SCALING‐UPRENEWABLEENERGYPROGRAM(SREP)

INVESTMENTPLANFORHAITI

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ClimateInvestmentFunds

SCALING‐UPRENEWABLEENERGYPROGRAM(SREP)

SREPInvestmentPlanforHaiti

APRIL 15, 2015

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CONTENTS

AcronymsandAbbreviations..............................................................................................................................5 Foreword......................................................................................................................................................................7 ExecutiveSummary.................................................................................................................................................8 1  CountryContext:EnergyStatusandPolicies..................................................................................18 1.1  Haiti’sDevelopmentStatus..........................................................................................................................19 1.2  EnergyConsumption.......................................................................................................................................20 1.3  ElectricityGeneration,Transmission,andDistribution...................................................................21 1.4  ElectricitySectorInstitutionalFramework...........................................................................................23 1.5  RoleofthePrivateSector..............................................................................................................................24 1.6  EnergyPolicyandStrategicFramework................................................................................................25 1.7  TheRuralElectrificationChallenge..........................................................................................................28 1.8  Energyasanengineofruraldevelopmentandgenderequity......................................................30 

2  RenewableEnergySectorContext.......................................................................................................35 2.1  RenewablesinHaiti’sEnergySector........................................................................................................36 2.2  BarrierstoDevelopingRenewablesandMeasurestoMitigateThem.......................................42 

3  RenewableEnergyNationalPlanningandMethodologiesforAssessingEconomicViability......................................................................................................................................................................45 3.1  Grid‐connectedRenewables........................................................................................................................47 3.2  Off‐gridRenewables........................................................................................................................................50 

4  PrioritizingStrategicInvestmentAreas............................................................................................54 4.1  RankingInvestments......................................................................................................................................55 

5  ResponsivenesstoSREPCriteria..........................................................................................................61 6  SREPforHaiti:ProgramDescription..................................................................................................64 6.1  ProgramObjectivesandExpectedOutcomes.......................................................................................65 6.2  ProgramRationaleandDesign...................................................................................................................65 6.3  ProposedSREPInvestmentPlanComponents.....................................................................................66 6.4  ProgramCo‐benefits.......................................................................................................................................72 

7  FinancingPlan...............................................................................................................................................73 8  InstitutionalFrameworkforImplementation................................................................................75 9  EnvironmentalandSocialAspects.......................................................................................................78 10  MonitoringandEvaluation,andKnowledgeManagement.......................................................81 10.1  StrengtheningMonitoringandEvaluation.............................................................................................82 10.2  Strengtheningknowledgemanagementandlessonssharing........................................................82 10.3  ResultsFramework..........................................................................................................................................83 10.4  SE4ALLMulti‐tierFrameworkforMeasuringEnergyAccess.......................................................84 

11  RiskAssessment...........................................................................................................................................86 AnnexI.ComponentBriefs................................................................................................................................91 ComponentBrief1.RenewableenergyforthePort‐au‐Princemetropolitanarea..............................92 ComponentBrief2.RenewableenergyforIsolatedGrids—Port‐de‐PaixDemonstrationProject96 ComponentBrief3.Off‐GridElectricityforProductive,SocialandHouseholdUses........................100 ComponentBrief4.Smallhydropowerrehabilitation..................................................................................108 ComponentBrief5.BuildingEnablingFramework,CapacitiesandSkillsforRenewableEnergyScale‐up.............................................................................................................................................................................111 

AnnexII.AssessmentofCountry’sAbsorptiveCapacity....................................................................115 Macroeconomicandfiscalsituation......................................................................................................................116 Government’sabsorptioncapacityintheElectricitysector.......................................................................116 

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AnnexIII.StakeholdersConsultations.......................................................................................................119 AnnexIV.RenewableEnergyBusinessModelsinHaiti.....................................................................129 HaitiBusinessCaseExample1—EmergingpartnershipbetweentheMFIFonkozeandthelanterndistributorMicamaSoley............................................................................................................................................130 HaitiBusinessCaseExample2—Re‐VoltserviceapproachwithindividualPVsystems...............130 HaitiBusinessCaseExample3—Off‐gridelectrificationforimprovedpublicservices..................131 HaitiBusinessCaseExample4—EarthSparkmicrogrid...............................................................................131 HaitiBusinessCaseExample5—AruralCooperative...................................................................................132 

AnnexV.ProjectinformationdocumentfortheProposedCTF‐supportedModernEnergyforAllProject........................................................................................................................................................134 AnnexVI.AdditionalDevelopmentActivities.........................................................................................144 AnnexVII.EDH—Maingenerationanddistributionassets..............................................................151 AnnexVIII.IndependentReview..................................................................................................................153 Introduction.....................................................................................................................................................................155 SpecificCommentsonInvestmentPlan...............................................................................................................156 CompliancewithSREPGoals....................................................................................................................................161 CommentsandRecommendations........................................................................................................................162 

AnnexIX.MDBRequestforPaymentofImplementationServicesCosts...................................173 Sources.....................................................................................................................................................................177 

FIGURESFigure1.Haiti’s10administrativedepartments.....................................................................................19 Figure2.Poverty(blue)andextremepoverty(green)bydepartment.........................................20 Figure3.Currentsubstitutableenergyexpenditures=minimumWTP(averagemonthlyinArtiboniteandPort‐au‐Prince).......................................................................................................................31 Figure4.Haiti’srenewableenergypotential............................................................................................36 Figure5.Haiti’sannualhydropowerproduction....................................................................................37 Figure6.Seasonalvariabilityofhydropower...........................................................................................37 Figure7.Haitisugarcanebiomasspotential.............................................................................................38 Figure8.Mapofwindpotential......................................................................................................................39 Figure9.Typicaldiurnalwindenergyprofile..........................................................................................40 Figure10.Solarenergyresourcemap.........................................................................................................41 Figure11.EDHrenewableenergysupplycurve.....................................................................................47 Figure12.REgenerationcostvs.thermalEDHandcogeneration..................................................48 Figure13.Spatialdistributionofenergysurveyrespondents..........................................................50 FigureA1.ThemainexistingelectricitygenerationanddistributionassetsinHaiti.............92 FigureA2.Percentageofpopulationpoorandextremepoorbydepartment............................96 FigureA3.Port‐de‐Paixanditsnonoperationalwindplant...............................................................97 FigureA4.WindresourcemapofNorth‐Westdepartment................................................................97 FigureA5.SynergiesbetweenSREP,IDA,CTF,andIFCinstruments...........................................104 

TABLESTable1.FivecomponentsinSREPHaiti’sInvestmentPlan................................................................14 Table2.SREPIndicativeFinancingPlan.....................................................................................................16 

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Table3.EDHgrids—capacityandcustomers...........................................................................................22 Table4.Penetrationofrenewableenergytechnologiesbydepartmentandbyrural/urbansplit.............................................................................................................................................................................29 Table5.Currentsubstitutableenergyexpenditures=minimumWTP(averagemonthlybydepartment).............................................................................................................................................................31 Table6.Estimatesforremaining“additional”pico‐tosmallhydropowerpotentialbydepartment...............................................................................................................................................................38 Table7.Mainbarrierstorenewableenergydevelopmentandmitigationmeasures............42 Table8.Off‐gridelectrificationpotential....................................................................................................52 Table9.Comparativeanalysisofon‐gridREbusinessmodels(earlystageofanalysis).......57 Table10.Potentialon‐andoff‐gridREbusinessmodels(earlystageofanalysis)..................58 Table11.RankingoffinalselectionofSREPHaitiprojects................................................................59 Table12.FiveproposedSREPcomponents...............................................................................................60 Table13.SummaryofprogramresponsivenesstoSREPcriteria....................................................62 Table14.PackagingofcomponentsintotheWorldBankandIFCprojects................................71 Table15.SREPfinancing,co‐financing,andprivatefinancingleverage.......................................74 Table16.SREPresultsframework................................................................................................................84 Table17.Mainidentifiedrisksandmitigationmeasures....................................................................87 TableA1.PopulationandpovertyrateinNorth‐Westdepartment................................................96 Boxtable1.Off‐gridelectrificationpotential..........................................................................................102 TableA2.Smallhydropowerrehabilitationplan..................................................................................108 TableA3.Estimatesforremaining“additional”pico‐to‐smallhydropowerpotentialinHaitibyregion..................................................................................................................................................................109 TableA4.HaitiSREPinvestmentplan:Matrixofcommentsandanswers................................127 

BOXESBox1.ThegovernmentprogramforreducingEDHlosses.................................................................28 Box2.Promotingfemaleentrepreneurs:MicamaSoley.......................................................................32 Box3.Promotingfemaleentrepreneurs:EarthSpark...........................................................................33 Box4.Generalrecommendationsforgrid‐connectedrenewables.................................................49 Box5.Estimatingthepotentialformini‐grids.........................................................................................51 Box6.Generalrecommendationsforoff‐gridrenewables.................................................................52 Box8.BuildingM&EcapacityforMTPTCandEDH................................................................................82 Box9.WorldBank’ssystematiccountrydiagnostic,February2015.............................................83 BoxA1.Urbanoff‐gridmarketpotential...................................................................................................101 BoxA2.Electricityforruraldevelopment................................................................................................102 

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ACRONYMSANDABBREVIATIONSBME BureaudesMinesetdel'Energie(BureauofMinesandEnergy)CIAT ComitéInterministérield'AménagementduTerritoire (Interministerial

CommitteeforRegionalDevelopment)CTF CleanTechnologyFundE&S EnvironmentalandSocialECVMAS EnquêtesurlesConditionsdeViedesMénagesaprèsleSéisme(Post‐

EarthquakeHouseholdLivingConditionsSurvey)EDH Électricitéd’HaïtiESIA EnvironmentalandSocialImpactAssessmentESMP EnvironmentalandSocialManagementPlanFI FinancialIntermediaryGDP GrossDomesticProductIDA InternationalDevelopmentAssociationIDB Inter‐AmericanDevelopmentBankIEA InternationalEnergyAgencyIFC InternationalFinanceCorporationIP InvestmentPlanIPP IndependentPowerProducerskW KilowattkWh Kilowatt‐hourLAC LatinAmericaandtheCaribbeanLNG LiquefiedNaturalGasM&E Monitoring&EvaluationMDB MultilateralDevelopmentBankMCI MinistèreduCommerceetdel'Industrie(MinistryofCommerceand

Industry)MDE Ministèredel'Environnement(MinistryofEnvironment)MEF Ministèredel'ÉconomieetdesFinances(MinistryofEconomyand

Finance)MTPTC MinistèredesTravauxPublics,TransportsetCommunications(Ministry

ofPublicWorks,TransportationandCommunications)MV MediumVoltageMW MegawattMWp Megawatt‐PeakNGO NongovernmentalOrganizationO&M OperationandMaintenancePPA PowerPurchaseAgreementPRELEN RebuildingEnergyInfrastructureandAccessProjectPREPSEL ProjetdeRéductiondePertesdansleSecteurElectriquePV PhotovoltaicRAP ResettlementActionPlanRE RenewableEnergySE4All SustainableEnergyforAllSME SmallandMediumEnterpriseSPDH StrategicPlanfortheDevelopmentofHaitiSREP Scaling‐upRenewableEnergyProgramTA TechnicalAssistancetoe TonsofOilEquivalent

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UN UnitedNationsUNEP UnitedNationsEnvironmentProgrammeUSAID UnitedStatesAgencyforInternationalDevelopmentvRE VariableRenewableEnergyWTP WillingnesstoPay

 

 

 

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FOREWORD

TheRepublicofHaiti isendowedwithvastandvarious renewableenergy potential resources. Exploiting this vast repository ofalternativeenergysourcesisacrucialstepinthegovernment’sgoalof becoming an emerging economy within the next decade and ahalf,asoutlined inour2030StrategicPlan for theDevelopmentofHaiti.

TheScaling‐UpRenewableEnergyinLowIncomeCountriesProgram(SREP)providesanextraordinary opportunity to jump‐startHaiti’s renewable energy portfolio, enabling thecountrytonarrowtheenormousgapbetweenenergyavailabilityanddemand,reduceitsdependenceonoil,createheightenedenergysecurity,andprovideaffordableelectricityforall. SREPwill also foster the emersion of new economic opportunities and increase theinvolvementofprivatesectorinrenewableenergy.AllthesearenecessaryforerunnerstocreatingtheeconomicconditionsthatwillimproveHaitians’standardoflivingandbolstertheir economic fortunes. Climate change has only added to the importance of ourrenewableenergyresourcesandtheurgencywithwhichtheymustbeutilized.

TheSREPHaiti InvestmentPlanwasspearheadedbyadiversegovernmentalTaskForceledbytheMinistryofPublicWorks,TransportationandCommunications(MTPTC).Butitismoreappropriatetocallthisaplanthatrepresentsthecollectiveconsciousnessandwilloftheentirecountry.Haitiwasfortunatetobenefitfromconsultationswithcivilsocietyandacademia,aswellastheexpertiseofourmultilateraldevelopmentpartners,whosedecadesof experience around theworld in similar projects have helped create an ambitious yetrealizableprogramforthecountry’salternativeenergyfuture.

Haiti has two challenges: the need to improve services for our residential and businesscustomers on the country’s public utility grid, and expand access to those households,businessesandinstitutionsthatcannotyetbereachedbythenationalutility,Électricitéd'Haïti(EDH).Renewable energy canboth improve serviceofferedby thepublic grid, andprovidealternative,affordablemeansofenergyaccessforthosewhomthepublicgridcannotreach.

On behalf of the government and the people of Haiti, I am submitting Haiti’s SREPInvestment Plan for endorsement by the SREP subcommittee. I greatly appreciate theworkoftheTaskForceandeveryotherstakeholderthathascontributedtotherealizationofthisplan—amilestoneinHaiti’smarchtowardsanenergyfuturethatmeetstheneedsofallofitscitizens.

JacquesRousseauMinisterofPublicWorks,TransportationandCommunicationsGovernmentofHaitiMarch15,2015

 

EXECUTIVESUMMARY

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EXECUTIVESUMMARYIn June 2014, the Republic of Haitiwas selected as one of the new countries eligible tobenefitfromtheScalingUpRenewableEnergyinLowIncomeCountriesProgram(SREP).SREPoperatesundertheStrategicClimateFund,partoftheClimateInvestmentFunds,andaims to demonstrate the economic, social, and environmental viability of a low‐carbondevelopment pathway by creating new economic opportunities and increasing energyaccessthroughrenewableenergy(RE)sources.

The SREP Haiti Investment Plan presents the country's approach to catalyzing REdevelopmentinordertofillthehugeelectricitydemandgapreliablyandcost‐effectively—and to sustainably transform the country's oil‐dependent energy mix. Harnessing thecountry's RE potential will enhance energy security and generate new economicopportunities through cheaper energyuse formenandwomen. Itwill alsomobilize andleverage private capacity in enterprises and lead Haiti toward becoming an emergingeconomy—agovernmentobjectivefor2030.TheInvestmentPlanwasdevelopedundertheleadershipofthegovernmentthroughacomprehensiveandconsultativeprocess.

TherationaleforsupportingHaitithroughSREPstemsfromthegovernment’sdifficultyintacklingonitsowntheenergychallengesitfacesandtheirseriouslong‐termconsequencesfor the economy, livelihoods, and environment. Haiti suffers from high rates of energypoverty, and the current fossil‐fuel based power system is unable to meet the rapidlyincreasing energy demand. But its untapped RE resources are abundant, and thegovernment’scommitmenttoharnesstheseresourcestopromoteeconomicdevelopmentandthewell‐beingofallcitizensisstrong.Andtheprivatesector’sinvestmentinbothon‐grid and off‐grid RE is growing, particularly if the enabling environment can bestrengthened. SREP support can therefore help Government address the key sectorchallengesandleveragenewopportunities.Thetimelinessofthissupportisunderlinedbyrecentgovernmenteffortstoaddressthewideningenergyneedsbyimprovingthequalityofelectricityservicesincitiesandexpandingaccesstobasicenergyservicesinruralareas.

TheInvestmentPlanwaspreparedbyamulti‐entitygovernmentalTaskForce ledbytheMinistry of Public Works, Transportation, and Communications (MTPTC). MultilateraldevelopmentbanksoperatinginHaitihavesupportedtheTaskForceduringthedesignoftheInvestmentPlan, includingconsultationswithothergovernmentagencies, theprivatesector,academia,andcivilsociety.Thisinclusiveandcountry‐ledREdevelopmentprogramis consistent with the government's long‐term strategy for Haiti's development, asenvisioned in the2030StrategicPlan for theDevelopmentofHaiti.Thatplanproposesaresults‐oriented,programmaticapproachtoscalingupREandenhancingaccesstoenergyinurbanandruralareas.

TheproposedapproachguaranteesengagementofthepublicsectorandencouragesthatoftheprivatesectortocatalyzesustainabledevelopmentofREinfrastructureandmarkets.

KeyEnergySectorChallenges

Haitifacesseveraldauntingenergychallenges:

Extremely limited access to reliable energy services. National energy consumption isdominatedbybiomass (75%), largely charcoal,which isunsustainablyharvestedand

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inefficientlyused.Electricityisavailabletoonly30%ofthepopulation.Inruralareas,withelectrificationat5%,householdsrelymainlyonkerosenelampsandoncandlesforlighting. Service is only intermittent, averaging 16 hours a day nationally, but manyhouseholdsreceivefewerthanfourhoursofdailypowersupply.Theunreliabilityandlow quality of on‐grid electricity has prompted the wealthiest households andbusinessestohavestoragecapacityor toself‐generate: the installedcapacityofsmallandmediumdiesel generator sets is estimated atmore than200megawatts (MW)—exceedingthetotalavailableon‐gridcapacity.

Aginganddamagedinfrastructure.Themainproviderof electricity is the state‐ownedutility,Électricitéd’Haïti (EDH),whichservesabout250,000customers. Itsassetsareaging—onaveragethenetworksare30yearsoldandpowerplantsare25yearsold—andinurgentneedofrepairs,rehabilitation,andupgrades.Thedevastatingearthquakeof 2010 and hurricanes of 2008 badly damaged the energy infrastructure, slowingfurthertherehabilitationprogress

Rapidlyincreasingenergydemand.Powerdemandhassurged inrecentyears, trackingeconomicgrowthandreconstruction.Butthestructural lackofcapacityhasincreasedthe volume of unmet demand. Current electricity peak demand is estimated at over500MWandisrisingfast,whileavailablegenerationcapacitypeaksat180MW,barelyreachedduetothesystem’sfragility.

Highdependenceonfossilfuel–basedelectricitygeneration.EDHgeneratesaround15%ofthecountry’senergy,withtherestcomingfromindependentpowerproducersandthe Tripartite Cooperation between the governments of Haiti, Venezuela, and Cuba.Most power—81%—comes from thermal generation (diesel and fuel oil), and 19%fromhydropower.Thisoil‐basedgenerationiscostly:EDHaveragegenerationcostsare32–39UScentsperkilowatt‐hour.Self‐generationisevenmoreexpensivethanon‐gridgeneration. The high energy costs directly undermine economic development byincreasing the prices of goods and services and by reducing Haiti’s industrialcompetitiveness.

Large government subsidies. In addition to high costs of generation, EDH has hightechnical and commercial losses due to aging infrastructure, illegal connections, andweakpaymentcollection.Sustainingeventhecurrentservicerequireshugesubsidies,equivalenttoUS$200millionayear—4%ofthenationalbudget.

Urban–rural disparities. Haiti has reduced poverty in the last decade but almostexclusively by improving opportunities in urban areas. To reduce urban–ruraldisparities, policies should target investments and job creation in secondary andtertiary cities and in rural areas,whichwill require improving access to reliable andaffordableenergy.

Gender inequity. Women and girls are particularly vulnerable to energy deprivationbecause it reinforces the obstacles they face in accumulating and using assets,particularlytheirhumancapital.Evenifequallyqualifiedandemployed,womeninthelabormarketearnmuchlessthanmen.

ConstraintstoRenewableEnergyDevelopment

Haiti has excellent but largely untapped RE potential, including hydro, wind, solar, andbiomass.HydropowermakesupthegreatestshareofREpowerproduction,butmicro‐and

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mini‐hydropower exploitation remains well below potential.Wind energy has yet to beexploited,andsolarenergyhasbeenharnessedonlyonaverysmallscale,mainlyoff‐grid.Ahandfulofbiomass‐poweredprojectsarebeingdeveloped.

REhasamajorroleinreachingthe2030ambitionforgreenjobsandsustainablegrowth,butitmustovercomethefollowingconstraints:

Legalandregulatory.Whilethebasiclegalconditionsallowtheprivatesectortoinvestin grid‐connected and off‐grid renewables, the legal and regulatory framework isobsolete, inconsistent, and incomplete, resulting in regulatory decisions often madecase by case. The consequent lack of predictability deters RE investments, andcompanies that have invested find it hard to attract financing for scaling up. Thegovernmentwantstoclarifytheframeworkforon‐andoff‐gridrenewablestoreduceinvestors’riskperceptionsandattractnewinvestment.

Institutional.Nospecificagency isresponsible for thepromotionofrenewableenergyandenergyaccess.Recently,MTPTC, responsible forenergyoversight,hascreatedan“EnergyCell,”whichisnowalsoinchargeofpromotingREdevelopmentandexpandingenergyaccess.Whilethisunitisstillveryrecentanditscapacityisstillbeingbuilt,ithasbeen the driving force behindHaiti’s SREP Implementation Plan, and in themediumrun,itistobetransformedintoaDirectorateofEnergyinMTPTC.

Economicand financial. Most RE projects have high capital costs, and the financingterms inHaiti (lackof long‐termdebt financingandhigh interest)discourageprivateinvestment. Equity financing is also very rare.REprojects also face risks of currencydepreciation,aswellasresourceandoff‐takerisks.Withgridrenewables,theoff‐takeriskisthebiggest,andthemainreasonthatnopowerpurchaseagreementhasyetbeensigned. To unlock private investment, the government wants to develop a public–private partnership (PPP)model thatwould reduce risks to theprivate sector,whilebenefiting EDH with lower‐cost generation choices. In parallel, the government isaddressing EDH’s financial situation through a comprehensive loss‐reduction andcommercial recovery program—supported by the World Bank and Inter‐AmericanDevelopment Bank and monitored by the International Monetary Fund—through arecentlynegotiatedthree‐yearprogramforHaiti.

Technical.Thesmall sizeand fragilityofEDHtransmissionanddistributionnetworksrestrict the amount of variable RE the grid can absorbwithoutworsening electricityservices. While SREP’s proposed investments of 10–20MW are within the gridabsorptioncapacity,future(post‐SREP)REinvestmentscouldfaceintegrationhurdles.The government, EDH, and the World Bank are carrying out a study to assess gridabsorptioncapacityandrecommendgridinvestmentstoincreasetheshareofvariableREthatcanbeintegratedwithEDH’smainpowersystem.

Social. Haiti has a history of social turmoil, which can affect RE, particularly if itspotentialbenefitsarenotsharedwidely.AlthoughthepenetrationofREisalreadyhighin the country (mostly solar lanterns and other solar‐powered appliances), fieldconsultations for the Investment Plan revealed misconceptions, inadequateinformation, and lack of consumer awareness of the potential benefits of RE. Thesebenefitsmustbeclearlycommunicated.

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Capacitiesandskills.Thelackofskilledlaborhasfrequentlybeenidentifiedasamajorbarrier forscalingupREinsideandoutsidegovernment.Theskillsgapisapparentatprofessional level (engineers and other specialists with RE expertise) and technicallevel (skilled technicians for assembling and maintaining systems). Consultationsconfirmedthatthereareinformationgapsforprojectsandpotentialpartners,andthatpublicinformationonthemcouldhelpdevelopREmarkets.

OpportunitiesforLeveragingthePrivateSector

Despite the barriers, SREP can leverage the promising private interest in RE. The mostactivemarket isforoff‐gridpower,duetolower(private)off‐takerisks,comparedtotheEDHoff‐takerisk,buton‐gridrenewablesaregarneringattention.

Offthegrid,privatecompaniesintheurbanmarketoffersolarphotovoltaic(PV)solutionsfor hybrid diesel self‐generation by businesses and individuals. In the rural base‐of‐pyramid REmarket, enterprises and nongovernmental organizations offer an increasingmenuofoff‐gridenergysolutions,includingmicro‐grids,solarlanterns,andpay‐as‐you‐gosolarkits.

The on‐grid market is stimulating investor attention because of the RE potential, nowquantified in studies, and because of the high power‐generation costs, which make REtechnologycompetitive.Thatcreatesanopportunityforboththegovernment/EDHandtheprivatesector.Severalcompanies,includingreputableinternationalinvestors,arealreadyconducting on‐site feasibility studies and discussing with government the potentialinvestmentmodalitiessuchasPPPs.

OpportunitiesforScalingUpRenewableEnergy

Theunderdevelopedstateofelectricityisbothanopportunityandachallenge.Itprovidesa chance to guide sector development toward a cleaner, cheaper, andmore sustainablepath from the start, and thus to leapfrog old technologies and to reap a “secondmoveradvantage”byapplyinglessonsfromothercountries’businessmodelsandplanningtools.

Butthesectorstillhasfartogoifitistoachieveuniversalelectricityaccessby2030.Thistransformation will happen not through one investment plan but only with phased,coordinated,and long‐termsupport.Diversifyingthe fossil‐fuelgenerationmixtoREwillbeaveryimportant,butnottheonlyelement.Successdependsonimprovingperformance,organization,andmanagementoftheelectricitysector,asgradualgainsininvestmentsandpolicy reform go hand in hand. RE investments in the EDH grid require improved EDHfinances, while cheaper RE in the gridwill help curtail EDH losses and improve servicequality—enablingfurtherpolicyreform.

