaling up electricity access in Africa are huge, mainly because of extremely low current electrification rates in most of the countries in the region (IEA 2010). The WBG has and continues to develop substantial action to address these challenges. In fiscal 2010, IDA supported several access projects, including the Kenya Electricity Expansion project (US$120 million), by financing T&D networks that will help connect 330,000 new households to the grid, the Mozambique Energy Development and Access Project APL-2 (US$18 million) that will help increase grid-based and off-grid access to electricity and modern energy services in unserved rural areas through conventional and RE resources, and the Ethiopia Additional Financing for Energy Access project (US$10 million) that will further accelerate access to households and enterprises by connecting more than a million consumers in three years.

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22. While electricity access financing in Africa is very prominent, South Asia still faces significant challenges. Expanding sustainable electricity access in South Asia faces significant challenges from the policy environment for rural energy. Investments to address those challenges have been particularly prominent in Bangladesh. A long-running program of projects to install solar home systems (SHSs) will culminate with the electrification of nearly a million homes in peri-urban and rural areas. In fiscal 2010, additional financing to the Bangladesh Renewable Energy project was approved, which will continue to support electricity access to the well-established and successful program. The WBG is becoming increasingly involved in the electricity access agenda in South Asia, preparing major investments in generation and transmission, which in turn will bring about the conditions to move forward in a sustainable manner.

23. Vietnam is one of the countries that has received increasing support by the WBG, showing successful outcomes. Vietnam benefited from a series of RE development and rural electrification projects (Box 1), as well as guarantees from both MIGA and IDA for the development of new gas-fired power plants. These projects made it possible to expand the rate of rural electrification in the country from 60 percent in 1998 to 86 percent in 2006, and over 90 percent in 2009, ensuring provision of good service to all consumers.

Box 1: Increasing Electricity Access in Vietnam

In the 1990s, Vietnam’s power sector was facing the challenge of meeting the needs of a fast-growing and rapidly industrializing economy. Electricity demand was growing at an annual rate of 13–15 percent. Government targets for economic and social growth required increasing the electricity supply at a rate 1.7 times faster than that for gross domestic product (GDP). In 1993, 70 million people still lacked access to electricity, and only 54.8 percent of the 8,860 rural communes—and less than 15 percent of the rural households—had access to electricity. In response, the government made rural electrification a primary component of its poverty reduction program—electrification would address imbalances in development and enhance overall welfare levels by providing reliable lighting sources and improving health care, education, and other social services.

In the late 1990s, the government sought the World Bank’s support to cover the financing gap for rural electrification and pilot institutional arrangements, with the goal of decentralizing the rural electrification program and building local capacity. A series of WBG projects were approved since fiscal 2000, which have been designed to address the changing needs of the power sector while keeping, as main objectives, narrowing the financing gap, strengthening institutions, and building capacity. However, a gradual shift in alignment has occurred with the changing focus of the country’s rural electrification program, from increasing access through grid extension to improving systems efficiency and reliability through rehabilitating and upgrading the existing systems. The World Bank has been the primary donor supporting Vietnam’s rural electrification effort.

The Rural Energy Project exceeded its original targets, connecting 976 communes (45 percent more than the target) and providing electricity to more than 550,000 households (41 percent above the target). Moreover, the targets were exceeded at a low average unit cost of US$363 per household connected (27 percent lower than the estimate at the time of project appraisal). The main factors for the project’s success were the commitment and involvement of local authorities, coordination mechanisms and close supervision, standardization of technical specifications, and cost-effective procurement packaging.

The Vietnamese rural electrification program is one of the most successful in recent history. The percentage of rural households with access to electricity increased from 34 percent in 1995 to 94.5 percent in 2008, providing electricity to an additional 40 million people. The percentage of communes with access to electricity increased from 58 to 98 during the same period. Electrification improved lighting, communications, and rural productivity. In addition, school enrollment increased by about 10 percent for both boys and girls, and the number of completed school years by 52 percent for boys and 15 percent for girls.

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24. The majority of electricity access financing has been through extension of the electricity distribution grid. Rural electrification programs involve nearly 70 percent of the financing for electricity access (Barnes 2009). While off-grid technologies have been adopted in developing countries, they involve less than 20 percent of investments for electricity access (Barnes, 2009). There are many promising new approaches for rural electrification, with notable programs of off-grid energy access in Bangladesh, Nepal, and Sri Lanka. However, in most countries, between 80 and 95 percent of the currently unserved communities are targeted to receive electricity supply through grid extension.

25. The WBG has also supported many off-grid programs, mostly based on RE technologies. Extending the national grid to remote rural areas remains a challenge, and the WBG has financed complementary off-grid solutions using RE applications, which brings the benefits of electricity service to many more low-income rural households (Barnes 2009). Minigrids and individual systems are used to connect remote rural areas to the grid in the foreseeable future, also ensuring that a sustainable supply is guaranteed. These programs have greatly emphasized the involvement of the private sector and community-based nongovernmental organizations (NGOs).

26. Lao People’s Democratic Republic has continued engagement in off-grid rural electrification. IDA approved Phase II of the Rural Electrification Program in fiscal 2010 to help connect 38,000 households to modern electricity services for the first time. A third of these new connections will be through RE sources, such as SHSs and picohydro systems. IDA is also working to address the underlying structural issues of the Laotian energy sector by improving the financial performance of the electricity utility, Electricité du Laos, and building capacity at the Ministry of Energy and Mines to ensure sustainable development of the power sector. IDA is supporting the overall planning process for rural electrification to ensure that the government’s targets for access are met. Low-carbon energy plans for rural areas will also be prepared to create an enabling environment that allows small and medium enterprises to participate in decentralized energy services.

27. Innovative off-grid solutions are successful in small villages in Bihar, India. In fiscal 2010, the IFC invested in Husk Power Systems, a company that uses biomass gasification technology to convert local farmers’ rice husk wastes into electrical power. It operates simple, low cost mini–power plants that provide affordable power to villages that are off the national grid. The miniplants have a capacity of 30 kilowatts with each plant illuminating 500 households. With more than 40 plants in Bihar, the company delivers electricity as a pay-for-use service connecting each household or business directly to a Husk Power Station. To help the company meet its goal of lighting up 1,000 villages in the next three years, the IFC plans further funding and advisory services.

28. Off-grid rural electrification has also been prominent in Bolivia. IDA has been working to provide 90,000 people in rural and peri-urban areas with electricity since 2005 through the Decentralized Infrastructure for Rural Transformation Project. In rural, remote areas of Bolivia, where grid electrification is not economically viable, the project has developed a new model to provide sustainable access to solar electricity. More than 9,200 SHSs have been installed in the poorest rural areas of Bolivia, benefiting an estimated 45,000 people since project inception in 2005. In addition, 87 SHSs have been installed in schools and clinics, benefiting another 30,000 people, and public lighting has been provided for 20,000 inhabitants in El Alto, the large poor satellite city of the country’s capital. Approximately 8,000 new electricity connections are under construction, as part of densification of the existing electricity network in periurban areas (extension of the grid to consumers that are nearby, but outside concession obligations). The project also supported the Electricity Program to Live with Dignity by establishing regulations and a regulatory body for off-grid rural electrification in 2007 (World Bank 2010b).

29. In Mali, the Household Energy and Universal Access Project promotes electricity services in peri-urban and rural areas. The project was designed to help Mali develop (a) a multilayered approach to rural energy, combining bottom-up spontaneous small concessions with top-down planned large

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concessions for electrification, and (b) community-based woodland management to ensure a sustainable fuelwood supply and interfuel substitution initiatives with a gradual introduction of improved stoves. Since 2004, through local private sector participation, the project has helped Mali increase its rural electrification access rate from 1 percent in 2003 to 13 percent in 2009, allowing energy services to cover about 650,000 people and about 803 public institutions, including 172 schools and 139 health centers. Moreover, local private operators have produced and disseminated 748,500 improved cookstoves to households. The project introduced new RE technologies into Mali’s rural energy mix. Over a period of six years, more than 7,926 SHSs and more than 500 institutional solar photovoltaic systems were installed countrywide. The project also placed 874,000 hectares of forested areas under community management. In view of the success of the project, an additional financing of IDA Credit US$35 million was presented to the Bank’s Board in fiscal 2009, and a second additional financing using trust funds from Russia and the Netherlands was signed in 2011.

30. Strategies to improve the access of poor households to modern clean fuels and other nonelectricity energy services are also important. Since 2003, 12 projects had the objective of improving energy access for cooking through fuelwood supply management or improved stoves dissemination initiatives (Ekouevi 2011). The total cost for these projects was US$825 million, to which World Bank contributed US$438 million. All of these projects were implemented in Sub-Saharan African countries, focusing on community-based forest management for sustainable supply of fuelwood, substitution of polluting fuels with cleaner fuels, and institutional capacity development. These projects have followed similar approaches, giving emphasis on supply-side and demand-side issues while strengthening institutions. Moreover, three biogas projects (US$225 million) for cooking and lighting were financed in China and Nepal during this period, and five natural gas projects ( US$87 million) for cooking and heating were financed in Europe and Central Asian countries (Ekouevi 2011).

31. To conclude, access to modern energy services is a fundamental building block of development. The WBG’s contribution to this agenda has been significant, although modest compared to global needs. Challenges still remain despite progress in some regions. An even stronger focus on energy access is necessary to meet the needs of the poor, stimulate economic growth and ensure human development. A coordinated approach among the international donors, countries, private sector, and others is needed to tackle the challenge of providing electricity services to the world’s poorest populations.

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3. Energy Portfolio Review

3.1. Overview32. The WBG is leading the effort to overcome challenges in the energy sector through investments, policy advice, capacity building, and TA. Financing for energy is on a growth trend with over US$44 billion committed since 2003, increasing by fivefold in the last eight years (Figure 1). In fiscal 2010, the WBG financed a record US$13 billion in 69 countries (Map 1), a 56 percent increase compared with the previous fiscal year, representing 18 percent of the overall WBG commitments (see Appendix 2 for list of fiscal 2010 projects). In the last two years, in particular, the WBG has rapidly scaled up energy financing as part of crisis response programs with more than US$20 billion, which provided a foundation for rapid recovery and job creation, as well as long-term sustainable growth in the energy sector.

Map 1: WBG Energy Financing, Fiscal 2010

33. The WBG has a diverse energy portfolio. Projects in the energy sector seek to increase energy access, develop RE and EE, advise on energy policy reforms and regulation, and provide support for energy generation, transmission, and distribution (Map 1, Table 1). There is also a modest but growing commitment to understand and support early-stage and innovative energy technologies with the potential to provide lower cost, environmentally superior energy services. Through its diverse portfolio, the WBG is helping developing countries improve access to and reliability of energy, while facilitating the shift to a more environmentally sustainable energy development path.

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Figure 1: WBG Energy Financing, Fiscal 2003–10

2003 2004 2005 2006 2007 2008 2009 2010 -

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Energy Efficiency Renewable Energy Oil, Gas and Coal Thermal Generation

Transmission and Distribution Reforms and Regulation

US

$ M

illio

n

Table 1: WBG Energy Financing by Subsector, Fiscal 2003–10

Project type 2003 2004 2005 2006 2007 2008 2009 2010 TotalEnergy efficiency 177 92 217 761 262 1,192 1,711 1,771 6,182Renewable energy 229 221 784 594 1,171 1,480 1,694 1,868 8,043Oil, gas, and coal 333 496 578 1,074 627 981 1,032 914 6,035Reforms and regulation

816 370 278 248 375 903 1,752 2,019 6,760

New thermal generation

599 272 100 511 360 957 936 4,270 8,005

Transmission and distribution

216 248 906 1,465 809 2,031 1,204 2,171 9,050

Total (US$ millions) 2,370 1,699 2,864 4,653 3,604 7,545 8,328 13,013 44,075

34. Energy financing varies across the institutions. IBRD remained the largest source of energy financing in the last few years, representing 40 percent of the total WBG energy financing (Figure 2). IBRD lending increased from a low US$500 million in fiscal 2003 to a record US$8 billion in fiscal 2010; commitments totaled US$18 billion during this period. The IFC was the second largest financier, accounting for 26 percent of the energy financing and committing a total of US$12 billion since fiscal 2003. Increasing by nearly 50 percent, the IFC reached US$2.4 billion in fiscal 2010. IDA was the third largest source of energy financing, accounting for 21 percent, with nearly a threefold increase since fiscal 2003, and commitments of US$9 billion during this period. IDA financing in fiscal 2010 totaled US$1.4 billion. MIGA guarantees accounted for 4 percent of the financing since fiscal 2003, with commitments of US$225 million in fiscal 2010. The remaining financing (8 percent) came from other sources, such as the GEF, Carbon Finance (CF), recipient-executed activities (RE), Special Financing (SF), and the Clean Technology Fund (CTF). The latter is a new and innovative instrument, under the Climate Investment Funds, with the purpose of bridging the financing and learning gaps for low-emissions and climate-resilient development in a defined set of relatively large GHG-emitting countries.

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Figure 2: WBG Energy Financing by Institution, Fiscal 2003–10

2003 2004 2005 2006 2007 2008 2009 2010 -

2,000

4,000

6,000

8,000

10,000

12,000

14,000

IBRD IDA IFCMIGA Others (CF, RE, SF, CTF)

US$

Mill

ion

35. Energy financing varies across regions. In fiscal 2010, the AFR region accounted for the largest share of the commitments (41 percent), with a total of US$5.3 billion (Table 2). This record volume is attributed to one large project (South Africa Eskom Investment Support Project), which accounted for 70 percent of the commitments. Almost doubling its commitments from fiscal 2009, the SAR region was responsible for 20 percent of the energy financing in fiscal 2010, or US$2.6 billion. Two large T&D projects, India Powergrid V and India Haryana Power System Improvement Project, accounted for half the region’s energy commitments. Financing for T&D projects has dominated SAR’s energy portfolio in the last two years. With 15 percent of the commitments in fiscal 2010, the LCR region approved several projects with EE interventions, and projects with RE components. Given its focus on RE and EE, the region approved a large DPL, the Framework for Green Growth DPL Project, which aims to develop the regulatory, monitoring, and financial framework for low emissions evolution of the transport and energy sectors in Mexico (Box 2). With the exception of ECA and EAP, all other regions have increased their lending compared to fiscal 2009.

Table 2: WBG Energy Financing by Region, Fiscal 2003–10

Region 2003 2004 2005 2006 2007 2008 2009 2010 TotalAFR 343 384 656 637 1,138 1,160 1,766 5,281 11,365EAP 498 174 779 593 302 1,491 1,255 965 6,057ECA 785 307 716 1,573 455 1,133 2,247 1,182 8,399LCR 488 435 460 792 472 1,171 801 1,966 6,584MNA 50 20 61 393 368 423 806 1,050 3,171SAR 196 253 167 666 804 2,131 1,454 2,569 8,239World 10 125 25 0 65 35 0 0 260

Total (US$ millions) 2,370 1,699 2,864 4,653 3,604 7,545 8,32813,013 44,075

36. In recent years, there has been a notable increase in financing for reforms and regulations. Such financing increased by more than twofold, from US$816 million in 2003 to a peak of US$2 billion

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in 2010. Demand for DPLs has increased in the last two years as a result of the economic crisis. This quick disbursing instrument aims to help the borrower achieve sustainable poverty reduction through policy and institutional actions. Financing for DPLs in the energy sector increased from none in fiscal 2003 to more than US$1.8 billion in fiscal 2010. Some DPLs committed in fiscal 2010 include the Mexico Framework for Green Growth Development Policy Loan (US$752 million for energy—Box 2), the Turkey Environmental Sustainability and Energy Sector DPL2 (US$455 million), and the Vietnam Power Sector Reform DPL (US$200 million).

Box 2: Mexico Framework for Green Growth Development Policy Loan

Mexico is one of the first developing countries to commit to a voluntary carbon reduction target to combat climate change, and it has established a federal emissions reduction program to address priority sectoral emissions, including from the transport and energy sectors. Such sectoral emissions reductions are now embedded in the Government of Mexico’s new Special Climate Change Program (Programa Especial de Cambio Climático, or PECC), which provides an accounting of emissions by sector, creates a framework for monitoring improvements, and establishes a blueprint for emission reduction initiatives. The Green Growth DPL, which was approved by the Bank in fiscal 2010, at the height of Mexico’s financial difficulties, supports the development of the regulatory, monitoring, and financial framework for low emissions evolution of the transport and energy sectors.

The Project Development Objective is to support stimulus of the economy while strengthening the framework for long-term sustainable growth. This will be achieved by further developing the regulatory, monitoring, and financial framework for low emissions evolution of the energy and transport sectors. The three Policy Areas of the DPL thus aim to (a) implement a verifiable, targeted, and cross-sectoral strategy for emission reductions; (b) establish institutions, regulations, and monitoring capacity to allow for the reduction of emissions in urban transport, energy generation, and efficiency; and (c) institutionalize the appropriate financing mechanisms to allow for the reduction of emissions in urban transport, energy generation, and efficiency.

In the energy sector, the DPL supports policies and programs for the development of RE and EE, including national laws and regulations, institutions, and the financial architecture. The Law for the Use of Renewable Energy and the Financing of the Energy Transition and the Law for the Sustainable Use of Energy, supported under this operation, provide the regulatory framework for putting in place new incentive structures for an increased use of RE in the country’s electricity generation mix and for improvements in the efficiency of energy use. The success of these initiatives rests on the adequacy of the secondary regulations and the effectiveness of the incentives aimed at public and private stakeholders, as well as end-consumers, a sound implementation program, the availability of financing mechanisms for such initiatives, and adequate capacity to implement and monitor policies.

In addition to global benefits, the adoption of RE and EE measures will provide a variety of local and regional air quality benefits through their role in reducing the use of fossil fuels for electricity generation. In sum, the DPL builds on the Bank’s existing and ongoing engagement in Mexico’s energy and transport sectors and is expected to contribute positively to the sectors’ ability to manage environmental and social impacts and risks, and to strengthen stakeholder engagement and transparency

37. As part of this retrospective review, a detailed analysis was carried out to understand better the kinds of projects supported by the WBG. A description of energy financing by subsector is reported below. Details of the methodology can be found in Appendix 1.

3.2. Renewable Energy and Energy Efficiency38. RE and EE are rapidly increasing in importance in the WBG’s portfolio, both in absolute terms and as a share of the total energy portfolio. The WBG’s interventions in the area of RE and EE encompasses a variety of approaches and lending instruments. This includes direct investments, such as procuring and distributing energy-efficient bulbs and appliances, as well as constructing RE facilities to support energy utilities in our client countries, but also includes indirect interventions, such as targeted funds, lines of credit, and partial credit guarantee mechanisms provided through financial intermediaries and domestic institutions. Finally, the WBG also supports policy and institutional development to help

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scale up private sector investments in RE and EE areas. This is achieved through its DPLs, which promote EE standards or feed-in-tariffs that help close the gap between RE and non-RE prices.

Figure 3: WBG Renewable Energy and Energy Efficiency Financing, Fiscal 2003–10

2003 2004 2005 2006 2007 2008 2009 2010 -

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

406 313

1,001 1,355 1,433

2,672

3,405 3,639

Energy Efficiency Renewable Energy

US

$ M

illio

n

39. WBG financing for RE and EE has scaled up considerably in the last few years. In fiscal 1990, the WBG committed US$53 million for RE, and none at all for EE, in a year when its annual energy investment portfolio was about US$3.8 billion. RE and EE investment has increased dramatically since then, both in volume and as a proportion of the energy portfolio as a whole. Since the establishment of the GEF in 1991, global environment aspects has been mainstreamed in WBG operations with increasing support for RE and EE investments. The WBG has committed more than US$14 billion in 99 countries since 2003 (Figure 3). The WBG far exceeded its Bonn commitments toward scaling up support for new RE and EE in the fiscal 2005–09 period. The WBG pledged to increase its financial commitments for new RE and EE at a growth rate of 20 percent per year between fiscal 2005 and 2009 over the baseline of US$209 million. With total commitments of US$7 billion, the WBG surpassed its target of investing US$1.9 billion during the period.

40. In fiscal 2010, the WBG committed US$3.6 billion for RE and EE—about 7 percent more than in the previous fiscal year. About equal shares of the WBG commitments went to RE and EE in the past year—US$1.87 billion for RE, and US$1.77 billion for EE. A similar distribution of financing has been seen in the past three fiscal years, reflecting the equal importance of RE and EE toward providing sustainable energy in developing countries.

3.2.1. Renewable Energy

41. In fiscal 2010, the WBG committed US$1,868 million for RE, representing 14 percent of the overall energy commitments. This is additional to the US$6,174 million committed in the previous seven years for RE. WBG financing for RE is on a growing trend, from an annual average of US$450 million for fiscal 2003–06 to US$1.5 billion for fiscal 2007–10. Table 3 summarizes the financing for the various types of RE projects supported in the past eight years.

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Table 3: Financing for Renewable Energy, Fiscal 2003–10

Type of RE FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 TotalBiomass 21 2 23 7 39 57 346 212 708Geothermal 0 0 35 4 63 14 84 361 560Hydropower 70 106 550 353 768 1,014 235 319 3,415Solar PV 4 26 0 10 23 12 420 110 604Solar Thermal 0 0 0 0 93 50 0 0 143Wind 4 1 69 47 67 6 154 145 493Multiple Types4

121 87 97 154 114 239 455 635 1,901

No Information

10 0 11 18 4 88 0 87 218

Total (US$ millions)

229 221 784 594 1,171 1,480 1,694 1,868 8,043

Supplying Renewable Energy through the Grid

42. The WBG continues actively engaged in hydropower, which is a critical RE resource. Hydropower accounted for more than 40 percent of all RE financing in the past eight years—the largest proportion of RE financing supported by the WBG since 2003. With natural variations year on year, average annual financing has increased from US$300 million in fiscal 2003–06 to US$600 million in fiscal 2007–10. This increase is driven by demand from developing countries and hydropower’s multidimensional role in poverty alleviation and sustainable development. Hydropower is a critical RE resource, bringing light and heat to 1.4 billion people who currently lack access. Africa, in particular, has a large physical and engineering hydropower potential that still needs to be developed. Seven individual projects constituted 97 percent of the financing categorized as hydropower in fiscal 2010: additional IDA financing in the amount of US$85 million for the Felou Hydroelectric Project in the West African Power Pool, a US$75 million loan from the IFC to AkEnerji to construct five hydropower plants in Turkey, additional financing in the amount of US$60 million for the IBRD-financed rehabilitation of two dams in Ukraine, and IFC loans of US$35 million, US$25.7 million, US$15 million, and US$12.6 million to Laraib Energy of Pakistan, Zhongda Hydro II in China, Ameriabank in Armenia, and NDB PADGO in Sri Lanka, respectively. Many countries still need to develop their hydropower potential. The WBG is helping the Government of India to increase the country’s installed generation capacity to 40 percent—a re-engagement after many years with no financing for hydropower in the country (Box 3).

Box 3: India’s Ongoing Engagement in Hydropower

In planning for India’s future energy needs, the Government of India has assigned an important role to the development of the country’s unharnessed hydropower potential. Plans call for an increase of hydropower’s share in the country’s installed generation capacity from 25 percent to 40 percent. The drivers behind this strategic objective include enhanced power system management (because of hydropower’s ability to respond rapidly to fluctuations in demand); contribution to lower-carbon growth; and energy reliability of future energy supplies. However, the experience of recent years has demonstrated that in order for these ambitious targets to be met, the hydropower industry in India needs to overcome daunting challenges. These challenges encompass complex technical issues (such as tunneling in the Himalayas), as well as hydropower companies’ ability to manage the social and

4 Multiple types refers to Bank projects that support the introduction of a pipeline of subprojects, where the type of technology depends on economic, technical, social, and environmental considerations to be analyzed and evaluated during the course of project implementation. Common examples include community-driven development projects where there was a range of technology options from which the community could choose; the options that could be financed were known ex ante, but not the funding allocation.

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environmental impacts of hydropower projects in an atmosphere of evolving expectations of project-affected communities and civil society stakeholders, and in an evolving legislative and regulatory environment.

The Government of India has requested World Bank support for this important national development program, with a particular emphasis on helping to build the capacity of public sector hydropower companies, to bring them to the level of top-performing public companies in the power sector, such as POWERGRID and the National Thermal Power Corporation. After several years of no lending to the sector, the Bank has re-engaged significantly in hydropower in India, with one project under implementation (Rampur HEP on the Satluj River in Himachal Pradesh) and two under preparation (Vishnugad Pipalkoti HEP on the Alaknanda River in Uttarkhand, and Luhri HEP on the Satluj River in Himachal Pradesh). The two projects in Himachal Pradesh are being developed by SJVNL, and the project in Uttarakhand is being developed by THDC India Ltd. In total, these three projects represent more than 1,600 MW in new generation capacity.

The Bank’s deep engagement with two major public hydropower companies provides an opportunity for informing the hydropower policy dialogue and practice in hydropower development in the two states slated to host a significant share of India’s hydropower development in coming years. Cascaded hydropower systems will be developed on the two river basins in question, which will create a need for effective project execution capacity in the broad context of a holistic, coordinated approach to river basin planning and development.