The SREP Investment Plan for Haiti has been designed with these opportunities andchallengesinmind.Itsfocusisonamixofseveralsmallinvestmentprojects(thefiveSREPcomponents), which allow learning by doing and real‐time fine‐tuning based onexperiences and realities on the ground, while being large enough to triggertransformational changes. SREP Haiti will build directly on current private activity andinterestineachmarket.Itwillbringaqualitativechangeineachsegmentbyremovingkeybarriersandofferingademonstrationimpact.AnditwillsupportsynergiesacrossmarketsandenablescalingupafterSREP.

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Combining economic and financial analysis with consultations, the Investment Planidentifiedpotentialinvestmentslikelytomaximizenationaleconomicbenefitsintheshortand long term (including post‐project scale effects), given current opportunities,constraints, and risks. The resultswerediscussedwith a broad range of stakeholders toensurethatSREPHaitiIPreflectsthecountry’sdevelopmentneeds,nationalpriorities,andrealitiesandexpectationsontheground.

Thisbackandforthidentifiedopportunitiesforon‐gridandoff‐gridREintheshortterm.

On‐gridRE.Atthisearlystageofon‐gridREdevelopmentinHaiti,allon‐gridtechnologies(hydro, biomass, wind, and solar) have large potential for scale‐up. Solar PV and windpowerarethemostlikelycandidatesforSREPinvestment—forthreemainreasons.First,the scalability and the potential demonstration impact of both are high. Second, windpower’s economic attractiveness is strong at the most promising sites near the major115kilovolt transmission line (soon tobeupgraded), connecting the largesthydropowerplant with the capital. Third, solar PV’s modular character allows for smaller projectinvestmentswithout losingeconomiesof scale, and its relative “site indifference” createspotentialforlocatingplantsinplaceswiththebestgrid‐absorptionconditions.

Fortheseintermittenton‐gridrenewables,anoptimalrangeofimmediateinvestmentsforcombining optimal net benefits from SREP funding and post‐SREP long‐term scale‐up is10–20MW.Thisrangereflectsthecurrentstateoftheunderdevelopedgridanddispatchcapability. Italsoreflects the interdependenciesofwindandPVwithseasonalhydroandwithdemand,andtheeffectonfuelsavingsandlinelosses.Anditreflectsthetypicalearly‐stageuncertaintiesonwinddata,detailedoperationalbenefits, fully loadedcosts,privatesectormargins,andnetbenefits.SREPwillhelpclarifytheseareasforpost‐SREPscale‐up.

Off‐gridRE—urbanmarkets. SREP has an opportunity to leverage the emerging solar PVmarketinurbanareas.SeveralcompaniesnowsellorleasesolarPVsystemstobusinessesthat have intentionally isolated themselves from EDH and self‐generate with dieselgeneratorsets.SolarPVcan lower theirenergycostsand improve theircompetitiveness,whilebuildingREgenerationcapacitythatcanultimatelybeharnessedfortheEDHgrid.

Off‐grid RE—rural markets. The geo‐spatial analysis, alongside stakeholder and fieldconsultations,suggeststhattomaximizethebenefitsofruralelectrification,thereisscopeforseveraltechnologiesandbusinessmodelstocoexist—inthattheyoperateindifferentmarket segments simultaneously and create competitive pressures benefiting end users.The geo‐spatial analysis indicates that the largest access gains in the village off‐gridsegmentcouldbemadefromEDHremotegrids,includinghybridizingitsdieselgenerationwithRE.Butsuch investmentsare inherentlycomplexandriskybecausetheydependonEDH’sabilitytoimproveitscommercialperformance.So,SREPfocusesinitiallyononlyoneor two pilots in this segment, and focus resources on private sector driven businessmodels. In this non‐EDH off‐grid market segment, the fastest scale‐up is likely with anenabling environment—including a regulatory and financing framework—that istechnology‐neutralandbusinesscase–neutral.TheobjectiveistoboostpromisingbusinessmodelsgroundedinHaiti’sconditions,rangingfromindividualsystemstovillagegrids.

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SREPProgramDescription

Program development objective. SREP Haiti is expected to achieve the following keyoutcomes:

Expandedandimprovedaccesstoelectricity IncreasedREcapacity(MW)andgeneration(megawatt‐hours) Reducedandavoidedgreenhousegasemissions Anenablingregulatoryframework AnexpandedREskillbase,includingincreasedcapacityoftechnicians IncreasednumberofREenterprises REjobs Knowledgetransfer Opportunitiesforfemaleentrepreneursandworkers.

SREP Haiti’s Investment Plan consists of five components targeting the most promisinginvestmentopportunities(table1)inthecontinuumofgrid‐connectedandoff‐gridRE.

Table1.FivecomponentsinSREPHaiti’sInvestmentPlan

Urban Rural Crosscutting

Feeding intotheEDHgrids

Component 1: RE for thePort‐au‐Princemetropolitanarea

Component 2: RE‐basedexpansion of Port‐de‐PaixremotegridComponent4:Rehabilitationofsmallhydroplants

Component 5: Building anenabling environment,capacities, and skills for REscale‐up.

OffEDHgrids Component3:Off‐gridelectricity forproductive, social,andhouseholduses

Component1:RenewableenergyforthePort‐au‐Princemetropolitanarea.Theobjectiveistobuild government and private sector experience by developing and implementing grid‐connectedRE.Thiswouldbedone throughsupporting the country’s first grid‐connectedvariable RE project or projects,wind or solar PV, totaling 10–20megawatt‐peak (MWp)feeding intoEDH’smaingridservingthePort‐au‐Princemetropolitanarea.TheapproachwillbeaPPP,encouragingprivateinvestmentsandadequateoperationandmaintenance.Theexactarrangements,tobedefinedatprojectimplementation,willdependonprogressintheEDHloss‐reductionprogram.IfaPPPapproachisnotfeasibleorwouldleadtotermsunfavorabletothegovernment,apublicsectoroption—anEPC(engineering,procurementand construction) contract plus an operation and maintenance contract to the privatesector—couldbeconsidered.ThefinaltechnologyanddealstructurewillbedecidedwhenSREP implementation starts, based on a more detailed analysis in the new ElectricityMaster Plan (to be released this year) and information on variable RE grid absorption,relative benefits in situ, private sector interest, and EDH performance at that time. Theexperiencewill be used to develop frameworks and instruments to encourage largerREinvestmentsandscale‐up.

Component 2: Renewable energy‐based expansion of Port‐de‐Paix remote grid. EDH alsooperates 11 isolated grids of 300kilowatts to 25MW, with most power supplied

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intermittently by diesel units. Low quality of supply constrains productive use andextensionofaccesstomorehouseholds.Itisestimatedthatmorethan300,000householdscouldbereachedbyexpandingthesegrids.Thecomponent’spurposeistodemonstrateanintegrated approach of hybridizing these (largely) diesel‐powered grids with RE,rehabilitatingandexpandingthegridinfrastructuretoallowfurthercustomerconnections,while improving commercial performance through installing meters. The component,targetingthemostremoteEDHgridinPort‐de‐PaixintheNorth‐Westregion,isexpectedto result in 1–2MW renewable generation capacity (most likelywind–solar hybrid) andexpansiontoatleast14,000customers.

Component3:Off‐gridelectricity forproductive,social,andhouseholduses.With only one‐third of the population electrified, innovative businessmodels have recently emerged tooffer RE services to off‐grid households, businesses, and institutions in urban and ruralareasnotservedbyEDH.Thepurposeofthiscomponent is toscaleupaccesstomodernelectricity services, aimed at supporting promising models in urban and rural settings,includingsolarPVleasingtohybridizedieselgenerationforindustrialandbusinessclients,village RE–diesel hybrid grids; service provision through pay‐as‐you‐go individual solarkits/homesystems;andsolarlanternsalesThecomponentisexpectedtoresultin10MWpofnewREcapacityandwellabove200,000newlyelectrifiedhouseholds,businesses,andinstitutions.

Component4:Rehabilitationofsmallhydroplants. EDH owns and operates six small andmini‐hydroplants(eachwithcapacitybelow2.5MW).Onlyoneisfullyoperational,andtheothers do not produce at potential capacity due to an urgent need for repairs andrehabilitation.Thecomponent’spurposeistorestoreEDH’ssmallandmini‐hydroplantstotheirfullcapacityof7.5MW,asacost‐effectivewayofexpandingREcapacitytoreducedependencyondiesel generation. Inaddition, increasing the shareofhydro resources intheoverall generationmix can facilitate investments in intermittent renewables, such aswind and solar. (This component is part of SREP but is not included in the $30millionrequestedSREPbudget.Thegovernmentintendstoseekfundingfromadditionalsources,such as the Green Climate Fund.) Component 5: Building an enabling environment,capacities,andskillsforrenewableenergyscale‐up.Beyondthelackofamodernregulatoryframework,allREinvestmentssufferfromfiscalpoliciesfavoringfossilfuelsandfromskillconstraints. This component tackles these crosscutting issues, rather than having atechnical assistance or capacity‐building subcomponent in each component—the moreusual approach but one that could fragment efforts. Covering a broad range, thecomponent’s key focus will be the enabling framework and local skills for RE projects.Implementationwillbetiedcloselytothatoftheotherfourcomponents.

FundingSourcesandRationaleforSREPFinancing

ThetotalestimatedbudgetforSREPHaitiisUS$149.5million—withaSREPcontributionofUS$30million forComponents1, 2, 3, and5 (table2). (Component4will seek financingfromother sources.)Theprogram is seeking co‐financing fromparticipatingmultilateraldevelopmentbanksandotherdevelopmentpartners, includingUS$30.5million from theWorld Bank for all five components and US$10 million from the International FinanceCorporation (IFC) to support Component 3. Finally, SREP Haiti is expecting to mobilizeUS$93millionfromtheprivatesector(includingIFC).TheoverallSREPleveragingfactoris

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estimated to be 1:4 to 1:5 largely depending on the final design and deal structure ofComponent1.

Table2.SREPIndicativeFinancingPlan

SREPComponent SREPfunding Publicco‐financing Privateleveraging

Totalleveraging

WB IFC TotalSREP

WB‐IDAd

WB‐CTFe

Otherpublicf

IFC Otherprivate

Public+private

1.REforthemetropolitanarea

8‐10 0‐2b 10 6 16g 22

2.REforPort‐de‐Paixremotegrid

2‐4a 2‐4 10 2 12

3.Off‐gridelectricity 8‐9 7‐9c 15‐17 8 11.5 15 60 94.54.Smallhydropowerrehab

0 4 14 tbd 18

5.Enablingframework,capacityandskills

1 1 2.5 0.5 3

Total 21‐23 7‐9 30 30.5 12 14 15 78 149.5a.TheexactamountneededfromSREPwillbedeterminedthroughadetailedfeasibilitystudy.b.IFCparticipationintheComponent1isdependentonviableconditionsinplaceforthePPPoption.IfaPPPoptionisnotviable,IFCresourcesmayshifttoexpandComponent3.c.Theinitialallocationforthesub‐componentisUS$7million.However,IFCSREPcontributioncouldbeexpandedtoUS$9millionifthesub‐componentprogressissatisfactoryandifIFCcontributionunderComponent1doesnotmaterialize.d.WorldBankco‐financingisfromtheexistingIDA‐financedPRELEN,whichisprioritizingSREP‐prioritizedinvestments.e.Projectunderdevelopment,ConceptnoteapprovedinFebruary2015f.Financingbeingsoughtfromothersources,suchastheGreenClimateFundg.Minimumleveragingestimate.Finalleverageforon‐gridRE,whereprivatesectorprojectsponsorswouldfeedintoEDHthegridwilldependonthespecificSREPCase(9–12)andmayvaryfromabout1:1(SREPtoprivateinvestmentfortypicalwindon‐gridcasewithmoderaterisk‐appetiteinvestors)to1:5(forsmalldistributedgenerationanalogoustothe“fuelsaver”caseinChapter2).Dealstructureswithinternationalbidderswilldependontheoff‐takeriskatprojectdevelopmentandonthedebttermstheycansecureintheglobalmarket.

TheaboveSREP financingamountsare sought to support catalytic investments inRE, toencourage private investment. This will be done through reducing the key regulatory,financial and capacitybarriers, developinganddemonstratingpublic‐privatepartnershipmodelsandriskmitigationinstruments,andsupportingtheemergingpromisingbusinessmodelsinbothurbanandruralmarkets.GiventheearlystageoftheREindustryinHaiti,SREP’s focus will be on demonstrating viable approaches and jump‐starting the mostpromisingmarketsegmentswhilecreatingtheconditionsforfuturereplicationandscale‐up.

ConcludingRemarks

Haiti's electricity sector stands at a cross‐roads between a business‐as‐usual scenario—which means increasing reliance on fossil fuels and their volatile prices—and analternativescenariosettingthesectoronasustainablepath.

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ThegovernmentviewsSREPHaitiasauniqueopportunitytoswitchfrombusinessasusualto a highly promising sustainable path. It is conscious of the detrimental impact thatbusinessasusualwouldhaveontheeconomyandonthewell‐beingofitscitizens,andiscommittedtoprovidingalltheenablingconditionsforsupportingthenewscenario.IthasalreadyputintoeffectacomprehensiveprogramtoreduceEDHtechnicalandcommerciallosses, and will continue supporting improvements in EDH performance. And it iscommittedtosupportingtheprivatesectorininvestinginon‐andoff‐gridREalternatives.

 

1COUNTRYCONTEXT:ENERGYSTATUSANDPOLICIES

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1 COUNTRYCONTEXT:ENERGYSTATUSANDPOLICIES1.1 HAITI’SDEVELOPMENTSTATUS

Haiti accounts for one‐third of the land area of Hispaniola Island in the Caribbean,neighboring the Dominican Republic and covering 27,750 km2. The population wasestimated at 10.9million people in 2003,1which makes Haiti one of the most denselypopulatedcountriesintheLatinAmericaandCaribbean(LAC)region.Afurther2.5millionHaitians are estimated to live abroad. The Haitian diaspora is an important source ofremittances,whichamount towell overUS$1.8billionannually2or equivalent to aroundone‐thirdofgrossnationalproduct(GNP),andexceedingallinternationalassistanceaftertheearthquakeofJanuary12,2010.

Figure1.Haiti’s10administrativedepartments

The country is administrativelyorganized into 10 departments(figure1).Morethanathirdofthepopulation lives in the Westerndepartment (Ouest), whichcontains the metropolitan area ofthe capital, Port‐au‐Prince. Haitihas seen steadyurbanizationoverthelast30years,withtheshareofthe rural population decliningfrom 75.5% in 1983 to 55.6% in2003,and furtherprojected to fallto48.1%bytheendof2015.3

Source:Vidiani.com:MapsoftheWorld.

Grossdomesticproduct(GDP)percapitawasUS$846in20144—farbelowtheLACaverageofUS$9,536.5Accordingtothelatesthouseholdsurvey(EnquêtesurlesConditionsdeViedes Ménages après le Séisme, ECVMAS) in 2012, 6million out of 10.4million of thepopulationwas poor, living under the national poverty line of US$2 a day, and almost aquarterofthepopulationwasextremelypoor,livingbelowUS$1aday.Haitiranks161stonthe 2014 Human Development Index. Economic development has repeatedly beeninterrupted by external shocks, including food and fuel price fluctuations and naturaldisasters.Themostdevastatingimpactwasregisteredfromthemagnitude‐7.0earthquakein January 2010,which killed, according to government sources, around300,000 peopleanddisplaced1.5millioninHaiti’scapitalandnearbytowns,makingitoneofthedeadliestnaturaldisastersonrecord.ItresultedindamagesandlossesofaroundUS$8billion(120%of GDP). One‐third of the country’s civil servants and most government buildingsdisappeared.Thecountryisonlynowbeginningtorecoverfromthedisaster.

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Thepovertydisparitybetweenurbanandruralareasiswidening.Thirty‐eightpercentofthepopulationinruralareasisstillunabletosatisfyitsnutritionalneedsandalmost70%of rural households are considered chronically poor—both below the poverty line andlackingaccess tobasic goodsand services,making it especiallyhard for them to emergefrompoverty.Eightypercentofthoseclassifiedasextremelypoorliveinruralareas.

Povertyalsovariesgeographically.Thepoorestdepartmentsarefarthestfromthecapitalandthemost isolated—North‐West(Nord‐ouest),North‐East(Nord‐est),andSouth(Sud)(figure 2). In addition, Haiti is themost unequal country in the LAC region. The richestquintilegetsover64%oftotalincome,thepoorestquintilelessthan1%.In2012,theGinicoefficientwas0.61,thehighestintheregion.

Figure2.Poverty(blue)andextremepoverty(green)bydepartment

Sources:ECVMAS2012;WorldBank.

Inanattempttodecreaserural–urbandisparities,thegovernmentstarteddecentralizingin1987.Since2006,thelawondecentralizationhasallowedmunicipalgovernments(amongothers) to generate, distribute, and commercialize energy at municipal level, as well asmanagemunicipalenergyinfrastructure.6

Althoughaframeworkfordecentralizationexists,inpracticeaccesstopublicservicesandpublicgoodsismainlyinthelargestmetropolitanareas.Thecapital’smetropolitanareaisrapidlygrowing,andatnearly3millionpeople—withaninfrastructuredatingbacktothelate1970s—theurbancenterisunabletofunctionefficiently,whilenegativeexternalitiesalsohindergrowth.Therefore,governmentpoliciescontinuetargetinginvestmentsandjobcreation in secondary cities. Access to reliable and affordable energy in these secondarycities,aswellasand tertiarycitiesandruralareas, isa lynchpinofdecentralization.Thegovernment firmly believes that the Scaling‐up Renewable Energy Program (SREP) canplayasupportiveroleinincreasingaccesstodecentralizedsourcesofpower,particularlyinisolatedruralareas.

1.2 ENERGYCONSUMPTION

OnlyaboutathirdofHaitian’spopulationhasaccesstoelectricity.Inruralareas,electricityis rare (5%) and Haitian households rely primarily on kerosene lamps, and sometimescandles,althoughpenetrationofsolar lanterns is increasing. Improvingaccess toreliable

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modern electricity services, particularly in rural areas, is therefore one of the keygovernmentpriorities.

Electricitydemandhasbeenrapidlygrowing inrecentyears, trackingeconomicgrowth.7But the structural lack of power supply capacity has increased the volume of unmetdemand, as well as autonomous generation, for personal, business, and community use.Currentpeakdemandisestimatedatover500megawatts(MW)andisprojectedtoreachover 750MW by 2020. It is therefore essential that generation, transmission, anddistribution capacity increases correspondingly, so that economic growth is notconstrained.

Haiti’s energy sector is characterized by intensive use of biomass fuel (mostly fuelwoodand charcoal), imported fossil fuels, and a largely untapped renewable energy (RE)potential.Totalprimaryenergyconsumptionis0.38tonsofoilequivalent(toe)percapita,one of the lowest in the world, and only a fraction of the average consumption in LACcountries.

AccordingtotheInternationalEnergyAgency(IEA),Haiticonsumed4milliontoein2012,including20%netimportsofconventionalenergy.Thecountry’stotalpetroleum‐productimportsamountedtoUS$755millionin2012.8Thesameyear,biomass(woodandcharcoalprimarily, but also sugarcane/bagasse waste in much less volume) represented around75% of total energy consumption, petroleum products 23%, and hydropower 3%. Theresidentialandcommercialsectorsaccountformostenergyuse.

Charcoal, from rapidlydeclining tree resources, is the single largest sourceofhouseholdenergyinurbanareas(91%ofhouseholdsusecharcoal).Inruralareas,woodfuel(twigs)dominatesastheprimaryfuelforhouseholdcooking.Inefficientcookingpractices,coupledwith high population density and severe poverty, are putting an enormous burden onHaiti'snaturalresources.9

Reducingcharcoalconsumption isan importantgovernmentgoal,andseveraleffortsarebeing financed by development partners including the United States Agency forInternational Development (USAID) and the United Nations Environment Programme(UNEP)focusedonincreasingadoptionofefficientcookstoves.REplaysaprominentrolein the government’s plan to expand generation capacity, and the government considersSREP the key tool for bringing in the required transformative change to attract REinvestments.

1.3 ELECTRICITYGENERATION,TRANSMISSION,ANDDISTRIBUTION

ThemainproviderofelectricityservicesinHaitiisthenational,government‐ownedutilityElectricityofHaiti(Électricitéd’Haïti;EDH).

Generationandtransmission

EDH generates some 15% of the energy produced in Haiti, with the rest coming fromindependent power producers (IPPs) and the Tripartite Cooperationmechanism (Haiti–Venezuela–Cuba).10 Current electricity infrastructure is aging and has been poorlymaintained.Installedgenerationcapacityisabout320MW(table3),ofwhichonly176MWis available11—insufficient to meet estimated peak load demand of more than 500MW,resultinginfrequentload‐sheddingandserviceinterruptions.12Mostofthepower(81%)is

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supplied through oil‐based thermal generation (diesel and fuel oil), with hydropowercontributing19%.

ThelargesthydroplantisPéligre(54MW),underrehabilitationwithitstransmissionlineto the metropolitan area. EDH owns eight other smaller hydro plants, but only one isoperatingatfullcapacity.Hydropoweristheonlygrid‐connectedREsource.

The majority of power is supplied by three IPPs, which provide 130MW operatingcapacity—ofwhich about 100MW is for themetropolitan area. All IPPs produce powerfromthermalsources(dieselandheavyfuel)viapowerpurchaseagreements(PPA)withEDH. These fossil‐fuel generation plants are expensive for EDH, straining its financialsituation;EDH’s current average generation costs areUS$ cents32–39/kWh. IntegratingREintothepowersupplymixcansignificantlyreduceEDHgenerationcosts.

Table3.EDHgrids—capacityandcustomers

Grid Installedcapacity(kW)

Availablecapacity(kW)

Activecustomers(number)

Metropolitan 248,000 98,800 160,487

Centre(Onde‐Verte) 650 500 788

Nord 14,400 10,500 17,435

Nord‐ouest 2,500 2,200 3,557

Nord‐est 5,750 4,500 4,540

Sud(Cayes) 11,600 7,600 21,246

Sud‐est(Jacmel) 5,150 4,450 11,413

Sud‐est(Bainet) 310 200 includedinJacmel

Artibonite 24,650 19,200 20,645

Grand‐Anse(Jeremie) 2,450 2,200 3,327

Ouest(Arcahaie) 2,000 0 2,611

Ouest(LaGonave) 425 350 625

Total 317,885 150,500 246,674

Source:EDH,2015.

Distribution

EDHoperatesonemaininterconnectedgridcoveringthemetropolitanareaand11isolatedgrids, serving about 250,000 “active” customers).13Most of these customers are on themain grid covering Port‐au‐Prince and surrounding areas, where most industrial and

23

businesscustomersare.In2014,EDH’s1,308industrialcustomersrepresentedabout40%ofthepowerdemand.Theisolatedgridsservetherestofthecountry,withpowermostlysupplied intermittently by diesel units and some hydropower, but with operation andmaintenance(O&M)problems.

EDH faces considerable technical, managerial, and financial challenges. Technical andnontechnical losses are 65%, a large part due to illegal grid connections. Further, thecollectionrateisonlytwo–thirds—meaningthatEDHrecoversonly22%(one‐thirdoftwo‐thirds) of the value of the electricity it generates. The losses contribute to an annualfinancialdeficitofUS$200million—equivalentto4%ofthenationalbudget.Consequently,EDHfacesdifficultiesinpayingforfuels,basicmaintenance,andotheroperatingcosts,anddependsongovernmentsubsidiestobridgethegap.

Currentelectricity tariffswereestablished in2009.Aspartof theElectricityMasterPlanthat it is drafting (and that should be ready by late this year), EDH is conducting aninvestmentplanandanalyzingtariffreform.Theaverageresidentialtariff(US$0.21/kWh)isbelowtheLACregionaverage,but theaveragetariff for the industrialandcommercialcustomers (US$0.30/kWh) is at the higher end of the regional range. Connection fees,differentiated by user type, are about US$65 for residential customers, and more forindustrialandcommercialcustomers.

The average daily electricity service of only 16 hours and the relatively high tariff forcommercial and industrialusers compelsmost industries to self‐generate, reducing theircompetitiveness.Itisestimatedthatthecumulativecapacityofindividualdieselgeneratorsets in the country is more than 200MW (more than the available power of 150MWsuppliedthroughEDH).Solarphotovoltaic(PV)powerhasrecentlystartedtoemergeasanalternativeforself‐supply,onwhichSREPcanbuildwithaviewtoscalingup.

1.4 ELECTRICITYSECTORINSTITUTIONALFRAMEWORK

Themainministriesandagenciesinvolvedintheenergysectorare:

TheMinistryofPublicWorks,TransportationandCommunications (Ministère des TravauxPublics, Transports et Communications; MTPTC)—the lead government agency for theenergy sector. Official oversight of energy access activities is handled by the offices ofMTPTCthroughtheEnergyCell,createdinlate2012.

TheBureauofMinesandEnergy (BureaudesMinesetde l'Energie;BME)—established in1986.ItoperatesunderthesupervisionofMTPTC,withamissiontopromoteresearchaswellasefficientexploitationanduseofmineralandenergyresources.

EDH—astate‐ownedcorporation.Itisthecountry’sutilitycompanyprimarilyresponsibleforelectricitygeneration,transmission,andretaildistribution.

Othergovernmentministriesandagenciesinclude:

TheMinistryofEnvironment(Ministèredel'Environnement;MDE)—mainlyresponsibleforenvironmentalprotection.Asacrosscuttinginstitution,italsohasakeyroleinpromotingsustainable energy through, for example, reducing charcoal consumption, increasinghouseholdenergywithimprovedcookstoves,diversifyingenergyresourcestowardRE,andincreasingruralenergyaccess.

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TheMinistryofCommerceandIndustry (MinistèreduCommerce et de l'Industrie;MCI)—responsiblefordevelopingbusinessestoexpandjobs.Itisalsoawareofenergyneedsandhas been involved in drafting energy‐related laws, as for example the law on liquefiedpetroleumgas(LPG)thatwillhelpimprovehouseholdenergyforcooking.Theministryisalso involved in franchising of free zones, which need electricity for most of theirindustries.

TheMinistryofEconomyandFinance (Ministère de l'Économie et des Finances; MEF)—responsible forbudgetsupport. Itoverseesthebudgetsofotherministries,agencies,andEDH, and is charged with supervising other ministries’ agreements with developmentpartners.

Interministerial Committee for Regional Development (Comité Interministérield'Aménagement du Territoire; CIAT)—chaired by the prime minister. Its mission is todefine government policy on land use, protection and watershed management, watermanagement,sanitation,planningandequipment.

Center for Facilitation of Investments (Centre de Facilitation d’Investissement; CFI)—createdin2007.Itaimstostreamlineinvestmentsbysimplifyingbureaucraticproceduresandprovidingeconomicandbusinessinformationtopotentialinvestors.

There is no regulatory agency. EDH is overseen by MTPTC and MEF, which providessubsidiestocoverEDHlosses.

The government is currently devising a plan for a new institutional structure for theelectricitysector,inlinewithabroaderreformagendadescribedinSection1.6.

1.5 ROLEOFTHEPRIVATESECTOR

Theprivatesector—inHaiti,mainlysmallandmediumenterprises(SMEs)—hasbecomeakey contributor to economic growth in numerous sectors. It has around 900,000micro,small, andmediumenterprises:60,000areSMEs—small firmswith10–49employeesormedium firms with 50–250 staff. The private sector is dominated by manufacturing(particularlytextilesandgarments)andagriculture.14

Independentpowerproducers

Most power is produced by IPPs, including Sogener, E‐Power, and HaytracIn with acombined production of 130MW of operating power from thermal sources (diesel andheavyfuel).

The private sector has explored opportunities for grid‐connected RE (mainly solar andwind) with various developers, including reputable investors from abroad, and hasconducted detailed studies. It is beginning to discuss potential projects with thegovernment.NoPPAforREhasyetbeensigned,however.

Renewableenergydistributedgeneration, including theprivate sector, cooperatives,andnongovernmentalorganizations

MostprivateREactivitiesconcentrateontheoff‐gridmarket,whichlargelyconsistsoftwotypesofcustomers:businessandindustrial,particularlyinurbanareas,whichintentionallydecided to isolate themselves from the EDH grid and self‐generate (because of

25

unreliability); andhouseholds,businesses,andinstitutions in unelectrified areas,mainly inruraltownsandvillages.

Anindustryhasdevelopedforbothstreams.SeveralcompaniesoffersolarPValternativestobusinesses todisplaceorcomplement theirdieselgeneration,but installedPVrooftopcapacity is still very small (estimated at around 4MW, primarily for health services).15Some private companies, nongovernmental organizations (NGOs), and the first ruralenergycooperative(establishedbytheNationalRuralElectricCooperativeAssociationoftheUnitedStatesin2014)provideoff‐gridelectricityinruralareas,throughvillagegridsorindividual systems. (Annex IV describes the main business models to serve base‐of‐pyramidconsumers.)Severallocalcompaniesalsospecializeinsupplying,andinonecasemanufacturing,streetlights.

A supply chain analysis16has identified 27 companies operating inHaiti’s solar businessand10supplyinggeneratorsets.

SeveralprivatesectorplayersareintheprocessofcreatingHaiti’sfirstRenewableEnergyAssociation, which would allow the private RE sector to speak with one voice. PrivateinterestsandcurrentinitiativesinREwillbereinforcedwiththesupportofSREPandwillbefundamentalinmeetingSREPresults.

Financiers

Haiti’sfinancialsystemhas8commercialbanks,17morethan220creditcooperatives,and21microfinanceinstitutions.Morethantwo‐thirdsofcommercialbankbranchesareinthePort‐au‐Princemetropolitanarea,andonlyfiveoftheeightbanksoperateoutsidethecity.Rural areas are served primarily by credit cooperatives—90% of these cooperativesoperatethere.

Microfinance institutionsfill thegapleftbycommercialbanksandcreditcooperatives, inMarch2008lendingtoaround150,000people,orthreetimesthenumberofcommercialbankborrowers.TheaveragemicrofinanceloansizeoutstandingwasUS$540orless.18

CommercialfundingforREisstillrareinHaiti.AprojectfinancedbytheCleanTechnologyFund (CTF)—the Modern Energy for All Project—is being prepared, which intends toestablishanaccessto financefacility tobemanagedbyacompetitivelyselected financialintermediary. The project’s design envisages a credit line to private providers of REservices andproducts (including toNGOs, cooperatives, rural retailers, andmicrofinanceinstitutions) for investing in off‐grid RE projects. The Modern Energy for All Project isexpectedtobuildarobustenergyprojectpipelineandincreaseinterestinandcapacityofHaiti’sfinancinginstitutions(annexV).

1.6 ENERGYPOLICYANDSTRATEGICFRAMEWORK

The government’s vision for the energy sector is based on the Strategic Plan for theDevelopmentofHaiti(SPDH),whichsetsapathforHaititobecomeanemergingeconomyby2030.

The SPDH envisages strengthening the private sector and providing basic services(includingelectricity)tothepopulace.TheMartelly19administrationhasidentifiedenergyasoneofitsfivepriorities—the“fiveE’s”(witheducation,employment,theenvironment,

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and the rule of law).20The January 2012 Draft Energy Policy Report (Avant‐Projet dePolitique Energétique d’Haïti) defined the government’s five key objectives of its energypolicy as to: ensure sufficient supply to meet demand and support economic growth;promote energy savings and efficiency; promote development of indigenous renewablesourcesofenergy;pursueexplorationoffossilfuelsourcesinHaiti;andcreatearegulatoryframeworktoencouragedevelopmentofsupplywhileprotectingtheenvironment.

TheNationalEnergySectorDevelopmentPlanfor2007–17recommendsimprovementanddevelopment measures but is now outdated, as it was completed before the 2010earthquake,whichfundamentallychangedtheenergysector’sdevelopmentneeds.EDHisthereforedevelopinganewElectricityMasterPlan,whichshouldbeoutlatethisyear,andwhichwillbuildontheeconomicandfinancialanalysisofvariousrenewablescarriedoutfor the SREP Investment Plan (Chapter3). The earthquake hugely compounded theproblems faced by the energy sector by worsening EDH’s financial situation and byundermining institutional andmanagerial capacities. It alsodamagedordestroyedmuchelectricityinfrastructure,increasingtheemphasisonrehabilitatingassets.

Since the earthquake, the government has focused on rebuilding the essential energyinfrastructureandmakingsurethatcriticalloadsweresupplied.Thisreconstruction,nowlargelycomplete,allowsthegovernmenttomovetoward its longer‐termpriorities intheSPDH.

ReachingtheSPDHgoalofbecominganemergingeconomyby2030willrequiretwin‐trackelectrification efforts: improving EDH performance and supporting on‐grid generationcapacitytoenabletheutilitytoprovidereliableandaffordableservicesinurbanareasandtheir surroundings; and supporting off‐grid electrification in rural areas thatwill not beservedbyEDH.

PowersectorreformandmeasurestoimproveEDH’sfinancialperformancearethereforecritical. The government’s approach to address EDH’s precarious financial situationconsistsofthreeparalleltracks:

1. ReduceEDHlossesby targeted investments in rehabilitatingexisting transmissionanddistributionlines—carriedoutwiththecurrentsupportfromtheWorldBankandtheInter‐American Development Bank (IDB)—and a comprehensive plan to reducecommercial losses, startingwith improvingcollections through installingnewmeters.Thegovernmenthasdevelopedaloss‐reductionprogram,whichisbeingadoptedasakey element of a new International Monetary Fund (IMF) program, currently beingnegotiated. The Rebuilding Energy Infrastructure and Access Project for Haiti(PRELEN), financedby the InternationalDevelopmentAssociation (IDA), is providingtechnicalsupportandfinancingfortheGovernment’sprogramforreducingEDHlosses(box1).

2. Increaseavailabilityandreducecostsofpowersupply, decreasing EDH dependency ontheexpensivefossil‐fuelpowerfromIPPs.Optionsincluderehabilitatingexistinghydroplants, boosting LNG imports for power generation, and raising the RE share in thegenerationmix.ThegovernmentseesSREPasacatalystforthisambition.

3. Preparethegroundforbroaderlegal,institutional,andregulatoryreforms,whichwouldclarify the legal framework, open the electricity sector to competition, incentivize

27

private investments, and establish a regulatory agency. The absence of a clearregulatoryenvironmentisoneofthemainbottleneckstodevelopingtheenergysectoringeneralandscalingupREactivitiesinparticular.Thecurrentlegalframework,basedon 1989’s Organic Law of Electricity is very outdated, and discourages privateinvestment. The resulting lack of competition is hurting consumers and constrainingfurtherdevelopment.Thegovernmentiscarryingoutstudiestohelpitstructurethesebroaderreforms.

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Box1.ThegovernmentprogramforreducingEDHlosses

Supportedbybilateralandmultilateralagencies, thegovernment iscommittedtoaddress thekeythreatstothesector’sfinancialviability—mainlytechnicalandcommerciallosses.In2014,the prime minister formed an Energy Commission in which strategic partners gathered todiscuss and coordinate the necessary steps toward EDH’s performance recovery andsustainabledevelopment.

In January this year, EDH outlined an ambitious loss‐reduction program, which has beenvalidated by MTPTC and MEF ministers, and signed an implementation plan to coordinatemonitoringofthisrecoveryprogram.Program’sshort‐termobjectivesareforEDHtosavemorethanUS$70millionannually(around40%ofannualbudgettransferstotheutility),through:

optimizingfuelandelectricitypurchases(whichofferthebiggestsavingspotentialforEDHcosts);and

sharplyimprovingallpartsofthecommercialvaluechain(installingnewmeters,adoptingautomatic billing and bill recovery)with the aim of cutting commercial losses by around10%inoneyear(from63.8%inOctober2014to57.4%12monthslater).

The2014–2015EDHrecoveryprogramalsohasthesupportoftheIMF,asitwillhelprapidlyreducebudgettransferstotheelectricitysector.InMarchthisyear,theIMFstateditsintentionto add implementation of the EDH loss reduction program to its structural measures in itsforthcomingthree‐yearprogramforHaiti,currentlyatadvancedstateofnegotiations.

PRELENisprovidingtechnicalsupportandfinancingfor implementingallactivitiesrelatedtothis program (and to EDH as needed) of US$77million, mainly for enhancing utilityperformance in seven areas: strengthening EDH management capacity; providing technicalassistance(TA)tosupportEDHontechnical,commercial,financial,andsectorplanningmatters;carrying out a 2030master plan for EDH to assess electricity demand and defining priorityinvestments tomeet it; extending EDH’s billing system to the provinces; installing a remote‐metering system for large industrial and commercial clients; providing TA to help EDH incarrying out external financial audits; and rehabilitating EDH’s distribution networks andinstallingmeteringequipmentinselectedareas.

Several development partners are supporting loss‐reduction efforts through complementaryinvestments in rehabilitating critical infrastructure to enhance the overall impact: in 2012,USAIDfinancedrehabilitationofsevensubstationsinPort‐au‐Prince(US$12million),followedby thatof sevenpowerdistributioncircuits in the samearea, financedby IDBand theWorldBank(US$3millionandUS$4million)in2013and2014.Thisyear,theWorldBankisanalyzingthe feasibility ofmodernizing EDH’s national dispatch center, a US$4million investment thatcould potentially generate US$0.5million in monthly savings to the utility. Lastly, IDB isrehabilitating EDH’s largest power generation asset, the Péligre hydropower plant and thetransmission line from Péligre to Port‐au‐Prince. The progressive upgrade of Péligre from35MW to 54MWwill ultimately provide 30% extra, cheap hydropower to theHaitian grids,thusloweringtheaveragecostofgeneration.

1.7 THERURALELECTRIFICATIONCHALLENGE

Statusandexpenditurepatterns

The official electrification rate according to EDH is 30%, but estimates vary due tounreliablestatistics.21Electricityconsumptionpercapitaismorethan80timeslowerthan

29

the average for the LAC region at about 30 kWh per year, reflecting the severe supplyconstraints discussed above, low electricity access, and low incomes. The distribution ofelectricity access is also highly unequal: electricity access in Port‐au‐Prince is relativelyhigh if irregular connections are accounted for, while access in rural areas remainsextremelylow(5%byofficialestimates).

Households in Haiti spend on average about US$30 amonth on electricity or electricitysubstitutes. However, rural/urban and departmental averages vary greatly (table 5 andfigure3inthenextsection),andthepooresthalfofthepopulationspendsmuchlessthanthisaverage.22

Renewableenergysolutionstoelectricityneeds

WithEDHabsentinmostruralareas,localgovernmentsandusershavebeenlargelylefttofind their own solutions. Up to very recently, individual diesel systems (for alternatingcurrentequipment)andkeroseneandcandles(forlighting)weretheonlyoptionsformostruralpeople,withdieselgeneratorsetsusedbymanybusinesses.Asmosthouseholdsowncellphones,theyalsospendalotonrechargingatcommercialchargingstations.Morethan36smallertownshavediesel‐poweredmini‐gridsbuiltbymunicipalgovernments,butonlyafewofthosearestillregularlyoperating,andwheretheyare,serviceistypicallyforonlyafewhoursintheevening.

Morerecently,REtechnologies,especiallysolarPV,havestartedtopenetrateruralareas,reflectingtheglobaltrendoffallingcosts;morelow‐cost,high‐performanceLEDlights;andtheemergenceofnewbusinessmodelsservingruralcustomers.

Thepenetrationof solar lanternsandsmallkitsamonghouseholds in ruralareas ishighinternationally(16–17%),23butvarieswidelyacrossthecountry.Theshareofhouseholdswithasolarlanternorsmallsystemrangesfrom9%intheCentralDepartmentto37%intheSouth‐East(table4).(SeetheAppendixfordetails.)

Table4.Penetrationofrenewableenergytechnologiesbydepartmentandbyrural/urbansplit

Share of HH owning shs or 

pico Column Labe

Row Labels Rural Urban

Grand Total 

unweighted

ARTIBONITE 10% 10% 10%

CENTRE 10% 9% 9%

GRAND ANSE 19% 37% 26%

NIPPES 31% 44% 35%

NORTH 18% 12% 16%

NORTH EAST 12% 17% 15%

NORTH WEST 24% 26% 25%

PORT AU PRINCE 6% 16% 10%

SOUTH 39% 27% 34%SOUTH EAST 44% 26% 37%

Number of 

Hoseholds:

HH with 

solar

HH without 

solar

402,126      40,213         361,913     

163,133      15,207         147,926     

98,725         25,445         73,280        

81,236         28,256         52,980        

213,773      33,533         180,240     

81,183         12,490         68,693        

146,283      36,834         109,449     

890,601      88,470         802,131     

162,019      55,655         106,364     141,996    53,113        88,883        

2,381,075   389,216      1,991,859  

100% 16% 84%

thus weighted average Haiti:

Source:Digicel/iiDevelopmentSurvey(2014).

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Paradoxically,theearthquakeservedasthecatalystfortheinitialspeedofdiffusionofoff‐gridrenewables.Withmuchoftheelectricityinfrastructuredestroyed,solarlanternshavebeen brought into the country as part of post‐earthquake assistance. These lanterns,originallyusedbydisplacedpeople in camps,haveeventually found theirway into ruralareasandtriggereddemandforsimilarproducts.Thequalityofsomeproductshowever,isanissue.Itisestimatedthatthereareatleast300,000solarlanterns/kitsinuseinHaiti,24butonlyabouthalfofthemarequality‐certifiedproducts,mostdistributedbylocalSMEsandNGOs.25

Post‐earthquake support has also triggered investments in street lighting. Originallystartedasareconstructioneffort, the investments instreet lightinghaveeventuallybeenexpandedtoruralareas—supportedbythegovernmentmainlythroughthe“Banmlimye,Banmlavi”(“Givemelight,givemelife”)program.The10departmentshaveabout13,500solarstreetlightsin140municipalities.

Theinvolvementofthediaspora,NGOs,andtheprivatesectorsincetheearthquakehasledto innovative approaches to sustainable energy off grid. (Annex IVprovides examples ofthese home‐grownmodels, ranging frommicrofinance for solar lanterns, to leverage ofmobilepaymentplatformsforoff‐gridenergy,todeploymentofsmartvillagemicro‐grids.)ManyoftheseinitiativeshavekeyattributesforreplicabilityandscalabilityunderSREP.

1.8 ENERGYASANENGINEOFRURALDEVELOPMENTANDGENDEREQUITY

Energyanddevelopment

The2015Haiti poverty assessment by theWorldBank26states that, despite a decline inmonetary andmultidimensional poverty rates since 2000, poverty still remains high byregional standards. Access to basic services is generally low, characterized by glaringinequalities.TheAssessmenthighlightsthatspecialattentionshouldbegiventovulnerablegroups suchaswomenand children, and to rural areas,whereextremepovertypersistsandwhereincomeinequalityis,infact,increasing.

Householdspaymuchforelectricityanditssubstitutes—accordingtobackgroundsurveysfor the SREP Investment Plan, more than half pay over US$20 a month, varying bydepartmentand rural/urbansplit (table5). InArtibonite, for example, about80%of thepopulationspendslessthanUS$8amonth,whileinPort‐au‐Prince,only10%paylessthanthat(figure3).27

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Table5.Currentsubstitutableenergyexpenditures=minimumWTP(averagemonthlybydepartment)

Average current 

substitutable energy 

expenses [$/m] Rural Urban

unweighted 

average

ARTIBONITE 13.04$                 23.65$                 16.85$                

CENTRE 22.84$                 29.43$                 25.06$                

GRAND ANSE 20.78$                 34.86$                 27.51$                

NIPPES 10.66$                 26.72$                 14.99$                

NORTH 14.68$                 36.66$                 24.16$                

NORTH EAST 17.95$                 24.74$                 22.37$                

NORTH WEST 22.32$                 37.14$                 29.57$                

PORT AU PRINCE 42.80$                 44.76$                 43.67$                

SOUTH 11.37$                 31.17$                 18.47$                

SOUTH EAST 13.22$                 23.47$                 16.72$                (blank)

thus, aprox. weighted national average 29.55$                 Source:Digicel/iiDevelopmentSurvey(2014).

Figure3.Currentsubstitutableenergyexpenditures=minimumWTP(averagemonthlyinArtiboniteandPort‐au‐Prince)

Source:Digicel/iiDevelopmentSurvey(2014).

The government recognizes the tight link between access to modern energy anddevelopment, which drives its modern‐energy efforts. The 2015 Poverty Assessmenthighlightstheimportanceofelectricityasoneofthekeyinputstoelevateproductivityandcreate jobs for both employers and the self‐employed by undertaking complementaryinvestments in basic infrastructure and removing constraints on access to inputs. Thisincludes augmenting credit and skills, with special attention to women, who areparticularlydisadvantagedinlabormarkets.

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Gender

Women and girls are particularly vulnerable to energy deprivation because it reinforcestheobstaclestheyfaceinaccumulatingandusingassets,particularlytheirhumancapital.Anddespiteprogressineducation,adultwomenarestilllesswelleducatedthanadultmen.WomenintheHaitianlabormarketarefarlesslikelytobeemployedandearnmuchlessthanmen,even ifequallyqualifiedCreatingeconomicopportunities forwomen isoneoftheimportantmeasurestoaddresstheimmediateandlong‐termneedsofwomenandgirls.

Similarly,lowfemaleparticipationinthepublicsphereiswidespread.Forexample,inthe49th legislature from2010 to2014,only4%ofallparliamentaryseatswereoccupiedbywomen,wellbelowtheregionalaverageof26%andplacingHaiti136outof142countries.Nationally in April 2014, eight of 23 ministers (i.e. more than 30%) and three of 20secretariesofstatewerewomen.Locally,womenaccountedforonly12%ofallmayors.28

The government has created a Gender Equality Office in Parliament and amended theConstitutiontostipulateaquotaofatleast30%womeninallpublicoffices.Butthereisnoenforcementmechanism,and implementationremains lowatall levelsof formalpoliticallife.

To support the government’s efforts at strengtheningwomen’s roles, governmental andnongovernmentalstakeholdershave launchedgender initiatives. Inenergy,aGenderandEnergyInteragencyCommissionwascreatedinAugust2014bytheBureauoftheMinisterDelegatetothePrimeMinister inchargeofEnergySecurityandbyBME,withsupportofthe Latin American Energy Organization (Organizacion Lationamericana de Energia;OLADE).Thiscommission,nowunderBMEleadership,aimstopromotegenderequalityinenergy for sustainable development. It intends to build alliances across the country'sinstitutions to coordinate efforts and ensure changes. It also brings togetherrepresentativesof theMinistryofEconomyandFinance, theMinistryofWomen'sAffairsand Women’s rights (Ministère à La Condition Feminine et aux Droits de la Femme;MCFDF), and the State University of Haiti. OLADE is supporting capacity‐building toprovidecommissionmemberswithtrainingandexpertise.

Ontheground,severalinitiativesdemonstratethatintegratingwomeninthesupplychainnotonlyenhanceswomen’slivelihoods,butcanalsoimprovetheoff‐gridenergybusinessandsustainability—Boxes2and3.

Box2.Promotingfemaleentrepreneurs:MicamaSoley

SAFICO, a Haitian manufacturing and trading company, has created a "social" division,MicamaSoley, offeringproducts to improve the livesof ruraldwellers, such as solar‐poweredlanterns, cell‐phone chargers, andwater filters.MicamaSoley leverages distribution networksthroughapartnershipwithFonkoze,Haiti’slargestmicrofinanceinstitution,andtheNGOCARE.SAFICO/MicamaSoleyhassoldmorethan54,000solarlanternsandsystems,mainlyviawomenandwomen’sgroups.

Fonkoze serves some 60,000 poor and ultra‐poor women in rural areas, with 46 branchesthroughout the country.29These female credit customers—most of themmarketwomen—areorganizedinabout2,000creditcenters.EachcenterelectsafemalechieftoliaisewithFonkozeandtooverseecustomers,whointurnoverseeagroupof10orsowomenwhoarereceiving

33

microloans.

MicamaSoley’sdistributionmodelthroughFonkozetargetsthesechiefs,whoareintroducedtodifferentproductsandwhoreceiveonesolarlanterntotakehomeandtrywithnoobligation.Afew weeks later, chiefs can either buy the lantern or give it back. Those who buy can thenpurchasemore lanterns atwholesale prices to sell at retail price tomembers of their creditcenters or to the general public. Since 2009 and through this channel, MicamaSoley hasrecruitedand trainedover1,200Fonkozecredit center chiefsandhas soldover50,000solarlanterns.

MicamaSoley’s second distribution network was developed with the NGO CARE, through aprogram,directedathelpingwomen,calledtheVillageSavingsandLoanAssociations(VSLAs).VSLAsarebasedontraditionalsavingsmethodsseenaroundtheworldundervariousnames,likesol(inHaiti),susu,tandas,hui,etc.WithsupportfromCARE,VSLAs(of20–30women)meetweeklyandsavesmallamountsofmoney,whicharethenmadeavailabletomembersasloanswhenneeded,plusinterest.WhenCAREidentifiesanaturalleaderinaVSLA,theyoffertrainingtobecomeavillageagent.CollaborationwithMicamaSoleyhashelpedthesewomenaccessnewrevenues by becoming resellers of solar lanterns.MicamaSoley has trained over 100 (mostlyfemale)villageagentsandsoldover4,000solarlanternsthroughthischannel.

Box3.Promotingfemaleentrepreneurs:EarthSpark

EarthSpark,anon‐profitbodyworkingasanincubator forcleanenergyenterprises, is leadinganinnovative approach to deliver sustainable off‐grid energy services. With the government, localofficials,andUNEP,EarthSparkhaslaunchedamicro‐gridinthetownofLesAnglais,Haiti,whichprovides affordable, reliable, and environmentally sensitive electricity services through EKoPwòp—EarthSpark’smicro‐utilityenterprise.LaunchedinNovember2012,theEKoPwòpgridhasbeenprovidingcontinuouselectricity to52householdsandwillbescaledupto430customers=theconstructioniscompletedandtheexpandedgridisbeingtested,expectedinfulloperationinMay2015.EarthSparkisalsosupportingsalesofsolarlanternsthroughitsEnèjiPwòpbranch.

Through both sides of itswork—retailing small, clean energy products and developing amicro‐grid—EarthSpark has mainstreamed gender considerations into its business. It has prioritizedreachingouttowomenfortrainingascleanenergyentrepreneurs,ascustomers,andasmicro‐grid‐employees, entrepreneurs, and customers. All grid “ambassadors” (promoters of the grid) arewomen, and once the grid expands, at least half the energy vendors in the townwill be female.Thesevendorswillgeneratenewincomebysellingenergycreditssimilar to thewaythatmobilephonecreditsaresold.Anecdotally,havingall‐femaleteamsclimbingladdersandmanagingmicro‐gridplanninghaschallengedgenderstereotypesinLesAnglais,butthereismuchmoretobedoneonthisfront.Sofar,allgridlinemenandelectriciansaremen,andEarthSparkisseekingtosupporttechnicalapprenticeshipsforfemalesinthefield.

ThroughapartnershipwithKiva.org,EarthSparkhashelpedprovideaccess to financing forbothEnèjiPwòpretailersneedingstartupcapitalfortheircleanenergybusinessesandtohouseholdsinLes Anglais needing a loan to cover connection fees to themicro‐grid. Kiva hasmade 490 loansthroughEarthSpark,57%ofwhichweretowomen.Asthenextstep,EarthSparkisplanningtoofferaloanproductjustforwomenconnectedtothegridtostartorexpandagriculture‐processingandfood‐preparationbusinesses.