43. Financing for other forms of RE has also increased in the last few years, especially in geothermal capacity. Geothermal has been gaining more attention with financing rising from zero in fiscal 2003 to US$361 million in fiscal 2010. For example, along Africa’s Great Rift Valley, and the Pacific Ring of Fire, the WBG has been developing geothermal energy since the early 1990s. In fiscal 2010, IDA lent Kenya US$120 million to increase geothermal energy production at its Olkaria Geothermal Power station by 280 MW, after helping finance the first three rounds of construction starting in 1993. This project leveraged cofinancing from other donors: French Development Agency (AFD), Japan International Cooperation Agency (JICA), European Investment Bank (EIB), Kreditanstalt für Wiederaufbau (KfW), the government, and Kenya Electricity Generating Company Ltd. By the time the project is completed in 2015, 20 percent of Kenya’s power will come from geothermal sources, reducing dependence on hydropower in the drought-prone country. In Indonesia and the Philippines, the WBG is financing the development of 1.7 GW of geothermal power through a combination of loans, carbon financing, and support from the GEF, US$155 million in total, leveraging nearly US$900 million of private, governmental and other developmental monies.

44. The WBG has also ramped up support to grid-connected wind power. Projects supporting wind power were financed by product lines such as the GEF, Carbon Finance, and the CTF. fiscal 2010 commitments for wind power totaled US$145 million. About 8 percent of WBG financing in fiscal 2010 and 6 percent of financing in the past six years has been channeled to wind power projects, mainly large facilities connected to national grids, as in Chile, China, Egypt, Mexico, and other countries, as well as small community-scale turbines to help meet the energy access challenge. In fiscal 2010, the IFC provided US$71 million for the construction of a 251 MW wind farm in Mexico (Box 4), and US$55 million for another 201 MW wind farm in China. In addition, the IBRD and CTF jointly provided US$220 million under the Egypt Wind Power Development project to help connect a privately developed 250 MW wind farm in the Gulf of Suez. The IFC has also provided financing for manufacturing of wind turbines.

45. The GEF and WBG have led the way in the development of concentrating solar power (CSP) projects in developing countries, with the GEF providing favorable grant financing and WBG staff providing TA and policy support to encourage client countries to pursue this low-carbon alternative. CSP can be deployed either as a stand-alone technology, as envisioned in the CTF regional investment plan for the Middle East and North Africa, or as a complement to conventional fuels, as the GEF has financed, in Mexico and Morocco. The Mexico Hybrid Solar Thermal Integrated project is an example of

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the latter. Financed in fiscal 2007, the project uses concentrating solar power to generate 31 MW to complement the 485 MW of gas-fired generation.

Box 4: Latin America–EURUS Wind Power Project, Mexico

The Isthmus of Tehuantepec, at the mouth of a corridor through the massive Sierra Madre mountain range, is an area with some of the world’s richest wind resources. A wind tunnel effect is created when the high pressure zone that sits over the Gulf of Mexico collides with the lower pressure zone over the Pacific Ocean resulting in average wind speeds in the 8–12 mile per hour range, well above the standard required for effective power generation. The region, in the state of Oaxaca, is among Mexico’s poorest, with large communities of indigenous peoples, an underdeveloped social support system, and few job opportunities.

The IFC is helping to harness the isthmus’ abundant wind power, with an investment in a new wind farm to be constructed in the La Ventosa community. Known as Eurus, the project is sponsored by Spanish firm Acciona Energia SA, an internationally respected RE player and one of the world’s largest wind farm developers.

When complete, the 250 MW wind farm will generate 973 GWh per year, to supply Cemex Mexico, a prominent cement producer under a 20-year power purchase agreement. The company will lease the land from the La Ventosa community, while working with them on social and community development programs that will enhance the quality of life for the people who live in the area. Notably, the cost of the power generated by the wind farm will be competitive with the cost of electricity generated by traditional means—without subsidies and without regulatory support, a remarkable feat made possible because of the extraordinary wind resource being tapped.

The IFC is lending US$71 million of its own account to the US$600 million project. Along with the Inter-American Development Bank as co-arranger, the IFC has also syndicated US$62 million from commercial banks and mobilized US$242 million from a diverse group of parallel lenders, including multilateral, bilateral, and Mexican development finance institutions.

Access through Off-Grid Renewable Energy

46. Community-focused development projects account for a large portion of the RE financing.5 While grid-connected RE has helped countries as diverse as Brazil, Kenya, China, Egypt, Indonesia, and Mexico meet their energy needs in a low emissions manner, and some off-grid RE technologies have also proven to be a cost-effective and efficient way to meet decentralized access needs. In rural parts of South Asia, Sub-Saharan Africa and Latin America, RE is often the lowest-cost option for bringing power to households, shops, clinics, schools, and small industry. Such community-focused development projects received the second largest form of the Bank’s support for RE in the past eight years, accounting for 24 percent of financing. In fiscal 2010, it was the largest form of RE supported at US$635 million, accounting for a third of all RE commitments for the year.

47. In such projects, a menu of multiple RE options exist—such as microhydro, solar, wind, or hybrid RE systems—offered to communities, but where the final distribution of RE technological option depended on market demand and other factors. Such projects include the additional IDA financing for Renewable Energy in Bangladesh and the Tanzania Energy Development and Access Project. Many solar photovoltaic (PV) projects are small installations for community use, as exemplified by the US$199 million IDA loan to Vietnam in fiscal 2009. In Bangladesh, a long-running program of projects to install SHSs will culminate with the electrification of nearly a million homes in peri-urban and rural areas.

48. The umbrella of biomass projects includes projects as diverse as landfill gas recovery, biogas collection at small farms, bagasse cogeneration, and developing sustainable traditional fuels for heating and cooking. In rural farms, waste from agriculture and animal husbandry provides a ready 5 While a large portion of the projects is community-driven, this category also includes other modalities, such as private sector–driven initiatives.

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source of fuel—with the added benefit of productively utilizing the potent GHG methane that would otherwise be leaked unproductively into the atmosphere. Through its Global Trade Finance Program, the IFC has been particularly active in creating funds to assist agricultural cooperatives and small and medium enterprises develop biomass sources of energy in Brazil and Panama. In Brazil, such financing reached US$151 million in fiscal 2010. The Carbon Finance Unit has also purchased certified emission reductions in many developing countries to help reduce emissions from farms, by capturing agricultural waste and using them to generate power, earning certified emission reduction credits that could then be sold. For a recent project in China, the IBRD loaned US$103.4 million to construct household- and farm-size biogas digesters for half a million rural families and another 30,000 larger units to heat houses and create fertilizer for farms, all while reducing carbon dioxide emissions by 60,000 tons a year.

Renewable Energy Lessons Learned

49. In the course of the World Bank’s financing of RE projects, a number of important lessons have been learned about how best to ensure the success of RE projects. Based on RE projects that have recently closed, emerging lessons from these projects fall into six categories:

- Policy and Regulatory Lessons

50. A predictable policy and regulatory environment is a critical precondition for private sector investment in RE development. An enabling policy environment, including predictable feed-in-tariffs and transparent rules for electricity trading, is critical for attracting private sector investment. Other favorable policies that could help are facilitation of developer access to land and adoption of transparent and streamlined procedures for obtaining licenses and clearances (such as water use rights in the case of hydropower development). In order to promote RE projects, as shown in the case of the Turkey program, it is important to develop a coherent strategy that integrates the establishment of an enabling policy and regulatory environment within the overall framework of the project design. It is also important to ensure that RE program objectives and activities are consistent with the overall energy sector strategic priorities, government reform programs, and activities of other stakeholders, such as municipalities, NGOs, and other donor agencies. For instance, under the Second Georgia Social Investment Fund Project, a Supervisory Board was created with the main task of ensuring that project activities were consistent priorities of relevant social/economic sectors.

- Program Design and Implementation Lessons

51. A long-term programmatic approach needs to promote RE, given the array of barriers, including institutional, capacity and financing challenges that need to be addressed in developing RE. RE promotion requires a thorough understanding of the sector background, long-term efforts, and a strategic mix of policy and investment interventions to overcome these barriers. An important aspect of the long-term programming approach in promoting RE is ensuring sustainable implementation procedures and robust monitoring and supervision frameworks for the components of program.

52. Focus on a select number of central actions, impacts, and results in the design of the Program in needed. The EnvSAL program of Mexico had a large number of prior actions that covered a broad range of development areas. Consequently, the implementation and supervision covered a wide range of topics, presenting challenges in terms of sufficient human and budgetary resources and constant dialogue between the Bank and the Government of Mexico throughout the period of implementation. This example illustrated the need to focus on a few strategically important actions that would address the sectoral priorities of the country while ensuring developmental impact.

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53. A relevant set of measurable and meaningful outcome indicators should be established at the outset of a program, along with clearly defined baseline and target values to monitor progress and evaluate outcomes. The lack of a definition of baseline and target values at the outset can make it more difficult to assess the program’s overall progress during implementation.

54. Client consensus, buy-in, and ownership of the operation’s objectives and implementation measures, as well as a strong “champion” to lead the relevant reforms, are critical to the success of policy lending, particularly in the highly political energy sector. Client consultation was integrated into the operational design of the Morocco DPL with the development of a clear communication strategy, client working groups, and a number of workshops. The other principal lesson is the importance of ensuring that the client prioritizes attainment of reform objectives over the implementation of a set of measures (that is, results as opposed to the mere process). Thus, strengthening of the accountability framework for reforms implementation, monitoring, and impact evaluation is critical.

55. The timing of program initiation is also important, especially for complex sectors, such as energy, for aligning it with the government calendars so that political changes do not cause loss of time and/or increase transaction costs (for instance, a new government may desire to revisit some of the earlier actions).

56. Flexibility in procurement procedures is important in working with the private sector. Based on the experience in the Turkey program, the follow-on project introduced increased flexibility, and International Competitive Bidding (ICB) procurement thresholds were changed so that private developers could use commercial practices for the entire project. Additionally, to ensure compliance with Bank procurement principles, an independent procurement audit process has been instituted in addition to the Bank’s periodic post-review.

- Institutional Lessons

57. Effective institutional structures at various levels are critical to ensure program sustainability. The Second Social Investment Fund Project (developing hydropower projects) in the Republic of Georgia has provided a number of lessons on project sustainability, including the following:

The need to focus on local self-governing structures and to develop an effective framework (structure, systems, and procedures) to facilitate interaction between community members and local self-government authorities. This was essential in helping move communities and local self governments from a dependency culture focused on short-term interventions to one that recognizes that communities have the ability to improve their living conditions and prospects for sustainable development through the active involvement of community members.

The importance of building the organizational capacities of communities.

The need to ensure good quality of work though improved procedures and an enhanced monitoring and supervision framework.

The need to devote greater attention to operations and maintenance of microprojects by ensuring adequate demand orientation and community participation in the choice of subprojects and through local capacity building.

The importance of institutionalizing the administration of microprojects in the government structure to create effective linkages between the central government and local communities, to ensure effective service delivery through qualified staff in the government structure, and thereby to sustain project activities beyond project implementation.

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- Capacity Building Lessons

58. Ensuring adequate capacity among community groups and local self-government bodies is critical for the sustainability of community investments in RE. In Georgia’s hydropower program, the training on community development plans and microproject development was instrumental in helping community leaders and citizens develop local self-government plans using participatory methods. The complementary interaction between institutionally strengthened local governments and mobilized community members participating in microproject planning, selection, and implementation helped create strong coordination between the local governments and communities.

59. Achieving upfront buy-in from and consensus among political authorities at the highest level is necessary to make progress on institutional capacity building and program implementation. The commitment and ownership shown by the political leadership and also by the executing agencies was to a large extent responsible for the success achieved in the hydropower program of Himachal Pradesh in India. A broad consensus on the importance of the reforms existed, as attested by the steadfast implementation of the operation despite change in government. The authorities acknowledge that the framework set by the operation enabled them to overcome inertia and obstacles and press forward in a timely manner. Nevertheless, the fact that numerous implementing agencies have effectively carried out various components indicates the impact of the political buy-in at the top level. However, another key lesson from the Himachal Pradesh experience is that many reforms and the institution-building efforts supported take time to deliver the expected results. Sustained budgetary and capacity building support is required.

60. To ensure intersectoral coordination, a champion is imperative. To ensure that interinstitutional coordination efforts are sustained throughout program implementation and beyond, it is essential that an entity take a leading role in overseeing these efforts, particularly as participating entities go through an initial learning process and define their functions within intersectoral working groups. In Mexico, SHCP and SEMARNAT assumed this coordinating role, which helped to ensure the success of the program’s coordination efforts.

- Financial Considerations

61. Long-term financing to RE development can be viable. However, financing RE is a complex line of business, and capacity building support should be provided to financial institutions in strengthening project evaluation and engineering skills and environmental and social safeguard functions. Feedback from the Turkey project shows that for RE projects, TA to financial institutions should be incorporated into the initial project designs.

62. Small and first generation entrepreneurs in RE development need strong financial support. High levels of collateral requirements by sponsors could constrain small renewable developers with low collateral value from accessing finance, so it is important to develop more friendly policies for RE developers, such as a guarantee fund, to overcome the challenge. For example, using World Bank funds for pilot demonstrations and capacity building, could help leverage investments into the RE sector. In Turkey, Bank support triggered interest among the financial institutions, which increased their RE portfolios after initial capacity support from the Bank program.

- Technology Lessons

63. Sustainable technologies, such as waste to energy (WtE) that convert landfill gas to electricity and heat have great potential in climate change mitigation, in addition to contributing to economic development and an improvement in public welfare and safety. The experience from the Hungary geothermal program indicates that an RE project with a certain portion of the grant designated for geothermal development could have resulted in a more robust pipeline of subprojects. At the same

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Figure 4: Incandescent Lightbulbs Being Exchanged for CFLs as Part of the Efficient Lighting Initiative of Bangladesh, June 2010

time, it should be ensured that special funds used for sector-specific programs (such as the GeoFund program of the GEF) are better integrated with country-based programs to ensure local ownership.

3.2.2. Energy Efficiency

64. In fiscal 2010, the WBG committed US$1.8 billion for EE measures, of which nearly two-thirds was for reducing demand for energy, and the remainder for reducing energy wastage in the supply of energy (Table 4). This was consistent with the pattern of financing for the past six years. In fiscal 2010, financing for demand-side EE increased by 25 percent from the previous year to US$1 billion, while supply-side financing slightly declined (16 percent) but remained considerably higher compared to the previous four years (2005–08).

Table 4: WBG Financing for Energy Efficiency, Fiscal 2005–10

Energy efficiency measures 2005 2006 2007 2008 2009 2010 Total

Demand side 184 333 176 850 807 1,013 3,362Supply side 33 428 86 343 904 757 2,552Total (US$ millions)

217 761 262 1,192 1,711 1,771 5,914

65. WBG financing for demand-side EE seeks to reduce the demand for energy in homes, shops, factories, schools, hospitals and government buildings. In the residential sector, the WBG has been active in financing the replacement of energy end-use appliances, such as lightbulbs, refrigerators, and air conditioners with more energy-efficient stock. An example of such interventions through utility demand-side management approach has been projects that replaced inefficient incandescent lamps with high-efficiency compact fluorescent lamps (CFLs). For instance, in the Bangladesh Rural Electrification and Renewable Energy Additional Financing project (Figure 4), more than 10 million incandescent bulbs were replaced with energy-efficient CFLs in 2010, to help Bangladesh bridge its burgeoning electricity supply-demand gap, exceeding 2,000 MW on many peak summer days. There is also a large potential in adopting EE measures in industries. In fiscal 2010, the IBRD approved the Energy Efficiency Facility for Industrial Enterprises Project in Uzbekistan with the objective of improving EE in industrial enterprises by designing and establishing a financing mechanism for energy-saving investments (Box 5). Another notable project committed in fiscal 2010 was the IFC’s Optima Energia in Mexico, which will help improve energy performance in the country’s hotel sector (Box 6).

Box 5: Raising Awareness of Energy Efficiency Measures in Industry

Uzbekistan has one of the most energy-intensive economies worldwide. According to the latest World Development Indicators, Uzbekistan uses three times as much energy to produce a unit of GDP as the average for Eastern Europe

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and Central Asia countries, and six times as much as Germany. The largest energy consumers in Uzbekistan are industrial enterprises that mostly operate outdated equipment and machinery. Because of this high energy intensity, Uzbekistan is also a major carbon dioxide emitter. It emits much more carbon dioxide per unit of GDP than most other countries in the region, more than twice as much as energy-rich Russia and three times the ECA average. There is a wide consensus that the potential for EE measures in industrial enterprises is huge, and the Government of Uzbekistan has declared energy conservation in industry to be one of its most important economic policy priorities. The major benefits of increasing EE in industry are that it will improve the overall competitiveness of the Uzbek industry by reducing production costs, freeing up scarce natural gas resources, and reducing overall GHG emissions.

The Government of Uzbekistan had asked for World Bank support through the Energy Efficiency Facility for Industrial Enterprises Project, which was approved in fiscal 2010. The project’s objective is to improve EE in industrial enterprises by designing and establishing a financing mechanism for energy-saving investments. These development objectives will be achieved through (a) development of EE capacity and (b) a line of credit for participating banks.

The participating banks in the credit line (Asaka Bank, Uzpromstroybank, and Hamkor Bank) will get an allocation of US$8 million each to onlend to industrial enterprises for EE investments. A set of eligibility criteria has been developed for industrial enterprises to participate in this project, including (a) state ownership or control in industrial enterprise must be below 25 percent; (b) the industrial enterprise should not have more than 1 percent of the shares in the participating banks; (c) participating banks should not have any ownership stake in the industrial enterprise; (d) industrial enterprises will need to demonstrate profitability in the two most recent business years; (e) a maximum debt-to-equity ratio of 75:25 must be achieved; and (f) industrial enterprises must demonstrate an annual EE savings in the investment of at least 20 percent.

Three categories of EE projects were identified that are eligible under the project. These include investments in (a) energy systems (such as those that are related to upgrading boilers and switching fuels); (b) process technology (upgrading and replacement of equipment, machinery, and facilities); and (c) waste heat and waste use.

The outcome of the Uzbekistan Energy Efficiency Facility for Industrial Enterprises Project is to raise awareness in industry about the benefits of energy savings and conservation and assist the participating banks in implementing a new line of credit for EE investments.

66. The IFC has been instrumental in setting up EE funds in Central Asia, Eastern Europe, East Asia, Latin America, and South Asia. These funds, an example of which is the US$23.8 million investment in MDM Bank in Russia in fiscal 2010, will be pooled with other commercial financing and loaned to energy service companies (ESCOs) which provide EE services to industrial and commercial energy consumers, and to small, medium, and large enterprises seeking to replace their existing, inefficient production lines with modern, efficient production processes. Similar efforts have been carried out by the IBRD and IDA. A recent example of such a project is the US$100 million China Energy Efficiency Financing II project in fiscal 2010 that provides financing to large industrial users across China to help them reduce their energy needs.

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Box 6: Latin America, Optima Energy, MexicoIn fiscal 2010, the IFC provided a US$10 million loan to Optima Energia to implement up to six energy-saving projects in Mexico’s hotel sector.

Optima Energia is an energy services company (ESCO) which provides complete energy-efficient solutions to clients in the hotel field. The company provides in-depth energy analyses, design of energy- efficient solutions, and the installation of the required equipment. Optima will work with local clients to maintain their system during a multiple-year contract period, while financing the hotel’s energy equipment investment. This complete energy- saving service package, which is still nascent in Mexico, is helping improve energy performance in the country’s hotel sector.

Since 2000, Optima has saved its clients 24 million liters of liquefied petroleum gas, 20 million liters of diesel, 8 million cubic meters of potable water, 145 million kilowatt-hours, and 186,000 tons of carbon dioxide emissions, translating into savings of US$14 million a year.

67. On the supply side, IFC has been effective at reducing technical losses in the production and T&D of electricity, which has increased efficiency of production and reductions in emissions per unit of energy output. The IFC has been helping residential, commercial, and industrial users reduce their demand for energy. For example, the district heating systems owned by Dalkia throughout Eastern Europe were rehabilitated using a €100 million IFC investment in fiscal 2010, a program that will see the replacement of heat-only boilers with combined heat and power boilers, increased use of waste biomass instead of oil and gas, and a reduction in leakages in the heat distribution network. In Colombia, the IFC helped Termoflores finance the conversion of open-cycle gas turbines to combined-cycle, and helped finance the installation of heat recovery systems that generated an additional 169 MW of power without increasing—and possibly, decreasing—the demand for fuel.

68. The IBRD and IDA also financed projects addressing supply-side EE. The IBRD provided Latin America’s largest power utility, Eletrobras of Brazil, with US$475 million in fiscal 2010 to increase the efficiency of its distribution network and install advanced metering technology (Box 7). Similarly, IDA provided an additional US$137 million to the Ethiopia Electric Power Company in fiscal 2010 to help it reduce losses on its urban distribution network in Addis Ababa and seven other cities, and connect 630,000 new urban consumers to the newly reinforced and efficient grid. Both the IBRD and IDA have also increased the efficiency of existing power plants. In India, the IBRD and GEF jointly provided US$225 million in fiscal 2009 to help refurbish 640 MW of coal-fired generation. As part of the investment, additional measures beyond the usual Indian rehabilitation and modernization practices were undertaken to reduce fuel consumption by modifying or replacing standard equipment with higher-efficiency versions. A detailed discussion of EE improvements in existing thermal power plants is included in the fossil fuel description of the portfolio.

Box 7: Brazil Eletrobras Distribution Rehabilitation Project: Reducing Electricity Losses and Emissions

Eletrobras is the holding company for six state electricity distribution companies (Discos) located in the northern and northeastern states, including (a) CEAL company in the state of Alagoas, (b) Boa Vista Energia in Boa Vista City, the capital of the state of Roraima, (c) CEPISA in state of Piaui, (d) CERON in the state of Rondonia, (e) ELETROACRE in the state of Acre, and (f) Amazonas Energia in the state of Amazonas.

The six Discos currently supply electricity to slightly more than 3 million customers in some of the poorest regions in Brazil. The aggregate electricity consumption for the six Discos was 17.2 TWh in 2009. The six Discos are characterized by high costs of service provision, high technical and nontechnical losses (about 34 percent on average for 2005–08), poor management, and a lack of commercial discipline that is exacerbated by the frequent involvement of local political authorities. The nonenforcement of payment for electricity, including from large consumers, along with mismanagement have led to a downward spiral of underinvestment in basic maintenance, leading to poor service for which consumers do not want to pay. According to the audited consolidated financial statements of Eletrobras for the years ended 2006 and 2007, the net balance recorded by the six Discos represented a loss of US$244 million and US$349 million, respectively.

An important issue that needed to be defined by Eletrobras in its restructuring process was how to address the large financial deficits of the 6 Discos while continuing to provide good service to poor consumers. The defined strategy to solve the problems and ensure the financial sustainability of the Discos includes comprehensive and coordinated actions aimed at improving corporate governance, as well as the operational and financial performance of those companies.

The Eletrobras Distribution Rehabilitation Project was approved in 2010 with an IBRD loan of US$495 million. The project’s main objectives are to improve the financial and operational performance and the commercial management of the six Eletrobras-managed Discos by reducing electricity losses, increasing bill collection rates, and improving quality of service. Specifically, the project will (a) improve the distribution network by reinforcing, rehabilitating, and expanding high-, medium-, and low-voltage distribution grids supplying urban areas; (b) supply advanced metering equipment to improve the efficiency of metering, provide incentives for conservation, and facilitate bill

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collection; and (c) modernize the companies’ management information systems, including the updating the client database and mapping of the distribution network based upon a geographic information system. An institutional strengthening component will improve the operational capacities of the Discos through (a) the provision of TA, training, consultancy services, studies, and equipment; and (b) the implementation of social action programs and communication campaigns to encourage consumers to legalize connections and pay bills, and to promote EE, safety, and environmental awareness.

Energy Efficiency Lessons Learned

69. Emerging lessons were drawn from EE projects that have recently closed. These lessons bring useful insights that help address the challenges in the EE market.

70. The implementation complexities continue to pose a challenge to EE market transformation to achieve energy savings, particularly through demand-side EE measures. Despite numerous attempts, including significant efforts by development institutions and national governments in accelerating EE scale-up, results have been modest. Market failures, along with gaps in information and perception, can be very difficult to overcome in EE markets. Without large clusters of viable projects, serviced providers and financiers are reluctant to enter the market. Determining how dispersed EE projects can be organized, packaged, financed, and implemented in the most effective and efficient manner has also proved elusive. Viable projects, in turn, are difficult to identify and develop without the supporting market actors to realize a project’s implementation. Through the cross-section of projects that the WBG has implemented in the past years, many lessons have emerged.

71. Numerous barriers and implementation challenges remain in most developing countries. Informational, technical, financial, institutional, and behavioral barriers across a wide range of stakeholders are particularly significant in the case of demand-side EE. In addition to these project-level barriers, other more systemic ones affect developing countries:

Lack of consensus on best practices for promoting EE, that is, regulation vs. incentives or subsidies vs. market-based schemes vs. awareness or informational issues, the right balance between these mechanisms, and the appropriate role of government.

Project-by-project solutions to address inherently larger and more systemic challenges that require a more ambitious and concerted engagement at all levels of government and in all sectors.

Over-reliance on Western EE program models (for example, demand-side management and ESCOs), which can help guide developing countries, but which need to be adapted to suit local markets and conditions.

Lack of EE data, compounded by the absence of internationally recognized indicators to adequately compare countries relative EE levels to take into account their economic structure, climate, geography, population, and other factors, and to effectively determine the real potential for improvements;

Poor EE governance among EE and related institutions that can undermine government policy frameworks and initiatives, for example, by rendering them unable to enforce or govern EE regulations and coordinate different level of government, the international community, the private sector, and civil society.

Small EE markets, where there is limited demand for high-efficiency products, in part because of the limited discretionary income among consumers and lack of awareness, and thus limited domestic supply of EE goods and services.

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Energy subsidies that continue to diminish the returns from EE improvements where pricing is adequate and bill collection is often unreliable or incomplete, or both.

Lack of institutions and capacity for public agencies to organize, transform, incentivize, and develop new and nascent markets for EE goods and services, and for local private sectors to adopt state-of-the-art EE technologies and practices (along with financing).

72. Transforming EE markets requires both regulatory policies and financial incentives. There is no single model for scaling up EE, especially when it comes to demand-side EE improvements. The greatest contributions come through systematic efforts to reduce the energy intensity of specific end-use sectors, and through efficiency improvements in technology, rational energy pricing, and market liberalization. The important approaches to scale-up EE—(a) regulations and institutional governance structures that foster scale-up, (b) targeted financial incentives, and (c) knowledge sharing and information dissemination mechanisms—must be tailored to meet each of the different market situations. The emphasis on one or the other and the right mix between regulation and financial incentives varies from one country to another.

For lighting, motors, and buildings, mandatory EE policies (such as EE codes for building and equipment standards) can achieve much greater savings at a lower cost than financial incentives. This has not worked that well in developing countries, although some voluntary programs using financial incentives, such as many of the Bank’s CFL bulk purchase–based utility demand-side management programs, have had better results in visibly shifting EE markets.

In some situations, the policy setting is conducive to a project’s success. For instance, in the Bulgaria District Heating Project, before the project started and in the early years of implementation, a number of policy measures were taken that supported the project. Also, a regulatory system helped regularly increase the tariffs, which made EE investments attractive.

73. Emphasis on institutional development, coordination, and capacity building is crucial for successful implementation of EE projects and programs. The major impediments to increased EE financing and implementation are inherently institutional in nature (Taylor and others 2008). A successful institutional framework for EE must take into account the country context; its technical and management capacity; new legislation and rules to enable EE investment; the level of integration between EE and other interventions in the energy sector toward sustainable development goals; the requirements for organizational autonomy, flexibility, and agility; and funding mechanisms. Because EE financing has often involved small transaction sizes, one of the primary lessons learned at the IFC has been to work through financial institutions and, where conditions are right, through microfinance.

74. It is important to convey the right message about how EE helps in economic prosperity, and focus on other important issues besides climate change mitigation. In the energy sector development agenda of most WBG client countries, meeting basic energy needs at affordable prices and in a reliable manner is the first and foremost development priority. EE interventions in the developing countries are a means to enhancing the energy reliability of future energy supplies and bridging the supply-demand gaps, which results in fewer power system outages, less load shedding, and fewer industries getting closed down. It also reduces vulnerability to energy prices and other relevant dividends that include economic prosperity, job creation, better health, reduced vulnerability to crime,6 and higher industrial and commercial competitiveness. Therefore, the message for selling EE, especially demand-side EE project

6 Such as those observed in many of the household EE lighting projects (replacement of kerosene lamps, which generate toxic fumes indoors, with efficient CFL- or LED-based lighting systems) and energy-efficiency street-lighting projects (replacement of inefficient mercury vapor lamps, which produce poor-quality lighting, with efficient technologies based on high-pressure sodium vapor or LED lamps).

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ideas, must be packaged to include not only the technical and financial benefits, but also the economic and social development benefits. These benefits, however, are rarely measured or tracked, which have kept EE low on the agenda, beyond the other traditional options. If these positive elements of EE can be conveyed in the messages to the decision makers, EE can become an attractive option to be pursued in the energy sector policy-making and action plans of many developing countries.

75. For policy-making and investment decisions, using GHG mitigation costs based on technology alone could be misleading. The EE debate must shift its focus beyond EE technologies to delivery of energy savings and emphasize the importance of transaction costs of EE. When it comes to implementing the EE options, particularly the end-use or demand-side EE measures, converting the “low-hanging fruit” of EE technical potential options into real, “delivered” energy savings is more complex than most supply-side generation options, although some of these same complexities may apply to other similar, small dispersed technologies, such as solar photovoltaics. In some cases, the actual savings can be different from the savings estimated because of the conditions in which equipment is operated. The implementation of EE options could be as complex as off-grid solar photovoltaics, for instance, but it could be more complex than even the large RE options, such as concentrating solar power. Governments, the public sector (ranging from utilities to municipalities), and markets must often intervene to push the EE envelope, but these interventions cost money and pose high transaction costs, which are incremental costs of offsetting the fundamental market failures and barriers for delivering EE savings, and should be considered along with the EE technology costs, while designing EE projects.

76. In addition to transaction costs, for EE project and program implementation, the upfront incremental cost required for development and preparation could also be high. These upfront preparation costs could become a hindrance, especially on the demand side, where projects are small and dispersed, and where they create higher risk perception (because EE projects are based on savings estimates) among financiers and EE market stakeholders. Based on the experience gained from numerous projects, such as the Romania Energy Efficiency in 2003 and the Mexico Energy Efficiency Appliances and Lighting Project in 2010, the project-level transaction costs are recognized to be high, and clients require considerable pre-investment TA support (such as feasibility studies, and structuring finance and finding attractive financing) before large-scale EE implementation is possible.

77. Client consensus, buy-in, and ownership and mainstreaming of the operation and implementation measures into the ongoing functions or reforms process are critical to the success of policy lending in EE. Emphasis on broad consultation and consensus that is integrated into the operations design is reflected in many successful projects, such as the Morocco Energy Sector Development Policy Loan. In this project, the integration was done through the following: (a) the creation and close coordination of multi-agency government working groups to discuss and agree on the sector reform’s priority objectives and measures, (b) organization by the government of a sectorwide stakeholder awareness campaign and consultations, (c) continued interactions and open communications on energy sector reforms, and (d) permanent contact between the Bank team and other donors active in the energy sector in Morocco. In the Bulgaria District Heating Project, the implementation was effective because the project implementation unit staff were drawn from the existing companies, bringing necessary technical and financial skills. As a result, the PIU members maintained their other work functions, which meant that they were well integrated into various day-to-day operations, easing project planning and implementation, and project investments could be carried out as part of the companies’ regular investment programs. A decentralized Bank team also increases supervision effectiveness, as demonstrated in the Bulgaria project.

78. Several recent DPL operations that were completed or are under preparation include heavy emphasis on EE (such as in Armenia, Mexico, Poland, Russia, and Turkey). Along these lines, one particular lesson learned in DPLs is the importance of ensuring that the client prioritizes the achievement of reform objectives over the implementation of a set of measures with a realistic timetable, and along

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with strengthening of the accountability framework for reforms implementation, monitoring and impact evaluation. It has been observed that in many operations, such as the Morocco Energy Sector DPL, the original ambitious timetable for the programmatic DPL could not be adhered to, in part because of the complexities of the program. This raises the question whether a programmatic (rather than single-tranche) DPL, and the adherence to a timeline for the individual components it implies, is the right instrument for this kind of broad policy reform in complex energy sectors. The Mexico Framework for Green Growth DPL and Mexico Low Carbon DPL in 2010 and other EE focused DPLs currently under preparation, such as the Poland Energy Efficiency DPL, follow the single-tranche modality. It is also seen that aligning the DPL—and governmental calendars—generally minimizes the risk of a new government revisiting part of the prior actions, as did in fact occur in many projects. A complex energy DPL might better be started somewhat earlier in a government’s term. This may mitigate problems arising from the changes in political preferences, key staff, or even institutional structures that a new government may bring, replacing it with the important continuous engagement throughout implementation with the very same government that had initially agreed on the measures contained in the DPL.

3.3. Transmission and Distribution79. WBG support for T&D infrastructure is a considerable part of the total energy financing. Over the past eight years financing for T&D has accounted for 21 percent of total energy commitments. Financing for T&D has increased in the last three years, with an annual average of US$1.8 billion, becoming the largest component of WBG’s energy financing in fiscal 2010 with a total of US$2.2 billion (Table 5). As in fiscal 2009, most of the T&D projects approved in fiscal 2010 were in the Africa (8 projects) region, followed by East Asia (4 projects) and South Asia (4 projects).

Table 5: WBG Financing for T&D Lines by Objective

T&D objective 2003 2004 2005 2006 2007 2008 2009 2010 Total

Connect new generation 0 0 3 0 0 0 43 351 397

Improve reliability 99 85 101 921 295 1,285 400 1,040 4,226

Increase access 60 134 417 223 1 229 406 450 1,920

Reduce losses 0 0 0 0 6 297 12 330 646

Regional trade 27 0 154 245 31 142 181 0 780

Other 30 0 165 6 32 78 129 0 440

No information 29 66 70 443 0 33 0 641

Total (US$ millions) 216 248 906 1,465 809 2,031 1,204 2,171 9,050

80. Financing for T&D is primarily targeted toward increasing access and improving reliability. Today, most of those with access to electricity get it from an integrated electricity system. The integrated electricity system requires that all of its parts—hardware (infrastructure), software (controls and protection), and human capital—function properly to deliver electricity services to all consumers—industries, commerce, schools, clinics, and households. An efficient and reliable T&D system is required to bring electricity from generation sources to final consumers. Despite some technological advances in small and distributed electricity systems, the most cost-effective way to provide electricity services for the

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aggregated demand of an economy as a whole is through integrated electricity systems. The integrated electricity system provides electricity services to meet the growing demand of existing electricity consumers, but it is also a cost-effective way to provide services to new consumers in a wide variety of circumstances. Projects that have supported T&D investment directly related to increased needs of providing services to new consumer include, for instance, the Haryana Power System Expansion project in the state of Haryana in India (US$330 million), the Moinak Electricity Transmission Project in Kazakhstan (US$48 million), and the Kenya Electricity Expansion Project (US$330 million; see Box 8).

Box 8: T&D Investments Helping Connect New Consumers—Kenya Electricity Expansion Project

The Kenya Electricity Expansion Project, approved in fiscal 2010, will help develop 280MW of the country’s 7,000 MW geothermal energy potential. To accompany this new resource development, IDA is assisting the country in developing required T&D networks that will help connect 330,000 new households to the grid, including 50,000 low-income customers that reside in Kenya’s slums. These new consumers will receive energy from the electricity grid, whose production capacity is being increased by this operation. Geothermal energy will supply about 20 percent of the electricity needs in the country by 2015.

The transmission investments (total cost of US$72.5 million, of which IDA will finance US$64.5 million and the Kenyan transmission company the rest) consist of the construction of 132 kV transmission lines, as well as substations that step down the voltage from these lines to the distribution system that will serve new consumers. New lines between the following locations will be built: (a) Kindaruma-Mwingi-Garissa, (b) Eldoret-Kitale, and (c) Kisii-Awendo. For Garissa, this is the first time the town has been connected to the grid.

The distribution investments (US$272 million, of which IDA will finance US$134 and the rest by the Kenyan utility, electricity users, GPOBA and other donors) consist of (a) reinforcement to strengthen the existing distribution system in the greater Nairobi metropolitan area and in the Coast, Mt. Kenya, Western, and Nyanza provinces; (b) grid extension to priority loads, such as schools, clinics, and district headquarters, as well as all key trading centers; and (c) grid extension in slum areas to connect about 50,000 low-income customers in Kenya’s slums.

81. Electricity that flows to final consumers—existing and new—comes from generation that is transmitted over a higher-voltage network. As demand from new and existing consumers increases, the demand for generation and transmission will increase. A failure to strengthen generation or transmission will invariably decrease the reliability of the service—leading to more frequent and severe interruptions—and will compromise the possibilities for extending service to new consumers. Poor reliability of the service not only affects the economy as a whole, but also to newly connected consumers who will revert to less efficient sources of supply, such as wood or kerosene for lighting and cooking.

82. While generation makes for most of the cost of the electricity supply chain, maintaining the reliability of service requires expanding high-voltage transmission networks whose costs are also an important component. Higher-voltage infrastructure is more costly than lower-voltage networks on a per-kilometer basis. Higher-voltage transmission networks must be reinforced to guarantee sufficient transmission capacity and adequate level of reliability. As can be seen in Table 5, the commitment for network reliability improvement, US$1 billion in fiscal 2010, accounted for the majority of lending in fiscal 2010. This reflects the long-term program in India with the Powergrid V Project approved in fiscal 2010 aiming to strengthen the existing transmission network (Box 9). Other sample projects aimed at improving the reliability of the service by increasing supporting transmission investment include the Energy Sector Financing Loan for Mongolia (US$12 million) and the System Efficiency Improvement Loan for Vietnam (US$20 million).

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Box 9: Meeting India’s Demand for Electricity: Bank Support to the National Transmission System

India faces an acute deficit of electric power. A large percentage of Indian households do not have access to electricity. Average annual per capita consumption of electricity in India was only about 30 percent of the world’s average in 2007–08. Generation capacity is insufficient to meet the existing demand for electricity, and T&D networks that carry power to consumers are inadequate. As India’s energy resources are spread unevenly across the country, the efficient transmission of power from surplus to deficient regions is critical. There is, therefore, a pressing need to strengthen and expand the all-India national transmission network—the national grid.

The IBRD has been involved with India’s current energy program for more than a decade, using innovative financing and technical advice to assist the Indian government and its power transmission utility—Power Grid Corporation of India Limited (POWERGRID). The World Bank is involved with POWERGRID through a series of lending projects. Implementation of all the World Bank–financed projects with POWERGRID is progressing well, and they are achieving the development objective indicator targets in recent years. For the fiscal year ending March 31, 2010, results included the following:

52,000 million kilowatt-hours of power exchange between and across the regions against a target of 50,000 million kilowatt-hours.

75,291 circuit-kilometers of transmission capacity against a target of 80,000 circuit-kilometers.

83,402 megavolt amperes (MVA) of transformation capacity against a target of 82,000 MVA.

Through steady improvements in planning, operations, management, and overall governance, POWERGRID now serves as an institutional role model not only for other transmission companies in India, but for other state-owned enterprises in developing countries. It is playing a major role in an inter-regional transmission network across various South Asian countries. In 2009, POWERGRID energized the Chimatala substation in Kabul, Afghanistan, within the scheduled time despite rough weather and effects of the continuing conflict.

The Government of India has undertaken an ambitious program to increase power generation and bring electricity to all by 2012. To achieve this, the existing transmission network must be expanded and improved. According to plans, the cumulative transmission network of POWERGRID is targeted to increase substantially over the 11 th Plan (2007–12), allowing POWERGRID to transfer 60 percent of power generated in the country as against 45 percent today.

By the end of the 11th Plan, the cumulative transmission network of POWERGRID is targeted to increase by 40,000 circuit-kilometers for a total of 100,000 circuit-kilometers, having an inter-regional transfer capacity of more than 37,000 MW (currently at 20,750 MW) and carrying 60 percent (currently at 45 percent) of power generated in the country.

83. Transmission infrastructure for regional integration is crucial for creating the platform to exploit more efficient, less costly, and lower-carbon generation options. Countries with small electricity systems do not have the demand scales required to bring to fruition larger, more efficient, and lower-carbon options to generate electricity. This is specially the case in some African countries, where the ability to exploiting natural resources, such as hydropower, geothermal, and wind power require sharing production between different countries. Trading electricity between countries can create the scales necessary to bring these projects to fruition. At the same time, the integration of electricity systems creates opportunities to make a more efficient use of existing generation resources. Complementarities between hydrological regimes and the diversity of demand can lead to lower consumption of fossil fuels, reduction of losses, and an overall reduction of the operational cost to supply the electricity. Regional integration, especially in Africa, will play an important role in bringing more supply to the region while improving the efficiency of the integrated networks. The Bank is providing support to the Eastern, Western, and Southern Africa, and South East Asia in their power integration processes. The support consists of financing investments, but more importantly on setting up the institutional and regulatory frameworks for energy trade, transmission expansion and pricing, and system operational rules. The long-

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term engagement of the Bank in the Greater Mekong subregion brought success stories in terms of developing a power trade in the region (Box 10). Other projects include the additional financing for the West African Power Pool (US$85 million)—a systematic effort by IDA to connect West African countries with more than US$1 billion in grants and loans in the last few years.

Box 10: GMS Power Trade in the Greater Mekong Subregion: Building the Institutional Framework

The countries of the Greater Mekong Subregion (GMS), comprising Cambodia, Lao PDR, Myanmar, Thailand, Vietnam, and Southern China, have agreed to pursue regional coordination and cooperation for socioeconomic development. Specifically, they have agreed to cooperate in agriculture, the environment, human resource development, investment, energy (power trade), telecommunications, tourism, trade, and transport.

Power trade in the GMS started in 1971 when Lao PDR and Thailand concluded a Power Purchase Agreement (PPA) for exports from the Nam Ngum hydropower plant in Lao PDR to northeastern Thailand. This project was the catalyst for the electrification of Vientiane. Cooperation between Thailand and Lao PDR expanded in 1991 with the Xeset hydropower project in southern Lao PDR financed by the Asian Development Bank and World Bank. This project also allowed Lao PDR to service domestic demand and provided an impetus to the development of Lao Southern grid. Additionally, GMS countries engaged in modest cross-border exchanges at the distribution level that made possible the electrification of remote areas of one country from the proximity system of another.

Formal institutional arrangements started in 1992 with the creation of the GMS Power Forum, which in 1993 endorsed the GMS Experts Group on Power Interconnection and Trade as the central coordinating entity. These coordinated activities led to the Intergovernmental Agreement on Regional Power Trade (IGA) signed during the first GMS summit in November 2002, and ratified by the national assemblies of each GMS country between 2004 and 2005. In 2002, the Regional Power Trade Coordinating Committee (RPTCC) was established as the body responsible for guiding GMS power trade and market development, as envisaged in the IGA. Power trade has expanded since then through a number of country-to-country agreements and projects, and export-oriented independent power producers selling to a national power utility in another GMS countries.

The Bank has participated in GMS Power trade forums and has provided analytical assistance since 1997 to support the efficient development of GMS power trade and good practices, including the following:

—In 1999, the World Bank identified a number of barriers to the development of a regional power market and proposed a strategy to remove them.—In 2003, a Market Structure Options Study funded by ESMAP and the World Bank helped raise awareness about the various dimensions of a future regional power market.—Between 2005 and 2006, studies funded by the World Bank/Japan Policy and Human Resource Development (PHRD) provided advice and examples on Good Practice Guidelines for Bilateral Power Trade Agreements in the GMS Region, and an Ownership and Benefit-Sharing study for cross-border transmission projects.

In recent years, TA packages funded by donor grants (Swedish International Development Cooperation Agency (SIDA) and French Development Agency AfD) have supported GMS Power Trade working groups in studies and capacity building, with the objective of reviewing, deciding, and adopting the framework to evolve from current bilateral one-way (export-only) power agreements to more efficient and economic two-way (export-import) use of regional interconnections, with cross-border transmission system integration and eventually multicountry exchanges. To support this objective, the Bank and ESMAP funded an activity to deliver policy notes to decision makers in GMS countries and to help GMS RPTCC and its working groups to complete the transition from the study and analysis phase into decision and implementation of a power trade market. The Policy Note, “Regional Institutional Arrangements to Develop Power Trade,” has been structured both as policy advice, taking into consideration specific conditions of GMS countries and systems, and capacity building, sharing relevant international experiences and lessons learned on roles of regional institutions and decision-making processes.

84. Reducing losses and improving technical and commercial performance of distribution utilities is important. High electricity losses in the distribution sector is one of the core problems of low and unreliable electricity services in many countries. High electricity losses (from 20–30 percent) can

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financially cripple any utility and lead to an unreliable supply and the impossibility of increasing access to population without service. Reducing technical losses requires not only investments in distribution networks, but also technological and managerial solutions. The Bank is increasingly supporting the introduction of effective technical, commercial, and resource management systems in distribution utilities to improve their performance. Introduction of advanced metering solutions can help control nontechnical losses and improve the financial performance of utilities. Computerized technical management systems can help distribution utilities detect weak reliability spots in the network and improve the service provided to their consumers. Upgrading overloaded transformers and distribution lines has an immediate impact on reducing technical losses. Reducing technical and nontechnical losses not only improves the quality of service and the performance of utilities, but it also has other global benefits. Reduction of technical losses can lead to considerable emissions reductions. The WBG has increased financing to improve the efficiency in the distribution sector. As seen in Table 5, financing for loss reduction has particularly increased in the last four years, with an annual average of nearly US$200 million leading to a record high of more than US$300 million in fiscal 2010. Examples of this type of intervention include the Brazil Eletrobras Distribution Rehabilitation project (Box 7) and the Multi-Sectoral Water and Electricity Loan for Burundi (US$16.8 million).

3.4. Fossil Fuels85. Energy generation from fossil fuels represents a sizable portion of electricity and heat supply for almost every country’s basic energy needs, and contributes to almost the entire baseload generation supply with the exception of a small handful of countries that rely on hydropower to meet their base and peak load energy demand. Correspondingly, the WBG has been engaged in financing fossil fuel power plants since the institution’s inception. The very first loan the IBRD ever made was a US$26.5 million loan issued on May 9, 1947, to Credit National of France aimed at financing the purchase of much needed gas and oil fuel to power French thermal generation stations and enable vehicles to begin plying the roads of France. Since fiscal 2003, the WBG financed US$18 billion of fossil fuel–related projects, with a larger share targeting gas-related projects (41 percent), followed by coal (35 percent), and oil (24 percent) (Table 6). These projects represent 41 percent of the overall WBG energy financing during those years.

Table 6: WBG Financing by Type of Fossil Fuel Projects, Fiscal 2003–10

Fuel type 2003 2004 2005 2006 2007 2008 2009 2010 TotalCoal 323 20 192 611 79 1,222 464 3,487 6,398Gas 657 497 469 1,088 835 1,005 1,732 1,154 7,438Oil 408 431 308 570 297 599 472 1,203 4,288Total fossil fuel financing (US$ millions)

1,388 948 969 2,269 1,211 2,826 2,668 5,844 18,124

Non–fossil fuel financing (US$ millions)

980 751 1,894 2,384 2,392 4,719 5,661 7,168 25,950

Total energy (US$ millions) 2,370 1,699 2,864 4,653 3,604 7,545 8,328 13,013 44,075% fossil fuel financing 59 56 34 49 34 38 32 45 41

86. The share of commitments related to coal, gas, and oil in the WBG’s energy financing has, however, decreased in relative terms over the last few years, as the WBG’s focus has shifted toward increasing financing for EE, RE, and T&D projects. The decline of the fossil fuel–related share of the overall WBG energy portfolio has been uneven, but steady (Table 6). It is evident that even though nominal investments in projects containing a fossil fuel component have increased, the overall share of projects with such a component has been decreasing over the reviewed period relative to the total volume

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of investments. The total share of fossil fuel–related financing has decreased from 59 percent in fiscal 2003 to 32 percent in fiscal 2009, although one large project caused this share to increase to 45 percent in fiscal 2010 (Table 6). The overall trend, however, as pictured in Figure 5, is toward a further decreasing share of fossil fuel–based financing.

Figure 4: WBG Fossil Fuel and Non–Fossil Fuel Energy Financing as a Percentage of Total Energy Financing, Fiscal 2003–10

2003 2004 2005 2006 2007 2008 2009 20100%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Coal Gas Oil Non-fossil fuel

% o

f tot

al e

nerg

y fin

ancin

g

87. The uneven trend of fossil fuel–based financing in the overall portfolio is because of the “lumpy” nature and capital intensive character of fossil fuel–fired power plants. Correspondingly, WBG financing rises and falls when such projects are financed. Fiscal 2010 shows the trend of decreasing fossil fuel–based financing reversed because of the relatively large loan (US$3.7 billion) to South Africa’s utility ESKOM for the construction of the coal-fired Medupi plant (Box 11). The year-to-year variation in commitment levels is driven by demand from client countries.