SREPwillbenefitfromtheseexperiencesandwillworkcloselywiththeGenderandEnergyInteragency Commission to mainstream gender considerations in individual project

34

interventions. The RE capacity‐building platform developed under SREP can become animportanttoolforclosingtheopportunitygapbetweenmenandwomeninHaiti.

 

2RENEWABLEENERGYSECTORCONTEXT

36

2 RENEWABLEENERGYSECTORCONTEXT2.1 RENEWABLESINHAITI’SENERGYSECTOR

Haitineedstoat leasttriple itsgenerationcapacityby2020tosatisfyrisingdemand.30Italsoneedstodiversifyitspowersourcesandmoveawayfromtheexpensiveuseoffossil‐fuel sources.31Under the Electricity Master Plan it is expected that RE will featureprominentlyintheleast‐costexpansionpath.Needlesstosay,greateruseofREwouldalsohelpHaitisetthesectoronalow‐carbonpath.

Haitihasexcellent,butlargelyuntapped,REpotential,includinghydro,biomass,wind,andsolar,asconfirmedbyrecentandcurrentstudies(figure4).

Figure4.Haiti’srenewableenergypotential

 Source:SREPTaskForce(seeChapter8forcomposition).

Despite such abundance, progress in harnessing it has been slow. Large‐hydropower (ifconsideredRE)makesupthegreatestshareofREpowerproductioninthecountry,whilemicro‐andmini‐hydropowerremainslargelyunexploited.Somebiomass‐poweredprojectsarebeingdevelopedbutarenotyetcomplete.Windenergyhasnotyetbeentapped,32andsolar energy has been exploited only on a small scale,with solar lanterns and as a self‐supplyoptionforbusinessestodisplacedieselandforruraloff‐gridelectrification.

Hydropower

Installed hydropower capacity is slightly over 60MW. Seven hydropower sites areoperating;thelargest,assaid,isPéligrewith54MWcapacity(andisbeingrehabilitated).EDH also owns sixmini‐ and small‐hydro plants (under 2.5MWeach),with a combinedcapacityof7.5MW,butonlyfiveofthemareoperatingandeventhosearebelowmaximumoutputduetorepairneeds.Figure5showsHaiti’sannualhydropoweroutputfrom1980to2006;Figure6illustratesitsstrongseasonality.

37

Figure5.Haiti’sannualhydropowerproduction

Source:IEA.33

Figure6.Seasonalvariabilityofhydropower

Source:Worldwatch(2014).

HydropowerpotentialforHaitiisestimatedatover200MW34(acrossallhydrosegments).Potentialformediumhydropowerisabout130MW(atthreesites).Thisincludesa32MWhydroelectric dam upstream of Péligre dam in Artibonite, which is under discussion fordevelopment with Sinohydro (China), per an agreement signed in February this year.Potential for small hydro, which remains largely untapped, is estimated at more than100MW,35in line with Worldwatch Institute’s 2014 analysis (table 6). EDH has listedpotential mini‐hydro sites of 0.1–2.6MW, with falls of 50–400 meters and a combinedcapacityof23MW.

38

Table6.Estimatesforremaining“additional”pico‐tosmallhydropowerpotentialbydepartment

Source:Worldwatch(2014)basedonSoleo(2012).

Biomass

Charcoalandfirewoodarethemainsourceofthermalenergywithmorethan70%oftotalenergy supply; however, not all of it is renewable as it contributes to deforestation.Biomass, if used direct for electricity production, could generate up to 300MW. . Thisassumes that 100% of the currently available feedstock is converted to power. Themajorityofthispower(81%)isfromwoodproducts,whilethebalanceisfromsugarcane(13%),rice(4%),andcoconutandcoffee(lessthan1%each)(figure7).36

Figure7.Haitisugarcanebiomasspotential

Biomass projects havebeen looking into usingfeedstock like jatropha,sugarcane, eucalyptus, andoil palm for conversion tobiofuel. Based on currentproduction of biofuelcrops, the country may beable to generate up to154million liters ofethanol (again assumingthat all the currentlyavailable feedstock isconvertedtopower).

Source:LamureTardieuF.X.,PressoirG.,Chibas;2015.

39

Themajorityof this ethanol is fromsugar (56%)and corn (44%),while a small amount(lessthan1%)comesfromsorghum.36

Haitimay also be able to generate up to 30million liters of biodiesel (making the sameassumption), almost all from coconut (70%), then sesame (27%) and cottonseed (3%).Althoughgainingattentionasapotentialbiofuel,jatrophaneedsmorestudyofitspotentialinvestmentreturns.37

Wind

Haiti has no grid‐connected operating wind generator, although wind is among thecountry’s promising renewable resourceswith a potential estimated capacity of at least70–80MW.38Apart from publicly available wind‐potential maps (e.g. IRENA, Figure8),site‐specific speedmeasurements and feasibility studies for significant projects (10MWand above) are being conducted by individual, private project promoters and investors.The final results of these studies should be known toward the end of this year. Theinvolvementofmultiplelocalandinternationalinvestorsinwindprojectspointstomarketreadinessonthesupplyside.Thegovernment,supportedbytheEuropeanUnion,hasalsoconductedastudyatthreesites(seethewebsitesoftheBMEandMTPTC).39

Figure8.Mapofwindpotential

Source:IRENAGlobalAtlas.3Tierwindlayer.40

AsillustratedbyFigure8,particularlypromisingareasforwindsitesinclude:41

ThecentralwindcorridorcrossingLacAzueïintheWesternDepartmentnortheastofPort‐au‐Prince.ItisinPlaineduCuldeSacbetweentwobigmountainchains(LaSelleandChainedesMatheux).Aswind‐speedestimatesvarywidelyforthisarea,actualmeasurementsatappropriateheightsareneeded.

40

The northernwindcorridor in the North‐west Department, near the island of LaTortue, which is part of the larger “canal du vent” between Haiti and Cuba(estimatedat6–9m/s).42

Aswind energy is highly volatile, detailedmeasurements at appropriate heights (ideally80–100meters)areneedednotonlyforactualprojectsitinganddesign,butalsotogaugethediurnalpatterns(estimatesvary)asthiswillhaveadirect impactonthefuel‐savingsbenefitsanddispatchabilityoftheinjectedwindpower(figure9).

Figure9.Typicaldiurnalwindenergyprofile

Source:iiDevelopment(2015)(includinguseofMETEONORM7©software).

Note:X=hourofdayandY=averagewindenergy(morepronouncedthanwindspeedvariability,duetocubicrelationbetweenenergyandwindspeed).

Solar

Haitihasexcellentsolarenergyresources(figure10),withhigh‐levelirradiationacrossalldepartments andmonths of the year. But this potential remains largely untapped, bothsolarPV (for electricity) and solar thermaluses (forwaterheatingand small productiveapplications).

41

Figure10.Solarenergyresourcemap

Thecountryhasnosignificantgrid‐connected solar PV generation, butit does have recent experience indeployingoff‐gridsolarPVsystemsin two distinct, nascent marketsegments.

In one, PV companies start servingthe urban businessmarket43via anemerging leasing model (PVcompanies providing long‐termlease of the PV equipment, forwhichuserspayafee).Thismarketis serving commercial andindustrial users who are currently(partially or fully) self‐supplying inlight of the grid unreliability, andnow wish to complement currentexpensivedieselgenerationwithPVasaco‐generation“fuelsaver”).ThetypicalPVcapacityper site ranging

fromthetensofkilo‐tomegawatt‐peak(MWp)scale(e.g.arecentlyconcludedinvestmentof1MWpofsolarpowerforMarriotthotel).

In the other segment, PV companies serve off‐gridmarkets (see Section 1.7) via picoPVsystems,solarPV forschools,andsolarstreet lights(withcombined installedcapacityofabout0.7MW,albeitofmixedquality).TherearealsoPVsystemsforschoolsandclinics.ThelargestisMirebalaisHospital,whichoperatesa400kWsystem.Manyoftheseoff‐gridsolarPVcompanieshavestatedaninterestintheon‐gridPVmarketifenablingconditionsare in place, especially for the distributed SME “fuel saver” market segment. One localcompanyisdesigningandmanufacturingitsownsolarPVsystems.

Due to the spatial stability of PV irradiation, the relative abundance of possible PVinstallationsitesrelativetonationaldemand,aswellasscalabilitytoMWp,Haiti’stechnicalPVpotential isvirtuallyunlimited.TheeconomicallyviablePVpotentialkeeps increasingduetorapidlyfallingcapitalexpenditure(capex)costs,sothatthebenefitsofdeferringPVinvestment need to be weighed against forgone fuel savings during such a delay ininvestment(seetheeconomicandfinancialanalysisinChapter3).However,PVisalreadyleastcostformostoff‐gridusersineconomicterms(butnotnecessarilyinfinancialterms,as steep risk‐premiums result in extreme discount rates), and below the Port‐au‐Prince

Source:GovernmentofHaitiEnergyCell.3Tiersolarlayer.1

42

benchmarkthermallevelizedcostofelectricity(again,onlyineconomicterms).Thatsaid,the practical PV potential has previously been estimated at around 200MWp in urbanareasandover1,600MWpthroughoutthecountry.44

2.2 BARRIERSTODEVELOPINGRENEWABLESANDMEASURESTOMITIGATETHEM

Transforming Haiti’s energy sector through large deployment of RE faces numerousinstitutional, regulatory, and legal challenges; information, knowledge, and capacityconstraints; and economic and financial uncertainties. These main barriers, as well asmitigation measures (table 7), were identified through consultations with stakeholders(annexIII).

SREPwillhelpdismantlebarriersthrough“learningbydoing”andrelateddemonstrationeffects. Instead of putting all resources into one large project, it will finance smallerprojectsthatwillhelptestregulatoryandrisk‐mitigationapproachesandbuildconfidenceandcapacitiesoftheprivatesectorandgovernmentforscale‐upinthefuture.Weconsiderthistheoptimalapproach(fortotalSREPeffect)inacountrywheremanypotentiallyviableREmarketsegmentsareataveryearlystageduetomarketinefficiencies.

Table7.Mainbarrierstorenewableenergydevelopmentandmitigationmeasures

MainBarrier MitigationMeasureWeakfinancialsituationofEDH SREPandotherprojectswillreduceEDHcostsand

improveitsfinancialsituation

EDH recovers only about 22%of the value of thepower it supplies due to high technical andcommercial losses. EDH’s financial situationpresentssubstantialrisksforprivateinvestors.

EDH losses will be cut via targeted investments inrehabilitatingtransmissionanddistributionlinesunderthe supervision of the World Bank and IDB, and viameasurestoimprovecommercialperformance,startingwithabettercollectionsystemandupgradedmetering.(See Section 1.6 for the government’s loss‐reductionplanbackedbytheIMF.)Theseinvestmentsarecarriedoutthroughexistinginstruments,outsideofSREP.More diversified power supply options for EDH,including those supported by SREP, will lower itsreliance on expensive fossil‐fuel generation from IPPs.Options include installing additional power generationcapacity based on RE sources, rehabilitating hydroplants (Péligre is in process; other plants are in thepresent Investment Plan), and possibly powergenerationfromimportedLNG.SREP will demonstrate a new public‐privatepartnership (PPP) approach for the development ofgrid‐connectedrenewables.TheresultingREgenerationoutput will be provided at much lower cost than thecurrent EDH generation costs, and will be therefore apartofaloss‐reductionstrategy,butinitialprogressonEDH’sfinancialsituationthroughtheimplementationofthe above mentioned loss reduction plan must bedemonstratedforthePPPinvestmentstoproceed.

43

MainBarrier MitigationMeasureConcernsaboutintegratingintermittentgenerationcapacity

SREP investments in grid‐connected renewableswillremainwellbelowabsorptivegridcapacity

The government and EDH are concerned aboutintegrating large intermittent generation with analready very unreliable grid without causingfurther problems. Transmission line capacity isconstrained and its spare capacity once Péligre isfullyonlineisnotfullyascertained.Dispatchisfarfromoptimalgiventheseveregenerationshortage.

MTPTC, EDH, and the World Bank are evaluating thecapacity of EDH’s grid and dispatch strategies forintegrating intermittent RE, including maximum grid‐absorptive capacity, onsite restrictions, and networkupgrades.SREP investments in grid‐connected renewables (10–20MW)willremainwellbelowthe“safe”capacitythatthegridcanabsorb.SREPwillalsohelpthegovernmentidentify strategies and complementary investments topreparelargerinjectionofREintothegrid(postSREP),maximizingtotalnetbenefitsfromREgrowth.

Lackofclarityonthelegalandregulatoryframework

SREP will help develop instruments and modifycurrentones

Thereisnolegalorregulatoryframeworkforgrid‐connectedrenewables, suchas feed‐in tariffs (andrights) or similar certainty on tariff levels; nostandardPPA;andnoagencytoprovideregulatoryprotectiontoinvestors,etc.For off‐grid renewables, the legal frameworkallowsinvestmentsinoff‐gridelectricitybutisnottransparent. The relationships and hierarchyamong different laws is unclear and particularlyaffects potential mini‐grid investors. (They couldface stranded RE assets, possibly expropriated orlosing value.) Legal/regulatory clarity onwhethermini‐gridoperatorsarefreetosettariffsislacking(in practice they have been allowed to do so) orwhether theywill be subject to government tariffor quality‐of‐service regulations. No provisionshave been set for what happens to assets if theEDHgridcomestothearea.Roof‐top solar PV cannot be used as collateral.(Current laws consider it fixed, or part of thebuilding, and thus collateral of the buildingfinancier.)

SREP will help the government develop regulatoryinstruments to support on‐ and off‐grid renewables,throughthe“Buildingenablingframework,capacityandskillsforREscale‐upproject”(ProjectBrief5,annexI),as well as through applying, testing, and fine‐tuningregulatory instruments in individual SREP‐supportedprojects(ProjectBriefs1–4).SREP will focus on removing the most importantbarriersfirstandfine‐tuningtheframeworkthroughoutimplementation.

Lackofaccesstocapital SREPwillmobilizefinancingAccess to capital for RE projects is problematic,particularlyforsmallercompaniesengaginginoff‐grid electrification. Projects relymainly on donorandNGOgrants,whicharenotsufficientforscalingup. The private sector has requested thegovernmentanddonorcommunitytofacilitatesoftloans for flagship projects in rural areas; provideimproved access to commercial loans; andencouragelessrisk‐aversecapitaltoinvestinruralprojects.

SREP, with a parallel project co‐financed by CTF, willmobilize a mix of commercial financing and results‐based subsidies, progressively targeting local financialinstitutionsinRElending.

44

MainBarrier MitigationMeasureInadequatefiscalpolicyforrenewables SREPwill aim to balance fiscal policy, helping the

poorFiscal policy disadvantages on‐ and off‐gridrenewables against fossil‐fuel alternatives. REequipment is subject to import duties and value‐added tax, together amounting to over 30% ofproductvalue.Cumulatively thispresents anotherburdenonthepoor.

SREP, through its “Building enabling framework,capacity and skills for RE scale‐up project” (ProjectBrief5)willworkwith the government on options forlevelingtheplayingfield.Targeted,market‐friendly subsidieswill be consideredforthepoor.

Informationandcapacityconstraints SREP will run a component addressing the keycrosscuttingconstraints

A lack of in‐depth information on the detailedperformance,riskdeterminants,andgoodpracticeof technical and financial engineering is a maindriver for extremely high risk‐premiums (GIZ2014b).ParticipantsinallHaitiSREPconsultationsagreed on the information gaps inmultiple areas,whichshouldbeclosed.Enhancing RE curricula and improving hands‐onRE experience among university graduates, andcreatingapoolof skilled technicians, is importantfor sustainability of rural energyprojects, and forfaster scale‐up. The National ElectrificationStrategy,which also ranked high in consultations,would form a bridge between plugging thisinformation gap and clarifying the legal andregulatoryframework(above).

Given the prominence of information and capacityconstraints and asymmetries cutting across all REsegments, SREP will include a project to address keycrosscuttingcapacitiesandskills,aswellasanenablingenvironmentforscalingupREinHaiti.SeeComponentBrief5inannexI.

 

3RENEWABLEENERGYNATIONALPLANNING

ANDMETHODOLOGIESFORASSESSING

ECONOMICVIABILITY

46

3 RENEWABLE ENERGY NATIONAL PLANNING AND METHODOLOGIESFORASSESSINGECONOMICVIABILITYHaiti’spowersectorplanning isdrivenby thegeneraldevelopmentneedsandobjectivesset in theSPDH,whichsets thepath for thecountrytobecomeanemergingeconomyby2030,andwhichwillbeakey reference for theElectricityMasterPlan (seeSection1.6).Reaching the SPDH goal of becoming an emerging economy by 2030 will require twin‐track,on‐andoff‐gridefforts.

Improving EDH performance and supporting on‐grid generation capacity. The aim is toenable EDH to provide reliable and affordable electricity services in urban areas andsurroundings. Grid‐connected renewables provide an important alternative to expensiveandvolatile oil‐based generation, andprovide anopportunity to addressEDH’s financialsituation directly and indirectly: directly, because on‐grid renewables are a lower‐costgenerationoption,allowinggradualdisplacementofthemoreexpensivefossil fuel–basedgeneration (Haiti’s thermal generation costs are very highby international standards, asHaiti’sREsupplycurve inthenextsection illustrates);and indirectly,becausetheoverallincreaseingenerationcapacitybywayofaddedrenewables(ifplannedandimplementedcorrectly)will help improve servicequality for existing customers, andpotentially allownewcustomerstobeconnected.

ThisisanimportantcomplementtothereformsbeingcarriedoutontheEDHcommercialside(aimedatincreasedcollectionsandreducedtheft),whichwillbeeasiertoimplementifcustomersperceiveparallelimprovementsinserviceavailability,reliability,andquality.SREP—throughamixoftargetedinvestmentsandadvisoryactivities—canhelpHaitibuildREexperience, introduceand improveregulatoryandplanning instruments,anddeveloptheskillsneededatalllevels(fromtechnicianstodispatch)forREscale‐up.

Supporting off‐grid electrification efforts for households, businesses, and institutions notservedbyEDH.Thegovernment isaware thateven ifpowersector reformandEDH loss‐reduction programs are successfully implemented, EDH will need to focus first onimprovingsupplyinurbanareasand(legally)connectinghouseholdsinthegridvicinity.Itwill therefore be years before EDH can start expanding deeper into rural areas. So, toachieve the 2030 universal access target, it is necessary to invest in parallel off‐gridelectrification.

Such investments are also strongly encouraged from an equity perspective. Whilenationwide Haiti has made progress in reducing poverty and extreme poverty, in ruralareasithasnot.Thecontinuedinfluxofpeopletothemetropolitanareaisunsustainable.Government policies thus continue targeting investments and job creation in secondaryandtertiarycities,andruralareas,underpinningdecentralization.

Forallthesereasons,thegovernmentisrequestingSREPfundsforabalancedprogramthatwill help it reconcile the need to simultaneously focus on strengthening energy sectorcapacityandonexpandingaccess.

47

3.1 GRID‐CONNECTEDRENEWABLES

Haiti’s current planning tool for grid‐connected electricity investments is the NationalEnergySectorDevelopmentPlanfor2007–17.Theplanis,however,outdatedandEDHisdevelopinganewElectricityMasterPlan,whichshouldbereadybylatethisyear.Thenewplan—informed by the current World Bank–financed study on integrating intermittentrenewables with the EDH grid and by the present SREP Investment Plan analysis—willproviderecommendations foranoptimalmixofREover time.SREP implementationwillmakesurethattheproposedgrid‐connectedREdevelopedunderSREPisfullyconsistentwiththenewMasterPlan.AstheSREPInvestmentPlanisbasedonanadvancedanalysisofeconomic costs and benefits of RE options and on a comparison with fossil‐fuelalternatives, theMasterPlan isexpectedtouphold(andfurtherdevelopwithbetterdataandmoredetailedanalysis)theSREPInvestmentPlan’srecommendations.

TheEDHsupplycurve forREis inFigure11,andtheREgenerationcostagainstthermalEDHandcogenerationisinFigure12,illustratingtheeconomicattractivenessofRE.

Figure11.EDHrenewableenergysupplycurve

Source:iiDevelopment(2015).

48

Figure12.REgenerationcostvs.thermalEDHandcogeneration

Source:iiDevelopment(2015).

Note:Thelevelizedcostofelectricityisforthelow‐caseweightedaveragecostofcapitaltypicallyappliedforSREPInvestmentPlans,asopposedtothe(muchhigher)actualrisk‐adjustedreturnsthatearly‐stageequityanddebtproviderswouldrequirewheninvestinginHaitiREtodaywithouttheSREPInvestmentPlan.ThecapacitycreditsdonotfullyreflectallthedispatchchallengesthatEDHwouldfacewhenintegratingwindand/orsolarabove10–20MWpintheshortterm.

Nevertheless,planningthescale‐upofprivatesector–ledon‐gridrenewablesinanygivencountry is a challenge, because appropriate methods have started to emerge onlyrecently.45Nor can approaches from pioneer markets such as the European Union orUnited States be simply transferred to sunbelt countries because of fundamentaldifferences in “boundary” conditions,46most of which apply to Haiti. They includechallenges such asweaker grids and less actual spinning reserve, aswell as advantages,such as better RE resources, and the availability of hydro storage that can significantlyincreasethedirectbenefitsderivedfromthermalfuelsavedbywind/solarinjection.47Asaresultofplanningdeficiencies,renewablesaresometimesregionallyclusteredinnetwork“hot spots” (where they are needed less than in other nodes of the national grid), orunfavorablePPAsmayleadtoinefficiencies,bothofwhichtheSREPInvestmentPlanaimstoavoid.DuetothetimeneededtoprocurequantitativeRE‐optimizationsoftwareserviceswithsoliddataonnetworkandgeneration, it isusuallybesttostartpragmaticallywithamixofmethodsandplanningtools,suchastheREsupplycurveandscorecardsusedforthis SREP IP, and add more advanced planning tools sequentially (including the finalElectricityMasterPlan).48

SREPwillthereforesupportthegovernment’spathalongthelearningcurveofREplanninganddispatchbyapplying lessons fromothercountriesandoptimizing thevolumeofon‐gridREinterventions.OnemaineffectofSREPonthelocalREmarketwillbetoimprovefinancial costs of RE by reducing the risk‐reflecting weighted average capital cost, forequityanddebtproviders.49TheAppendixgivesfurtherdetailontheissuesandmethodsconsidered in the Investment Plan’s comparison of costs and benefits of RE capacity

49

additions,andon‐gridRE“SREPCases”studiedinmoredetail(SREPCases9–12inChapter4).GeneralrecommendationsforSREP’sinterventionsingrid‐connectedrenewablesareinBox4.

Box4.Generalrecommendationsforgrid‐connectedrenewables

Atthisearlystageofon‐gridREdevelopment,allanalyzedSREPon‐gridcases(SREPCases9–12)have significant potential for scaling‐up under Haiti’s conditions—once the necessary enablingconditions,includingregulatoryframework,adequatefeed‐intariff,etc.areputinplace.Theeffortit takestoreachthatstagedependsonthemarketsegmentandtargetedmarketshare.Henceanoptimaltargetvolumemustbeestimatedforeachcase,aswellasforthetotalsumofimplementedcases—for instance, the total of on‐grid RE volume in parallel to the optimal range for eachindividualon‐gridREsegment.Theoptimalvolumes for the final selectedcases (underStep5 inChapter4)arethenusedasakeyinputtothefinancingplan.

Basedonaninitialanalysisofintermittenton‐gridrenewablesforthePort‐au‐Princemetropolitangrid, it appears that an investment in about 10–20MWp capacity before 2020 would allow anoptimalcombinationofnetbenefitsfromcapacityaddedwithSREPfundingandnetbenefitsfrompost‐SREPlong‐termscale‐up(the“transformational”effect).

This is ina contextofmultiple trade‐offs, including thecurrentstageof theunderdevelopedgridand dispatch capability; interdependencies of wind and PV with seasonal hydro generation andwithdemand, and the effectof growingwind andPV shareson fuel savings and line losses (boxfigure); thedifferences inthespeedofcapexreductionbetweenwindandPV(Appendix); lackofinformation on the exact net benefits of the best wind site close by (which might result inunnecessary welfare losses with premature peak capacity commissioning); and the hefty riskpremium that private sector players would add in light of the (pre‐SREP) sector boundaryconditions(whichwillbeimprovedbySREPexit).

Boxfigure.Initialsimulationsofaverageannualfuelsavings

Source:iiDevelopment(2015);GIZ2013,2014aand2015.

Note:(yaxis,inUS$MWh)ofinjectinggrowingamountsofvariableRE(xaxis,2%energyshare=5–10MWp,dependingonwindshareandcapacityfactor)intoEDH’smaingrid.

Giventhatthecountrystillneedstodeveloptheregulatoryand“marketenabler”instrumentsforefficientlyscalingupRE,theSREPInvestmentPlanrecommendsstartingwithmoderateadditionsof up to 20MWp of combined variable RE (vRE) capacity under SREP, thus jumpstarting the

50

developmentofHaiti’s experiencewithdiversegrid‐connectedRE.All analyzed resourceoptionsarefeasibleinprincipleforthePort‐au‐Princemetropolitanarea,withwindandsolarPVprimarycandidatesdue to thewind’s good levelized cost of electricity expected forLacAzueï on theonehand,andsolarPV’smodularcharacterandsite flexibilityontheother(whichallowsforsmaller“line‐loss reduction” distributed projects exactly at the segments of the EDH grid that can bestaccommodatethem).