Box 11: Application of Criteria for Coal Power Generation Projects: ESKOM Investment Support Project

Starting 2009, the South African and neighboring economies were in desperate need of additional baseload electricity generation capacity to be deployed in the near term to avoid severe economic impacts on industrial production in both South Africa and across the region. There was a critical need for rapid expansion of the electricity supply, which was planned to be met by the rapid construction of the Medupi coal-fired power plant. This relatively large facility of 4,800 MW will add about one-eighth to South Africa’s baseload generation capacity. The amount is critical, since South Africa accounts for more than 60 percent of the total electricity generated in the region—Botswana, Lesotho, Namibia, Swaziland, and Zimbabwe all directly rely on South Africa’s Eskom for their electricity. Medupi will also be the first coal-fired power plant in Africa to use the more efficient supercritical pulverized coal combustion technology. Because of the financial crisis experienced in many countries in the world, the Government of South Africa approached the WBG with a request to provide financing for the Medupi power plant construction as part of the ESKOM Investment Support Project. However, the investment that was sought raised the question of whether such financing would be fully aligned with the Bank’s Strategic Framework on Development and Climate Change (SFDCC). The project team therefore prepared an assessment of the project scope against the criteria for WBG investment in coal power generation facilities as defined in the SFDCC. The summary of the assessment is presented below:

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SFDCC criteria Project assessment summary

Demonstrated developmental impact of the project, including improving overall energy security, reducing power shortage, or increasing access for the poor.

Supports regional and domestic energy security by increasing capacity through improved efficiency and additional capacity. Allows for expansion of access to the remaining one-fifth of the South African population, and larger unsupplied populations of neighboring countries.

Assistance is being provided to identify and prepare low-carbon projects.

A CTF investment plan has been endorsed, which supports EE measures and includes private sector– and municipality-led solar water heater programs. The project is mobilizing additional financing for new low-carbon technologies, including wind power and concentrating solar power. South Africa is taking significant steps on research and development related to carbon sequestration and underground coal gasification with its own resources.

Energy sources are optimized, looking at the possibility of meeting the country’s needs through EE (both supply and demand) and conservation.

The energy sector strategy includes demand-side efficiency improvements and is expected to realize 3,000 MW in three years. The RE strategy aims at adding 10,000 GWh (1,700 MW equivalent) of energy from renewables led by the private sector by 2013. The government is implementing other efficiency measures, including road-to-rail measures and bus rapid transit. On their own, the measures cannot meet the country’s demand growth.

After full consideration of viable alternatives to the least-cost (including environmental externalities) options and when the additional financing from donors for their incremental cost is not available.

Integrated resource planning has been undertaken by the Government of South Africa. Excluding environmental externalities, no other feasible alternatives are present that could substitute for the proposed plants—domestic or regional. Even if the switching price of carbon—assumed to be US$29 per ton of CO2—is accounted for, the Medupi Power Plant remains the most viable alternative. The only lower-cost option when environmental externalities are accounted for would be the regional Inga III hydropower development in the Democratic Republic of Congo. The difference in price from the higher-cost options would have been considerable—for example, incremental financing for the necessary wind capacity to generate the energy equivalent to the proposed Medupi Power Plant would have been more than US$20 billion. Domestic or regional alternatives cannot meet the required baseload capacity (9,600 MW over 5 years).

Coal projects will be designed to use the best appropriate available technology to allow for high efficiency and, therefore, lower GHG emissions intensity.

The Medupi plant will use supercritical technology. South Africa has decided to execute coal power plants only with super-critical or superior technology.

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SFDCC criteria Project assessment summary

An approach to incorporate environmental externalities in project analysis will be developed.

The project has considered GHG emissions in evaluating options. Combinations of load shedding, diesel generation, and other technologies, if viable, have been compared with the proposed plants at a switching price of US$27/tCO2 equivalent. A portfolio approach to reducing carbon footprint is being proposed by the Government of South Africa.

In addition, an external expert panel has reviewed and confirmed the rigorousness of the assessment prepared by the team and analysis outcomes, thus validating the conformity of the ESKOM Investment project to the screening criteria for coal power projects defined in the SFDCC.

3.4.1. Financing by Type of Intervention88. The WBG has financed a variety of project types involving fossil fuels over the years. In addition to new fossil fuel–fired thermal generation, the WBG has supported the discovery, extraction, and processing of fossil fuels, and EE interventions at existing thermal power plants, and has provided policy support and TA related to fossil fuels. Table 7 shows the areas of interventions financed by the WBG and the types of fossil fuels involved over the past eight fiscal years.

Table 7: WBG Financing by Area of Intervention and Fuel, Fiscal 2003–10

Project type Coal Gas Oil Non-

fossil Total

Energy efficiency 1,151 357 353 4,321 6,182Upstream oil, gas and coal 223 3,219 2,593 0 6,035Reforms and regulation 205 1,201 817 4,536 6,760New thermal generation 4,819 2,661 525 0 8,005 Total (US$ millions) 6,398 7,438 4,288 8,857 26,982

89. Projects under the Energy Efficiency category include activities targeting either the supply or the demand side. Projects targeting the supply side often provide assistance for the maintenance and rehabilitation of existing generation by financing more efficient equipment. As rehabilitation of generation infrastructure often goes hand in hand with switching to a more efficient fuel, supply-side EE projects usually have the added effect of considerably reducing emissions per kilowatt-hour produced. On the demand side, fossil fuel–related EE projects usually range from the rehabilitation of district heating systems to the installation of gas metering systems for residential and commercial customers. Albeit on a smaller scale, such projects also lead to a reduction of overall emission levels.

90. Over the eight-year period, fossil fuel–related EE projects targeting the supply, as well as the demand side, account for 30.1 percent (US$1.8 billion) of overall EE-related financing, with the bulk of fossil fuel–related projects in this area targeting efficiency enhancements of coal-fired generation, which offer large-scale emission reduction opportunities at a very low cost per ton of carbon dioxide reduced. Of the US$1.8 billion that went toward the rehabilitation of existing thermal power plants, US$1.15 billion went to rehabilitate coal-fired thermal power stations (Table 7), including a US$336 million refurbishment in fiscal 2006 in Turkey to bring the Afsin-Elbistan power plant in line with European Union regulations; a US$185 million project in Liaoning Province, China, in fiscal 2008 to convert heat-only district heating boilers to combined heat and power projects; and the above-mentioned

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joint IBRD-GEF project in India in fiscal 2009. Table 8 below summarizes the kinds of fossil fuel rehabilitations financed by the WBG.

Table 8: WBG Types of Fossil Fuel Efficiency Interventions

Type of fossil fuel rehabilitation 2005 2006 2007 2008 2009 2010 Total

Captive generation plant

52 23 3 15 0 0 93

Conversion to combined heat and power plant

0 0 0 0 0 74 74

District heating improvements

0 2 185 126 0 313

Fuel switching to cleaner fuels

0 0 27 10 0  0 37

Increased efficiency at grid-supply power plant

3 340 6 18 228 57 651

Others 94 123 57 160 0 194 627Total (US$ millions) 149 487 92 388 354 324 1,795

91. Projects in the Oil, Gas, and Coal category often have reduced emissions because of their focus on promoting a cleaner, more efficient fossil fuel supply. Examples (Boxes 12 and 13) of such projects include the financing in both domestic and cross-boundary trade of natural gas via the construction of transmission pipelines and storage facilities, as well as upgrading and extension of residential and commercial gas networks through the construction of distribution networks. Projects in these two areas account for more than half the financing in the Oil, Gas, and Coal category. In addition, projects under this classification often provide the equipment to increase the efficiency and hence reduce the emission intensity of using fossil fuels throughout the conversion cycle, for example, by enabling the production of higher-quality and hence cleaner coal via the financing of more efficient briquette manufacturing plants or renovation of coal washing and blending plants. Funds intended for the cleanup of contaminated former oil production sites also fall under this category.

Box 12: Partial Risk Guarantees for Electricity and Gas Supply Improvements in Nigeria

The World Bank provided US$400 million in partial risk guarantees (PRGs) to the Power Holding Company of Nigeria (PHCN) in order to assist the Nigerian government in its efforts to improve the domestic gas supply for power generation. Insufficient supply and the lack of the necessary transmission infrastructure have previously caused a severe shortage of gas for power generation. This has resulted in only 40 percent of the population enjoying access to electricity. Overall per-capita consumption of electricity in Nigeria remains among the lowest in the world. In addition, poor access to power has forced companies and consumers to invest heavily in self-generation, thereby diverting substantial resources away from productive uses, lowering productivity and competitiveness.

To tackle this situation, the government has launched a series of measures designed to enhance domestic gas production, centering on the conclusion of specific Gas Supply Agreements (GSAAs) with international and domestic oil companies. In addition a major investment program will support the upgrade of the existing power T&D networks to accommodate the increase in power generation.

The World Bank’s PRG Electricity and Gas Improvement Project is the single biggest PRG operation in the oil and gas sector during the review period. The project provides US$400 million in PRGs to guarantee gas supply payment obligations of PHCN under individual GSAAs to international and domestic oil companies that are in existing joint ventures with the state-owned Nigerian National Petroleum Corporation (NNPC). A supplemental Investment Loan is supporting T&D infrastructure investments and providing TA. The program will significantly improve the

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availability and reliability of gas supply for power generation and the network’s capacity and efficiency to transmit and distribute high-quality electricity to the consumer.

92. Policy support and TA projects, listed under Reforms and Regulation, relate to investments in governance-related reforms and regulatory issues in the energy and electricity sectors. The bulk of financing in this area is made up by projects providing support for modifying underlying regulations to increase the respective subsector’s efficiency. These projects often focus on commercialization and privatization support for the oil, gas, and electricity sectors, as well as on support for any reforms targeting the restructuring or unbundling of the electricity sector. In addition, several projects also provided support to the establishment of rational pricing frameworks and the rationalization of electricity tariffs. To a minor degree, projects also target the desubsidization of energy prices, while always trying to mitigate potentially adverse effects on the lower-income population. Policy support and TA projects for fossil fuel–related issues account for 25 percent of all policy support and TA financing, with the natural gas sector accounting for more than 70 percent of this share.

Box 13: The IFC and Cairn India

Cairn India is an oil and gas company that focuses on oil and gas exploration and production in India. The company has built the world’s longest heated and insulated oil pipeline to transport oil from the Indian state of Rajasthan to India’s domestic market. The company is currently producing more than 125,000 bpd, contributing more than 20 percent of India’s crude oil production. In fiscal 2010 the IFC provided Cairn a US$250 million loan as part of a US$750 million financing package arranged together with the Standard Chartered Bank. In addition to financing, the IFC has assisted with the establishment of guidelines on issues like land compensation. Cairn adheres to those guidelines and provides advice on social issues and proper consultations with local communities. Since the majority of Cairn’s operations are in Rajasthan, one of the poorer states in India, Cairn has partnered with the IFC to design and operate an enterprise center that provides training, among other activities, such as vendor development and stimulating small businesses. In fiscal 2010 the center provided skills training to more than 2,200 men and women and helped more than 750 local farmers increase their dairy revenue.

93. Investments in New Thermal Generation account for the largest share (44 percent) of overall financing for fossil fuels because of the capital-intensive character of such projects. Investments enabling the construction of new, more efficient, and cleaner coal and gas plants make up for the largest portion of investments under this category. The remaining investments are mainly targeted toward providing emergency oil-fired generation capacity and emergency fuel supplies in order to cope with temporary shortfalls in acute crisis situations. Actual investment flows in new thermal generation show the typical pattern caused by the “lumpy” character of these capital-intensive investments. As Table 9 shows, financing for new thermal generation has consistently fluctuated according to the number and size of the projects approved in a particular fiscal year. Nevertheless, as depicted in Figure 6, the general pattern was one of a somewhat steady financing flow, with the exception of the last three fiscal years, which have seen a nominal increase in financing volumes, especially with regard to commitments for coal and gas-fired generation. This is again largely because of a few large-scale projects, such as the above mentioned Medupi plant, which alone accounted for nearly 90 percent of all commitments for new coal-fired generation capacity in fiscal 2010.

Table 9: New WBG Thermal Generation Financing by Fuel Type, Fiscal 2003–10

Fuel type 2003 2004 2005 2006 2007 2008 2009 2010 TotalCoal 289 20 40 168 11 745 128 3,417 4,819Gas 232 182 10 322 244 175 807 688 2,661Oil 78 71 50 21 105 36 0 165 525

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Total (US$ millions) 599 272 100 511 360 957 936 4,270 8,005

Figure 5: New WBG Thermal Generation Financing by Fuel Type, Fiscal 2003–10

94. With regard to technologies applied in New Thermal Generation installations financed by the WBG, a clear tendency toward cleaner, more efficient combustion technologies is evident. Supercritical technology offers higher operating efficiency, meaning less coal feedstock is needed, which consequently leads to lower emission levels per unit of electricity produced, although there could be variations in the particular amounts of emissions reduction, depending on the fuel quality and site conditions. Table 10 shows that commitments for the more efficient technologies is by far higher, with the ratio increasing even more in the latter half of the period. Over the eight-year period, financing for supercritical and combined–cycle gas-fired generation exceeded financing for simple–cycle, gas-fired capacity by a factor of 2.2, with this ratio increasing to 3.4 during the latter half of the period. For coal-fired capacity, the ratios are even higher—over the whole period financing for supercritical coal-fired capacity exceeded financing for subcritical coal-fired capacity by a factor of 3.8, with the ratio again increasing to 4.3 for the latter half of the period from fiscal 2007 to 2010.

Table 10: New Thermal Generation Financing by Generation Technology Type, Fiscal 2003–10

New fossil generation 2003 2004 2005 2006 2007 2008 2009 2010 TotalCoal: Subcritical* — 20 40 50 11 295 128 377 922Coal: Supercritical — — — — — 450 — 3,040 3,490Gas: Combined-cycle 45 165 — 63 — 200 — 600 1,072Gas: Simple 75 — 10 260 116 4 203 88 756Gas: Supercritical — — — — — — 600 — 600Oil: Diesel — — — — — 8 — 17 24Oil: HFO — 44 28 21 — — — 135 227No information 479 44 22 118 232 — 4 14 913Total (US$ million) 599 272 100 511 360 957 936 4,270 8,005

*This number includes both subcritical and the more efficient fluidized bed combustion (FBC) technology.

95. The WBG is exploring ways to support the deployment of advanced technologies that have potential to substantially increase efficiency of power and heat generation. These include supercritical and integrated gasification combined cycle plants equipped with carbon capture and storage (CCS) technology. One of the examples of the WBG support for the deployment of such advanced

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technologies is presented in Box 14. The emerging challenges associated with current patterns of energy production and use have brought increasing focus inside the WBG on supporting new technology development, transfer, and deployment in the energy sector. A review of the opportunities and challenges facing clean energy technology development can be found in a recent WBG background paper prepared for the energy strategy:“Promotion of New Clean Energy Technologies and the World Bank Group.”

96. In brief, the WBG has been involved in new energy technology projects for more than 15 years, including support for such technologies as concentrating solar power plants, grid-connected photovoltaic power plants, stationary fuel cells, and biomass gasification. Most of these projects were initially done using donor resources, primarily provided by the GEF. A recent example, initiated with GEF support, is the Lighting Africa program that promotes new low power lighting devices, such as solar lanterns suitable for replacing kerosene lamps in rural areas without access to the grid (www.lightingafrica.org). This program focuses primarily on facilitating market development by testing and certifying products, helping bring together manufacturers with vendors and utilities, and otherwise accelerating growth of the value chain necessary for successful markets. In contrast, resources from the CTF are being used to support an Investment Plan for Concentrated Solar Power in the Middle East and North Africa Region.7 In this case, the plan is to use funds to provide a substantial part of the capital cost of a promising but still expensive technology. The IFC is increasingly internalizing new energy technology investment in its commercial investments, sometimes incorporating small amounts of donor support when necessary. One operational group focuses on direct investment in clean technologies (ifc.org/cleantech), while another seeks to seed private equity funds focused on clean tech opportunities (ifc.org/funds).

97. To conclude, the review of fossil fuel projects presents two findings: (a) Total fossil fuel–related financing remains steady although, relative to the overall WBG energy volumes during fiscal 2003–10, the share of fossil fuel–related investments is declining; and (b) financing in cleaner fossil fuel–fired generation technologies has increased in both absolute and relative terms relative to overall financing in new thermal power generation. New clean technologies have the potential to increase the availability and the environmental sustainability of modern energy services through lowering the cost of securing cleaner energy and reducing the intensity of energy use (World Bank 2011a).

Box 14: Carbon Capture and Storage Trust Fund Project in Botswana

Botswana is an African success story with an extraordinary record, having enjoyed 9 percent per year growth for nearly four decades. The nation has transformed itself from one of the poorest in Sub-Saharan Africa to an upper middle-income country, driven by the discovery and production of mineral resources (predominantly diamonds, but also nickel and copper), democratic governance, political stability, and sound macroeconomic management. However, Botswana’s economic diversification strategy is threatened by two serious challenges requiring urgent actions, namely protecting its economy from the worst of the global economic crisis and avoiding a looming energy crisis.

The government’s response to the economic crisis is to diversify the economy, beginning with the provision of adequate and reliable energy sources to meet new industrial, commercial, and residential demand. Botswana’s approach is therefore to develop a domestic energy portfolio including low-carbon (such as coal bed methane and possible coal gasification) and no-carbon (such as concentrating solar power) technologies, while concurrently examining the application of carbon capture and storage (CCS) for Botswana’s coal power generation installations. Toward this end, the World Bank CCS Trust Fund is supporting Botswana with the objective of integrating CCS into sustainable development plans associated with the development of energy resources located within Botswana. A two-day workshop held in April 2010 in Botswana on the assessments of the CCS possibilities found that there is a lack of awareness among key stakeholders about CCS, and information gaps related to cost implications and storage potential. Therefore, the assistance to be provided will support a dialogue around CCS to reduce information uncertainty, while concurrently complementing the Morupule B Generation and Transmission project

7 See http://www.climateinvestmentfunds.org/cif/Country%20Investment%20Plans.

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that involves a feasibility study for a proposed CCS pilot.

The Trust Fund–supported project is split into two parts. The first component involves assessment on the feasibility of CCS for Botswana in terms of capture technology suitability, cost implications, and storage capacity. Data collection on storage sites will be carried out in conjunction with the coal bed methane (CBM) industry, since there are already ongoing CBM explorations that can provide useful information. One of the outcomes of the first component will be a CCS storage atlas that can be used by decision makers.

The second component involves creating managing bodies to coordinate the knowledge sharing around CCS to promote open and informed dialogue. These bodies include a CCS Working Group to discuss key development issues regarding CCS, and a CCS Secretariat to support all CCS-related activities in Botswana, such as workshops. These workshops will engage stakeholders in exchanging views on concerns and issues, and to disseminate information and promote consensus related to coal, CCS, and CBM.

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4. Analytic and Advisory Activities in Energy

98. Aside from the project financing, the WBG delivers a range of analytic and advisory activities (AAA) to support developing countries’ efforts in their energy programs. Considerable preparatory work is required to identify opportunities of financing and to build capacity of individual countries. In the Bank (IBRD/IDA), this work takes the form of ESW, including sector reports and policy notes, and nonlending technical assistance (nonlending TA), including “how to” guidance notes, knowledge-sharing forums, institutional development plans, and other TA activities. The main distinction between ESW and nonlending TA is that ESW is intended to influence an external client’s policy through an original analytical effort that makes the case for reforms while nonlending TA is intended to help in implementing changes or institution-strengthening, but is not expected to contain significant original analytical work. To summarize, AAA work provides a foundation for carrying out the policy dialogue with external clients, building countries’ analytic capacity, as well as TA on policy reforms, strengthening institutions, and facilitating knowledge exchange.

99. The energy sector is supporting the knowledge generation in client countries through a strong AAA program. While the amount of energy AAA declined steadily from fiscal 2003 to 2006, the sector rebounded in fiscal 2007 and has shown steady growth in recent years (Figure 7). After delivering 49 energy products in fiscal 2006, the Bank delivered a record 96 energy products in fiscal 2010. Today, the energy sector represents 8.8 percent of Bankwide AAA, or 10 percent of nonlending TA and 7 percent of ESW.

Figure 6: Number of AAA Activities in the Energy Sector

100. Delivery of nonlending TA has increased significantly in the energy sector over the past eight years while the number of ESW activities has steadily declined. Today, nonlending TA represents 64 percent of the Energy AAA, having risen from a low of only 16 products delivered in fiscal 2005 to a record 62 products delivered in fiscal 2010. This is indicative of a Bankwide trend of favoring nonlending TA rather than ESW. Delivery of ESW has steadily declined across the Bank since fiscal 2003, while the number of nonlending TA has increased. Regions have continued to consolidate ESW tasks to reduce fragmentation and push toward more lending to mitigate the effects of the global crisis, thereby resulting in a decrease in ESW. Moreover, the nonlending TA increase reflects the additional demand for TA activities from the clients and the utilization of external funding to support this kind of work. The nonlending TA in Maharashtra is an example of the continuous support of the World Bank,

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which is bringing positive changes in bridging the electricity gap in the region. The long-term engagement has helped the electricity transmission utility transform itself into an agile commercial business entity (Box 15).

Box 15: Bridging the Electricity Gap in Maharashtra: An Innovative Engagement with a Middle-Income Client

The people in Maharashtra, one of India’s most industrial regions, were unfamiliar with power outages until about 10 years ago. A growing gap between electricity supplied and demanded reached almost 4,000 MW by 2006, and power cuts emerged as a major constraint to growth and a source of public dissatisfaction. The WBG supported the Government of Maharashtra and the Maharashtra State Electricity Transmission Company Ltd (MSETCL) with a series of TA and finance focused on sustainable change management.

The first phase of Bank engagement with MSETCL was through a PPIAF-funded exercise to help the company identify a corporate vision and finalize its business plan. The Bank supported this exercise with an assessment of the growth in demand and of MSETCL’s implementation capacity; and the development of strategic options available to the company to leverage its scarce financial and managerial resources, including exploring options for public-private partnership.

A second World Bank–administered PPIAF grant assisted MSETCL in designing an optimal bidding strategy for selecting a private partners and in developing a risk-sharing contractual framework.

Last, through an ESMAP- and AUSAid-funded TA project, the World Bank supported institutional capacity-strengthening, so MSETCL could more effectively supervise its projects. This involved major changes in business processes, including the realignment of existing roles, more decentralized levels of responsibility, and a revamped performance appraisal system that empowers staff and holds them accountable for meeting key performance levels.

This nonlending TA supported the parallel effort by a joint IFC–World Bank team that worked on a loan of US$50 million to prepare the MSETCL for the management of commercial financing.

This three-year relationship, involving TA, as well as lending, highlights the potential for the IFC and the World Bank to work together to provide timely and responsive financial and advisory solutions. It focused on sustainable change management, through a consultation-driven process owned by the company, and it offers important lessons for the WBG in other infrastructure sectors and developing countries.

101. ESW in the energy sector is carried out on a wide range of topics and sectors. ESW is the best-known of the knowledge activities in the Bank and it often influences the larger community of energy practitioners, as well as those in client countries. In fiscal 2010, the energy sector delivered 34 ESW products showing a decline compared to the past seven years. ESW is a critical Bank instrument to analyze economic and development contexts and to formulate customized recommendations. Some examples of recently delivered ESW are PPP Options for Electricity Generation in Montenegro, Household Energy Study in Timor-Leste, Modern Biofuels Assessment in Mozambique, and South Asia Regional Power Trade. In many cases, these are the foundation for Bank lending, with the study identifying potential opportunities and policy direction.

4.1. Role of Trust Funds financing AAA102. Over the past decade, trust funds have become an increasingly important source of funding for AAA across the Bank, especially in the energy sector. Although the Bank continues to advocate for the importance of AAAs, expenditure from trust funds has risen from US$5 million in fiscal 2003 to

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nearly US$18 million in fiscal 2010, increasing its share from 43 percent in fiscal 2003 to 63 percent in fiscal 2010 (Figure 8). The trust funds enable the Bank to deliver more core services and to respond to more client needs. The trust funds leverage Bank internal administrative resources and also fund entire knowledge products. Some of the most prominent trust funds are ESMAP and PPIAF. ESMAP, a Bank-administered Trust Fund, committed nearly US$12 million to support energy assessments and strategy, propoor energy access TA, and other cross-cutting initiatives in fiscal 2010. Trust funds have been especially important for advancing knowledge on RE having increasingly accounted for a larger share of the expenditures in recent years. In view of the global attention to climate change, many low-carbon studies have been commissioned to support client countries in a low-carbon path. Albania’s Climate Vulnerability Assessment report is a recent example of a knowledge product financed by ESMAP, which developed a framework for decision making to support adaptation of energy infrastructure vulnerable to climate change. The report showcases a pilot vulnerability, risk, and adaptation assessment undertaken for Albania’s energy sector to raise awareness and initiate dialogue on energy sector adaptation (Box 16).

Figure 7: World Bank and Trust Fund Expenditure on Energy AAA

Box 16: Energy Vulnerability Assessment of Climate Change in Albania

Albania’s water resources are a national asset. The River Drin provides about 90 percent of Albania’s domestic electricity to local industry and households. However, high dependence on hydropower brings challenges: electricity production can vary from almost 6,000 GWh to less than half that amount in very dry years. Climate change may likely make matters worse and by 2050, annual average electricity output from Albania’s large hydropower plants could be reduced by about 15 percent and from small hydropower plants by around 20 percent.

The Climate Change–Energy Vulnerability Assessment project screened the energy sector in Albania to identify and prioritize hazards and vulnerabilities to projected climate scenarios for the period 2030–50. It identified options for adaptation to reduce overall vulnerability and their costs and benefits. A bottom-up consultative process was used to support stakeholders in identifying and prioritizing adaptation options for vulnerable and at-risk energy infrastructure along the entire energy supply-use chain. The project identified a number of actions that Albania can take to build its resilience to climate change:

Improve the way that institutions monitor, forecast, and disseminate information on meteorological and

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hydro-meteorological conditions. Albania could develop (in-country) or obtain (from elsewhere) weather and climate forecasts appropriate for energy sector planning. Improve EE by encouraging and helping end users to manage their demand for power. The large technical and commercial losses in the distribution system could be reduced and demand-side management could be improved through, for example, the improved bill collection and establishment of cost-recovery tariffs (amending energy subsidies that are distorting market signals). Diversify energy supply, domestically and through trade and through developing a more diverse portfolio of domestic generation assets, ensuring that these are designed to be resilient to climate change. Ensure that the management and development of water resources integrates all sectors—energy, agriculture, water supply and sanitation, and cross-border concerns—along with environmental and social concerns. Build climate resilience into all new investments. With major investments in upgrading, new energy assets on the horizon, and the privatization of assets, the earlier the climate risks are considered, the greater the opportunities to identify and implement solutions that make the energy system more robust and resilient for coming decades.

A Hands-on Energy Adaptation Toolkit, HEAT (http://www.esmap.org/esmap/heat), has been developed as an online resource to lead countries through a similar assessment of climate vulnerabilities, risks, and adaptation options in the energy sector.

4.2. Sectoral versus Multisectoral Trends103. Energy issues have also gained increasing attention in multisectoral knowledge products. From fiscal 2003 to 2010, energy components were included in 615 pieces of AAA. Of these, 65 percent were sectoral energy products, while 35 percent were multisectoral work. AAA with energy as a primary focus are considered “sectoral,” while pieces featuring energy as one of many components are typically considered “multisectoral.” The multisectoral dimension tends to be more prominent in ESW than nonlending TA. Examples include the advisory reports on infrastructure and environment, with energy-specific issues addressed as part of the overall report. Nonlending TA tends to be more targeted, focusing exclusively on the energy sector.

104. AAA originated in the energy sector has driven the majority of the growth in recent years, delivering 70 products in fiscal 2010 compared to only 25 products in fiscal 2005 (Figure 9). Sectoral AAA accounted for about two-thirds of all energy AAA delivered from fiscal 2003 to fiscal 2010 with an average of 50 energy products annually. A considerable share (34 percent) of the energy AAA, however, was delivered by other sectors, such as the Environment, Financial and Private Sector Development, Economic Policy and others. The multisectoral AAA accounted for an average of 26 energy products per year. These have generally not kept pace with the growth in knowledge delivered by the energy sector.

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Figure 8: Energy Sector and Multisectoral AAA

105. The Sustainable Development Network is responsible for the prominence of energy in multisectoral AAA, especially related to the environment sector. This may be attributed to the increasing level of awareness toward climate change issues. While the share of multisectoral AAA has fallen since fiscal 2005, the share delivered by the Sustainable Development Network, including Environment, Urban Development, Social Development, Water, Transport and Agriculture and Rural Development, accounted for 16 percent of energy AAA delivered over the past eight years and 20 percent in fiscal 2010. In particular, the rise in energy AAA delivered by the Environment Sector has been impressive—especially in the area of RE. In fiscal 2010, Environment delivered 15 energy products, accounting for nearly 16 percent of energy AAA, compared to only 5 products in fiscal 2004, accounting for only 6 percent of energy AAA. Some of the recent products delivered by the environment sector with energy components include Climate Development Mechanisms for several countries, along with many climate change reports (with finance and economic dimensions) and Country Environment Analysis.

106. Energy pieces have also been delivered by sectors outside of Sustainable Development Network, accounting for 18 percent of energy AAA from fiscal 2003 to 2010, most notably Financial and Private Sector Development (FPD) and Poverty Reduction and Economic Management Network (PREM). The share of energy knowledge delivered by FPD has steadily declined from about 20 percent (fiscal 2003–04) to only 3 percent (fiscal 2009–10). Some examples of FPD products include TA (nonlending) on Public-Private Partnerships and Investment Climate Assessments. By contrast, the share of energy knowledge delivered by the PREM network has slightly increased over the same period and now accounts for 5 percent of all energy AAA. Some examples of PREM products with energy components include poverty-focused policy notes, petroleum pricing studies, and general macroeconomics and growth studies, among others.

4.3. AAA by Subsector107. While a majority of energy AAA focuses on “multiple” energy subsectors, increasing attention has been given to RE in recent years. In fiscal 2010, RE was the largest individual sector accounting for at least 18 percent of energy AAA. AAA focused on RE had a growth of 88 percent (number of activities) from fiscal 2006 to 2010. Attention to Power, which has historically been the largest individual subsector, has declined over the same period, but it remains the second largest sector, accounting for at least 16 percent of energy knowledge in fiscal 2010.

108. Nonlending TA for RE, in particular, has grown considerably in recent years, becoming the largest source of nonlending TA among the energy subsectors. RE now represents at least 26 percent

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of the nonlending TA done in the sector, compared to only 5 percent from fiscal 2003 to 2006. Many of the nonlending TA focused on the promotion of RE and regulatory aspects. Nearly all of the growth in RE AAA from fiscal 2006 to 2010 was driven by the Energy and Environment sectors (Figure 10). An example of RE AAA is the work done in Nepal designed to organize an evaluation system that measures the impact of microhydro installations on rural livelihoods and to establish a monitoring system to measure the results of the RE programs against the targets (Box 17).

Figure 9: RE AAA

Box 17: Power and People: The Benefits of Renewable Energy in Nepal

A large section of the Nepalese population is deprived of electricity coverage despite huge hydropower potential, particularly in the rural areas. About 63 percent of Nepalese households lack access to electricity and depend on oil-based or RE alternatives. The disparity in access is stark, with almost 90 percent of the urban population connected, but less than 30 percent of the rural population. Nepal has about 83,000 MW of economically exploitable resources, but only 650 MW have been developed so far.

Decentralized service delivery in the form of renewables, such as microhydro and solar, can fill more of the gap in rural areas. Traditional water wheels (gharats) provide electricity to 7 percent of the rural population, equivalent to about 800,000 people. The 10th Five-Year Plan sets a target of generating electricity equivalent to 10 MW from microhydro schemes and access to off-grid electrification for 12 percent of the population.

The primary institutional responsibility of providing energy access in rural areas using renewable technologies falls on Alternative Energy Promotion Center (AEPC). AEPC aims to energize rural households and kickstart economic activities in the project areas. Since its inception in 1996, it has emerged as one of the world’s leading proponents of community—and private sector–led expansion of RE technologies in rural areas. It is a government institution falling under the oversight of the Ministry of Environment and operating with semiautonomous status. Its mandate is policy and plan formulation, resource mobilization, coordination, and quality assurance. Its programs primarily relate to micro/minihydro and improved water mills, solar energy (PV and thermal), biogas, improved cooking stoves, wind energy, and geothermal.

The World Bank/ESMAP study has been designed to organize an evaluation system that measures the impact of microhydro installations on rural livelihoods and to establish a monitoring system for AEPC to continually measure the results of the RE programs against the targets. Given AEPC’s high dependence on donor and government funds, the need to develop a system that provides information on a wide range of technical, operational, and financial parameters is similarly high. The integrated monitoring and evaluation system encompasses all of AEPC’s programs in microhydro (MH), solar, biomass, improved water mills, and biogas, and builds its capacity to execute it.

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109. AAA focusing on power has declined in recent years across the Bank. Power was historically the largest individual subsector, accounting for nearly 25 percent of energy knowledge delivered from fiscal 2003 to 2006. While it represented only 15 percent of energy knowledge delivered from fiscal 2007–2010, it remains the second largest individual sector behind RE. A notable example of Power AAA is the Bank’s efforts in implementing a power trade market in the Greater Mekong Subregion (see box 10). Oil and Gas AAA have also declined across the Bank with the exception of those delivered by PREM. Energy products delivered by PREM tend to focus on the management of oil revenues, fiscal discipline, and the impact of fuel pricing on the poor.

110. Forty-one percent from the energy AAA delivered during fiscal 2003–10 focused on “multiple” energy subsectors. About half of these products were ESW and 30 percent were nonlending TA. An example of AAA with multiple sectors is the energy strategy reports produced for various countries. The East Asia region has recently delivered its strategy in the energy sector through the report Winds of Change: East Asia’s Sustainable Energy Future (Box 18).

Box 18: Winds of Change: East Asia’s Sustainable Energy Future

East Asia has experienced the fastest economic growth in the world over the last three decades, accompanied by a 10-fold gross domestic product increase and rapid urbanization. Energy consumption has more than tripled during this period and is expected to double over the next 20 years. This remarkable trend has led to twin energy challenges in the region—environmental sustainability and the energy reliability of future energy supplies.

Written for an audience of energy policy makers and practitioners, Winds of Change explores the region’s energy future over the next two decades through two energy scenarios. It outlines the strategic direction East Asia’s energy sector must take to meet its growing energy demand in an environmentally sustainable manner, and presents a pathway of policy frameworks and financing mechanisms to get there.

The six East Asian countries—China, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam—examined in this book could, with the right policies and financing, stabilize carbon dioxide emissions by 2025, improve local environments, and enhance the energy reliability of future energy supplies without compromising economic growth. They must move their energy sectors toward much higher efficiency and more widespread use of low-carbon technologies, while obtaining substantial financing and low-carbon technologies from developed countries. This shift to a clean energy revolution requires major policy and institutional reforms, including energy pricing reforms, regulations such as EE standards, and financial incentives, such as feed-in tariffs for RE, and accelerated research and development. Finally, building low-carbon cities will be critical for containing the rapid urban energy growth through compact urban design, public transport, clean vehicles, and green buildings.

The window of opportunity is closing fast—delaying action would lock the region into a long-lasting high-carbon infrastructure. The technical and policy means exist for such transformational changes, but only strong political will and unprecedented international cooperation will make them happen.

4.4. Regional Focus111. The Bank has increasingly delivered more global knowledge products—that is, AAA with no specific regional or country focus. This trend is especially true in the Energy Sector, where global knowledge products rose from only 3 percent of the AAA portfolio in fiscal 2003 to 15 percent in fiscal 2010. This is largely attributed to an increase in global knowledge-sharing forums, which now represent 8 percent of all Energy AAA. Examples of global energy forums held in fiscal 2010 include the CSP

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Knowledge-Sharing Forum, the Bali Breakfast Series, and Experiences with Mining Foundations. In addition, energy was a primary component of the Cities, Climate Change and Finance Symposium.

112. The Africa Region was the largest recipient of Energy AAA in the last eight years (fiscal 2003–10), followed by ECA and EAP. This follows a Bankwide trend, as Africa, ECA, and EAP have also been the three largest recipients of Bankwide ESW and nonlending TA since fiscal 2003. Over that time, Africa accounted for 22 percent of Energy AAA, followed by ECA (21 percent) and EAP (19 percent) (Figure 11).

113. The Latin American and Caribbean region has experienced a major growth in the AAA program in the past few years. Energy advisory and analytical products in the region have risen from only 6 percent of the energy AAA in fiscal 2003 to 15 percent in fiscal 2010. This has been driven by an increase in both ESW and nonlending TA, specifically an increase in Energy Reports, Client Document Reviews, and Knowledge-Sharing Forums. While Bankwide ESW in the region has declined dramatically since fiscal 2003, LCR has represented the largest source of growth for Energy ESW. In fiscal 2010, it was the second largest recipient of Energy ESW behind Africa. LCR’s AAA includes low-carbon studies, electricity subsidy studies, and the impact of crisis on energy in the region. A notable and recent LCR AAA is the low-carbon study in Brazil, which aimed at providing the Government of Brazil with the inputs needed to assess the potential for lowering the carbon content of the country’s planned development (Box 19).

Figure 10: Energy AAA by Region

FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY100

102030405060708090

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f Ene

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114. There has been a noticeable decrease in AAA delivered to Europe and Central Asia—both within the Energy Sector and Bankwide. ECA’s share of Energy AAA has fallen from 37 percent in fiscal 2003 to 20 percent in fiscal 2010. This is primarily because of a decline in the number of advisory reports delivered to the region. Twenty-four energy reports were delivered to ECA from fiscal 2003 to 2004, compared to only 7 from fiscal 2009 to 2010.

115. From a country perspective, the focus on smaller countries has increased in recent years. From fiscal 2003 to 2006, the top 5 recipients accounted for 22 percent of energy AAA. But from fiscal 2007 to 2010, the top 5 recipients accounted for only 16 percent. While large countries, such as China and India, have consistently ranked among the largest recipients of energy AAA, the Bank has increasingly targeted smaller countries.

Box 19: Brazil Low-Carbon Study

As the world’s largest tropical country, Brazil is unique in its GHG emissions profile. The steady expansion of crop land and pasture has required the conversion of large volume of native land, making land use change the country’s main source of GHG emissions today. As a result, Brazil has become one of the largest GHG emitters from land use

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change. At the same time, Brazil has used the abundant natural resources of its vast territory to explore and develop RE and has accumulated an unprecedented experience in industrial use of renewable biomass.

Without Brazil playing a prominent role, it is difficult to imagine an effective solution to stabilizing global GHG concentrations to the required scale. Like other developing countries, Brazil faces the dual challenge of encouraging development while reducing GHG emissions.

The primary aim of this study was to provide the Government of Brazil (GoB) the inputs needed to assess the potential for lowering the carbon content of the country’s planned development, following a four-step approach:(1) Anticipate the future evolution of Brazil’s GHG emissions consistent with the long-term development objectives of the country, thereby establishing a reference scenario.(2) Identify and quantify lower carbon-intensive options to mitigate or sequester GHG emissions consistent with the development objectives of the country.(3) Assess the associated costs of the low-carbon options identified, identify the main barriers to immediate adoption, and explore potential measures for overcoming them.(4) Build a low-carbon emissions scenario consistent with the long-term development objectives of the country.In order to build upon the best available knowledge, the study process emphasized a consultative, iterative approach that involved extensive participation by more than 50 Brazilian experts and representatives of 10 ministries. In particular, this study adheres to the government’s development plans, exploring options to achieve the same development goals while reducing emissions in four main areas—LULUCF, energy, transport, and waste management. However, it does not stop at establishing a list of low-carbon technical options. It builds understanding of the current dynamics that drive emissions in these sectors and examines the necessary conditions for these low-carbon options to be effectively scaled up in place of conventional ones. By doing so, the study provides technical and analytical elements for exploring possible emissions reductions through 2030, going beyond the 2020 voluntary commitments announced by the government.

The main conclusions are as follows: Increasing livestock productivity could free up large quantities of pasture, enough to accommodate the most

ambitious growth scenario for agriculture, thus reducing (a) the need to convert more native vegetation through deforestation and consequently (b) associated GHG emissions.

The energy and the transport matrix of the country is already low-carbon. Main remaining mitigation options are EE and fuel-switch in the industry, modal shifts in regional and urban transport, and landfill gas capture and destruction in waste management.

Implementing the low-carbon scenario options would require an average of US$20 billion in added annual investment, that is, less than 10 percent of the annual investments in Brazil in 2008.

To mobilize the private investment, incentives would be required to turn the low-carbon options attractive when compared with more conventional options. However, most of EE measures would not require incentives.

Shifting to the low-carbon scenario is not expected to negatively affect economic growth. Both GDP and employment might improve slightly, respectively, 0.5 and 1.13 percent per year on average, owing to economywide spillover from the low-carbon investment.

4.5. The IFC’s Advisory Support for Climate Change Mitigation116. The IFC’s support includes a diverse set of advisory services aimed at accelerating market development by promoting consumer acceptance, overcoming regulatory and other barriers . These activities correspond with issues relevant at different stages of the innovation process. Regulatory reform efforts are often most important initially to create a favorable investment and business climate. Industry standards and market intelligence are thereafter often needed to refine business models and aggregate markets to sufficient scale. At the near commercial stage, bank financing and, where commercially justified, limited concessional funding may be provided. The IFC’s growing portfolio includes examples of each of these activities. The Lighting Africa program has built market interest in new lighting products for off-grid, rural customers, attracting more than 50 new companies with more than 100 new products to Africa. The project has been so successful that it has been replicated in South Asia. Collaboration with Gujarat state in India is helping structure government support for rooftop solar systems to effectively

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attract investment and meet solar goals. A risk insurance instrument, backed by donor funds, will address investment risks for geothermal power production in Africa. The IFC’s advisory services intend to increase total spent on climate-related advisories to more than US$40 million by fiscal 2013.

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5. Energy Financing Partnerships

117. The WBG has a variety of partnerships and global trust funded programs that are vital for generating the body of knowledge and lessons on which Bank staff and practitioners can draw. As new development challenges arise along with the need to accelerate results, the partnerships and trust funds have emerged as a significant pillar of the global aid architecture, together with bilateral and multilateral aid (World Bank 2011b). These partnerships support the analytical advisory work produced by the WBG, as described in previous session. Partnerships in the energy sector, in particular, have increased significantly in the last few years, giving rise to programs targeting several subsectors, especially RE and EE.

118. The partnerships offer three opportunities for the WBG to advance its development strategies and priorities: (a) by strengthening country operations through increased financing and donor coordination, in several cases funding preparation, appraisal, and supervision of cofinanced projects; (b) by expanding the Bank’s role at the global level through the financing of development-related global knowledge; and (c) by supporting the Bank’s work program (analytical work and TA), including the piloting of innovative development approaches.

119. The partnerships have enabled the WBG to reinforce and expand its business in the energy sector. While the budget has remained fixed in real terms, these partnerships have played a critical role in the expansion of the WBG’s energy portfolio and knowledge. Some of the partnerships provide direct cofinancing to WBG operations, complementing or leveraging other financial resources to help client countries in their energy programs. Other partnerships are primarily responsible for generating the knowledge as a foundation for new operations.

5.1. Cofinancing PartnershipsThe leading cofinancing partnerships in the energy sector are (in alphabetical order): Carbon Finance (CF), the recent Climate Investment Funds (CIF), Extractive Industries Transparency Initiative (EITI), GEF, and Global Partnership on Output-Based Aid (GPOBA).

5.1.1. Carbon Finance120. Carbon finance is part of a larger response to leverage development finance and other financial instruments that can contribute to mitigation and adaptation interventions to address climate change. Carbon finance sets the basis for innovative schemes to meet the GHG emission reduction objectives of developed and developing countries. Carbon finance can both complement and leverage other financial resources to unlock low-carbon investment in host countries.

121. Carbon finance revenues can also leverage upfront capital for underlying investments and provide incentives to overcome social inertia, low awareness, transaction costs, and financing of programs. In the case of the Kyoto Protocol`s Clean Development Mechanism (CDM), it is estimated that forward contracts of CDM credits (that is, Certified Emission Reductions) over the 2002–09 period leveraged underlying low-carbon investments in developing countries at a ratio of 1:4.6 (World Bank 2010d). From 2003 to 2009, global carbon transactions for CDM and Joint Implementation credits totaled about US$27 billion. Today, the World Bank has approximately US$2.5 billion in capitalized funds (representing 16 governments and 66 firms) that support climate change mitigation projects and programs in 57 developing countries and economies in transition.

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122. Carbon finance is an important complement to the World Bank’s financing in RE and EE projects and programs. There are several types of RE (hydro, wind, solar, and geothermal) and EE (loss reduction in transmission and distribution of power, energy-efficient lighting, industrial and household EE and cogeneration) interventions. Since 2000, the Carbon Finance Unit of the World Bank has committed to purchasing emission reduction credits from 101 energy sector projects amounting to US$564 million until fiscal 2010. Sixteen of these projects also involve lending from the Bank with the current focus in the recent past and going forward on operations that can blend carbon finance with other World Bank products and instruments. Carbon finance contributions to the energy sector projects and programs can be scaled up with the development of new financing facilities, such as the CTF and the Carbon Partnership Facility.

123. The Bank’s expanded program of carbon finance—the Carbon Partnership Facility (CPF)—has raised about €200 million to date and is actively looking to commit the capital in energy sector programs in several countries and technologies. The CPF is designed to scale up the climate change mitigation actions on a larger scale and to support countries’ low-carbon development initiatives through programmatic approaches. In the energy sector, it is targeting RE and EE. The CPF will draw on the World Bank’s financial and knowledge resources to strategically integrate carbon finance with Bank lending operations.

124. The IFC is also active and launched its Post-2012 Carbon Facility in Cancun in December 2010. This €150 million facility will help address post-2012 market uncertainty faced by climate-friendly projects eligible under the Kyoto Protocol’s Clean Development Mechanism (CDM) by creating a pathway to market. Currently such projects have few means of obtaining revenues for carbon reduction because of the expiration of the Kyoto commitment period at the end of 2012. The IFC will manage the facility and participate with up to €15 million for its own account and mobilize up to an additional €135 million in funds from European Union–based power utilities and other energy companies. Funds will be used to forward purchase emission reduction credits produced by IFC client companies and projects financed by the IFC’s client banks until 2020. Project companies will benefit, since future carbon revenues can be used to leverage current financing needs.

125. The IFC also offers innovative debt financing to projects that rely on carbon revenue from sale of post-2012 carbon credits to bankable buyers. By monetizing firm carbon offtake agreements, the IFC helps projects reach financial closure despite few or no fixed assets and substantial dependence on future generation of emission reduction credits. Furthermore, the IFC has completed three Carbon Delivery Guarantee transactions with structured carbon finance exposure for the IFC’s account. These transactions will guarantee delivery of 2.2 million credits from CDM projects.

5.1.2. Climate Investment Funds126. The CTF and the Program for Scaling up Renewable Energy in Low Income Countries (SREP) are new financing partnerships made available through the Climate Investment Funds. The Climate Investment Funds (CIF) are a collaborative effort among the multilateral development banks and countries to bridge the financing and learning gap on climate change action between now and a post-2012 agreement under the UNFCCC. The Climate Investment fund is a new financing partnership that makes available a wide range of financial tools, as well as capacity building services to support the design and implementation of a wide range of climate change–related projects across the world. The total pledged amount is US$6,135 million. The CIF consists of the two following funds:

Clean Technology Fund (CTF), which promotes investments to initiate a transformational shift toward clean technologies. Through the CTF, countries, multilateral development banks, and other partners agree upon country investment plans for programs that contribute to the demonstration, deployment, and transfer of low-carbon technologies with significant potential for

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GHG emission savings. The pledged amount is US$4,297million. The CTF finances investments in the energy and transport sectors in middle-income countries. The main focus is on generation with lower GHG emissions and supporting transmission, EE, and urban transport. Investment plans for 29 countries have been approved by CTF Trust Fund Committee and US$2,395 million are being channeled through the World Bank. All projects are blended with IBRD financing and attract significant cofinancing from borrowers, the private sector, and other international financial institutions.

The CTF funds are expected to be committed by the end of fiscal 2013. Some of the projects approved by the Trust Fund Committee and the World Bank Board are Turkey’s Private Sector Renewable Energy and Energy Efficiency Project (US$100 million CTF and US$500 million IBRD; total financing is US$1,150 million); the Mexico Urban Transport Transformation Program (US$200 CTF million and US$200 million IBRD; total financing is US$2,225 million), and the Egypt Wind Power Development Project (US$150 million CTF and US$70 million IBRD; total financing is US$795.8 million). The CTF will also support a MENA regional initiative to promote development of concentrated solar power generation in the region and other cutting-edge transformational initiatives.

The Strategic Climate Fund (SCF), which serves as an overarching fund to support targeted programs with dedicated funding to pilot new approaches with the potential for scaled-up, transformational action aimed at a specific climate change challenge. One of the targeted programs under the SCF is the Program for Scaling up Renewable Energy in Low Income Countries (SREP) to demonstrate the economic, social, and environmental viability of low-carbon development pathways in the energy sector by creating new economic opportunities and increasing energy access through the use of RE. The total pledged amount is US$284 million. Ethiopia, Honduras, Kenya, the Maldives, Mali, and Nepal have been selected as the first batch of pilot countries. The preparation of investment plans was expected to commence in fiscal 2011.