Itisrecommendedthattheactualbusinessmodel—IPP,PPP,utility‐ownedwithorwithoutanO&Mcontract—isconsideredbasedonthefeasibilityatthetimeofprojectdevelopment,givendegreeofgovernment andEDHsuccess in improvingEDH’s financial viability tomakeprivate investmentspossible.Todayhowever,PPPoptionsappearthemostattractive,atleastforthefirst10–20MWp,astheyleveragepublicfunding(givinglargergenerationcapacitythanapurepublicoption)whilereducing the risks for the private sector (reduced exposure and presence of risk‐mitigatinginstruments) and for the government (lower tariff paymentobligations) than in apurelyprivateIPPapproach.

3.2 OFF‐GRIDRENEWABLES

ForSREP’soff‐gridREplanning,currentenergysupplyanddemandinareasnotservedbythe EDH grid have been analyzed (figure13 and box 5),50and alternatives for off‐gridmarketsegmentsdefined.Theeconomicandfinancialanalysislookedatend‐userpricesatwhich existing energy demand would match RE off‐grid supply options, based onwillingnesstopay(WTP)andwelfaregains.(DetailsareintheAppendix.)

Figure13.Spatialdistributionofenergysurveyrespondents

Source:DigicelandiiDevelopment2015.

Note:ThemapshowssurveyresultsoftheDigicel/iiDevelopmentmarketsurveyforgridaccess(heatmap:red=gridaccess);off‐gridsolarkitsorlanterns(yellowspikes);andtheircurrentsubstitutableexpenditures(onlight,phonecharging,radiodrycells,TV,etc.—bluespikes,whereheightofspike=monthlyexpenditures).

51

Box5.Estimatingthepotentialformini‐grids

The box figure identifies population clustersmore than 2 km from the grid (generators,low‐voltagetransmission,substations),whichrepresentpotentialforvillage‐basedsupplyoptionssuchasmini‐andmicro‐grids.

Boxfigure.SREPassessmentoftheoff‐gridvillagegridpotentialinHaiti

Source:SREPTaskTeam/Navigant(2015).

Note:Thecoloredranges(redtoyellowreflectingpopulationsize)correspondtothenumberof“urban”or“village”householdsinurbansections.Asectionis“urban”ifithasanyurbanpopulationaccordingtotheHaitianInstituteofStatisticsandInformatics.Thisisonlyaroughdraft:resultswillberefinedduringfurtherSREPpreparation.Privatefirmswilleventuallybeabletobuildtheirownestimatesbytechnologyandareabasedonthe“LivingGIS”andwebpagethatSREPintendstoprovide.

The three basic off‐grid electrification options identified for Haiti’s off‐grid areas are (i)retrofittingandexpandingthecurrent largerremotesystems(mostlyEDHoperated), (ii)investing invillagemini‐/micro‐grids,or in(iii)stand‐alonesystems(suchassolarhomesystemsor smaller kits/lanterns).The analysiswas carriedout to estimate thepotentialmarketforeach,basedonthegeo‐spatialanalysisofunelectrifiedpopulation(table8).

52

Table8.Off‐gridelectrificationpotential

Off‐gridREoption Theoreticalmax.potentialofsegment(population)

RecommendedSREPtarget(population)

REretrofit,upgrade,andexpansionoflargerruralremotegrids(mostlyEDH,suchasPort‐de‐Paix)

1,500,000 45,000–150,000(3–10%)

Smallandmediumvillagegrids(retrofitandgreenfield)

300,000 30,000(10%)

Stand‐alonesystems(households,socialusers,SMEs)

>5,000,000 500,000–1,000,000(10–20%)

Source:Navigant(2015)andiiDevelopment(2015)forSREPInvestmentPlan.

Drawing on the estimates for each option, themost promising businessmodels of eachwere assessed for scalability and transformational potential, based on existing off‐gridbusinessactivities inHaiti.Themodelswerethencomparedwith internationalsuccessesandfailures, fromwhicha“short list”(ofeightmarketsegments, includinghybridvillagegridcasesandstand‐aloneusers)wasselectedofthebestsuitedSREPCasesforin‐depthfinancialandeconomicanalysis(seeStep3inthefollowingchapter).

Itwasthenestimatedwhatwouldittaketobringthesebusinesscasesuptoahigherlevelofquality,sales,andsustainability;andtheiruserstohigheraccesstierlevels51viasuitablepublic–private support instruments. This qualitative analysis was complemented by aquantitative analysis of typical cash flows and pricing strategies of Haiti RE off‐gridprovidermodels for relevant segments and technologies (picoPV and small solar stand‐alones forvillagepowerand largesocialandproductiveusers).Foreachcase,effectandsubsidyneedstill2020—andprobablemarketdevelopmentpost2020(afterSREPexit)—wereestimatedtogaugetheeffectofpossibleSREPinterventions.

GeneralrecommendationsforSREP’sinterventionsinoff‐gridrenewablesareinBox6.TheAppendix gives more detail on the identified business cases for stand‐alone segments(SREPCases1–5),andthedifferentEDHremotegridsandvillagegridsmarketsegments(SREPCases6–8).

Box6.Generalrecommendationsforoff‐gridrenewables

Urbanmarket:SREPcanachieveasignificantimpactfromexploitingsynergieswiththeemerging,dynamicsolarPVmarketinurbanareas.SeveralPVcompaniesarenowsellingorleasingsolarPVsystemstoindustriesandbusinessesthathaveintentionallyisolatedthemselvesfromEDHduetoproblems with EDH power supply, and that self‐generate with more expensive but also morereliabledieselgeneratorsets.

SolarPVorotherREtechnologiescanreduceenergycostsoftheseenterprisesandimprovetheircompetitiveness,whilebuildingdistributiongenerationcapacityinthecountrythatcanultimatelyalsobeharnessedfortheEDHgrid.

Due to EDH’s lack of financial sustainability, net metering for distributed generation is notconsideredaviableoptionfornow.However,SREPrecommendscontinuingtobuildontheexistinggrowingself‐supplymarketandtodivertitsdevelopmentfromdieseltorenewables,whichshouldcreate a more thriving solar PV industry benefiting on‐ and rural off‐grid renewables. Once

53

conditionsareright,netmeteringarrangementscouldbeputinplacetomaximizebenefitsofthisinstalledinfrastructureforbusinessesandEDH.

Ruralmarket:The initial geospatial and load analysis of unelectrified households suggests thatthereisscopeforseveraloff‐gridtechnologiesandbusinessmodelstocoexist.Thefastestscale‐up(throughSREPandafterSREPexit)islikelytobeachievedbycreatingalargelytechnologyneutralandbusinesscaseneutralenablingframeworkforoff‐gridRE(includingaccesstofinanceorequityfacilities, results‐based financing, or both) with the aim of benefiting a full range of RE supplyoptions. A complementary TA and South–South exchanges would, however, be used to supportthose technologies and business models that show the most important promise for scale‐up(annexIVpresentsexamples).

Asastartingpoint,maximummarketpenetration(withandwithoutSREP funding)and“optimalranges”wereestimatedforeachtechnology(mainlysolarforstand‐alone;andbiomass,solar,wind,hydroorhybridforvillages)andeachbusinessmodel.Buttheactualmixofoff‐gridcasesfundedbySREPmaywelldiffer fromtheestimatesunder the InvestmentPlan,as itwilldependonprivatesectorinterest(ananalysiswhichwillbesupportedbythepublicSREPGISonHaitiREresources,expected to be completed by 2016) and demand for SREP support. Success factors of the mostpromisingoff‐gridbusinessmodelswillbetransferredtothelocalprivatesectoraspartofprojectTA.

Forthevillagegridsegment(SREPCases6–8),themostcost‐effectiveinterventionandthelargestmarket potential by clients is for RE retrofitting of the larger remote grids (Cases 7 and 8).However, given that EDH runs the majority of these, feasibility is held back by EDH’s financialposition. SREP therefore recommendspilotingoneor two such interventions in oneor twoEDHgrids(ComponentBriefs2and4,annexI)anddevelopingparallelinterventionstoscaleupvillagegridsforsmallerruraltowns(retrofittingexistingmunicipalgrids,possiblywithgreenfieldactivity)alongsideacceleratingmarketdevelopment for individual systems(Cases1–5) (ComponentBrief3).PrivateoperatorsofCases6–8maywellbecomeactiveinCases1–5,too.

 

4PRIORITIZINGSTRATEGIC

INVESTMENTAREAS

55

4 PRIORITIZINGSTRATEGICINVESTMENTAREAS4.1 RANKINGINVESTMENTS

Theabovefinancialandeconomicanalysiswasbutoneelementinacomprehensivesector‐wide analysis and ranking of all possible RE investments for the SREP Investment Plan,whichhasconsideredalldiversetechnologiesandbusinessmodels thatcouldbeusedtoachieve the two government SREP goals identified in the previous chapter.52Thiscomprehensive approach was used to avoid crowding out emerging success cases bysupportingothers.

TheGovernmentSREPTaskForce(seeChapter8foritsmembers)ledbytheEnergyCell(underMTPTC),withsupportofMultilateralDevelopmentBanks (MDBs),prioritized theinvestments.Itconsultedwithstakeholders,whosecontributionswereessentialtothefiveproposedSREPcomponents(table10below).(TheconsultationprocessandresultsareinannexIII.)Prioritizationhadfivesteps.

Step1

The SREP Team (the Task Force and MDBs) used the Comprehensive Framework forNational REProgramPlanning53for analyzing local examples of private businessmodels(private, public and NGO projects) and international examples of public interventionsrelevant to Haiti (“RE Intervention Universe”). With key stakeholders, it adapted thisframework to local conditions, assembling a “long list” of potential business cases(Appendix).

Step2

ThoseonthislonglistwereanalyzedtodeterminetheirsuitabilityforHaitianconditions,fitwithgovernmentpriorities,readinessforimplementation,andpotentialforscalingup.Thisidentified12Haiti‐specificpotentialbusinessmodelsforallREmarketsegments–the“shortlist”).(TheAppendixhasfurtherdetail.)

Step3

Eachofthe12businessmodelswasrankedforeconomicandfinancialfeasibility,andforrelative cost‐effectiveness bymarket share target (tables 9 and 10). The ranking used avarietyofscorecardtoolsfortransparentdiscussionsoftrade‐offs,risks,andpotential.

Table 7 illustrates some of these elements for on‐grid cases (9–12). It contrasts typicalvaluesforunleveragedprojectinternalratesofreturn;54typicalminimumreturnsaprivateinvestorwouldrequire in lightof thecurrentsubsectorcontext;55thedifferencebetweenthese two (as a quick practitioner indicator of caseswhichmight require de‐risking forprivateagentstomovein);thewaycapex56usuallychangeswithgrowingcumulativeshareofeachmarketsegment;57thewaybenefitschangewith increasedcumulativecapacityinHaiti;58andthewaycapexchangesovertime,allelseheldconstant.59

Table 8 summarizes another set of illustrative scores developed by the Task Forcewithindependentconsultants(Navigantetal.2015)asoneofseveralinputstotheshortlist.60Theanalysiswasbasedondiscussionswithkeystakeholdersand the typical costs, firm‐level ratesof return, andmaximumvolume for the12 cases, attaching relative scores to

56

eachcasetoserveasthefirstfilter.(Forexample,thecases“smallpublicremotegrid”and“largegovernment‐ownedhydro”rankedlowest,failingtomakeittothefinalround.)

57

Table9.Comparativeanalysisofon‐gridREbusinessmodels(earlystageofanalysis)

IRR

(%

)

hu

rdle

rat

e if

P

RIV

AT

E O

WN

ER

IRR

min

us

hu

rdle

rat

e

Ow

ner

Ris

k if

Pri

vate

(e

xcep

t ca

se 9

= o

nly

p

ub

lic)

com

men

ts o

n r

isk

1. CAPEX change with increasing ENERGY SHARE @

same vintage (t held

constant)

2. BENEFIT change with significantly increasing ENERGY SHARE @

same vintage (t held

constant)

-6%

0%

4%

11%

8%

11%

ONGRID BIZ MODELS Summary of Ongrid RE Comparative Analysis with Tool C

SR

EP

CA

SE

#C

usto

mer

seg

men

tS

cale

Pro

duct

Ow

ner

RE

Sel

ler

(SP

V O

wne

r)3. CAPEX change over

TIME (share held constant, but plant

comissioned later, at t1 instead of t0)

9

mai

n gr

idM

Wel

ectr

icity

Gov

ernm

ent

Lab

el

RE

Res

ourc

e

I. Financial Feasibility: IRR Vs wacc II. Scale: Optimizing RE Net Benefits over Time

15%

###

Public Sector has no offtaker risk. Private IPP would need de-risking

10.0%

0.0% #govt

Uti

lity

hyd

ro

hyd

ro

9%no singificant Capex drop if built at t1 > t0. However: (i) the more hydro in system, the more wind&pv becomes viable; (ii) Investor loses savings between t0 and t1.

slight Capex reduction: (i) wind capex fall less than solar, (ii) BOS (t) and transaction costs (t) less of an issue for IPP than for behind-meter cases

<10

MW

win

d IP

P o

r ut

ilit

y

win

d

15% 15%

14%

Lower offtaker risk, because part of generation

is used for self supply

0.0%

-2.0%

#

###

Public Sector has no offtaker risk. Private IPP would need de-risking

10.0%

-10.0

%#

11a

stan

dalo

ne/g

rid

mix

kWeq

uipm

ent

Cus

tom

er o

r L

ease

/PP

A

11b

stan

dalo

ne/g

rid

mix

kWeq

uipm

ent

Cus

tom

er o

r L

ease

/PP

Abu

sine

ss/N

GO

fast Capex Reduction: international CIF and BOS fall fast, only local transaction costs depend more on share (market stage) than time

10%

###

###

Zero offtaker risk, because RE capacity

capped at solar noon

demand in this biz case

(simple no battery case)

0.0%

0.0% #

fast Capex Reduction: international CIF and BOS fall fast, local transaction costs depend more on share (market stage) than time, post 2020 battery becomes attractive

Sel

f su

pply

PV

w

itho

ut f

eed-

in

16% 5%

12a

stan

dalo

ne/g

rid

mix

MW

equi

pmen

tC

usto

mer

or

Lea

se/P

PA

15%

###

Has both (i) biomass

supply risk (strong if

local unrest) and (ii) offtaker/

regulatory risk

5.0%

-5.0%

#

can go both ways: capex may fall slightly for specialized hardware/suppliers, OpEx may increase or fall (BM supply)

###

Has (i) biomass

supply risk, but (ii) zero offtaker risk, because BM

used 100% for self supply

5.0%

-5.0%

#

can go both ways: capex may fall slightly for specialized hardware/suppliers, OpEx may increase or fall (BM supply)

sola

r

Sel

f su

pply

bio

mas

s w

itho

ut f

eed-

in

busi

ness

/NG

O

Beh

ind-

met

er: b

iom

ass

fuel

sav

er +

fee

d-in

busi

ness

/NG

O

Beh

ind-

Met

er: P

V

fuel

sav

er +

fee

d-in

10

mai

n gr

idM

Wel

ectr

icity

Sel

ler

bu

sine

ss/N

GO

23% 12%

12b

stan

dalo

ne/g

rid

mix

MW

equi

pmen

tC

usto

mer

or

Lea

se/P

PA

busi

ness

/NG

O

bio

mas

s

23%

58

Table10.Potentialon‐andoff‐gridREbusinessmodels(earlystageofanalysis)

En

ergy

Acc

ess

En

v iro

nm

enta

l

Ben

efit

Sca

lab

ilit

y

Tra

nsf

orm

ativ

e

TO

TA

L S

CO

RE

(hig

her

=b

ette

r)

Enersa

TOTAL

Micama

Drip Irrigation (LAC)

Rural Stores Refrigeration (in LAC)

Rural Community Tourism Enterprises

Drip Irrigation Agriculture Coops (Rotary International/Haiti)

Zanmi Agrikol Lashto Fish Farm (Croix-des-Bouquets)

Micro-Enterprise Center (MEC no microgrid) SELF other countries

L'Hôpital de Port-à-Piment

School in Port-a-Piment (Electronic Learning Board)

solarCompanies starting in Africa: PowerHive, TTA, etc..

solarEarthspark Int'l Les Anglais (DIGICEL TOWER)

solar SELF Feyo Bien (With MEC)

biomass Limye Pa w Camp-Perrin (Anchor?)

hydro Nepal community-run grid

wind Alaska wind--diesel grids

solarNRECA Port-à-Piment, Côteaux, Roche-à-Bateau

hydro Pichon/Belle Anse?

wind Port de Paix?

solarProposed Caracol. Other countiries (Australia?).

Saut Mathurine (rehab)

Guayamouc (new)

wind Lac Azuei/Étang Sautmâtre

solar may be part of virtual utility pv + wind

Hôpital Universitaire de Mirebalais

L'Hôpital Bernard Mevs (Port au Prince)

Darbonne Sugar Mill (Léogâne)

Unikode Distllery

Barbancourt Distillery (La Plaine du Cul-de-Sac)

COLOR CODE. High

Medium

Low

SREP CASE

#:

mar

ket

segm

ent

Sca

le

Ow

ner

RE

Sel

ler

(SP

V B

usi

ne s

Ow

ner

)

GENERIC BUSINESS

MODEL

RE Resou

rce

solar 2

OF

FG

RID

sin

gle

use

r 1

stan

d al

one

W

Hou

seho

ld o

r

Lea

se/P

PA

busi

ness

/NG

O

SUPPLY RESIDENTIAL

SOLAR PRODUCTS

Example Cases

Filtering Discussion Tool B

3

3

stan

d al

one

kW

Coo

pera

tive

busi

ness

/NG

O

SUPPLY COOPERATIVE

PRODUCTIVE PV SYSTEMS

solar

SUPPLY PRODUCTIVE PV (PPV) SYSTEMS

solar2

stan

d al

one

kW

Ent

erpr

ise

or L

ease

/PP

busi

ness

/NG

O

3

4

stan

d al

one

kW

Gov

ernm

en

busi

ness

/NG SUPPLY

COMMUNITY SOCIAL PV SYSTEMS

solar 2

OF

FG

RID

vill

age

min

igrd

5

rem

ote

grid

kW Selle

r

1

6

rem

ote

grid

kW Selle

r

busi

ness

/NG

O

SMALL SCALE ANCHOR

TENANT GRID

mun

i/coo

p

SMALL SCALE PUBLIC REMOTE

GRID

3

7

rem

ote

grid

MW

Selle

r

mun

i/coo

p

MEDIUM SCALE COOPERATIVE REMOTE GRID

2

8

rem

ote

grid

MW

TB

D

2

ON

GR

ID R

E

9

mai

n gr

id

MW

Gov

ernm

ent

govt LARGE SCALE

GOV'T DGhydro

busi

ness

/NG

O

LARGE SCALE [PRIVATE/PRIVA

TIZE/EdH] REGIONALGRID

1

2#

mai

n gr

id

MW

Selle

r

busi

ness

/NG

O

LARGE SCALE PRIVATE IPP

BEHIND-THE-METER SOLAR: fuel saver or mix

with feed-in

solar#

stan

d al

one/

ma

grid

hyb

rid

kW

Cus

tom

er o

r

Lea

se/P

PA

busi

ness

/NG

O

#

stan

d al

one/

mai

n gr

hybr

id

MW

Cus

tom

er o

r

Lea

se/P

PA

busi

ness

/NG

O

BEHIND-THE-METER BIOMASS:

a. fuel saver or b. mix with feed-in

2

biomass 2

59

Step4

Thetop‐scoredSREPcaseswerethencompiledintoarangeofpossibleSREPcomponents(orSREPinterventionssupportingthescale‐upofthesebusinesscasesorthedevelopmentofthesemarketsegments)toassessandrankfourelements:feasibilityatcomponentlevel(implementableathighprobabilityandwithmanageabletransactioncosts);synergiesandeconomiesofscale(e.g.severalpotentialoff‐gridelectrificationbusinessmodelswouldbeincluded in one “umbrella” off‐grid electrification component); the overall effect ofdifferent“bundles”ofmarketsegmentinterventionsontheoverallenergymarket(withtheaimofoptimizingthetotaleffect,efficiency,SREPscale‐uppotential,andtransformationalimpact);andthespecificprocessrules,safeguards,andprioritiesofSREP,thegovernment,andMDBs.TheresultingcomponentsorinterventionswereagainrankedinafinalorderofprioritybytheSREPTaskForce,whichconsideredfeedbackfromstakeholders(table11).

Table11.RankingoffinalselectionofSREPHaitiprojects

FinalselectionofSREPcomponents

Transformative

impact

Development

impact

Econom

icand

financialviability

Leveraging

additional

resources

Leveragingprivate

resources

Implementation

capacity(nat.gov’t)

ViabilityforMDB

financing

Sum

1REforPort‐au‐Princemetropolitanarea

4 4 3 2 3 3 2 21

2.RE‐forPort‐de‐Paixremotegrid

2 3 2 2 3 3 2 17

3.Off‐gridelectricityforproductive,social,andhouseholduses

4 4 3 4 3 4 3 25

4.Rehabilitationofsmallhydroplants

2 3 2 2 1 3 2 15

Note: Scored from 0 to 4, with 4 the best.

Step5

The potential components were discussed with key stakeholders, who requested acrosscuttingcomponentforbuildingcapacityandimprovingtheenablingenvironmentforscaling up RE in Haiti, giving the final proposed SREP Investment Plan five SREPcomponents(table12).

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Table12.FiveproposedSREPcomponents

SREPproject Priority

1REforPort‐au‐Princemetropolitanarea

High—importanttransformationalpotentialforexperienceandcapacitiesinintegratingrenewablesinEDHgrid.Itwillinjectmuch‐neededREgenerationcapacityinthegridandhelpunlockfutureinvestmentsinRE.ItneedstoensureadequatemaintenanceifownedbyEDH.

2.RE‐forPort‐de‐Paixremotegrid

Medium/High—lessreplicationpotentialduetothesmallsizeofisolatedgrids,butcanbereplicatedinthefiveotherisolatedgrids.Itprovidesgoodlearningpotential(cooperationwithacademia,etc.)andhasstrongdevelopment‐impactjustification(asitisforthepoorestandmostisolateddepartmentthathasstrongdevelopmentpotentialbutthatlackselectricity).

3.Off‐gridelectricityforproductive,social,andhouseholduses

High—transformationofruralareaswhereelectrificationrateshavebeenstagnantinthepast30years;potentialtosupportagricultureproductivityimprovementsandotherproductiveuses;complementsaparallelengagementunderIDAandCTF.

4.Rehabilitationofsmallhydroplants

Medium/High—cost‐effectiveintervention,butlimitedreplication/scale‐upimpact.NeedtoensureadequatemaintenanceifownedbyEDH.

5.Buildingenablingenvironment,capacitiesandskillsforREscale‐up

High—crosscutting—essentialcomplementofcomponents1,2,3and4,andforthefuturescalingupbeyondSREP.

 

5RESPONSIVENESSTOSREPCRITERIA

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5 RESPONSIVENESSTOSREPCRITERIATheSREPInvestmentPlanisresponsivetoalltheSREPcriteria(table13).

Table13.SummaryofprogramresponsivenesstoSREPcriteria

Criterion Off‐gridrenewableenergy On‐gridrenewableenergyforgrid‐connectedinfrastructure

IncreasedinstalledcapacityfromREsources

Itwillleadtoabout10MWp(possiblerange10–18MWp)ofdecentralizedREcapacityandsolarstand‐alonesystems.

Itwillresultdirectlyin10–20 MWpofgrid‐connectedREcapacity(dependingstronglyonwindshareandabsorptivecapacity,aswellasthefinaldealstructure)ofinstalledgenerationcapacity.ItwillbuildenablingframeworkandthecapacityforfurtherREscale‐up.

IncreasedaccesstoenergythroughREsources

It will provide new electricity access to at least 1 million residents -- including Port-de-Paix

Itwillimproveelectricityaccess——toabout1millionEDH‐usingcitizens.

Lowemissionsdevelopment

REmini‐gridsandsmallstand‐alonesolarsystemsandproductsemitnocarbondioxide;mini‐gridsthatusebackupdieselforpartialgenerationemitrelativelysmallamountsrelativetothebaseline(Chapter10).

RE(solar,wind,hydro)forexistinggrid‐connectedinfrastructureemitsnocarbondioxide.

Affordabilityandcompetitivenessofrenewablesources

Theeconomiccostofsupplyformini‐gridsisfarlessthanfordieselgeneration;theeconomicavoidedcostoflightingisfarlessforpicoPVthanforkerosene.Butgivenruralconsumers’limitedabilitytopayandtheneedtoreachlow‐incomeconsumerstodeepenaccesstotheruralpopulation,targetedincentiveswillbeneeded.

REiscostcompetitivewithexistingPort‐au‐Princegeneration,seenintheRESupplyCurve(figure11)andadvancedmodelingofoperationalbenefitsfromsavedfuel.

Productiveuseofenergy

Mini‐gridsdirectlysupportelectricitysupplytoenterprises.Stand‐alonesystemssupportproductiveenergyuse,directlybyenablingcottageindustriesandsmallretailventurestoincreaseproductivity,andindirectlyviathebenefitsfromchildren’simprovededucationduetobetterlightingandcommunication,health,andsecurity.

On‐gridrenewableswillincreasethequantityandqualityofPort‐au‐Princeelectricitysupplygiventhetoughbaseline,andthushelpmeetsomesuppresseddemand,whichnowlimitsproductivity.

Economic,social,andenvironmentaldevelopmentimpact

Displacementofdieselandkerosenereduceslocalpollutionandriskoffire.Greatereconomicopportunityresultsfromelectricityaccess.Localcommunitiescanretainmoneythatpreviouslywouldhavebeenusedtobuyfuel.

Inadditiontoobviouseconomicimpacts,thelocalandwiderenvironmentalimpactsareexpectedtobepositiveduetothedisplacedthermalfuelandthesmallsizeoftheinstalledwind,PV,andhydroplantsintheuncriticalPort‐au‐PrinceLacAzueïareas.

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Criterion Off‐gridrenewableenergy On‐gridrenewableenergyforgrid‐connectedinfrastructure

Economicandfinancialviability

Economicandfinancialviabilityhavebeenconfirmedinconsumersurpluscalculationsbasedonanestimated,income‐correcteddemandcurveusingdataoftheDigicel/iiDevelopment2014andECVMAS2012surveys.REsourcesareleastcostagainstfossil‐fuelalternatives,andprojectshavepositiveandrobusteconomicratesofreturn.Financialratesofreturnaresatisfactory,thoughsomegrantsupportforinitialinvestmentisneededduetoruralresidents’lowerabilitytopay,

Economicandfinancialviabilityhavebeenconfirmedviaastandardeconomicandfinancialanalysisforon‐gridREbenefitsandcosts.

Leveragingofadditionalresources

Infrastructureisneededtorapidlyscaleupinvestmentstoachievethenationalelectrificationgoal.SREPresourcesalsoleverageinvestmentfinancingfromothersources(privatesector,otherMDBs,households,leveragedatabout1:4–1:6).

Aleverageofabout1:1–1:5 (SREPtoprivateandMDBs)isexpectedfortheon‐gridcomponent,butwilldependheavilyonthefinaltypeoftheinvestment,thedealstructureandtheriskappetiteoftheinvestorsatthetimethegrid‐connectedREcomponentisdeveloped.

Genderequity Womenandchildrenaredirectandmajorbeneficiaries,gainingaccesstocleanerenergyservicesinhomesthatofferfarsuperiorservices,improvedaccesstoessentialhealthandeducationalservices,greatereconomicopportunities,andlowercostsofaccessingbetterenergyservices.Wherefeasible,womenwillbeinvolvedinsupplychainssuchasbuildingontheFonkoze/MicamaSoleyexample.

Improvedpoweravailabilitywillbenefitbothmenandwomen.DevelopmentofanewREindustrywillcreatenewopportunitiesforwomen’semploymentandbusinesses.SREPcapacity‐buildingprojectwillspecificallytargetwomentohelpthemtakeadvantageofthenewopportunities

Co‐benefitsofREscale‐up

Scaled‐upREreduceslocalairpollutionandavoidsriskoffirefromfuelspillage.Electricityisanimportantinputinpovertyreductioneffortsandruraldevelopment.

Localdieselfuelusewillbecut,alleviatinghandlingissues.GreaterrelianceonlocalREsupportsenergysecurity.

 

6SREPFORHAITI:

PROGRAMDESCRIPTION

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6 SREPFORHAITI:PROGRAMDESCRIPTION6.1 PROGRAMOBJECTIVESANDEXPECTEDOUTCOMES

The SREP Investment Plan provides a balanced allocation of resources between twocompetingandurgentsectoralpriorities:reducingcostsandimprovingquality,reliability,and sustainability of services for existing customers (particularly in urban areas)—Components 1, 2, and 4; and increasing electricity access (especially in rural areas)—Components2 and3. Inboth cases, the services improved and the access increasedwillraiseproductivityandboostsocioeconomicdevelopment.

Asmanycustomersreceivefewerthan4hoursofpowersupplyaday(tier0oftheSE4ALLMulti‐Tier Framework), the impact of improved servicesmay be as striking as receivingelectricityforthefirsttime.TheMulti‐tierFrameworkwilltracktheinvestments’ impact,includingnewconnectionsandimprovementsofservicelevelsacrosstiers.Thehouseholdsurveys will include gender‐disaggregated data to track specific impact on women. Thebaseline is planned for this year (Chapter 10). It will also closely track the impact ofproductiveuses.

The main outcome of the SREP Haiti Program will therefore be the expansion andimprovementofelectricityservicesforhouseholds,businessesandinstitutions.Additionalkeyoutputsandoutcomes include increase inREcapacity (MW)andgeneration (MWh);greenhouse gas emission reductions and avoidance; enabling regulatory frameworkenacted;expandedskillbaseforfurtherREscale‐up;increaseinnumberofREenterprises;RE jobs created; a knowledge transfer/increased capacity of the local technicians; andopportunitiescreatedforfemaleentrepreneursandworkers.

6.2 PROGRAMRATIONALEANDDESIGN

TheSREPInvestmentPlanisconceivedasacomprehensiveprogram,withtheobjectivetoinitiate a transformation from theunderdeveloped, unreliable, and expensive fossil fuel–based electricity generationmix to a modern and sustainable energy system relying ondiversesourcesofpower.

The underdeveloped state of the energy sector is a challenge and an opportunity. It is achallenge because the electricity sector has still a long way to go if it is to power theeconomytoemergingstatuswithuniversalelectricityaccessby2030.Thischangewillnothappen through one program but will require long‐term and consistent support.Diversifying to REwill be very important, but not the only element. Ultimate success iscloselytiedtostructuralchangesinorganizingandmanagingtheelectricitysector,startingwith the recent government plan agreed with the IMF and supported by PRELEN(Chapter1).

The opportunity comes from the underdeveloped state of the sector, making it open toinfluencetowardacleanerandmoresustainablepathfromthestart,inaleapfroggingviastate‐of‐the‐art know‐how and technologies, including public RE planning methods andprivateREbusinessmodels.Thisallowsthegovernmenttoreap“second‐moveradvantage”byabsorbinglessonsfromothercountries’early‐stageefforts.

SREPisdesignedtoaddressthesechallengesandexploittheseopportunities,soasto:

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Identify immediate, cost‐effective, readily implementable opportunities for REinvestmentswiththebestsuccessprobability,replication,andscale‐uppotential.

DemonstratehowREcanfillthegapsinthedevelopmentofall levelsofelectricitysystems, byworking on these levels in parallel, from the EDHmain grid, to EDHisolatedgrids,onexisting(mostlynon‐operational)ruralmunicipalgrids,tosmallergreenfield off‐grid investments or smaller villages without anchor clients, to thesmallestpicoPVsystems.Thismultichannel approachwillhelp reduce transactioncostsandshowcasean integrated,nationalREdevelopmentplan.Tominimizetherisks from working on multiple fronts, SREP is bundling several smallerinterventions into larger projects, focusing on creating a framework that cansupport diverse technologies andbusinessmodels,while leaving thedecisions onthe most appropriate technologies and business models to the market, thusloweringtransactioncosts.

Start small, but think big, by reducing the daunting barriers to RE investments(Chapter2).Successful transformationtorenewableswill requireasteep learningcurveforthegovernmentandprivatesector,andmanyexperimentsandfine‐tuningwith what works. The Investment Plan thus recommends starting with multiplesmaller investments that will allow learning by doing and pave the way forsuccessfullargerinvestments(seeBoxes4,6,and7).

Complement SREP‐facilitated investment with other energy sector interventions.IDBandtheWorldBankareassistingthegovernmentthroughMTPTCandEDHinoverallsectordevelopmentandreforms,capacity‐building,rehabilitationofexistingassets, and actions to improve EDH commercial performance and reduce losses(annexVI).SREPisintegraltothisbroaderprogram.

Complement investmentswithastrongTAandcapacity‐buildingprogrambeyondtheneedsofindividualprojects,soastobuildthenationwideskillstosupportmoreambitiousandsustainableREscale‐up(duringandaftertheSREP)—SREPProject5.

Coordinatewith other donors, such as UNEP, the Norwegian government, USAID,and the Pan‐American Development Foundation (annex VI). SREP will focus onfilling the gaps between these organizations: for example, many of them providegrant funding for innovativeoff‐gridenergystart‐ups.The companies that startedwiththesefunds,however,oftenfinddifficultiestoexpandfurther—agapthatSREPaimstofill.

DevelopingtheenergysectorinHaitiwillbealong‐termprocess,inwhichSREPcanplayan important role. To lift Haiti’s electricity sector from its dire situation, investments inadditionalgeneratingcapacityforthegridwillhavetobesequencedwithpolicyreforms,whichinHaiti—asinotherfragileorpost‐conflictdisastercontexts—willbeadaptiveandincremental. The combination of IDA, IDB, and IMF support for EDH, alongside SREPsupport to start decreasing the gap between tariffs and costs of production, is the onlyviableapproachforsettingthestageforelectricitysectorgrowth,aswellasfordoingawaywiththesubsidiestoEDHforbetteruseineradicatingpoverty,includingelectrifyingruralareas.

6.3 PROPOSEDSREPINVESTMENTPLANCOMPONENTS

TheSREPInvestmentPlanforHaitihasfivecomponents.

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1.RenewableenergyforthePort‐au‐Princemetropolitanarea

.The component will deliver 10–20MW ofRE(dependingontechnologymix,finaldealstructure, and result of feasibility studies)into the EDH main grid serving Port‐au‐Princeandsurroundingareas.The currentinstalled capacity in the main grid is240MW, of which only about 100MW isavailable (15% hydro and 85% thermal)against anestimatedpeakdemandof over500MW. The grid serves about 160,000(legal) customers and many more“irregular” customers, who all howeverreceive only intermittent service. The

averagedailysupplytimeis16hours,butthisaveragehidesdifferencesacrossgeographicareasandtypesofclients.Manyhouseholdsreceivefewerthanfourhoursofserviceaday.

This Port‐au‐Prince on‐grid component will support the country’s first grid‐connectedvariableREproject(eitheronelargeprojectorseveralsmaller,parallelorconsecutiveREprojects)totestandfine‐tunetheapproachesproposedbythegovernment.Theexperiencewouldbeusedtodevelopasuitablepolicyandregulatoryframeworktoencouragelargerinvestments (post‐SREP scale‐up). The approach will be a PPP, encouraging privateinvestments (and adequate O&M), with SREP financing focused on reducing the totalinvestmentcostsandtheriskexposureforthatsector.

The projects will be selected following competitive procedures. The PPP option will beconditionalonademonstratedcommitmenttoimproveEDHfinances.IfaPPPoptionisnotviablewhenthisSREPcomponent isdeveloped,apublicalternativecouldbeconsidered,but it would involve, at a minimum, a private contract for O&M, following establishedinternationalexamplesofsuchcontracts.

VariousRE technologieswillbe considered (wind, solar,biomass, andhydro),withwindandsolarPVtheprobableprimarycandidatesduetowind’shigheconomicattractivenessat the best sites and due to the solar PV modular character, which makes it easier todevelop smaller projects. Also, the most suitable wind sites are near the existingtransmissionline,whilesolarPVissiteflexibleandcanthereforefeedintothegridinareaswheregridisbestequippedtoabsorbthevariablerenewableenergy.ThefinaltechnologychoiceofthiscomponentwillbedecidedatthestartofSREPimplementation,basedonthemoredetailedanalysis inthenewElectricityMasterPlan(2015)andinformationonvREgrid absorption (annex II), relative benefits in situ, private sector interest, and EDHperformance.

ProposedtotalcapacityofintermittentREof10–20MWremainswellbelowthesafegridabsorptionlimit.Componentimplementationwillalsobenefitfromtherehabilitationofthetransmission line from Péligre to Port‐au‐Prince, which is being upgraded to allow foradditionalREoutput.IncreasedhydropowergenerationfromtherehabilitatedPéligredamwillalsosmoothintegrationofintermittentwindandsolar(GIZ2013).

Photocredit:CaribbeanJournal(Grenada)

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2.Renewableenergy‐basedexpansionofPort‐de‐Paixremotegrid

Apart from themain grid serving Port‐au‐Prince, EDH runs 11 isolated grids, from300 kW to 25MW, with power mostlysupplied intermittently by diesel units andsome hydropower. They have O&Mproblems, thusmaking it harder to extendaccess tomore households, even though itis estimated that over 300,000 households(see Table6) could be reached byrehabilitatingandexpandingthesegrids.

The Port‐de‐Paix grid is in theNorth‐West

department, the most isolated with thehighest proportion of poor in Haiti. It has

an operational capacity of 2.2MW, serving some 3,600 customers. Service is in generalavailable only 5–12 hours a day, partly dependent on supplies of diesel fuel, for whichtransportisoftenachallenge,particularlyintherainyseason.

Theareahasprovenwindandsolarresources.ThecomponentwouldexpandcapacityofthePort‐de‐Paixgridwith1–2MWRE(mostlikelyasolar–windhybrid)toimprovequalityfor existing customers and to help expand the isolated system to some further 14,000customers.Thiscomponentwillserveasapilotcaseforpotentialreplicationofasimilararrangement in other EDH isolated grids. Learning from the previouswind pilot projectinstalled in Port‐de‐Paix in 1978 (but no longerworking), the componentwill explore aPPP arrangement to support its sustainability. At aminimum, the private sectorwill becontractedforEngineering,Procurement,Construction(EPC)deliveryaswellasO&M.Thefeasibilityoftheprivatesectorinvestingdirectlyinthecomponentwillbeexploredduringfinalcomponentdesign.

3.Off‐gridelectricityforproductive,social,andhouseholduses

Investments in rural electrification haveremainedscarceinthelast30years,keepingrural electrification extremely low (around5%). With EDH largely absent, local ruralgovernmentsandusershavefoundtheirownsolutions. Until recently, individual dieselsystemsandkerosenewere theonly lightingandpowersolutionsformosthouseholdsandbusinesses. More recently, RE technologies,especially solar PV, have taken off as a newalternative for off‐grid energy access.Paradoxically, in urban areas, manyindustries and enterpriseshave intentionally

Photocredit:UNEP–MarkSteed

Photocredit:Winenergy,Haiti(Port‐de‐Paixtown)

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went off‐grid, isolating themselves from the EDH grid due to unreliability and voltagefluctuations, supplying themselves with more expensive but more reliable dieselgeneration.

InnovativeandpromisingbusinessmodelshaverecentlyemergedtoofferREservices tooff‐gridhouseholdsandbusinessesinruralandurbanareas.TheyincludevillageRE/dieselhybridgrids;serviceprovisionthroughpay‐as‐you‐goindividualsolarkits/homesystemsandsolar‐lanternsalesinruralareas;andsolarPVleasingapproachestohybridizedieselgenerationofbusinessclients.

The component would scale up access to modern electricity services, supporting thesebusinessmodels. It is expected to result in about10MWpof newRE capacity andmorethan200,000newlyelectrifiedhouseholds,businesses,andotherinstitutions.

SREP support will be technology and business model neutral. All technologies will beeligible for SREP support:mini‐hydro, solar PV, biomass, andwind. This technology andbusiness model neutrality is needed to incentivize private sector innovation and not tocrowd out potentially viable business models by narrowing support to only a few“winners.” However, a parallel TA, including South–South exchanges, will be used todevelopthosebusinessmodelsthatappearthemostpromisingtoachievescaleandimpact.

Ultimately, the technology choice will be decided throughout the componentimplementationbyprivatesectortake‐upandperformanceundereachoftheSREPoff‐gridsegments, as participating firms will decide on their own business plans and priorities(based on the public GIS61developed during SREP preparation and their own marketintelligence).

As the component targets areas outside EDH range, the utility will not be involved inimplementing thisproject, although investmentswillbecoordinatedwithEDH toensurethatthecomponent’soff‐gridareasarenotscheduledforgridelectrification.

Thecomponentwillbeco‐financedwiththeexistingIDARehabilitatingInfrastructureandAccessprojectandtheparallelCTF‐fundedModernEnergyforAllProject(annexV).Urbanoff‐gridmarketdevelopmentwouldbeco‐financedbyIFC(box7).

Box7.Urbanoff‐gridmarketpotential

IFC is considering supporting development of a solar PV leasing solution tomedium to largeindustrialandcommercialprivateplayers(“lessees”),thefirstsuchattemptonalargescaleinHaiti.Thistypeofprojectswouldtargetusersthatarealmostentirelyoperatingoff‐gridduetogridreliabilityissuesgenerally.ItwouldnotdisplaceEDHasasourceofelectricitysupplyinthelongrun.Insteaditwouldaimatreducingthecostofself‐generatedelectricityforthoseoff‐gridcustomers,improvingtheirefficiencyandcompetitiveness.Ifsuccessful,itmayopenthedoorsforsolarPVleasingtoawiderrangeofusersviaaggregators.ItcouldalsodevelopalocalsolarPVconstructionandmaintenanceindustry.

Thisprojectistargetingthosealmostentirelyoperatingoff‐gridoutofreliabilityconcerns,andso does not displace EDH as a source of supply. Instead it aims to reduce the cost of self‐generated electricity for those off‐grid customers, improving their efficiency andcompetitiveness.

IFC’s pipeline of projects under this SREP component would be first‐of‐their‐kind projects,

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deploying a business structure not yet tried in Haiti and relying on long‐term financing in ahigh‐riskmarketenvironment.Thebusinessmodelsunderthosetransactionswouldgenerallybe testedand their robustness confirmedby targeting customerswithbetter credit risk first,andover timemoving toweakercreditcustomers.TheuseofSREP fundsby those initiativeswouldreducelendingriskandhelpensurethebusinessmodels’sustainability.SREPfundsarenotintendedtobegrants,butcouldbedeployedintheformofdebtorguaranteesfollowingtheprincipleofminimumconcessionality

ForEDH, thispipelineofprojectswould improveHaiti’sbusinesspotential in the short term,whilepreparingoff‐gridsegmentsforgridconnection(forwhenreliableEDHsupplycomesonstream).

Current IFC’s pipeline of off‐grid projects offers a solar PV distributed generation platform,whichcoulddeliverimmediateandsignificantbenefitsandleverageprivatesectorfunds.TheseprojectswouldultimatelyallowEDHtotapintotheresultedinstalledcapacityvianetmeteringor other types of arrangement. In the shorter term, given poor EDH electricity supply or thefocus on customers already off grid, those projects are unlikely to compete with EDH’soperationsorweakenitsfinancialposition.

4.Rehabilitationofsmallhydroplants

EDHownsandoperatessixsmall‐andmini‐hydroplants(withacapacitybelow2.5MWeach). Only one of them, however, is fullyoperational;noneoftheothersproducesatpotential capacity out of need for repairsandrehabilitation.

Suchrehabilitationisacost‐effectivewayofexpandingRE capacity. Further, increasingtheshareofhydroresources in theoverallgeneration mix will attract otherinvestment in intermittent renewables,such as wind and solar. EDH has

commissioned a study evaluating the potential for rehabilitating the small hydro plants,potentiallyaddingupto20GWhayearofrenewablegenerationatatotalcostofaroundUS$10million. The component as well can be developed in phases. Given EDH’smaintenance deficiencies in the past, the component will aim to ensure that crediblearrangementsareputinplaceformaintenance,suchassettingupamaintenancefundwithobligatoryEDHcontributions,outsourcingO&Mtotheprivatesector,orconcessioningthehydroplantstoprivateoperators.

Studiesarealsounderwaytoassessindetailthepotentialfornewmini‐andmicro‐hydroplants.Theproposedcomponentwillalsoprovidefundingfordevelopmentofonetothreenewmini/micro‐hydroplants,forwhichPPParrangementswillbeconsidered.

5.Buildinganenablingenvironment,capacities,andskillsforrenewableenergyscale‐up

AllRE investments lacka transparentandconsistent regulatory framework,have to facefiscal policies favoring fossil fuels, and operate with a dearth of capacity and skills

Photocredit:UNEP–MarcSteed

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throughout the supply chain. RE scale‐uptherefore requires comprehensive andsystematic efforts to eliminate thesebarriers nationally for all types of REinvestments. For that reason, the SREPInvestment Plan includes a specificcomponentforthesecrosscuttingissues,asopposed to integrating TA/capacity‐building directly in each investmentcomponents. This component will cover arange of enabling activities,62but the keyfocus will be on two areas, which thestakeholder consultations revealed as the

main bottlenecks: lack of an enabling legal and regulatory framework; and lack of localcapacity and skills. Implementation will be closely tied to the execution of the fourinvestment components described above, offering a real‐life RE market developmentlaboratory.Capacity‐buildingwillincludeagenderdimension.

Thiscomponent,byremovinginformationasymmetriesandothermarketinefficiencies,isexpected tohelp lift severalREmarket segments to anew,moreefficient level, bringingdowntherisk‐adjusted financingcostsofnewREprojects(GIZ2014b).Additionally, thiscomponentwillcoordinateSREP‐widemonitoringandevaluation,usingtheSE4ALLMulti‐tierFramework.63

Sequencingandpackagingcomponentsintoprojects

The five components will be phased in order not to overstretch the implementationcapacityofkeyagencies,andwillhavetheirownimplementationarrangements.

Components2,3and5arenaturalexpansionsofactivitiesalreadycarriedoutbyPRELEN(and IFC for the IFC‐managed activities under Component 3) and can therefore bedevelopedquickly.Component1 isnewandwill require furtherstudiesandpreparationefforts, and is therefore likely require a longer preparationperiod. Component 4will beimplementedinthethirdround,asadditionalfinancingismobilized.

TheWorldBank–supportedcomponents(1,2,3,and5)arelikelytobebundledintotwoWorld Bank SREP projects. The first project Renewable Energy and Access for All willincludeComponents2,3and5,thesecondproject:RenewableEnergyfortheMetropolitanAreawillcoverComponent1.

In parallel, IFC will implement its activities under Component 3 and may also provideadvisoryservicesforComponent1.

Table14.PackagingofcomponentsintotheWorldBankandIFCprojects

SREPcomponent WBProject IFCProject1.REformetropolitanarea REforthemetropolitan

areaproject(AdvisoryFacilitiesmaybeprovided,tbd)

Photocredit:UNEP–MarcSteed

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2.REforthePort‐de‐Paixremotegrid REandaccessforallproject3.Off‐gridelectricityforhousehold,productive

andsocialuses.Off‐gridelectricityforhousehold,productiveandsocialuses

5.Buildingenablingframework,capacitiesandskillsforREscale‐up4.Rehabiitationofsmallhydor Notyetincludedinaproject

6.4 PROGRAMCO‐BENEFITS

Inadevelopmentpatterninwhichenvironmentalandsocialbenefitsareenmeshed,SREPis expected to reduce dependence on fossil fuels; cut local pollution; create economicactivities and jobs related to new technologies with private participation; boost privateinvolvement in RE production through building technical and organizational capacity inenergyandcraftinglegalandregulatoryarrangementsthatengagetheprivatesector;cutpovertyandimprovethequalityoflifeoftheruralpopulation,forwhichimprovedaccessand use of electricity is a key enabling condition; and raise the socioeconomic status ofwomen.

 

7FINANCINGPLAN

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7 FINANCINGPLANThetotalestimatedbudgetforSREPHaitiisUS$149.5millionwithSREP’scontributionofUS$30millionforComponents1,2,3,and5(Component5isapartoftheprogrampackagebutwill seek additional financing fromother sources). SREP is seeking cofinancing fromparticipatingMDBs and other development partners, including US$30.5million from theWorldBanktosupportallfivecomponents(includingtheforthcomingCTF‐eligibleModernEnergy for All Project under preparation) and US$15million from the IFC to supportComponent 3. Finally, SREP is expecting to mobilize just under US$80million from theprivatesector.TheSREPleveragefactorisexpectedtobe1:4–1:5,dependingmainlyonthefinaldesignandthedealstructureoftheon‐gridcomponent(Component1).(Seetable14.)

Table15.SREPfinancing,co‐financing,andprivatefinancingleverage

SREPComponent SREPfunding Publicco‐financing Privateleveraging

Totalleveraging

WB IFC TotalSREP

WB‐IDAd

WB‐CTFe

Otherpublicf

IFC Otherprivate

Public+private

1.REforthemetropolitanarea

8‐10 0‐2b 10 6 16g 22

2.REforPort‐de‐Paixremotegrid

2‐4a 2‐4 10 2 12

3.Off‐gridelectricity 8‐9 7‐9c 15‐17 8 11.5 15 60 94.54.Smallhydropowerrehab

0 4 14 tbd 18

5.Enablingframework,capacityandskills

1 1 2.5 0.5 3

Total 21‐23 7‐9 30 30.5 12 14 15 78 149.5a.TheexactamountneededfromSREPwillbedeterminedthroughadetailedfeasibilitystudy.b.IFCparticipationintheComponent1isdependentonviableconditionsinplaceforthePPPoption.IfaPPPoptionisnotviable,IFCresourcesmayshifttoexpandComponent3.c.Theinitialallocationforthesub‐componentisUS$7million.However,IFCSREPcontributioncouldbeexpandedtoUS$9millionifthesub‐componentprogressissatisfactoryandifIFCcontributionunderComponent1doesnotmaterialize.d.WorldBankco‐financingisfromtheexistingIDA‐financedPRELEN,whichisprioritizingSREP‐prioritizedinvestments.e.Projectunderdevelopment,ConceptnoteapprovedinFebruary2015f.Financingbeingsoughtfromothersources,suchastheGreenClimateFundg.Minimumleveragingestimate.Finalleverageforon‐gridRE,whereprivatesectorprojectsponsorswouldfeedintoEDHthegridwilldependonthespecificSREPCase(9–12)andmayvaryfromabout1:1(SREPtoprivateinvestmentfortypicalwindon‐gridcasewithmoderaterisk‐appetiteinvestors)to1:5(forsmalldistributedgenerationanalogoustothe“fuelsaver”caseinChapter2).Dealstructureswithinternationalbidderswilldependontheoff‐takeriskatprojectdevelopmentandonthedebttermstheycansecureintheglobalmarket.

 

8INSTITUTIONALFRAMEWORKFORIMPLEMENTATION

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8 INSTITUTIONALFRAMEWORKFORIMPLEMENTATIONThe implementation of the proposed SREP‐funded components will be overseen andcoordinatedbyMTPTCthroughitsEnergyCell(withsupportfromtheSREPTaskForce).Itis expected that the same Task Force that prepared the Investment Plan will retain anadvisory role.64MTPTChasmuch experiencewith implementing donor programs, and isalsomanagingPRELEN.