5.1.3. Extractive Industries Transparency Initiative (EITI)Extractive Industries Transparency Initiative promotes and supports improved governance and transparency in resource-rich countries through the full publication and verification of revenues from oil, gas, and mining, through a coalition of governments, companies, and civil society organizations. The Oil, Gas, and Mining group manages a multidonor trust fund that provides countries with grants to implement the EITI principles of revenue transparency (Box 20). In 2010, the EITI MDTF established a US$1 million grant to help strengthen civil society engagement in the EITI process. Revenue Watch Institute was selected as the implementing agency, and will work in six countries: Afghanistan, Burkina Faso, Liberia, Mozambique, Peru, and Yemen. In each country, the program of activities will include information dissemination and capacity building, as well as components for mobilization, coordination, and networking. Since its inception in 2005, EITI has received a total funding of US$28.7 million. As of May 2011, 35 countries (21 in Sub-Saharan Africa) were implementing EITI globally, of which 11 had been validated as EITI-compliant.

Box 20: EITI: Increasing Extractive Industries Transparency at the Country Level

Approximately 3.5 billion people live in countries rich in oil, gas, and minerals. However, historically, resource-rich developing countries have shown a below-average growth performance and many have suffered from endemic corruption and persistent poverty because of a lack in transparency and weak governance.

The launch of EITI has brought great momentum and traction, with rapid uptake in most World Bank regions. Many countries are now implementing the EITI. Significant progress has been made toward EITI compliance in several countries: three countries have become compliant, while 19 more are well on their way and will most likely reach

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validation in the next few months. EITI reports have helped uncover certain financial irregularities and provided a sound roadmap for meaningful reforms in the oil, gas, and mining sectors. Some important country successes, based on innovative approaches and noteworthy progress, include the following:

Liberia: The country was one of the first countries to be validated by the EITI board in March 2010, thanks to fast and widespread implementation of EITI principles. Liberia enacted the Liberia EITI act in the summer of 2009, establishing EITI as a public entity with access to the national budget so the need for donor funding can be limited or phased out. EITI is incorporated into the national plan to develop the mining sector. The government also expanded the initiative to include the forestry sector and has reached out to help EITI implementation in neighboring Sierra Leone. Ratings for Liberia in Transparency International’s CPI index moved up from #137 (out of 158 countries) in 2005 to #97 (out of 180 countries) in 2009, which has improved the investment climate for the extractive industries sector.

Mongolia: The country’s mining law has progressively mandated both companies and government institutions to report payments and revenues according to EITI principles since 2006. Reconciliation following the initial audit report reduced discrepancy from MNT 25 billion in February 2008 to MNT 775 million in November 2009. The government is determined to go beyond EITI in managing Mongolia’s natural resource exploitation to include improvements along the full extractive industries value chain, from bidding for contracts to implementing sustainable development programs. An EITI law and strategy for 2010–14 are currently being drafted, and civil society organizations capacity and participation has been enhanced.

5.1.4. Global Environment Facility (GEF)127. Originally established as a partnership between the UNDP, UNEP, and the World Bank in October 1991, the GEF now operates a partnership between 10 multilateral development banks and U.N. agencies. It has established itself as the world’s largest funder for global environmental programs. From the early pilot phase initiated in the run-up to the Rio Convention of 1992, the GEF was restructured in 1994, and has since run through four operational phases and five replenishments. The GEF 5, set to operate from 2011 to 2014, is the largest replenishment period to date, with total pledges of US$4.2 billion, of which US$1.35 billion is devoted to climate change mitigation. The GEF has set for itself the goal of providing incremental costs for projects demonstrating global environmental benefits in developing countries and countries with economies in transition. Since its restructuring in 1994, it has served as the financial mechanism for five global environmental conventions of the United Nations.

128. The Bank has always been the most prominent implementing partner of the GEF. From 2001 to 2010, the GEF has provided US$1.8 billion of funding for Bank climate change mitigation projects (RE, EE, and sustainable transport projects) to which the Bank added more than US$4 billion of loans linked to over US$14 billion of counterpart funding. Nearly 60 percent of the GEF’s funding to climate change has passed through the World Bank. From 1991 to 2000, nearly 34 percent of the World Bank’s financing to RE and EE projects was estimated to come from GEF resources. From 2001 until 2010, as the Bank’s resources began to flow to energy and RE and EE in particular, that percentage declined to less than 10 percent.

129. The GEF–World Bank partnership has played an important role in helping the Bank gain experience with low-carbon operations. Many of the early, innovative RE and EE operations of the Bank were largely funded by the GEF. Early projects promoting CFLs were all supported by the GEF (World Bank 2006). Experiences with ESCOs and third-party financing of energy efficiency investments drew heavily on GEF experiences (Singh 2005), as did work on off-grid electrification using renewables (Govindarajalu and others 2008). With its focus on innovation and technology, the GEF supported the initial Bank-implemented projects on CSP, even when the industry in the developed countries was largely

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inactive (World Bank–GEF 2006). The challenge of the future will be for the Bank-GEF partnership to find new ways to continue supporting the innovative approach that has made it valuable to Bank clients and staff in the past.

5.1.5. Global Partnership on Output-Based Aid (GPOBA)130. GPOBA is a global partnership program administered by the World Bank, with donor funding totaling US$242.5 million. It has a mandate to support results-based approaches to improve service delivery in developing countries. Since its creation in 2003, GPOBA has focused on piloting output-based aid (OBA) approaches to improve delivery of basic infrastructure and social services to the poor. GPOBA has built up a portfolio of 31 OBA subsidy schemes with US$124.9 million in funding, expected to benefit around 6.5 million people. These GPOBA pilots are showing results: 18 projects have delivered verified outputs benefiting nearly 755,000 people. Services delivered include water, electricity and gas connections, SHSs, ICT services, and basic healthcare. The experience so far has demonstrated that OBA can help target subsidies more efficiently to the poor, mobilize the private sector to serve low-income households, and facilitate monitoring for results.

131. Energy is the second largest sector in GPOBA’s portfolio of OBA subsidy schemes, used mostly through off-grid access. There are 9 projects totaling US$40.7 million in subsidy funding (33 percent of the total) in the Africa, Europe and Central Asia, Latin America, and South Asia regions. Although some schemes are in early implementation, other schemes, such as a heating and gas supply project in Armenia, a natural gas project in Colombia, an SHS project in Ghana, and a biogas support program in Nepal, are already delivering results, benefiting a total of more than 312,200 people so far. Box 21 describes two GPOBA-funded energy schemes in more detail. In addition to the GPOBA-supported schemes, another 18 OBA schemes have been identified in the energy sector in the WBG, and several outside the WBG. All of these OBA initiatives are providing valuable lessons, as described in Output-Based Aid: Lessons Learned and Best Practices (Mumssen, Johannes, and Kumar 2010).

Box 21: OBA in the Energy Sector

The most common use of the OBA approach in the energy sector is through off-grid access. GPOBA is funding a replication of Decentralized Infrastructure for Rural Transformation project (Infraestructura Descentralizada para la Transformación Rural, or IDTR), which plans to introduce low-end pico-PV solutions specifically targeted to the poorest households. The project expects to benefit 45,000 people. The IDTR scheme installed 6,154 individual systems (as of February 2009), benefiting more than 30,000 people, and 87 social systems in schools and clinics.

Some OBA energy schemes provide grid-based access. An example is the Armenia gas and heat supply scheme that aims to provide safe, affordable, gas-based heating solutions for poor urban households. Eligible poor households receive capital grants to help them adopt either individual heating solutions, based on a gas heater, or local heating solutions, based on a boiler for the whole building. The Armenia scheme benefits from a US$3.1 million GPOBA grant and US$3 million in from IDA’s Urban Heating Project. The GPOBA component closed in December 2009, providing access to gas and heating services for 5,847 households (23,739 people). The disbursement of funds after service delivery created strong incentives to deliver outputs in a timely manner, and some evidence shows that this led to increased customer satisfaction.

5.2. Partnerships in Knowledge132. There are many energy partnerships that are responsible for generating the new knowledge in the sector, as a foundation for future investment operations. The most prominent partnerships are (in alphabetical order): Africa Renewable Energy Access (AFREA) Program, Energy Sector Management

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Assistance Program (ESMAP), Carbon Capture and Storage (CCS), Lighting Africa, Public-Private Infrastructure Advisory Facility (PPIAF), and the Asia Sustainable and Alternative Energy Program (ASTAE). Partnerships in extractive industries include Communities, Artisanal, and Small-Scale Mining (CASM), Global Gas Flaring Reduction (GGFR), and the Petroleum Governance Initiative (PGI).

5.2.1. The Netherlands Trust Fund for the Africa Renewable Energy Access (AFREA) Program

133. The AFREA Program was originally conceived by the Energy Sector Assistance Program (ESMAP) in 2008 in support of the strategic plan developed by the Africa Energy Unit (AFTEG) to expand access of affordable, reliable modern energy services to Sub-Saharan African countries. This strategic plan—the Africa Energy Access Scale-up Plan—identified the following five-track approach: (a) scale-up of household electrification programs (including grid reticulation and off-grid solutions); (b) expansion of power generation and transmission capacity (including regional and cross-border infrastructure to achieve least cost solutions); (c) targeting programs to expand the provision of energy services to key public sector services, such as schools and clinics that contribute toward achievement of MDGs; (d) providing households without electricity service connection with improved access to standalone lighting packages; and (e) providing households with greater and more sustainable access to cleaner cooking and heating fuels. On February 3, 2009, ESMAP and AFTEG signed an agreement transferring the responsibility for allocation, supervision, disbursement, and monitoring of Bank-executed and recipient-executed activities to AFTEG.

134. AFREA funds (US$28.8 million) are earmarked to execute analytical and advisory activities, and also to provide recipient-executed TA and pre-investment grants that would help accelerate deployment of RE systems in Sub-Saharan Africa. AFREA activities include capacity building, TA, advisory services, and economic and social studies that directly support and/or create enabling conditions for increased RE investments, and expanding access to modern energy. Other activities focus on dissemination of information, such as case studies, best practices, and lessons learned, to public and private organizations, as well as recipient-executed grants that are complementing IDA lending programs and piloting innovative ways of expanding energy access.

5.2.2. Energy Sector Management Assistance Program (ESMAP)135. One of the most prominent and recognized global trust-funded programs in the energy sector is the Energy Sector Management Assistance Program. ESMAP is a global knowledge and TA partnership administered by the World Bank and sponsored by bilateral official donors since 1983. ESMAP’s mission is to help clients from low-income and middle-income economies to increase their know-how and institutional capacity to achieve environmentally sustainable energy solutions for poverty reduction and economic growth. Under its 2008–13 Strategic Business Plan (SBP), ESMAP has been extending its engagement with clients to encompass the nexus of energy reliability of future energy supplies, energy access, and climate change. To meet these challenges, ESMAP focuses its efforts “upstream” through three core functions—think tank, knowledge clearinghouse, and operational leveraging—all aimed at helping clients make better informed choices, enhance capacity, and adopt cutting-edge solutions. The total budget for the SBP is estimated at US$55 million.

136. Toward delivering a “full menu” of energy options for clients, ESMAP relies on a core set of four programs and initiatives:

The Energy Strategies and Assessments Program encompasses a wide range of country-specific assessments, focusing on the impacts of the financial and credit crisis, volatile oil prices, and climate change, and building institutional capacity and know-how, to reduce the vulnerability to interlinked global crises, diversify energy supply, and help formulate strategies toward a low-carbon development path.

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The Propoor Energy Access Technical Assistance Program prioritizes the needs of people lacking access to modern energy services by supporting activities in small and medium enterprise development, rural electrification strategies, and gender development strategies.

The Energy Efficiency Cities Initiative assists cities to enhance EE in the delivery of city services through the preparation of strategies as well as cutting edge tools.

The Renewable Energy Market Transformation Initiative (REMTI) helps clients diversify their energy supply mix and scale up deployment of RE technology, particularly in concentrated solar power, geothermal, small hydropower, and wind.

137. In fiscal 2010, ESMAP efforts concentrated on helping clients develop their energy sector sustainably and mitigating the adverse impacts of external shocks of the global financial crisis and climate change. Some of the innovative products/initiatives were the low-carbon development country study program, studies, and assessments on concentrated solar power, rapid assessment frameworks, and power sector vulnerability assessments (details in box 22). ESMAP will continue to develop its knowledge program to distill lessons, experiences, tools, and methodologies from the rich knowledge base and dataset that comprises the low-carbon development country study program. These products are aimed at informing internal and external audiences wishing to understand the low-carbon planning process or embark on similar work. The knowledge program is implemented in partnership with WBI.

Box 22: ESMAP Highlights This Year

Low-Carbon Development Country Study Program. In the period 2007–10, ESMAP supported low-carbon development planning in seven emerging economies: Brazil, China, India, Indonesia, Mexico, Poland, and South Africa. These assessments include identification of development goals and priorities and GHG mitigation opportunities, and examination of the benefits and costs of low-carbon growth. The studies have taken a flexible approach to their design and implementation to respond to national priorities, support local ownership and collaboration, and provide an objective and transparent analysis.

Studies and Assessments on Concentrated Solar Power (CSP). Assessments to identify CSP potential and institutional capacity for undertaking large-scale CSP investments were conducted in the Middle East and North Africa region and India. These ESMAP assessments will enable clients to leverage the resources for the feasibility and investment phases of CSP projects, including those of the multilateral development banks, Climate Investment Funds, Carbon Finance, the GEF, the European Union, bilateral donors, the private sector, and PPPs.

Rapid Assessment Framework (RAF). A diagnostic tool for analyzing energy use in cities was developed. RAF is designed to present a quick, first‐cut, and sectoral analysis on city energy use across six sectors: transport, buildings, water and waste water, public lighting, solid waste, and power and heat. RAF was field-tested and validated in Quezon City (part of metro Manila) during February–March 2010.

Power Sector Vulnerability Assessments. About 20 country assessments have been conducted to help clients appraise the impacts of the financial crisis on investments in their power sectors, identify measures that could counter the adverse effects, and offer financing options, including by the WBG.

5.2.3. Carbon Capture and Storage (CCS)138. The CCS TF, a multidonor trust fund, was established in December 2009 to support strengthening capacity and knowledge sharing, create opportunities for developing countries to

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explore CCS potential, increase access to carbon markets, and realize benefits of domestic CCS technology development. In addition, the CCS TF is designed to facilitate the inclusion of CCS options into low-carbon growth strategies and policies developed by national institutions and supported by World Bank interventions. The CCS TF objectives cover five areas of activities: (a) integrating CCS into sustainable development plans and/or low-carbon strategies and policies; (b) building in-country management skills and expertise; (c) structuring legal and regulatory frameworks; (d) developing financing mechanisms; and (e) assessing environmental impacts.

139. CCS TF are implemented in a variety of World Bank instruments. These are TA programs, both stand-alone and connected to investment operations (such as investment loans, credits, and grants), development policy operations, and analytical advisory activities, such as ESW and knowledge products. The CCS TF aims to coordinate its activities with other institutions and initiatives providing CCS assistance to avoid duplication of efforts. Specific activities to achieve the fund objectives will be identified during in-country consultations and through dialogue with counterparts.

140. The CCS TF is fully operational, capitalized with contributions of about US$8 million from the Government of Norway and the Global Carbon Capture and Storage Institute . Initial project activities are expected to begin implementation in the second half of calendar year 2010 in the focus areas of activities of the CCS TF. The CCS TF work program was developed and endorsed by the TF donors. It includes projects in 10 developing countries. Additionally, regional aspects are being addressed through ESW on the regional perspective in developing countries with the objective to inform policy makers in developing partner countries and Bank staff about (a) technical, environmental, regulatory, and socioeconomic issues related to potential CCS deployment in regional energy infrastructure and (b) existing and prospective financing mechanisms that might encourage deployment of CCS in developing countries.

5.2.4. Lighting Africa141. There are alternatives to fuel-based lighting for people not yet connected to the electricity grid. Today, solar and other lighting products offer better illumination, longer battery life, and such features as cell phone chargers. They are also becoming increasingly affordable for low-income households. Africans spend an estimated US$10.5 billion on kerosene for lighting annually. This represents a vast, largely untapped opportunity for the off-grid lighting sector. However, this emerging market for off-grid products is hard to penetrate. Manufacturers struggle to find business partners, and financial institutions not familiar with the industry are unable to exploit the market’s growth potential. In addition, end users have not yet embraced the new technologies, and low-quality products undermine consumer confidence.

142. Lighting Africa, a joint IFC and World Bank program, works as a catalyst to make high-quality, off-grid lighting products accessible to energy-poor households in several regions of the continent as part of the WBG’s wider efforts to improve access to energy. Lighting Africa’s objective is to provide safe, affordable, and modern off-grid lighting to Africa’s unelectrified communities. The program targets reaching 2.5 million people by 2012 and 250 million by 2030.

143. The program has already been piloted in Kenya and Ghana, and is expanding to Ethiopia, Mali, Senegal, and Tanzania, with the potential to grow further still. Lighting Africa lowers entry barriers to the off-grid lighting market, from the design of lighting products to their production and distribution. More specifically, the program establishes quality standards, supports product development, educates consumers on the benefits of solar lighting products, supports the creation of a favorable investment climate, offers business and market development support to new players, and supports governments in integrating off-grid lighting products and services into their energy access programs. Visit www.lightingafrica.org.

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144. The Lighting Africa initiative has been actively growing, and many successful activities have been delivered (Box 23).

Box 23: Lighting Africa Recent Achievements

In 2010, more than 134,000 solar portable lamps that had passed Lighting Africa quality tests were sold in Africa, providing more than 672,000 people with cleaner, safer, better lighting and improved energy access. This represents a 70 percent growth in sales in 2010 alone.

Eight products have so far passed Lighting Africa quality tests and are available in the African market, retailing between US$22 and US$97.

Five portable solar lamps have won the Lighting Africa Outstanding Product Awards, resulting in increased sales in Africa.

The program has worked with test laboratories in China, Germany, and the United States, and recently in Kenya to establish low-cost testing services for off-grid lighting products. The tests allow manufacturers, distributors, NGOs, and other players to make accurate performance measurements of lighting products.

Since February 2011, the first testing lab in East Africa is offering testing of off-grid lighting products as a commercial service to manufacturers and distributors. The lab, at the University of Nairobi, uses Lighting Africa’s low-cost initial screening method.

The governments of Ethiopia, Mali, and Senegal signed agreements with Lighting Africa to integrate lighting services into their rural energy programs. The Rural Energy Agency in Tanzania is implementing a Lighting Rural Tanzania program, inspired by the Lighting Africa Development Marketplace.

Lighting Africa’s consumer education campaign reached 9.4 million people in Kenya. The campaign encourages populations in rural areas to switch from kerosene lighting to solar lighting, and makes consumers knowledgeable buyers.

In Kenya, a leading microfinance institution started to provide loans over the past six months, for people in rural areas to purchase solar portable lanterns.

The biannual Lighting Africa Business Conference and Trade Fair is seen by the industry as the reference event in this market, facilitating business partnerships. More than 600 participants from 50 countries attended the 2010 edition of the Conference, which resulted in business partnerships between manufacturers and distributors of lighting products.

5.2.5. Public-Private Infrastructure Advisory Facility (PPIAF)145. PPIAF is a multidonor TA facility, which has provided support for rural electrification in many regions. It was created in 1999 to act as a catalyst to increase private sector participation in emerging markets. It provides TA to governments to support the creation of a sound enabling environment for private service provision. Since 2000, PPIAF has been providing TA to governments to explore options to involve the private sector in rural electrification in several regions.

In SSA, PPIAF supported strategic options for rural electrification in Uganda and helped the government of Senegal to analyze options to bring the private sector to several infrastructure sectors, including electricity (Box 24). The recommendations of this study were incorporated in a Rural Electrification Program with private concessions. PPIAF also paid for a feasibility study for one of the concession areas.

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In South Asia, PPIAF provided TA to develop a system to supply power to remote rural areas of Kutubda Island in Bangladesh and to improve service provision in rural India through renewable-based electricity generation. In East Asia, PPIAF provided support for a workshop related to the Small Power Utilities Group Project in Philippines and supported policy advice for private sector participation in decentralized energy services in Laos.

In Latin America, PPIAF supported work in El Salvador and Nicaragua to promote private sector participation to supply electricity in poor rural areas. In Peru, PPIAF provided support to design the enabling framework for PPP models in rural electrification.

146. PPIAF is developing a new results-based aid to increase electricity access in SSA. Based on the successful experience of some countries introducing rural electrification programs based on public-private partnerships (PPPs) with results-based aid (RBA) subsidies, PPIAF is developing an initiative to increase access to electricity in rural areas of countries in SSA with the participation of the private sector using an RBA approach. This initiative will attract and promote the use of RE technologies for rural electrification.

Box 24: PPIAF Supports Rural Electrification in Senegal

The Public-Private Infrastructure Advisory Facility (PPIAF) has provided TA to the government of Senegal since 2000 in support of its objectives to foster the effective development of private sector participation in infrastructure, including the electricity sector, and to strengthen the capacity of its Electricity Sector Regulatory Commission. PPIAF’s first such intervention in the country was grant funding for a Country Framework Report prepared at the request of the government.

PPIAF’s support to Senegal’s policy-enabling environment in the power sector led to the structuring of rural electrification concessions with private sector participation. The recommendations of a Country Framework Report that PPIAF supported in 2000 were incorporated into the design of a rural electrification program, the objective of which was to increase electrification coverage from 14 percent of rural households in 2005 to 50 percent by 2012.

In May 2008 the first concession, the Saint–Louis–Dagana–Podor project in the northern part of the country, was awarded to the Office National de l’Electricité (ONE), Morocco’s electricity utility. It has attracted foreign direct investment totaling US$24 million, funded with a mix of equity, debt, and subsidies. The World Bank is providing subsidies representing approximately 30 percent of the financing, and the GEF is providing a US$1.1 million grant to support solar technology in 5,719 new connections (29 percent of the total).

This first concession is also expected to bring 19,574 new electricity connections to 298 villages over three years (2010–13), supplying electricity to approximately 130,000 people. Furthermore, it is expected that the 11 concessions, when completed, will make possible 200,000 new connections that will benefit over one million people. These new connections in turn are expected to improve education and health, among the other benefits that arise from access to electricity.

In January 2010, the International Finance Corporation partnered as a shareholder with the utility in this venture and will contribute 19.9 percent of the total capital required by the project.

5.2.6. The Asia Sustainable and Alternative Energy Program (ASTAE)147. ASTAE was created in January 1992 with a mandate to scale up the use of RE to improve EE and increase access to energy to reduce poverty. ASTAE has developed a strong portfolio of TA activities in East Asian and Pacific countries, supporting the operational implementation of large World Bank investment projects. It is estimated that ASTAE leverage on World Bank operations over the fiscal

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2007–10 period, contributed to the installation of 1,030 MW of RE, to saving 1.6 TWh of electricity through EE projects and to bringing access to energy to 610.000 new households. This will result in substantial mitigation of local pollutant and global GHG emissions by a total of 98 million tons of carbon dioxide over the next 20 years.

148. In fiscal 2010 ASTAE disbursed US$2.1 million funding 22 activities in 11 countries. There was a strong involvement in Indonesia (19 percent of fiscal 2010 activities disbursements), Pacific Islands (20 percent) as well as China, Mongolia, and Vietnam (10 percent each). Key fiscal 2010 activities include TA to the Indonesia Geothermal Power Sector program, the Vietnam Renewable energy Development Project, to EE in small and medium enterprises (SMEs) in India and access to energy in Timor-Leste. The Indonesia Geothermal Power Sector Program (Box 25) provides a good illustration of the use of ASTAE’s operation-focused support mechanisms and its flexible response to evolving needs in project development.

Box 25: ASTAE Support to the Indonesia Geothermal Power Sector Program

1. Following the rapid economic growth of its economy, Indonesia’s energy demand is beginning to outstrip its supply. To ensure that the additional demand not be met only through the use of coal, the government requested World Bank support to triple its rate of development of new geothermal capacity in order to reach an installed capacity of 10,000 MW by 2020. The incremental geothermal capacity added following the proposed reforms will directly displace an equivalent amount of coal-based capacity, and balance the energy mix. Over its life cycle, it is expected to reduce carbon dioxide emissions by about 500 million tons.

2.3. ASTAE allocated US$0.8 million in TA in three phases. The funds were primarily used to build capacities in the

government and in the state-owned geothermal developer Pertamina Geothermal Energy (PGE), as well as to support the preparation of World Bank lending in the geothermal field. The first two phases of ASTAE funding provided policy dialogue and advisory support, assessed the project developer and parent company’s governance, and improved their capacity to process procurement under Bank rules.

4.5. Ongoing work under the third phase comprises support to the design of a policy

framework, including pricing and compensation mechanism and a competitive and transparent bidding process for geothermal concessions.

5.2.7. Communities, Artisanal, and Small-Scale Mining (CASM)149. Communities, Artisanal, and Small-Scale Mining is a global networking and coordination facility with a mission to reduce poverty by improving the environmental, social, and economic performance of artisanal and small-scale mining in development countries. An estimated 100 million people globally depend either directly or indirectly on artisanal and small-scale mining for their livelihoods. In order to better position CASM for the future, the Bank hosted a multistakeholder roundtable in June 2010 to discuss the future direction and structure of CASM. The meeting recognized the important role CASM has played in being a network, support, and advocate for artisanal and small-scale miners and communities and the need for CASM to continue in some form. An options paper and business plan are being prepared for the end of September 2010, including the possibility of the CASM Secretariat having a new home outside of the Bank. Established in 2001 with DFID as the main donor, CASM has received a total of US$1.8 million.