MTPTCcreatedtheEnergyCellin2012,tosupportenergysectordevelopment.AsthekeyimplementingunitforSREP,theEnergyCellwillgetmorestafforconsultantstosupportitsincreased duties. PRELEN is supporting capacity‐building activities for MTPTC and itsEnergyCell,EDH,andotherstakeholders,andthissupportwillberaisedunderComponent5.Aspossible, implementationarrangements for the individualcomponentswillbuildonthoseestablishedunderPRELEN.

Partsofprogramimplementation—especiallytheoff‐gridcomponent—willbeassignedtoprivate sector entities,withMTPTC focusing on the enabling environment andoversight(with funds channeled to the private sector primarily through IFC and a competitivelyselectedfinancialintermediary).Thebeneficiarycompanies,inon‐andoff‐gridsectors,willreceive further TA and will benefit from exchanges with similar enterprises in otherdevelopingcountries.

Implementationarrangementspercomponent

RenewableEnergyforthePort‐au‐PrinceMetropolitanArea(Component1)willbemanagedbyMTPTCEnergyCellandEDH(theexactarrangementsaretobedefined),whichwillbeinchargeofprojectpreparationstudiesandthecompetitiveprocessforselectingprivatefirmsforthePPPcontract.ThecomponentwillbesupportedbytheWorldBankwiththepossibleoptionofTA/advisoryservicesprovidedbyIFC.

Renewable energy for Port‐de‐Paix remote grid (Component 2) will be managed by theEnergy Cell with EDH, which will be in charge of project preparation studies and thecompetitive process for selecting private operators, and channeling subsidies to theproject.EDHwillimplementtheupgradingandexpansionofthePort‐de‐Paixisolatedgrid.ThecomponentwillbesupportedbytheWorldBank.

Off‐gridelectricityforproductive,socialandhouseholduses(Component3)willbemanagedby the Energy Cell with the support of BME, except the CTF‐funded access to financefacility,whichwillberunthroughacompetitivelyselectedfinancialintermediary,andtheprivatesectorsupportfacility,whichwillbedirectlymanagedbyIFC.ThecomponentwillbesupportedbytheWorldBankGroup(bothWorldBankandIFC).

Smallhydrorehabilitation (Component 4) will be managed by EDH, the owner of smallhydropowerassets.Thecomponent ispartof thebroaderSREP InvestmentPlanbutnotincludedinSREPfinancing.Additionalfundingforimplementationisbeingsought.

Building enabling environment, capacities and skills for renewable energy scale‐up(Component 5)will bemanagedby the EnergyCell,whichwillworkwith universityREprogramssuchasthoseattheStateUniversityofHaitiandQuisqueyaUniversity,andthe

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Gender and Energy Interagency Commission. The component will be supported by theWorldBank.

 

9ENVIRONMENTAL

ANDSOCIALASPECTS

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9 ENVIRONMENTALANDSOCIALASPECTSThe lead national SREP coordinating entity, MTPTC (via the Energy Cell), has alreadyundertaken lendingandTAprojectswith theWorldBankand IDB,andso ithaspoliciesand procedures to ensure compliance with government, World Bank, and IDBenvironmentalandsocial(E&S)safeguards.IFCperformancestandards,anditspoliciesonE&Ssustainability,willbeapplied.Specificarrangementsareasfollows.

E&S Management Framework. Because some investment locations will be determinedduring project design, a frameworkwill be prepared that defines E&S plan, review, andclearanceprocessesthatfollownationalandMDBguidelines.TheMinistryofEnvironmentwillplayakeyroleindesigningthisframework.

ResettlementPolicyFramework. This will set the modalities for conducting resettlementaction plans (RAPs) and outline components that must be integrated, such as legalframework, eligibility criteria, methodologies for asset valuations, and mechanisms forstakeholderconsultations.

Strengthening the Safeguards Compliance Capacity under SREP will be of utmostimportanceandrequirecontinuedjointeffortsbetweenthegovernment,WorldBankandIFC.

E&SAssessments. Each SREP project will be subject to comprehensive E&S assessments,whichwill include detailed studies aimed at uncovering the particular E&S impacts of aproject or its subprojects. The studies include an Environmental and Social ImpactAssessment (ESIA), anEnvironmental andSocialManagementPlan (ESMP), anda full orabbreviatedRAP.65AdequatestakeholderconsultationsmustbeundertakenandguidethedevelopmentofE&S studies.Additional specializedE&Smanagementplansor initiativesmay be required to address the impacts associated with given projects or subprojects.PreparationofdetailedE&SstudiesmustadheretoHaitianlawsandregulations,aswellastheE&Spolicies,guidelines,andstandardsoftheMDBs.

Responsibilities. Project implementing agencies, and where applicable subprojectimplementers (e.g. SREP‐supported RE IPPs ormini‐grid operators), are responsible forcomplying with national law and regulations and the E&S policies, guidelines, andstandards of theMDBs. These operators are also responsible for preparing the requireddetailed E&S studies (ESIA, ESMP, and RAP), obtaining clearances, implementing allrequiredmitigationandmonitoringmeasures,providingadequate funds to sustain theseactivities,andcomplyingwithanydirectivesissuedbyrelevantparties.

ThedetailedE&Sstudiespreparedbysubproject implementersmustbesubmittedtotheMinistry of Environment and to theMDBs for their review and approval. TheMinistry’sapprovalisbasedonHaitianlawsandregulations,whilethatoftheMDBsisbasedontheirE&Spolicies,guidelines,andstandards.TheMinistrywillberesponsibleforreviewingandclearing ESIAs and ESMPs for subprojects. It provides a one‐stop clearance process byinvolvingallotherkeygovernmentalagenciesintheapprovalprocess.

The MTPTC, via its Energy Cell, has overall responsibility for implementing the ESMPs,resettlementpolicyframeworks,andanyspecializedE&Smanagementplansorinitiativesdeveloped for the subprojects. MTPTC will not issue licenses or permits to subproject

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implementers (if they are required) until the environmental entity or other relevantauthoritiesissueE&Sclearances.

Stakeholderconsultations. The E&SManagement Framework contains detailed checklistsand genericmitigationmeasures to ensure that potential impacts are addressed in E&Sassessments and subproject management plans. In preparing the required detailed E&Sstudies (ESIA, ESMP, and RAP), the subproject implementers must adhere to therequirements for ensuring thatparticipatory stakeholder consultationshave takenplace,as captured in the E&S policies, guidelines, and standards of theMDBs. Project‐affectedpeopleandothercritical stakeholdersmustbe informedandconsultedabout thenature,timing, and scopeof the relevantproject impacts andmitigationmeasures.Participatoryapproaches must be used in organizing and conducting the consultations. Genderconsiderationsmustalsobefactoredin.

Capacity‐building. The government, working with its MDB partners, has carried outnumerousworkshopsandothercapacity‐buildingactivities forkeystakeholders throughPRELEN, through IDB projects, and in preparing the SREP Investment Plan. Capacity‐buildingactivitiesunderPRELENincludehiringaconsultanttosupportMTPTCandEDHinimplementing safeguard policies during project preparation and TA. SREP interventionswill build on those and otherMDBs’ capacity‐targeted activities. It is thus expected thatthese improved capacitieswill facilitate implementation of safeguard instruments underSREP.

Environment,Health,andSafetyManagementSystem.Projectandsubproject implementerswilldesign,construct,andoperatetheprojectsandimplementsuchasystem.

PublicDisclosure.Projectandsubproject implementationwill requirecommunicationandconsultation with the Haitian stakeholders affected directly and indirectly by thesubproject,andwithotherstakeholderswithinandbeyondtheprojectzoneof influence.DisclosureofthedetailedE&Sstudies(ESIA,ESMP,andRAP)mustbedoneincompliancewiththepublic‐disclosurerequirementsoftheWorldBankGroup.Relevantdocumentationwill be made available on the websites of the government and the MDBs, and throughadditionalmeans.

 

10MONITORINGANDEVALUATION,ANDKNOWLEDGEMANAGEMENT

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10 MONITORINGANDEVALUATION,ANDKNOWLEDGEMANAGEMENTThe SREP Investment Plan will strengthen monitoring and evaluation (M&E) andknowledgemanagement,relying inpartontheSREPM&Eframework(tobecoordinatedbytheMTPTCEnergyCell),andtheSE4ALLMulti‐tierFramework.

10.1 STRENGTHENINGMONITORINGANDEVALUATION

The Energy Cell will define and implement the SREP M&E system aimed at collecting,analyzing,processing, and reportingonkey information related toprogramactivities, aswell as progress in reaching SREP impacts and outcomes, and applying lessons learned.SREPwillcontributetoeffortstoestablishanenergysector‐wideM&Esystem(box8)toensure that the sector‐wide M&E framework includes SREP indicators to facilitatereporting, improves indicators on RE, and sets up a data collection system to obtainbaselineinformation.

Box8.BuildingM&EcapacityforMTPTCandEDH

The IDA, through PRELEN, is providing TA to the sector‐wideM&E system, which is short ofhumanandtechnicalresources,targetingMTPTCandEDH.

TA shows how to develop an effective M&E framework. Under PRELEN, MTPTC has overallresponsibilityfortheM&Eofprojectactivities.Itpreparestheproject’sM&Ereportsthatincludequarterly reports on project performance, based on the M&E framework set during projectpreparation;quarterly interimfinancialreports;andannual independentfinancialauditsoftheprojectandofEDH.

TA further helpsMTPTC set up its ownmonitoring framework. EDH, as part of its corporateresponsibilities, reports on its performance regularly, providing the project coordination unitwithinformation.

10.2 STRENGTHENINGKNOWLEDGEMANAGEMENTANDLESSONSSHARING

The outcome of consultations with stakeholders from academia (August and November2014, February 2015), and from civil society and from among end‐user beneficiaries(February2015),revealedtheneedtofocusSREPonbuildingcapacityofREtechnologies,includingapoolofskilledtechnicians.

ThelackofappropriatelyskilledlaborisoftenidentifiedasamajorbarrierforscalingupRE.66Governmentagencies,privateenterprises,multilateralinstitutions,andNGOswidelyrecognize the shortage of skilled technicians for installation andO&M of renewable anddecentralizedenergysystemsasmajorbarriers.ForHaiti,arecentWorldBankSystematicCountryDiagnostic(February2015)outlinesthecorrelationbetweenhigheducationandskills and higher labor income. It explains that skills and experiences, with access toservicessuchaselectricity,contributetohigherproductivityinthecountry.Absentskills,theprivatesectorwillmostlikelybeunabletoincreaseproductivity(box9).

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Box9.WorldBank’ssystematiccountrydiagnostic,February2015

Surveyspointtothelackofqualifiedhumanresources.OnemajorconstraintfacedbyenterprisesinHaitiisfindingwell‐qualifiedtechnicians,particularlyinnewtechnologies.Thisforcesthecountrytopositionitselfasalow‐costproducerforgoodsandservicesrequiringfewskills.Anopaquelabormarketmay be at fault, with no institutional mechanism to enable the exchange of informationbetweenlabordemandandsupply.

More rigorousanalysis confirms thatmoreexperienceand skills, aswell as access to inputs, areassociated with better performance. An analysis of correlates of successful self‐employedperformancewas carried out, using threemeasures: revenuesperworker (in log), revenuesperworker in the top30of thedistribution,andprofitsperworker in the top30of thedistribution.Withthecaveatthatthisexerciseindicatesaconditionalcorrelationratherthanacausalrelation,theanalysishelpsidentifythecharacteristicsandinputsthatcouldimproveunderstandingofwhatisneeded toraiseproductivityandgenerate jobs in theself‐employedandsmallbusinesssector.Theresults suggest thatexperience, skills, andaccess to inputssuchaselectricityandwater,areassociatedwithhigherreturns.

Policies to boost households’ income—wherever they work—are essential to sustaining andacceleratingwelfaregains.Inurbanareas,achievingthisobjectivewillhavetoinvolvethecreationof economic opportunities andbetter jobs. A higher level of education and skills, for example, iscorrelatedwith higher labor income. In rural areas, the stagnation of both extreme poverty andincome inequality observed between 2000 and 2012 reflects the increasing reliance on the low‐productivity agricultural sector. Because 80% of the extreme poor live in rural areas, it will benecessary todevelop this sectorbymeansofpolicies that support incomediversification. Suchadiversification could contribute to spreading risk, strengthening food security, and preservingbiodiversity.Further,inurbanandruralareas,itisnecessarytopromoteexpandedaccesstoinputs(e.g.seeds,electricity, finance,water)andtoproductmarkets(e.g. transport),aswellas improvethe business environment so as to increase the profitability of employment. Greater economicopportunities andbetter jobs, especially inurbanareas,would contribute to reducing crimeandviolence,furtherimprovingthebusinessclimate.

AnotherimportantbarrieristhelackofawarenessofREtechnology,asfoundbyaWorldBankmissiontonumerousdepartmentsinHaitiinFebruary2015(annexIII).

Component5willfocusonbuildingcapacitiesandskills—workingcloselywithacademia.Wherefeasible,theremainingSREP‐fundedcomponents(Components1–4)will integratelearning and capacity‐building activities, and where feasible, involve universities inimplementation.

10.3 RESULTSFRAMEWORK

Table16belowsummarizestheSREPM&EresultsframeworkforHaiti.

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Table16.SREPresultsframework

Result Indicator Baseline Minimum target by

2020

Minimum target by 2030

Means of verification

Support for low-carbon development pathways by reducing energy poverty and/or increasing energy security

National measure of energy poverty

MEPI = tbd tbd tbd MEPI = This will be calculated based on the M&E component

Electricity output from on- and off-grid renewables in GWh per year (excluding baseline hydro)

2 42 200 MWp installed and feeding into grids + off-grid sales reports; dispatch of vRE in Port-au-Prince

Increased national annual public and private investments (US$) in total targeted subsector(s)

about 1.5 million

40 million 60 million Annual reports, government, EDH, RE IPPs and off-grid sales companies as per supply-chain analysis

Increased supply of RE

Increased annual electricity output (GWh) as a direct result of SREP off- and on-grid interventions

n.a. 40 n.a. See 2 rows above

Increased access to modern energy services

Increased number of women, men, businesses and community services benefiting from improved access to electricity due to SREP interventions

n.a. 1 million people

n.a. M&E, sales reports of companies

New and additional resources for RE projects

Leverage factor: SREP funding (off- and on-grid) versus financing from all other sources compared with (notation: SREP: Others)

n.a. Minimum 1:4

n.a. Donor reports; private sector financial statements; sales reports; PPAs signed, etc.

n.a. = not applicable. MEPI = U.S.–Middle East Partnership Initiative. tbd = to be determined.

10.4 SE4ALLMULTI‐TIERFRAMEWORKFORMEASURINGENERGYACCESS

SREP will apply the SE4ALL Multi‐Tier Framework introduced in the Global TrackingFramework of 2013, and updated this year. This framework replaces the traditional“binary” measure of energy access (with or without) with a five‐tier measurementapproach, which also assesses other attributes of the energy service such as quantity,quality, affordability, andduration of supply. The framework thus allows for assessmentnot only ofwhether households, businesses, and institutions have electricity access, butalsowhethertheserviceisadequatetomeetdemand,allowingtrackingofnewaccessandimprovementsinaccessacrosstiers.

Theframeworkcandifferentiatebetweenaminimumlevelofservice(likethatprovidedbya small solar kit—tier 1) and final aspiration, which is 24‐hour unlimited reliable andaffordable power (tier 5), acknowledging that a grid connection does not guarantee the

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highest tier. Intermittency and unreliability of supply would, for example, downgrade atier5connectiontoalowertier.

 

11RISKASSESSMENT

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11 RISKASSESSMENTTheoverallimplementationriskoftheSREPInvestmentPlanisassessedasModeratetoHigh,mainlydue to overall countrypolitical andgovernance risks.Table17presentsthe main identified risks and mitigation measures. Appropriate corrective andsupportivemeasureswillbeputinplaceduringimplementationinlightoflessonstobedrawnfromactivities.GuidancefrommembersoftheSREPTaskForcewillberegularlysought.

Table17.Mainidentifiedrisksandmitigationmeasures

Risktype Description Mitigationmeasure Residualrisk

Technical Solar PV and other RE, mini-grid technologies and grid-connected RE technologies (solar, wind, hydro) may not work as intended.

Grid-connected solar, wind, and hydro technologies are mature, with decades of experience worldwide. Detailed feasibility studies and mini-grid and off-grid projects under way will provide site-specific information and valuable lessons learned for fine-tuning designs. For off-grid renewables, comprehensive TA and capacity-building to project developers will be offered.

Low

Grid-connected intermittent renewables cannot be connected to the grid due to poor grid capacity and reliability.

The 10–20 MW of SREP-supported intermittent RE capacity is well below the “safe” limits for integrating intermittent renewables into the EDH grid. However, SREP will also prepare conditions for facilitating a larger injection of RE in the future. The World Bank is supporting a study that analyzes optimal ways of integrating RE into the EDH grid. Its findings will inform both how much intermittent renewables the grid can absorb, which sites are most suitable for injecting the power to the grid, and what kind of grid improvements are needed to ensure grid reliability. SREP grid-connected project will allow testing and fine-tuning of technical and regulatory approaches for integrating intermittent renewables.

Low

O&M fails. EDH had deficiencies in the past with maintaining its assets. The proposed SREP investments will establish mechanisms for supporting maintenance and sustainability of investments. These include relying on the private sector for investing and operating SREP RE projects (grid-connected and off-grid), with PPPs structured to provide incentives and contractual obligations to the private sector for sustainable O&M. Trained managers and operators will be required at all facilities. In off-grid projects, long-term maintenance contracts will be required. For individual systems, provision of after-sale services will be a condition for support. Technician training will be expanded.

High

River/stream flow data quality and adequacy are uncertain. Hydrology is affected by climate change. Biomass fuel availability can become limited and prices rise after investments are made. Wind resource data quality and adequacy are uncertain.

Resource availability will be confirmed during feasibility studies, including sensitivity analysis for hydrology changes. Risk of price rise in biomass fuel will be mitigated by project developers having long-term supply contracts for a portion of their fuel needs, as well as directly controlling access to a portion of requirements through their own fuelwood plantations.

Moderate

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Risktype Description Mitigationmeasure Residualrisk

Financial Mini-grid and solar off-grid customers have limited ability to pay or will not pay.

WTP and market studies have been carried out during preparations for the SREP Investment Plan. The surveys confirmed a fairly high WTP for electricity (about US$30 per month on average, with wide differences across regions and customer types). To accommodate different WTPs, SREP will support a range of technologies and business models, which will cater to different market segments with varying WTPs—from solar lanterns, through pay-as-you-go solar kits/home systems up to village mini- or micro-grids. The initial experience of off-grid energy companies in Haiti is positive, showing that rural customers are willing to pay for reliable electricity, particularly if they can control their expenses, as through prepaid meters.

Moderate

EDH presents payment default risk or delays payment.

The government, with MDBs and development partners, is aware of EDH’s financing difficulties and is working with EDH to overcome them. SREP will develop risk mitigation instruments to support private sector investment, mitigating the EDH off-take risk. Even in today’s difficult conditions, three IPPs are already operating in Haiti and several serious potential (international and local) investors are exploring grid-connected renewables, having expressed a possible interest in investing in a PPP approach, along the lines presented in SREP. Implementation of Component 1 will be conditional on the government/EDH demonstrating progress on the actions that improve EDH performance.

High

The associated CTF credit line will not disburse due to lenders’ lack of interest or knowledge in off-grid businesses.

CTF’s access to finance facility is being designed. Several financial intermediaries (FIs) have shown interest in supporting off-grid SMEs but successful implementation of the facility will require a greater degree of de-risking for the FIs. It is therefore anticipated that for the first round of lending, most of the risk will be carried by the government. The SREP risk-mitigation facility will be developed to progressively seek greater participation of FIs in off-grid electrification lending. The IFC-run facility will first target urban off-grid market but over time it is expected to progressively extend its reach to rural areas Training to FIs on pipeline development and due diligence for appraising RE projects will be provided.

Moderate

Project developers have limited financial management capability.

Transaction advisory services and capacity-building are provided to overcome these risks.

Moderate

The Haitian gourde will depreciate.

Investors already take into account some currency depreciation risk. SREP will consider offering guarantees to cover such risks.

Moderate

The government fails to secure funding for the proposed projects.

Co-financing from the MDBs is secured, except CTF co-financing, for Component 3, which is expected to be confirmed by June 2015. If these resources are not secured during project preparation, the implementation of Component 3 could be phased, with the first phase having secured funding and the second scaling up once additional funding is secured.

Low

Insti-tutional

Poor governance—Haiti has one of the worst transparency indexes in the world.

SREP will be designed to promote transparency. This will include development of a transparent regulatory framework, The CTF access to finance facility will be managed by a competitively selected FI and loans will be awarded according to transparent rules published in the Operating Guidelines. All projects will need to adhere to MDB procurement and financial management rules.

High

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Risktype Description Mitigationmeasure Residualrisk

Regulatory and contractual mechanisms are not adhered to or are delayed. The regulatory framework for grid-connected and off-grid renewables is weak and inconsistent. There is no regulatory agency.

The minimum necessary legal/regulatory conditions for private agents to invest in grid-connected and off-grid renewables exist. For the former, PPAs are in place for the current IPPs, although each is negotiated individually. For the latter, there are already private investments in either individual systems (which, as in most countries, are not subject to regulation) or in mini-grids taking advantage of municipal and cooperative legislation, allowing private sector mini-grids under certain conditions. All investment projects can therefore start, while SREP assists the government in improving this framework to provide better certainty and incentives to investors, while protecting users.

Moderate to High

Human capacity for project development and implementation is limited.

SREP is ambitious, which may stretch existing implementation capacity of government entities. The government is aware of this risk, and several measures have already been, or will be, put in place. For example: The Energy Cell has RE and rural energy specialists. Further recruitment is in process. Post–SREP Investment Plan approval, it will be strengthened with staff supporting the SREP. PRELEN is already building capacity in MTPTC and its Energy Cell, as well as EDH. SREP will include a project focusing on building local capacities of government, the private sector, academia, and technicians to facilitate RE scale-up. Parts of program implementation, including most of the off-grid component, will be delegated to private entities, with MTPTC focusing on creating an enabling environment and on oversight. Beneficiary companies will receive TA and will benefit from South–South exchanges with similar enterprises in other countries. Individual components will be phased, in order not to overstretch the implementation capacity of key agencies.

High

Clearance and approval are delayed.

The Energy Cell will work with project developers to forestall bottlenecks.

Moderate to High

Power-planning capacity gives inadequate consideration to RE development.

The SREP will support EDH in improving planning processes to incorporate generation from RE, intermittent and dispatchable technologies, starting with the new Electricity Master Plan. New expansion planning tools will be introduced and capacities of power planners strengthened.

Moderate

Environ-mental

Projects have unacceptable environmental impacts.

All projects must comply with environmental assessments as part of Ministry of Environment oversight and clearance procedures. The Ministry of Environment and MTPTC (via the Energy Cell) will monitor impacts according to national legislation and MDB requirements.

Moderate

Political Instability surrounds the 2016 presidential election. Social unrest appears in areas with electricity supply issues.

The extensive consensus-building process as part of SREP preparation and implementation should build a broad base of support for the project, The SREP program will be also accompanied by a communication and consumer awareness strategy, communicating benefits of renewable energy to public and potential users, especially in rural areas.

Moderate to High

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Risktype Description Mitigationmeasure Residualrisk

Social Projects have unacceptable social impacts.

Intensive stakeholder consultations were carried out during SREP preparation and will continue when projects are implemented. Specific project-level, social-safeguards assessments will be undertaken per regulations of the BME and the Gender and Energy Interagency Commission, and compensation or other mitigation actions will be undertaken in accord with the framework, as well as government and MDB guidelines. By providing affordable electricity to more people, the program will promote greater economic growth and equity, including targeted investment activities in rural areas.. Design of financial mechanisms under the SREP will take affordability and WTP into account, supported by information, education, and communication campaigns. The program will mainstream gender consideration in its design.

Low

Project design

The CTF access to finance facility funds could remain unused due to a lack of interest and knowledge of private sector providers (including NGOs and cooperatives) and FIs/ microfinance institutions.

Measures include: a pipeline of scalable projects; FIs’ interest in accessing the funds; consultations with key stakeholders about lending terms and risk sharing; arrangements to ensure that terms respond to key stakeholders’ needs; and provision of TA to stakeholders, including private actors and FIs.

Low to Moderate

 

ANNEXICOMPONENTBRIEFS

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ANNEXI.COMPONENTBRIEFSCOMPONENTBRIEF1.RENEWABLEENERGYFORTHEPORT‐AU‐PRINCEMETROPOLITANAREA

Background

Haiti’s central power grid consists of the main network of Électricité d’Haïti (EDH),which connects the Port‐au‐Prince Metropolitan Area (West) with the CentralDepartment.Separatefromthismainpowergridare11mediumandsmalllow‐voltage“island” grids that range from 300kW to 25MW peak load (installed, but not fullyoperational). The main interconnected grid covers Haiti’s most densely populatedarea—almost half of its population (4.6million) live in the West and CentralDepartments, which are growing fast. It serves over 160,000 active, legal customers(over 200,000 if irregular customers are counted), with a total installed capacity of

248MW, of which only about100MWisoperational.Thisis

insufficient to satisfy risingelectricitydemand in the fast‐growing capital and itssurroundings, with peak loadcurrentlyestimatedatcloseto500MW. As a result, loadshedding and blackouts arefrequent and paymentmoraleisweak.Most firms andotherlarge users who have a highwillingness to pay (WTP) forstable electricity operate orbuy power from on‐sitecogeneration generator sets(gen‐sets), totaling another200megawatt‐peak(MWp).