5.2.8. Global Gas Flaring Reduction150. Global Gas Flaring Reduction (GGFR) supports national efforts to increase the use of associated natural gas, thus reducing gas flaring and venting, which waste resources and increase global carbon dioxide emissions. GGFR aims to improve EE, expand access to power by developing gas

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markets, and mitigate climate change through the reduction of GHG emissions from flaring (Box 26). The GGFR partnership was recently joined by Mexico and Pemex as official partners, and by Finland’s Wärtsilä as the first Associated Partner. At a Steering Committee meeting in March 2010, GGFR partners officially launched the third phase of the World Bank–led initiative covering the period 2010–12. The work program for this phase focuses on implementing concrete gas-flaring reduction projects in high-impact countries across the Middle East and North Africa, Europe and Central Asia, Africa, the Americas, and East Asia. Since its inception, GGFR has received almost US$16 million in donor contributions (with US$14.9 million in disbursements), which have helped finance 40 projects/activities (mostly in the Africa region).

Box 26: GGFR: Better Gas Flaring Data through Satellite Innovation

A major obstacle to reducing global gas flaring is poor data on flaring volumes. When GGFR started in 2003, flaring data reported by governments and companies were inconsistent and often under-reported. As a way of improving the reliability and consistency of global gas flaring data, the World Bank–led GGFR partnership, in cooperation with scientists at the U.S. National Oceanic and Atmospheric Administration (NOAA), produced the first globally consistent satellite survey of gas flaring in 2006.

The survey was conducted using satellite data to produce a series of national and global estimates of gas flaring volumes covering a

12-year period spanning 1995 through 2006. Since 2007 NOAA and GGFR have continued to produce annual estimates.

NOAA scientists used low-light imaging data from the U.S. Air Force Defense Meteorological Satellite Program to assess the volumes of gas burned in flares, which are visible in night-time observations under cloud-free conditions. Current and planned satellite sensors will continue to provide data suitable for estimating gas-flaring volumes for years to come.

A significant innovation in the utilized methodology was to confirm each light interpreted from satellite data as a flare using Google Earth. This visual confirmation ensured that data was interpreted correctly. Google Earth has proved to be an excellent resource in the identification and confirmation of flares.

5.2.9. Petroleum Governance Initiative (PGI)151. Petroleum Governance Initiative is a bilateral collaboration between the Government of Norway and the World Bank designed to achieve structured cooperation on petroleum sector governance issues. It provides support to developing countries in the implementation of appropriate petroleum governance frameworks, including on resource and revenue management and linkages to environmental and community issues. The Norwegians have confirmed that they will be contributing NOK 5 million to PGI in fiscal 2011, a significant portion of which will be allocated to the regional environmental work in West Africa.

5.3. Other Innovative Partnerships

5.3.1. The World Bank and IFC Green Bond152. Many energy projects have benefited from the innovative World Bank Green Bond program. It started in 2008 in response to interest from a group of investors in supporting the financing of projects that help mitigate climate change and help countries adapt to the effects of climate change.

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World Bank Green Bonds have now raised about US$1.6 billion in 22 bond transactions in 15 different currencies. These bonds are part of the overall World Bank funding program (raising approximately US$30 billion annually from the capital markets) offering investors the Aaa/AAA credit strength of the World Bank while providing an opportunity to learn more about the World Bank’s climate change program. The Green Bonds have already captured the attention and imagination of other issuers, including governments that recognize green bonds as a way to tap private capital to support their own climate change mitigation and adaptation efforts. Some of the RE projects included in the Green Bond program are Argentina PERMER Renewable Energy, India Rampur run-of-river hydro, Mexico (CRL2) Integrated Energy Services, Jordan—Amman Solid Waste, and EE projects, such as China Energy Efficiency Financing, Montenegro Energy Efficiency, and Turkey RE and EE project.

153. The IFC issued its first green bond in April 2010, and is now on its fourth issue . IFC Green Bonds have raised more than US$400 million in bond transactions. Proceeds from the green bond are ring-fenced and disbursed against eligible projects drawn from the IFC’s climate-related portfolio.

5.3.2. Carbon Efficient Index154. The IFC helped Standard & Poor’s to launch the world’s first carbon efficient index for emerging markets. The new index provides investors with an emerging markets benchmark portfolio that delivers the same return as the well-established S&P/IFCI index with a 28 percent lower carbon footprint by overweighting allocations to more carbon efficient companies. SBI provided technical and financial support in the product development process, also convening a number of large institutional investors to help shape the index. This support was coupled with financial assistance to the Carbon Disclosure Project to reach over 400 companies listed in emerging markets for the first time, encouraging them to publicly disclose their GHG emissions.

5.3.3. Africa Electrification Initiative (AEI)155. The recently launched AEI aims at creating and sustaining a living body of practical knowledge and a network of practitioners in the area of design and implementation of rural, peri-urban and urban on-grid and off-grid electrification and lighting programs. This is an initiative supported by AFREA, ESMAP, EUEI, and GIZ, and the principal target audience is African practitioners, including individuals who work for electrification agencies and funds, ministries, regulators, and state, community or privately owned utilities. AEI was launched with a kickoff workshop in Maputo (June 9–12, 2009) for SSA practitioners. More than 170 individuals from 42 countries (including 32 African countries) attended the workshop. The workshop succeeded in (a) sharing practical information on ground-level implementation issues related to rural, peri-urban, and urban electrification; (b) creating a network of electrification practitioners; (c) refining the topic areas where SSA practitioners face the most constraints and that are of greatest interest to them; and (d) defining the AEI follow-up activities.

156. The initiative creates long-term information dissemination mechanisms on electrification issues. It creates long-term information dissemination mechanisms, such as the AEI website, a blog that allows the practitioners to share knowledge on electrification implementation issues and an archive of operational documents of practical use for electrification experts. Several short discussion papers on key electrification topics are being discussed online on both grid and off-grid electrification topics, including ground-level implementation issues in promoting small power producers, Pico PV, carbon finance opportunities for rural electrification, hybrid minigrids, productive uses, microfinance in off-grid electrification, connection charges in grid expansion, and the experience of REA/REFs in SSA. While the focus is on SSA experiences, other international experiences are brought if they are found to be relevant. The initiative also continues to support regional and thematic miniworkshops (for example, the workshop on access to electricity organized in May 2010 by Rwanda Electricity Company that brought together representatives of the utilities and Rural Energy Agencies (REA) from East Africa.)

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6. Conclusion

157. The WBG has responded actively to the challenges in the sector, through policy dialogue, financing, knowledge, and global partnerships. With its diverse portfolio, the sector interventions were central for expanding sustainable energy access and meeting the needs of the poor. The challenges, however, still remain. Many developing countries are still seeking to provide reliable energy access to their citizens, and many more are still seeking to expand energy services to support economic growth. In the last two years, the WBG was able to respond to the economic crisis that significantly impacted the energy programs in developing countries. This support was essential to help client countries maintain its investments in energy infrastructure and create jobs, while also supporting them on a more sustainable development path.

158. The WBG was able to scale up its financing for energy in the last few years. In its upward trend of financing, and with a record of US$13 billion in fiscal 2010, the WBG approved several types of interventions in the areas of RE, EE, T&D, new thermal generation, upstream oil/gas/coal, and energy policy reforms and regulation. Each of these interventions contributed to increasing energy access to, and reliability of modern energy services, while continuing the shift to an environmentally sustainable energy development direction. Financing for access projects have increased significantly with most of the assistance in Africa, showing the lowest access rate in the world and the highest reliance on biomass energy fuel. Many countries still face significant policy sector challenges concerning energy access, especially in East Asia and Pacific and South Asia. Coordinated approaches between international donors and countries are needed to tackle the challenge of providing modern energy services to the poor.

159. In its goal of increasing access and improving energy services, the WBG has supported projects involving fossil fuels. These still contribute to a large share of the electricity and heat supply for almost every country’s basic energy needs. Financing for gas, however, has exceeded coal and oil in the last eight years. More importantly, there is a new tendency toward cleaner, more efficient combustion technologies with many projects incorporating technologies, such as supercritical and combined–cycle gas-fired generation. The WBG is exploring ways to support the deployment of advanced technologies with a potential to increase the efficiency of power and heat generation.

160. While extending access and improving reliability is a priority, financing for RE and EE has sharply increased. Meeting the energy needs of developing countries in an environmentally sustainable manner is an urgent challenge. The WBG peaked its financing for RE and EE projects in fiscal 2010, with more than US$14 billion committed since 2003, reaching a record 3.6 billion in fiscal 2010. Earlier Bonn commitments were exceeded, and the WBG is in the direction of achieving the new targets established under the DCCSF. Climate financing has increased considerably and continues to strengthen the WBG’s support for new RE and EE technologies.

161. The energy knowledge portfolio is large, complex, and diverse with knowledge produced in every region in the WBG. Energy knowledge products inform the WBG’s operations and shape the advice it provides to client countries. As a foundation for future investments, many important and strategic pieces identifying energy challenges and strategic directions have been delivered. Energy has become a multisectoral issue gaining increasing attention in multisectoral knowledge projects. Many partnerships and trust funds have emerged in the last few years playing a critical role in the expansion of the energy portfolio and generation of new knowledge. The energy partnerships have been instrumental in advancing the knowledge in many energy subsectors, especially in the area of RE and EE. The WBG has

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been leveraging financing for energy by mobilizing private financing and harmonizing aid resources for energy while using its convening power to support developing countries.

162. The WBG is focused on ensuring the long-term sustainability of the energy sector. Through its financing, analytical work and partnerships, the WBG is actively supporting the global effort to expand access and increase energy reliability of future supplies. The new Energy Sector Strategy will continue to energize the financing in the energy sector, and will be a major milestone to transform the energy sector in its efforts to reduce energy poverty and move countries toward a low-emissions direction.

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Appendix 1: Methodology and DefinitionsThe World Bank’s Energy Anchor, jointly with the IFC and MIGA, has prepared and implemented a computerized system, the Energy Master database, to collectively report on WBG energy commitments. This database provides detailed categorization of data that are not part of the Bank’s institutional database, Business Warehouse. This database presents energy commitments data for a variety of purposes: the Clean Energy Investment Framework (CEIF), from which the definitions are drawn, and Energy Sector Strategy requirements, as well as other requests from both internal and external stakeholders. The database encompasses a variety of information on each project including, but is not limited to energy sector commitment amount, product line, and project type. This comprehensive master database allows for the reporting of energy commitments across the IBRD, IDA, GEF, Carbon Finance, IFC, and MIGA.

The database comprises all projects that contain any of the seven Energy sector codes 8 as per the World Bank’s institutional database and all “power” projects from the IFC and MIGA. The resulting database of energy projects is further refined to identify individual project components. If a project has multiple components, the database will include multiple lines for that project, with the commitment amount prorated in accordance with the defined project type categories. It is important to note that under the mining category, all nonenergy mining components (such as mineral mining) have been excluded from the database. A regular review of available Project Information Documents and Project Appraisal Documents provide accurate reporting of commitment figures against the Energy sector codes. These same documents also provide increased granularity in reporting.

Definitions

In preparing the report, the following definitions were used to classify projects.

Energy Efficiency: EE covers both demand-side efficiency and supply-side efficiency components. New high-efficiency thermal power (such as super-critical or ultra-critical thermal power plants) is considered in the “thermal generation” category, and not “energy efficiency.”

o Demand-side efficiency includes improvements in efficiency from load management, demand response programs, and direct load control; improvements in end-use energy efficiency in residential, commercial, industrial, public/municipal, agricultural, and transport sectors, and energy conservation. Also included are energy efficiency improvements through institutional development, regulatory reforms, and improvements in utility management performance, introduction of improved building codes and appliance energy efficiency standards and labeling systems, retrofits to meet new standards, energy audits, waste heat recovery, improved fuel efficiency standards for automobiles, use of drip irrigation or irrigation pumping in agricultural systems, municipal water pumping, energy efficiency financing through financial intermediaries, and implementation of consumer awareness programs.

o Supply-side energy efficiency encompasses transport systems (including modal shifts from cars to mass transit systems), district heating enhancements, improved power T&D (including enhanced metering systems, capacitors, and substation rehabilitation), power system optimization, and increasing the efficiency of existing thermal power generation,

8 Energy Sector Codes are LA (district heating and energy efficiency services), LB (mining and other extractive), LC (oil and gas), LD (power), LE (renewable energy), BU (pub. adm. for energy) and LZ (general energy).

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plant rehabilitation (including plants that offset conventional fuels), improved operations and maintenance and converting heat-only plants to combined heat and power plants.

o The projects or project components for EE include investments in rehabilitation of transmission and/or distribution networks only when the share of EE improvements in such projects can be clearly disaggregated from other objectives, such as network expansion and load increase. Interventions in DPL commitments are included only when the share attributable to energy efficiency can be clearly demarcated.

Renewable Energy: Projects or project components were classified as RE if support was provided for solar energy for heat and power, wind energy for mechanical and electrical power generation, geothermal and biomass energy for power generation and heat, hydropower, and waste-to-energy if it generates electrical power or heat for productive uses.

New Thermal Generation: Thermal power projects produce electricity from fossil fuel–based primary energy sources using conventional turbo-generator technologies based on single-cycle systems, which do not necessarily improve overall power generation efficiency over the baseline. These project components do not specifically target lower-carbon or energy-efficient solutions.

Transmission and Distribution: T&D projects are associated with new network capacity expansion or rehabilitation of existing T&D systems. These are projects that have new T&D equipment and are associated with network capacity expansion. T&D rehabilitation projects, even if they implicitly result in loss reduction, are included entirely in this category, if the energy efficiency component cannot be clearly disaggregated from network expansion or load increase. If the financing for energy efficiency components of T&D rehabilitation projects can be disaggregated, they are classified as supply-side energy efficiency.

Oil, Gas, and Coal: Project components that include the exploration, production, refining, storage, T&D of oil, gas, and coal products are classified as Oil, gas, and coal. Oil, gas, and coal are investment projects in upstream and midstream, excluding those for power generation or those in which the purpose is to increase the technical efficiency of fuel delivery. Moreover, closures (for example, mine closures) do not fall under this category.

Reforms and regulation (or other energy): Includes projects where energy policy support is provided, such as energy sector DPLs or other WBG interventions where the form of energy cannot be clearly distinguished, or where multiple energy subsectors are supported within a single project that could not be classified into a specific subsector. Includes energy storage projects, such as pumped hydropower storage.

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Appendix 2: List of Energy Projects Committed in Fiscal 2010

Country Project name Project typeFinancing

source

Energy component

commit. cost (US$ millions)

Sub-Saharan AfricaAFR Region 3A—FELOU Add. Fin. for WAPP

APL2Hydro IDA 85.00

AFR Region 3A:EN 1st Joint Multipurpose Program ID

Other Energy RE 2.10

AFR Region Dibamba Thermal Generation IFC 30.73AFR Region Heidelberg Africa EE—Demand Side IFC 37.40Benin BJ-PRSC 6-Sixth Poverty

Reduction SuppoOther Energy IDA 3.60

Botswana BW:Morupule Generation and Transmission

Other Energy IBRD 12.30

Botswana BW:Morupule Generation and Transmission

Thermal Generation IBRD 46.90

Botswana BW:Morupule Generation and Transmission

Transmission and Distribution

IBRD 77.20

Botswana BW-Morupule B Generation Project

Thermal Generation Guarantees 242.66

Cape Verde Cape Verde—DPL 1/PRSC V Other Energy IDA 1.50Congo, Dem. Rep.

CG-Water, Electricity & Urban Dev. SIL

Other Energy IDA 0.70

Congo, Dem. Rep.

DRC IBI Carbon Sink Bateke (FY10)

Other Energy Carbon Finance

0.80

Côte d’Ivoire CI-EGRG-Econ. Gov. & Recovery 3

Other Energy IDA 22.50

Djibouti DJ-Power Access & Diversification AF

EE—Supply Side IDA 4.00

Djibouti DJ-Power Access & Diversification AF

Transmission and Distribution

IDA 2.00

Ethiopia Additional Financing for Energy Access

EE—Supply Side IDA 137.00

Ethiopia Additional Financing for Energy Access

RE IDA 10.00

Ethiopia Additional Financing for Energy Access

Other Energy IDA 3.00

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Country Project name Project typeFinancing

source

Energy component

commit. cost (US$ millions)

Ethiopia Additional Financing for Energy Access

Transmission and Distribution

IDA 30.00

Ghana GH—Add Fin for the GEDAP (FY10)

Transmission and Distribution

IDA 70.00

Ghana Tullow Ghana Jubilee Floating Production Storage and Offloading Facility

Oil, Gas and Coal MIGA 225.00

Kenya KE-Electricity SIL (2010) RE IDA 120.00Kenya KE-Electricity SIL (2010) Other Energy IDA 11.50Kenya KE-Electricity SIL (2010) Transmission and

DistributionIDA 198.50

Mauritius MU-Infrastructure Project Other Energy IBRD 2.00Mozambique MZ-Energy Dev. & Access Project

(APL-2)EE—Supply Side IDA 9.40

Mozambique MZ-Energy Dev. & Access Project (APL-2)

RE IDA 18.00

Mozambique MZ-Energy Dev. & Access Project (APL-2)

Other Energy IDA 21.09

Mozambique MZ-Energy Dev. & Access Project (APL-2)

Transmission and Distribution

IDA 31.51

Rwanda RW—Sustainable Energy Dev. Proj (GEF)

RE GEF 2.15

Rwanda RW—Sustainable Energy Dev. Proj (GEF)

Other Energy GEF 2.35

Rwanda Rwanda Electricity Access Scale-up Proj.

EE—Demand Side IDA 5.78

Rwanda Rwanda Electricity Access Scale-up Proj.

Other Energy IDA 7.56

Rwanda Rwanda Electricity Access Scale-up Proj.

Transmission and Distribution

IDA 56.67

Rwanda Rwanda: CFL Energy Efficiency EE—Supply Side Carbon Finance

2.28

Rwanda RW-PRSG VI DPL Other Energy IDA 17.39São Tomé and Principe

Sao Tomé—PNRMD: Supplemental

Oil, Gas and Coal IDA 0.40

Senegal SN-Second Sust. & Part. En. Mngt (SIL)

Other Energy IDA 2.72

Senegal COMASEL St Louis Transmission and Distribution

IFC 0.75

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Country Project name Project typeFinancing

source

Energy component

commit. cost (US$ millions)

Sierra Leone SL:GRGC-3 Suppl.Credit (Crisis Window)

Other Energy IDA 1.19

Sierra Leone SL-GRG 3 DPL Other Energy IDA 1.70South Africa ZA:Eskom Investment Support

ProjectEE—Supply Side IBRD 30.00

South Africa ZA:Eskom Investment Support Project

RE IBRD 260.00

South Africa ZA:Eskom Investment Support Project

RE CTF 350.00

South Africa ZA:Eskom Investment Support Project

Thermal Generation IBRD 3039.86

Tanzania TZ:Additional Financing—TEDAP RE IDA 25.00Togo CG Togo Thermal Generation IFC 14.00Zambia ZM-PRSC1 (FY09) Other Energy IDA 5.00East Asia and the Pacific

China China WindPower RE IFC 55.00China CN-CF-Jiangxi Shihutang Navig &

HydroHydro Carbon

Finance2.34

China CN-CF-Yingkou Economic Dev Zone Heating

EE—Supply Side Carbon Finance

8.40

China CN-Energy Efficiency Financing II EE—Demand Side IBRD 100.00China Shuoren EE—Demand Side IFC 3.00China Shuoren QE EE—Demand Side IFC 5.00China Yaohua Glass EE—Demand Side IFC 16.90China Zhongda Hydro II Hydro IFC 25.70EAP Region CRAGF EE—Demand Side IFC 12.50EAP Region CRAGF RE IFC 12.50EAP Region SalamanderJunior Oil, Gas and Coal IFC 9.80EAP Region SalamanderJunior Oil, Gas and Coal IFC 2.80Indonesia ID—Third Infrastructure DPL

(IDPL3)Other Energy IBRD 80.00

Indonesia ID-Additional Financing of JBPSRSP

Other Energy IBRD 30.00

Indonesia Indonesia Climate Change DPL Other Energy IBRD 66.00Lao PDR LA—TA for Hydropower and

Mining sectorsOther Energy IDA 4.97

Lao PDR Lao PDR PRSO 5 Other Energy IDA 2.40Lao PDR LA-Rural Electrification Phase II EE—Demand Side IDA 1.30Lao PDR LA-Rural Electrification Phase II RE IDA 4.00

69

Country Project name Project typeFinancing

source

Energy component

commit. cost (US$ millions)

Lao PDR LA-Rural Electrification Phase II Transmission and Distribution

IDA 14.70

Mongolia Energy Sector Additional Financing

Transmission and Distribution

IDA 12.00

Philippines PEEP-BPI EE—Demand Side IFC 10.56Philippines PEEP-BPI RE IFC 10.56Philippines PH—Chiller Energy Efficiency

ProjectEE—Demand Side GEF 2.60

Philippines Sunpower RE IFC 75.00Thailand SPC Korat 1 RE IFC 1.70Vietnam GTFP Techcombank EE—Demand Side IFC 12.00Vietnam InfraV-SN Power Hydro IFC 1.00Vietnam SEIER Additional Financing Other Energy IDA 6.51Vietnam SEIER Additional Financing Transmission and

DistributionIDA 20.00

Vietnam Techcom EE Loan EE—Demand Side IFC 24.00Vietnam VN Urban Upgrading Project Add.

FinanceTransmission and Distribution

IDA 4.80

Vietnam VN-Power Sector Reform DPO Other Energy IDA 111.80Vietnam VN-Power Sector Reform DPO Other Energy IBRD 200.00Vietnam VN-Project Preparation TA

FacilityOther Energy IDA 15.00

Europe and Central Asia

Armenia AM DPO-1 Other Energy IDA 18.00Armenia Ameriabank RE IFC 15.00Azerbaijan GTFP Demirbank EE—Demand Side IFC 3.64Belarus Belarus Development Policy Loan Other Energy IBRD 20.00Belarus GTFP Belgaz Bank EE—Demand Side IFC 4.90Belarus GTFP BPS Bank EE—Demand Side IFC 3.17Czech Republic

Czech Republic: GIS/AAU Trade EE—Demand Side Carbon Finance

21.00

Czech Republic

Czech Republic: GIS/AAU Trade RE Carbon Finance

9.00

ECA Region Dalkia DH EE—Demand Side IFC 73.74ECA Region Dalkia DH RE IFC 49.16ECA Region GGF EE—Demand Side IFC 15.70ECA Region GGF RE IFC 15.70Kazakhstan GTFP BCC EE—Demand Side IFC 1.00

70

Country Project name Project typeFinancing

source

Energy component

commit. cost (US$ millions)

Kazakhstan MOINAK ELECTRICITY TRANS PROJECT

Transmission and Distribution

IDA 48.00

Kyrgyz Republic

ADDITIONAL FINANCING—VIP 2

Transmission and Distribution

IDA 0.64

Kyrgyz Republic

EEAP—ADDITIONAL FINANCING

EE—Supply Side IDA 4.00

Moldova Economic Recovery DPO Other Energy IDA 4.00Moldova UF Moldova II EE—Supply Side IFC 9.40Moldova UF Moldova II Transmission and

DistributionIFC 5.60

Russian Federation

Asteros Group EE—Demand Side IFC 2.50

Russian Federation

Avtokran EE—Demand Side IFC 17.90

Russian Federation

Borets EE—Demand Side IFC 33.10

Russian Federation

CBMA + B Loan EE—Demand Side IFC 40.00

Russian Federation

CI RREEF-Agri EE—Demand Side IFC 10.00

Russian Federation

Energomera EE—Demand Side IFC 5.00

Russian Federation

GTFP ATB Bank EE—Demand Side IFC 0.61

Russian Federation

GTFP MDM Bank EE—Demand Side IFC 23.84

Russian Federation

GTFP RosEvropBank EE—Demand Side IFC 4.60

Russian Federation

Kulon Yugros EE—Demand Side IFC 0.43

Russian Federation

Vyksa II EE—Demand Side IFC 22.20

Serbia PFDPL 2 Other Energy IBRD 10.00Tajikistan Energy Emergency—Additional

FinancingOther Energy IDA 15.00

Turkey AkEnerji Hydro IFC 75.00Turkey ESES DPL2 Other Energy IBRD 455.00Turkey FinansL EE EE—Demand Side IFC 30.00Turkey FinansL EE RE IFC 10.00

71

Country Project name Project typeFinancing

source

Energy component

commit. cost (US$ millions)

Turkey YKL Health,EE/RE EE—Demand Side IFC 10.00Turkey YKL Health,EE/RE RE IFC 10.00Ukraine HYDROPOWER—ADDITIONAL

FINANCINGHydro IBRD 60.00

Uzbekistan ENERGY EFF—INDUST ENTERPRISES

EE—Demand Side IBRD 25.00

Latin America and the Caribbean

Argentina Diadema III Oil, Gas and Coal IFC 30.00Argentina PAE G San Jorge Oil, Gas and Coal IFC 19.00Argentina PAE G San Jorge Oil, Gas and Coal IFC 31.00Brazil BR (AF) Bahia State Integ. Pr

RuralTransmission and Distribution

IBRD 3.00

Brazil Constellation Oil, Gas and Coal IFC 103.00Brazil ELETROBRAS Distribution

RehabilitationEE—Supply Side IBRD 475.00

Brazil ELETROBRAS Distribution Rehabilitation

Other Energy IBRD 20.00

Brazil GTFP ABC Brazil RE IFC 28.80Brazil GTFP Banco Fibra RE IFC 3.96Brazil GTFP Banco Pine RE IFC 75.00Brazil GTFP BIC Banco RE IFC 4.40Brazil GTFP Daycoval RE IFC 37.00Brazil GTFP Indusval RE IFC 2.20Chile CTA Thermal Generation IFC 0.00Colombia Century CaruSwap RE IFC 0.35Colombia Century GuanSwap RE IFC 0.35Colombia Termo Rubiales Thermal Generation IFC 16.50Colombia Termoflores EE—Demand Side IFC 52.50Costa Rica Promerica CR EE EE—Demand Side IFC 3.00Costa Rica Promerica CR EE RE IFC 3.00Dominican Republic

Banco BHD—EE EE—Demand Side IFC 20.00

Dominican Republic

DO Prog.PubFinance & Social Sector DPL

Other Energy IBRD 67.50

Dominican Republic

Linea Clave Transmission and Distribution

IFC 5.00

El Salvador SV Local Government Strengthening Project

Other Energy IBRD 8.80

Guatemala Banco Gyt EE—Demand Side IFC 3.99

72

Country Project name Project typeFinancing

source

Energy component

commit. cost (US$ millions)

Guatemala Lapco EE—Demand Side IFC 4.00Haiti E-Power Thermal Generation IFC 16.00Haiti HT (AF) Electricity Loss

Reduction ProjectOther Energy IDA 5.00

Haiti HT Solar Autonomous Lighting MSP

RE GEF Med Size

0.50

LCR Region Geopark RI III Oil, Gas and Coal IFC 0.60LCR Region Geopark RI III Oil, Gas and Coal IFC 1.40Mexico Calidra III RE IFC 5.00Mexico EURUS RE IFC 71.00Mexico MX Framework for Green Growth

DPLOther Energy IBRD 751.88

Mexico Optima Energia EE—Demand Side IFC 10.00Mexico WCAPH EQ EE—Demand Side IFC 7.80Mexico WCAPH EQ RE IFC 7.80Nicaragua Banco de Finanzas EE—Demand Side IFC 4.49Panama GTFP Multibank RE IFC 0.31Panama Pando Montelirio RE IFC 45.00Paraguay Banco Continental EE—Demand Side IFC 0.39Paraguay Banco Regional EE—Demand Side IFC 0.69Paraguay BBVA Paraguay EE—Demand Side IFC 1.58Peru BPZ Convertible Oil, Gas and Coal IFC 9.94Peru BPZ RI III Oil, Gas and Coal IFC 7.60St. Lucia GTFP Bk St Lucia EE—Demand Side IFC 1.21Uruguay UY UTE 10 MW Wind Power

Farm ProjectRE Carbon

Finance0.70

Middle East and North Africa

Egypt, Arab Rep.

EG-Giza North Power Project Other Energy IBRD 0.51

Egypt, Arab Rep.

EG-Giza North Power Project Thermal Generation IBRD 600.00

Egypt, Arab Rep.

EG-Wind Power Development Other Energy CTF 1.75

Egypt, Arab Rep.

EG-Wind Power Development Transmission and Distribution

IBRD 70.00

Egypt, Arab Rep.

EG-Wind Power Development Transmission and Distribution

CTF 148.25

Egypt, Arab Rep.

ERC Refinery Oil, Gas and Coal IFC 120.00

73

Country Project name Project typeFinancing

source

Energy component

commit. cost (US$ millions)

Jordan Tamweelcom EE—Demand Side IFC 1.50Jordan Tamweelcom RE IFC 1.50Jordan Zara CPLP EE—Demand Side IFC 1.80MNA Region

Kuwait Energy Oil, Gas and Coal IFC 50.00

Morocco ARIF RE IFC 1.17Saudi Arabia Saudi Orix SF EE—Demand Side IFC 20.00Tunisia TN-CBF Sidi Daoud Wind Farm

ProjectRE Carbon

Finance5.00

West Bank and Gaza

GZ-Municipal Development Program

EE—Demand Side SF 0.70

Yemen, Rep. RY-Loss Reduction (CDM) EE—Supply Side Carbon Finance

28.00

South Asia

Afghanistan National Solidarity Program III Other Energy IDA 5.60Bangladesh GPOBA: Bangladesh Solar Home

SystemsRE RE 7.20

Bangladesh Investment Promotion &Financing Facility

EE—Demand Side IDA 25.70

Bangladesh Renewable Energy (Additional Financing)

EE—Demand Side IDA 30.00

Bangladesh Renewable Energy (Additional Financing)

RE IDA 100.00

India 29.7MW Wind Power Project Karnataka, IN

RE Carbon Finance

13.59

India Apollo Tyres III EE—Demand Side IFC 30.00India Applied Solar RE IFC 15.43India Auro Mira Biosys RE IFC 6.20India Auro Mira Equity Transmission and

DistributionIFC 7.72

India Azure Power CCD RE IFC 5.50India Azure Power CCPS RE IFC 4.50India Bhilwara Energy RE IFC 23.90India Cairn India II EE—Demand Side IFC 90.00India Cairn India II Oil, Gas and Coal IFC 50.00India Cairn India II Oil, Gas and Coal IFC 200.00India CCIL CPLP EE—Demand Side IFC 3.90India Egy Effcy at SMEs EE—Demand Side GEF 11.30

74

Country Project name Project typeFinancing

source

Energy component

commit. cost (US$ millions)

India Energy-Efficient Streetlighting EE—Demand Side Carbon Finance

8.12

India Haryana Power System Improv Project

Transmission and Distribution

IBRD 330.00

India Husk Power RE IFC 0.35India IDFC CC Loan EE—Demand Side IFC 37.50India IDFC CC Loan RE IFC 37.50India IIFCL—India Infras Finance

Company LtdThermal Generation IBRD 87.90

India IIFCL—India Infras Finance Company Ltd

Thermal Generation IBRD 87.90

India IIFCL—India Infras Finance Company Ltd

Thermal Generation IBRD 87.90

India IIFCL—India Infras Finance Company Ltd

Transmission and Distribution

IBRD 35.05

India Jain-II EE—Demand Side IFC 15.00India Kalyani Gerdau EE—Demand Side IFC 6.40India Kanoria Vizag EE—Demand Side IFC 0.08India Karnataka Municipal Water

Energy EfficieEE—Demand Side Carbon

Finance0.66

India MSECTL EE—Supply Side IFC 50.00India Petronet Oil, Gas and Coal IFC 0.00India POWERGRID V Transmission and

DistributionIBRD 1000.00

India Snowman II RE IFC 0.27India Vicat Sagar EE—Demand Side IFC 8.90India WEG EE—Demand Side IFC 25.00Maldives Universal CPLP EE—Demand Side IFC 2.50Nepal Butwal Power Co RE IFC 6.50Pakistan InfraV-Mashal Oil, Gas and Coal IFC 3.00Pakistan Laraib Energy Hydro IFC 35.00Peru Calidda Peru Oil, Gas and Coal IFC 50.00SAR Region GEF SACEF EE—Demand Side IFC 5.00SAR Region GEF SACEF RE IFC 5.00Sri Lanka NDB PADGO RE IFC 12.60

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Appendix 3: List of AAA Delivered in Fiscal 2010

Region Country Proj ID Proj Name Prod Line Output TypeEnergy ShareIncl Supp (#)

AFR Cote d'Ivoire P096223 Investment Climate Survey Report ESW Report 0.2AFR Sudan P097252 Sudan ICA (09) ESW Report 0.2AFR Southern AfricaP099315 3S-ESMAP Indicative Gen & Transm Expans ESW Report 1.0AFR Africa P103333 3A-Zambezi Basin Multi-Sector Inv (FY10) ESW Report 0.3AFR Africa P107099 3A-WA Mineral Sector Strategic (FY09) ESW Report 0.3AFR Zambia P107331 ZM-Water Resources Assistance (FY10) ESW Report 0.2AFR Madagascar P107379 MG-ICA Policy Note ESW Policy Note 0.2AFR Sudan P107481 Rev of Forest Policies&Inst in Post-conf ESW Report 0.2AFR Africa P108965 Regional Implications of Climate Change ESW Report 0.2AFR Africa P109700 SSA Downstream Petroleum Effi ciency StudESW Report 1.0AFR Burkina Faso P111378 BF-CEM (FY10) ESW Report 0.1AFR Africa P111483 3A-ESMAP Regulating Elec.Trading in SADC ESW Report 0.6AFR Africa P111496 3A-Regional ICA - Southern Africa Region ESW Report 0.2AFR Benin P113144 BJ-Country Environ. Assessment ESW Report 0.2AFR Mauritius P113332 MU-ICA (FY10) ESW Report 0.2AFR Lesotho P113430 LS-ICA Policy Notes ESW Policy Note 0.2AFR Zimbabwe P114686 ZW-Policy Support ESW Policy Note 0.1AFR Africa P115200 Africa Regional Study on Biofuels ESW Report 0.5AFR Africa P117897 Regulatory Approaches to LED and Mining ESW Report 1.0AFR Mauritania P118048 MR-Multi Sector Stock Taking/Re-engagemeESW Policy Note 0.3AFR Liberia P118478 Liberia Energy Policy ESW Report 1.0AFR Mozambique P118628 MZ: Growth Poles & Economic Zones ESW Policy Note 0.3AFR Zimbabwe P120822 ZW: Diagnostic Study on Minerals License ESW Report 1.0AFR Liberia P088679 LR-MultiSec Grant Infrstrctr TA Non-Lend Institutional Development Plan 0.3AFR Nigeria P090895 NG-EITI Mgt/Gas & Oil Sec Policy TA Non-Lend Institutional Development Plan 1.0AFR Congo, Republic ofP102338 Congo - Oil Sector Review TA Non-Lend "How-To" Guidance 1.0AFR Africa P106178 3A-ESMAP Lighting Africa TA Non-Lend "How-To" Guidance 1.0AFR Guinea P108841 GN-ESMAP SMEs in Rural Electr. (FY10) TA Non-Lend "How-To" Guidance 1.0AFR Zambia P112680 Zambia EITI++ Scoping Study TA Non-Lend Client Document Review 1.0AFR Africa P112760 AFCW1: Inst Strengt & Growth Corridor TA TA Non-Lend Institutional Development Plan 0.2AFR Mozambique P113170 MZ-Environmental Policy Dialogue (FY10) TA Non-Lend Institutional Development Plan 0.3AFR Africa P113599 LED Lights Quick Screening Methodology TA Non-Lend "How-To" Guidance 1.0AFR Africa P113808 LA Dev. Mrktplace Awardees Supervision TA Non-Lend Client Document Review 1.0AFR Congo, Democratic Republic ofP113809 DRC: Env. & Soc. Portfolio review TA Non-Lend Institutional Development Plan 0.2AFR Africa P114237 PPP Capacity Building and Advisory TA Non-Lend "How-To" Guidance 0.3AFR Mauritius P115687 MU-Safeguard Country Systems TA Non-Lend Client Document Review 0.3AFR Rwanda P118402 Rwanda: Petroleum Exploration Cap Bldg TA Non-Lend "How-To" Guidance 1.0AFR Africa P118594 3A-Mining Sector Support (FY10) TA Non-Lend Knowledge-Sharing Forum 1.0AFR Ghana P119760 depeGH: Hydrocarbon Regulatory Advisory TA Non-Lend Client Document Review 1.0AFR Africa P120980 Dissemination of Best Practice in Infras TA Non-Lend Knowledge-Sharing Forum 0.4EAP China P099544 CN - Energy Intensity Strategy ESW Policy Note 1.0EAP Papua New GuineaP102834 PNG Economic Report ESW Policy Note 0.3EAP China P103624 Coal Power Country Study ESW Report 1.0EAP Pacific Islands P110315 Pacific Infrastructure Diagnostics AAA ESW Report 0.3EAP Indonesia P114181 Papua Infra Strategy and Prioritization ESW Report 0.3EAP Thailand P117844 Thailand Economic Monitor FY2010 ESW Report 0.1EAP Philippines P118583 Philippines Discussion Notes (2010) ESW Policy Note 0.2EAP Mongolia P118704 MN-Ger Area Development Strategy ESW Report 0.1EAP Vietnam P118840 VN-Policy for Financing Infra PPPs II ESW Report 0.3EAP Philippines P119502 PH Scale Up - Climate Change ESW Policy Note 0.3EAP Mongolia P100112 MN-Mitigation Sector Reform & Tariff Adj TA Non-Lend "How-To" Guidance 0.6EAP China P104768 CN- Biomass Cogeneration Development TA Non-Lend "How-To" Guidance 1.0

76

Region Country Proj ID Proj Name Prod Line Output TypeEnergy ShareIncl Supp (#)

EAP East Asia and PacificP105117 Regional Capacity Dev for Risk Mgt POPs TA Non-Lend "How-To" Guidance 0.2EAP Papua New GuineaP110036 Comprehensive Framework for EI in PNG TA Non-Lend "How-To" Guidance 1.0EAP Lao People's Democratic RepublicP110629 LA-Power tothe women-concerns in ENhydTA Non-Lend "How-To" Guidance 0.6EAP Solomon IslandsP112555 SB - PPP in Renewable Energy TA Non-Lend Institutional Development Plan 1.0EAP Philippines P113939 PH - Strategic Approach to CC Strategy TA Non-Lend "How-To" Guidance 0.5EAP Cambodia P114368 Cambodia: Rural Energy Strategy TA Non-Lend "How-To" Guidance 1.0EAP Cambodia P115903 Cambodia-Oil & Gas Sector Dialogue TA Non-Lend "How-To" Guidance 1.0EAP Thailand P118595 Thailand CDP for INFRA and CC TA Non-Lend "How-To" Guidance 0.3EAP Lao People's Democratic RepublicP120267 Lessons from Lao Rural Electrification TA Non-Lend Knowledge-Sharing Forum 1.0ECA Europe and Central AsiaP101817 ECA ENERGY FLAGSHIP STUDY ESW Report 1.0ECA Europe and Central AsiaP105603 ESMAP:Affordable Gas-Fired District Heat ESW Report 1.0ECA South Eastern Europe and BalkansP110548 SEE REGIONAL ENERGY EFFICIENCY & RENEWAESW Report 1.0ECA Armenia P110724 Armenia - Country Environmental Analysis ESW Report 0.2ECA Serbia P110742 Note on Municipal Public Utiity Companie ESW Policy Note 0.1ECA Montenegro P112552 PPP Options for Electricity Generation ESW Report 1.0ECA Tajikistan P113068 Prog. Country Economic Memorandum ESW Report 0.2ECA Moldova P113570 DISTRICT HEATING RESTRUCTURING ESW Report 0.2ECA Turkey P113660 Growth CEM ESW Report 0.2ECA Kazakhstan P113823 ICA (JERP) ESW Report 0.2ECA Central Asia P090077 WATER/ENERGY DIALOG/TA TA Non-Lend "How-To" Guidance 0.8ECA Kazakhstan P104941 Kazakhstan EITI - JERP TA Non-Lend "How-To" Guidance 1.0ECA Macedonia, former Yugoslav Republic ofP105057 ENERGY POLICY NOTE TA Non-Lend Client Document Review 1.0ECA Bulgaria P107982 REGULATION OF RENEWAL ENERGY TA Non-Lend "How-To" Guidance 1.0ECA Russian FederationP108022 Policy Dialogue and TA on PPP TA Non-Lend "How-To" Guidance 0.2ECA Central Asia P109979 Vakhsh River Basin Development TA Non-Lend Client Document Review 1.0ECA Hungary P110874 ESMAP: SMART METERING TA Non-Lend "How-To" Guidance 1.0ECA South Eastern Europe and BalkansP112423 SEE Wholesale Market Opening TA Non-Lend "How-To" Guidance 1.0ECA Azerbaijan P112565 SOCAR Gas Flaring Reduction (AGRP Plan) TA Non-Lend "How-To" Guidance 1.0ECA Kazakhstan P112735 Public-Private Partnerships TA (JERP) TA Non-Lend "How-To" Guidance 0.2ECA Turkey P112764 Energy Effi ciency Assessment TA Non-Lend "How-To" Guidance 1.0ECA Russian FederationP114816 Environmental Liabilities TA Non-Lend "How-To" Guidance 0.4ECA Central Asia P115094 Central Asia Disaster Mgmt & Hydromet TA Non-Lend "How-To" Guidance 0.2ECA Russian FederationP115372 ENERGY EFFICIENCY TA Non-Lend "How-To" Guidance 1.0ECA Ukraine P116729 CTF Investment Plan TA Non-Lend Client Document Review 1.0ECA Kazakhstan P118881 JERP FISCAL RISK MGMT in PPPs TA Non-Lend "How-To" Guidance 0.3ECA Albania P118932 Increasing Transparency in ASM in Albani TA Non-Lend "How-To" Guidance 1.0ECA Kazakhstan P119579 JERP - Improvement of Nat'l. Fund Mgmt. TA Non-Lend "How-To" Guidance 0.1ECA Kazakhstan P119803 Kazakhstan EITI - JERP TA Non-Lend "How-To" Guidance 1.0LCR Central AmericaP095704 6C Crime & Violence ESW Report 0.1LCR Nicaragua P101330 NI CEA ESW Report 0.3LCR Brazil P101889 BR Amazon Regional Programmatic ESW Policy Note 0.3LCR Brazil P105702 BR CCH Low Carbon Country Case Study ESW Report 0.8LCR Latin America P108939 6L(CCH) Social Impact of Climate Change ESW Report 0.4LCR Peru P109969 PE (CCH)Overcoming Barriers to HydropwerESW Report 1.0LCR Central AmericaP110201 6C(CCH) Program. Energy Study ESW Report 1.0LCR Peru P111012 PE Natural Gas Study ESW Report 1.0LCR Argentina P112070 AR Logistics II AAA ESW Report 0.1LCR Latin America P114009 6L Electricity Security ESW Report 1.0LCR Latin America P114322 Flagship: Commodities in LAC ESW Report 0.4LCR Dominican RepublicP114677 DO Policy Notes ESW Policy Note 0.2LCR Nicaragua P103865 NI-Improv. Small-Scale Egy Supply TA Non-Lend "How-To" Guidance 1.0LCR Bolivia P105119 BO Strengthening Small Scale Offgrid TA Non-Lend Knowledge-Sharing Forum 1.0LCR Colombia P108945 CO Policy Options for Renewables TA Non-Lend Knowledge-Sharing Forum 1.0

77

Region Country Proj ID Proj Name Prod Line Output TypeEnergy ShareIncl Supp (#)

LCR Mexico P114892 MX Energy Sector MoU TA Non-Lend Client Document Review 1.0LCR Latin America P115422 Renewable Energy-Implementing AgenciesTA Non-Lend Client Document Review 1.0LCR Brazil P115550 BR SNTA Nova Eletrobras TA Non-Lend Client Document Review 1.0LCR Latin America P118014 Impact of Credit Crisis on Energy in LAC TA Non-Lend "How-To" Guidance 1.0LCR Latin America P121819 Spring Meeting Round Table TA Non-Lend Knowledge-Sharing Forum 1.0MNA Djibouti P107067 DJ-Energy Sector Master Plan ESW Policy Note 1.0MNA Middle East and North AfricaP113903 AWI: 5M-Energy Integration Study ESW Policy Note 1.0MNA Algeria P104074 DZ-RTA SONATRACH Procurement TA Non-Lend "How-To" Guidance 0.2MNA Morocco P108120 ESMAP:MA-Energy Supply Strategy TA Non-Lend "How-To" Guidance 1.0MNA Yemen, Republic ofP112919 RY-Energy Subsidy Reform TA TA Non-Lend "How-To" Guidance 0.7MNA West Bank and GazaP113010 GZ-Energy Sector TA TA Non-Lend "How-To" Guidance 1.0MNA Lebanon P113858 LB - Support to Impl of Electricity Sect TA Non-Lend "How-To" Guidance 1.0MNA Kuwait P113902 KW BOT: PPP Capacity Development SupportTA Non-Lend "How-To" Guidance 0.3MNA Yemen, Republic ofP114431 RY-Inst Framework for Energy Effi ciency TA Non-Lend Institutional Development Plan 1.0MNA Jordan P114958 JO-CDM TA for Jordan TA Non-Lend "How-To" Guidance 0.2MNA Middle East and North AfricaP116206 5M-Assess Energy Sect.Credit Constraints TA Non-Lend "How-To" Guidance 1.0MNA Middle East and North AfricaP116216 Maghreb-Vulnerability Assessment-MA & TNTA Non-Lend "How-To" Guidance 1.0OTH World P109856 Survey - Environmental Mgmt Systems ESW Report 1.0OTH World P109896 Notes on Cities and Climate Change ESW Policy Note 0.1OTH World P110637 Improving Water Mgmt in Peri-Urban Ag. ESW Report 0.1OTH World P111583 Decommissioning of Oil Fields and Mines ESW Report 0.2OTH World P113313 Evaluation of SEA pilot program ESW Report 0.2OTH World P115284 Climate and Finance Policy Notes Series ESW Policy Note 0.2OTH World P116023 Financing Instruments for CC Mitigation ESW Policy Note 0.7OTH World P117788 Energy Use, Market, and CO2 Emissions ESW Report 1.0OTH World P118066 LKD: Allocation of Petroleum Rights ESW Report 1.0OTH World P118306 Analysis of WB carbon finance lessons ESW Report 0.2OTH World P120466 G20 Energy Subsidy Agenda ESW Report 1.0OTH World P115227 Carbon Expo 09- CFA Global Activities TA Non-Lend Knowledge-Sharing Forum 0.3OTH World P115928 CC support to G20, G8 & other processes TA Non-Lend "How-To" Guidance 0.4OTH World P116055 CDM Stakeholders Consultation WorkshopsTA Non-Lend Knowledge-Sharing Forum 0.5OTH World P116098 CIF Partnership Forum TA Non-Lend Knowledge-Sharing Forum 0.3OTH World P116778 FY10 carbon Expo TA Non-Lend Knowledge-Sharing Forum 0.5OTH World P116831 EAPIRF II TA Non-Lend Knowledge-Sharing ForumOTH World P116934 Cities,CC & Finance- Symposium TA Non-Lend Knowledge-Sharing Forum 0.8OTH World P116948 Experiences with Mining Foundations TA Non-Lend Knowledge-Sharing Forum 1.0OTH World P118104 Knowledge platform on climate finance TA Non-Lend "How-To" Guidance 0.4OTH World P119461 Bali Breakfast Series - Annual Meetings TA Non-Lend Knowledge-Sharing Forum 1.0OTH World P120792 Conference on Oil and Gas in Federal Sys TA Non-Lend Knowledge-Sharing Forum 0.6OTH World P121216 EFO Korea - Market readiness workshops TA Non-Lend Knowledge-Sharing Forum 1.0OTH World P121664 Bali Breakfast for Spring 2010 TA Non-Lend Knowledge-Sharing Forum 1.0OTH World P122693 CSP Knowledge Sharing Forum TA Non-Lend Knowledge-Sharing Forum 1.0SAR India P101555 Low Carbon Growth ESW Report 0.3SAR India P110068 Clim Chng & Coastal Adapttn ESW Report 0.2SAR Nepal P111242 Assess. Social Impacts of Rural Energy ESW Report 1.0SAR Sri Lanka P111245 Environmentally Sustainable Power Dev. ESW Report 1.0SAR Afghanistan P113541 Policy Notes for the New Government ESW Policy Note 0.2SAR South Asia P119698 South Asia Climate Change Shared Views ESW Report 0.3SAR Bangladesh P083898 BD Addressing IAP TA Non-Lend Institutional Development Plan 0.4SAR Afghanistan P102672 AF Land Acquisition & Resettl TA Non-Lend Institutional Development Plan 0.2SAR Pakistan P105916 PK Environment Program TA Non-Lend Knowledge-Sharing Forum 0.1SAR Pakistan P106948 Pakistan PPP NLTA TA Non-Lend "How-To" Guidance 0.3SAR Bangladesh P108789 Power Sector Governance TA Non-Lend "How-To" Guidance 1.0SAR India P122385 Village Energy Security Biomass TA Non-Lend Institutional Development Plan 1.0

78

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