Péligre, Haiti’s largest hydroplant (54MWp peak, halfoperational) feeds into themain grid and is underrehabilitation with its 115kVtransmission line, to increasecapacity. Rehabilitation is

supported by the Inter‐American Development Bank (IDB) and Kreditanstalt fürWiederaufbau (KfW). The remaining power is provided by thermal plants, mostlyindependentpowerproducers(IPPs)withhighgenerationcostssetinpowerpurchaseagreements(PPAs),contributingtoEDHlosses.

Available capacity is inadequate. On average, power is supplied 16 hours a day, butmany customers receive fewer than four hours of service a day. Consequently,industriesandbusinesses (aswell aswealthier individuals) all relyonback‐updieselgenerators. Due to problemswith quality of service (voltage fluctuations, etc.),many

FigureA1.ThemainexistingelectricitygenerationanddistributionassetsinHaiti(source:EDH,2014)

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customershavedecidedtointentionallygooffgridandself‐supply,despitehighercostsofdieselgeneration.

EDH’s ability to improve this situation is hampered by its weak financial position.Technicalandnontechnicallossesare65%,alargepartduetoillegalgridconnections.Inaddition,thecollectionrateisonlytwo‐thirds—meaningthatbetweentechnicalandcommercial losses,EDHrecoversonly22%of thevalueof theelectricity itgenerates.The losses contribute to an annual financial deficit of US$200million—4% of thenationalbudget.

Thegovernment’sapproachtoaddressmattersconsistsoftwoparalleltracks:

Reduce EDH losses by targeted investments in rehabilitating existingtransmission and distribution lines (carried out with support from theWorldBankandIDB),andacomprehensiveplantoreducecommerciallosses,startingwithimprovingcollectionsthroughinstallingnewmeters.

Increase availability and reduce costs of power supply, decreasing EDH’sdependencyontheexpensivefossil‐fuelpowerfromIPPs.Diversificationoptionsinclude rehabilitating existing hydro plants (Péligre already in process,additionalplants included in thepresent InvestmentPlan); importing liquefiednaturalgas(LNG);andincreasingtheshareofrenewableenergy(RE),includingadditionalhydroplants,aswellaswind,solar,andbiomasssources.

Resource‐mappingstudies (seeChapter2) indicate thatHaitihasampleREresourcesthat could be harnessed for power generation. Moreover, many economically andfinancially feasible sites are close to the interconnected grid, and could therefore bedevelopedwithoutaneedtoinvestinlongtransmissionlines.

Objectives

TheobjectiveoftheproposedScaling‐upRenewableEnergyProgram(SREP)willbetobuild government and private experience with developing and operating grid‐connectedREprojectsthroughsupportinginvestmentsingrid‐connectedREgenerationcapacityof10–20MWofRE.67

Approach

Apartfromhydroelectricity,therearenogrid‐connectedREprojectsoperatinginHaiti.There are, however, several potential investors, including reputable internationalcompanies, that have been exploring RE opportunities, particularly wind and solar,carrying out detailed studies and initiating discussions with the government onpotentialtermsthatwouldmakeREPPAsviable.However,noneoftheseprojectshavematerializedandnoPPAforREhasbeensigned.Thereasonsforthisslowprogressaremultiple.Fromtheprivatesectorperspective,EDH’sfinancialsituationposessignificantrisks, even if the PPA can be backed by government guarantee. From thegovernment/EDH perspective, there is a concern about how to integrate largeintermittentgenerationintoanalreadyveryunreliablegridwithoutcausingadditionalreliabilityandqualityissues.ThegovernmentisthereforeinterestedtouseSREPfundsto develop a viable public–private partnership (PPP) model that would unlock REpotential, startingwithamoremodest10–20MW investment that thegrid can safelyabsorb,andbuildingconditionsforfuturescale‐up.

the proposed component would therefore support the country’s first grid‐connectednon‐hydroREprojectorprojects(ifmorethanone,parallelorconsecutive)todevelop,

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demonstrate, and fine‐tune the proposed PPP approach and to build capacity for REinvestmentsingovernmentandintheprivatesector.Theexperiencewouldbeusedtodevelopapolicyandregulatoryframeworkencouraginglargerinvestments.

The proposed approach will be a PPP,encouraging private investments (andoperation and maintenance [O&M]),withSREPfundingfocusedonreducingthe total investment cost and riskexposure for the private sector. Theproject(s) will be selected followingcompetitive procedures. The PPPoption will be conditional on thedemonstrated commitment to improveEDH finances and the resulting PPAterms that would make the projectviable for the government and theprivate sector. If a PPP option is not

viablewhen the component isdeveloped,a smallerpublic sectoralternativecouldbeconsidered.However,inthatcase,itwouldinvolveataminimumaprivatecontractforO&Mfollowinginternationallyestablishedstandardcontractsforsuchagreements.

Various RE technologies will be considered (biomass, wind, photovoltaic [PV]), withwindandsolarPVbeingprimarycandidatesduetowind’shigheconomicattractivenessat thebest sites anddue to the solarPVmodular character and site flexibility,whichmakes it easier todevelopsmallerprojects. Inaddition,windandsolar resourcesarepresentandabundant,andclosetothecurrenttransmissionline/distributiongrid.ThiswillallowpotentialoutputfromREplantstobemaximized.

The transmission line from Péligre to Port‐au‐Prince is being upgraded to allow foradditional RE capacity, accommodating additional power feed‐in of wind farm(s) orsolarpowerplants.IncreasedhydropowergenerationfromrehabilitationofPéligrewillalsofacilitateintegrationofintermittentRE(asdescribedinGIZ2013).Inallcases,theproposedtotalcapacityofintermittentREtobeaddedundertheproposedSREPHaiticomponentremainswellbelowthesafelimitforgridintegration.SREPpreparationhasincludedinitialadvancedanalysisoffuelsavingsandlinelossesofdifferentvariableREtechnologies,aswellasawholerangeofpractitionermethodstogaugethe“safe”and“optimal”volumeofpre‐2020 (i.e.up toSREPexit)variableRE injections, so that thetargetedvolumeisexpectedtobewellinlinewiththeupdatedgovernmentanalysisofnationalREtargets(supportedbyWorldBankresearch).68

Sub‐Components

SREPfundingwillhavethreesub‐components;costbreak‐downisindicative:

1.Technicalassistance for feasibility, environmental, social and grid capacity studies,preparation andmanagement of the procurement process for the turnkey contractorand for the O&M contractor. Estimated costs: SREP US$ 1million; InternationalDevelopmentAssociation(IDA)US$3million.

2. SREP incentives for the private sector (public share in PPP and risk mitigationmechanism).Estimatedcosts:SREPUS$9million.

Photocredit:CaribbeanJournal(Grenada)

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3.Connectiontothegrid/gridupgrades.Estimatedcosts:IDAUS$3million.

Results

10-20 MW of RE capacity (depends on technology mix, final deal structures, and result of ongoing wind studies), connected to the main EDH interconnected grid serving the Port-au-Prince metropolitan area

Private sector investments leveraged Increased government and private sector experience and capacity to develop and

operate RE projects in Haiti Regulatory instruments developed for the scale-up phase Greenhouse gas (GHG) emissions reduced or avoided

Implementationarrangements

ThecomponentwillbedevelopedbytheMinistryofPublicWorks,TransportationandCommunications (Ministère des Travaux Publics, Transports et Communications;MTPTC) through itsEnergyCell inpartnershipwithEDH. If sufficient commitment toimproveEDHfinancesisdemonstratedtoallowaPPPoption,IFCadvisoryservicesmaybesupportingGovernmentinthedevelopmentofthePPPtransaction.

The component will be supported by the World Bank with a possible option ofTA/advisoryservicesprovidedbyIFC.

Sustainability

Investments.ThiswillbeassuredthroughthePPPapproach,whichwillrequireprivateentitiestoinvesttheirownresourcesandtooperateandmaintainthenewplants.Theprovisionofpublic fundingfortheprojectandtheriskmitigationinstrumentthroughSREPwillmitigatetheriskofnonpaymentbyEDHbyreducingthefeed‐intariff toanaffordable level, favorably comparing with alternative fossil fuel generation; byconditioningthecomponentonthecontinuationofcurrentprogressinaddressingEDHfinanciallosses;andbyprovidingadequatepaymentguaranteestotheprivatesectorasEDHtransitionstoafinanciallysustainableutility.

Approach. Leveraging future investments will be carried out through paralleldevelopment of a more comprehensive regulatory framework, which will providegreatersecuritytoinvestorsforlargerREprojects,andwillbefacilitatedbyincreasedexperience and learning from the first grid‐connected RE projects under SREP. Thepublicandprivate learningcurves,andimprovedwinddata,willallowfor lowertotalfinancialcostsoffuturewindparksandsolarplants.

Componentreadiness

Componentcanbedevelopedandappraisedinabout15monthstime.

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COMPONENTBRIEF2.RENEWABLEENERGYFORISOLATEDGRIDS—PORT‐DE‐PAIXDEMONSTRATIONPROJECT

Background

The EDH network consists of themain interconnected grid—connecting the Port‐au‐Princemetropolitanarea(West)withtheCentralDepartment—and11smallerisolatedgrids, ranging from300 kW to 25MWpeak load (Chapter 1). These grids aremostlyserved by diesel plants providing intermittent, low‐quality power—a constraint forfurtherexpansion.Someofthemhavesomesmall,mini‐,ormicro‐hydrogeneration,butmostareoperatingbelowcapacityornotatallasEDHhasconsistentlylackedfundingforrepairsandevenbasicmaintenance.

Suffice to say, thesegrids typically serveonlya small shareof thepopulation in theirdepartments, typicallyconstrainedby theiravailablegenerationcapacity.REresourceanalysiscarriedoutduringpreparationoftheSREPInvestmentPlanhasdemonstratedthatconsiderable,yetso faruntapped,REresources(solar,biomass, small‐hydro,andwind), exist near these grids, and could be used to hybridize existing diesel grids toincrease generation and reduce the costs of supply—thereby allowing bothimprovements of service for existing customers and expanding access to newcustomers. The analysis also shows that substantial access gains could be made byconnectinghouseholdsinthevicinityoftheexistinggrids(about300,000households).

The Port‐de‐Paix grid, serving the North‐West region, is a good example of thechallengesandopportunitiesforthesesmallergrids,andisthereforeagoodcandidateforademonstrationproject.TheNorth‐WestDepartment,alsoamongthemostisolatedand poorest departments, further highlights the value added of an SREP Haiticomponentinthisregion(figureA2).

FigureA2.Percentageofpopulationpoorandextremepoorbydepartment

TableA1.PopulationandpovertyrateinNorth‐Westdepartment

Location Poverty headcount (%)

Total population

Total poor Population share, %

Share of poor, %

Urban 65 189,278 122,305 25 20

Rural 87 574,227 502,319 75 80

Total 82 763,505 624,624 100 100

Source:ECVMAS2012;WorldBankcalculations.

Poverty Extreme Poverty

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The North‐West Department is home to 763,505 people, of whom 75% live in ruralareasand82%areclassifiedaspoor(tableA1).TheregionisservedbyanEDHisolatedgridwithsome3,500activecustomers—coveringlessthan3%ofthedepartment’stotalpopulation(assumingaveragehouseholdsizeoffive).Port‐de‐Paixcityitselfhassome200,000habitantsand isexperiencing rapidurbanization,puttingevenmoredemandontheEDHgrid.

Thegridisservedbyadieselplantofabout2.2MWavailablecapacity,buttheserviceisoften affected by unavailability of fuel, due to the region’s isolation and poortransportation, especially during the rainy season. Consequently, power is typicallyavailableonly5–12hoursaday.Asremotenessmakesaninterconnectionwiththemaingrid infeasible, the only option for increasing access is by expanding the grid reach,whichrequiresadditionalgenerationcapacity,rehabilitationoftheexistingdistributioninfrastructure, and investment in new connections, including new meters for allcustomerstoimprovecollections.Inthepast,thePort‐de‐Paixgridhada300kWwindgeneratortocomplementthedieselplantoperatedbyEDH(figureA3),butduetolackofsustainableO&M,thisplanthasnotbeeninoperationsince1991andisnowbeyondrepair.

FigureA3.Port‐de‐Paixanditsnonoperationalwindplant

Availablerenewableresourceassessmentsindicatesolarwindpotential(windspeed6–9m/s based on existing data, to be confirmed by studies during componentpreparation—figureA4).Hencethereisgoodpotentialtohybridizethedieselplanttoprovide a higher service tier (per the SE4ALL Multi‐tier Framework) to existingcustomersandtoexpandthegridtonewcustomers.

FigureA4.WindresourcemapofNorth‐Westdepartment

Source:WorldwatchInstitute(2014).

u

 Photocredit:Winenergy,Haiti Photocredit:Winenergy,Haiti

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Objective

TheobjectiveofthecomponentwouldbetodemonstrateimprovementsandexpansioninenergyaccessinthePort‐de‐PaixisolatedgridthroughitshybridizationwithRE.Thiscomponentwouldserveasademonstrationprojectforotherisolatedgridsthat,duetotheirisolation,cannotbeconnectedtothemaingrid.

Approach

The componentwill invest in RE to hybridize existing Port‐de‐Paix diesel generationwith1‐2MWrenewablepower(SREPfunds),andwillrehabilitateandexpandthegridtoallowmorecustomerstoconnect(IDAfunds).Detailedresourceassessmentswillbecarried out to confirm solar and wind capacity. If wind capacity is confirmed above6m/s, it is recommended to invest in a solar/wind hybrid plant. Alternatively, if it isbelow 6m/s, only solar power and batteries appear a more economic option. Theexisting diesel plant and grid also need to be rehabilitated to allow for efficientintegrationofthesolar/windenergy.

Theaddedgenerationcapacitywillupgradethecurrentintermittentservice level toareliable24/7supplyandexpandthenumberofcustomersfromthecurrent3,600activecustomersto18,000.

Learning from the earlier wind project at Port‐de‐Paix, special attention must to begiven to ensure sustainable O&M. The component will therefore be developed withparticipationoftheprivatesector.Ataminimum,thatsectorwillbecontractedfortheO&M,althoughaPPPapproachwouldbepursuedasapreferredoptioniffeasible(tobedecidedonatcomponentdesignstage).

Thecomponentwillbe linked toandconditionalonEDHdevelopingaviableplan forreducing losses in thegrid. Thiswill include installationofmeters to all Port‐de‐Paixgridcustomersaspartoftheproject.

Sub‐Components

Thecomponentwillhavethreesub‐components.Thecostbreak‐downisindicative.:

1.Technicalassistance for feasibility, environmental, social and grid capacity studies,designandimplementationofthePPPstructure(orO&Mcontract),regulatoryandriskmitigation instruments, and other specific project development–related studies.Estimatedcosts:IDAUS$2million.

2. Investmentsandriskmitigation to reduce total investment costs and the risk to theprivatesector—PPPorEPCandO&Mcontract.Estimatedcosts:SREPUS$4million.

3.EDHinvestmentsingridanddieselpowerrehabilitation,installationofmetersforallhouseholds and connections of additional households. Estimated costs: IDAUS$6million.

Results

1-2 MW of RE connected to the Port-de-Paix isolated grid Upgrading the current service level of 5-12 hours of intermittent service a day to full

24/7 service (from Tier 1-2 to Tier 4-5 f the SE4ALL Multi-tier Framework) Increasing the number of active customers from 3,600 to 18,000 Increased government and private sector experience and capacity to develop RE

projects in Haiti

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Regulatory instruments developed for the scale-up phase GHG emissions reduced or avoided

Implementationarrangements

Components1and2wouldbemanagedbyMTPTCthroughitsEnergyCell,whichwillbe in charge of implementing the project preparation studies and carrying out thecompetitiveprocessforselectingtheprivatesectoroperator,workingcloselywithEDH.Component3wouldbe implementedbyEDH.ThecomponentwouldbesupportedbytheWorldBank.

Sustainability

Investments.Thiswould be assured through the PPP approach or an O&M contract,whichwouldprovideincentivesfortheprivatesectorforsustainableO&Moftheplant.Securing funds for EDH investments would be a precondition for generationinvestments,toensurethattheaddedsolar/windplantwillbecompatiblewiththegridandhaveasufficientcustomerbasetoabsorbitsgenerationoutput.Anotherconditionwould be for EDH to develop and start implementing a viable plan for improvingcollections. All Port‐de‐Paix customers will have meters installed as part of thiscomponent.

Theprovisionofpublic fundingforthecomponentandtheriskmitigation instrumentwill mitigate the risk of nonpayment by EDH by reducing the feed‐in tariff to anaffordable level, favorably comparing with alternative fossil fuel generation; and byproviding payment guarantees to the private sector. Additional risk mitigationmeasureswillbeexploredtoprotectPort‐de‐PaixfromspilloversfromEDHcommercialdifficultieselsewhere,suchasrevenuescollectedfromPort‐de‐Paixcustomerscouldbesecuredforprioritypaymentfortheprivatesectoroperatorofthehybridplant,beforebeingpassedontoEDHcentraloffice.

Approach. Leveraging future investments would be carried out through paralleldevelopmentofamorecomprehensiveregulatoryframework,whichwouldalsoincludeincentivesforhybridizingandexpandingEDH’sremotegrids,developedonthePort‐de‐Paixexperience.

Componentreadiness

Componentcanbedevelopedandappraisedinabout15monthstime.

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COMPONENTBRIEF3.OFF‐GRIDELECTRICITYFORPRODUCTIVE,SOCIALANDHOUSEHOLDUSES

Background

The government aims for Haiti tobecome an "emerging economy" by2030.This vision includes theobjectiveto reach universal electricity access by2030—in line with the SustainableEnergyforAllgoals.

Reaching this goal will require dualelectrification efforts: improving EDHperformance and supporting on‐gridgeneration capacity to enable EDH toprovide reliable and affordableelectricity services in urban areas and

surroundings; and supporting off‐grid electrification efforts to those who cannot beservedbyEDH.

RE can play a transformative role in both, but success requires that REmarkets andcapacities be developed. That said, as the on‐grid market is constrained by EDH’sfinancial capacity and lack of sector/regulatory reform,Haiti’s incipientREmarket isdevelopingprimarilyinoffgrid.

Themarketisemerginginurbanandruralareas.Inurbanareas,severalPVcompaniesare now offering leasing services to hybridize diesel generation of commercial andindustrialclientswhohaveintentionallyisolatedthemselvesfromtheEDHgridduetoits unreliability. Solar PV can reduce their energy costs and thus improve theircompetitiveness. Once the EDH technical and financial situation improves, this newinstalledcapacityofdistributedrenewablescanthenfeedintothegrid,e.g.throughnetmeteringarrangements(boxA1).

In parallel, several local and international companies offer solar PV lanterns tounelectrifiedhouseholds inruralareas,andthefirstpioneershaverecentlybuilt(andcontinuetobuild)REmicro‐andmini‐grids.Furthermore,inlinewiththeglobaltrends,new business models are emerging for leasing small solar kits/solar home systems(SHS).(AnnexIVdescribesexamplesofHaiti‐growninnovativebusinessmodels).SREPHaitiwillleveragetheseinnovationstobringoff‐gridelectrificationeffortsfromapilottoscale‐upstage(boxA2).

Photocredit:UNEP–MarkSteed

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BoxA1.Urbanoff‐gridmarketpotential

IFC is considering supportingdevelopment of a solar PV leasing solution tomedium to largeindustrialandcommercialprivateplayers(“lessees”),thefirstsuchattemptonalargescaleinHaiti.Thistypeofprojectswouldtargetusersthatarealmostentirelyoperatingoff‐gridduetogridreliabilityissuesgenerally.ItwouldnotdisplaceEDHasasourceofelectricitysupplyinthelongrun.Insteaditwouldaimatreducingthecostofself‐generatedelectricityforthoseoff‐gridcustomers,improvingtheirefficiencyandcompetitiveness.Ifsuccessful,itmayopenthedoorsforsolarPVleasingtoawiderrangeofusersviaaggregators.ItcouldalsodevelopalocalsolarPVconstructionandmaintenanceindustry.

Thisprojectistargetingthosealmostentirelyoperatingoff‐gridoutofreliabilityconcerns,andso does not displace EDH as a source of supply. Instead it aims to reduce the cost of self‐generated electricity for those off‐grid customers, improving their efficiency andcompetitiveness.

IFC’s pipeline of projects under this SREP component would be first‐of‐their‐kind projects,deploying a business structure not yet tried in Haiti and relying on long‐term financing in ahigh‐riskmarketenvironment.Thebusinessmodelsunderthosetransactionswouldgenerallybe tested and their robustness confirmedby targeting customerswithbetter credit risk first,andover timemoving toweakercreditcustomers.TheuseofSREP fundsby those initiativeswouldreducelendingriskandhelpensurethebusinessmodels’sustainability.SREPfundsarenotintendedtobegrants,butcouldbedeployedintheformofdebtorguaranteesfollowingtheprincipleofminimumconcessionality

ForEDH, thispipelineofprojectswould improveHaiti’sbusinesspotential in the short term,whilepreparingoff‐gridsegmentsforgridconnection(forwhenreliableEDHsupplycomesonstream).

Current IFC’s pipeline of off‐grid projects offers a solar PV distributed generation platform,whichcoulddeliverimmediateandsignificantbenefitsandleverageprivatesectorfunds.TheseprojectswouldultimatelyallowEDHtotapintotheresultedinstalledcapacityvianetmeteringor other types of arrangement. In the shorter term, given poor EDH electricity supply or thefocus on customers already off grid, those projects are unlikely to compete with EDH’soperationsorweakenitsfinancialposition.

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BoxA2.Electricityforruraldevelopment

World Bank’s 2015 poverty assessment “Creating Opportunities for Poverty Reduction in Haiti”concludes that “continued advances in reducing both extreme andmoderate povertywill requiregreater,morebroad‐basedgrowth,butalsoaconcertedfocusonincreasingthecapacityofthepoorand vulnerable to accumulate assets, generate income, and better protect their livelihoods fromshocks.Specialattentionshouldbegiventovulnerablegroupssuchaswomenandchildrenandtoruralareas,whicharehometooverhalfofthepopulationandwhereextremepovertypersists.”Thestudy identifiedruralelectrificationasoneof theareas thatcan improveagriculturalproductivityandsupportnonfarmincomegeneration—bothsourcesforincreasingincomeinruralareas.

InvestmentsinruralelectrificationinHaitihaveremainedscarceinthelast30years,resultinginanextremelylowofficialruralelectrificationrateofaround5%.Formostpeoplelivinginruralareas,adieselgen‐set isunaffordable,andtheyrelyonkeroseneandcandlesforlighting,andchargetheirphonesatcommercialchargingstations. In the frameworkofcomponentpreparation,a telephonesurveyof1,400householdswasconductedwithDigicel,Haiti’slargestcellphoneprovider.The2014Digicel/iiDevelopment energy survey amongmobile phone users confirmed a fairly high level ofelectricity‐substitutable expenditure of households with at least one mobile phone. The surveyfound that these households spend on average US$30 per month on electricity or electricity‐substitutable expenditures such as lighting, cell phone charging, and batteries, but expenditurepatterns vary strongly by household income, urban/rural context, and locations. For example, inArtibonite, some 80% spend less thanUS$8 amonth on electricity (and its substitutes),while inPort‐au‐Prince, only 10% pay less than that. The energy use and expenditure data have beenanalyzedforeachofthe10departments,andwillbemadeavailableviaapubliclyavailableGIStoolandweb‐based“dataroom.”

The threebasic identified options forHaiti rural off‐grid areas are retrofitting and expanding thecurrent larger remote systems (mostlyEDHoperated); investing invillagemini‐/micro‐grids;andstand‐alone systems (such as solar home systems). The analysiswas carried out to estimate thepotentialmarket for each, aswell asoptimalvolumes that couldbe targetedunder each segmentwhenconsideringsupply‐sideconstraints,subsidyefficiency,andoptimalscale‐upduringandafterSREP,basedonageo‐spatialanalysisoftheunelectrifiedpopulation(boxtable1).

Boxtable1.Off‐gridelectrificationpotential

Off‐gridREtype Theoreticalmax.potentialofsegment

(population)

Short‐term(SREPtime‐frame)potential(population)

REretrofitting,upgradingandexpansionofthelargerruralremotegrids(EDHormunicipal)

1,500,000 45,000–150,000(3–10%)

Smallandmedium‐sizedvillagegrids(retrofit+greenfield):

300,000 30,000(10%)

Individualsystemclients(HH,socialusers,andSMEs)

>5,000,000 500,000–1million(10–20%)

There are strong grounds for the component to cover the urban and ruralmarkets, and developsynergiesbetweenthem.Bothmarketsrequirecompetentskilled laborandfinancingmechanismsencouraging the banks to lend to all types of RE off‐grid interventions etc., which the SREPcomponentwillexplore.Ultimately,urban‐orientedcompaniescanalsobemotivatedtoserveruralmarkets, asmini‐grid IPPsor by expanding the leasing arrangement to agri‐businesses andotherruralenterprises,iftherightconditionsarecreated.

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Objectives

TheproposedSREPcomponentwill scaleupaccess tomodernelectricity services forproductive,social,andhouseholdusers.

Approach

Theproposedcomponentdesign isbuiltonextensiveconsultationswithstakeholders(annex III). The key information for the design of the SREP off‐grid electrificationcomponentwascollectedduring theHaitiRuralEnergyForum,heldonNovember24and25,2014byMTPTC,withsupport fromtheWorldBankand IDB,whichgatheredsome200ofthekeygovernmental,private,andnongovernmentalorganization(NGO)stakeholders involved in planning, financing, and providing rural energy services.Several real‐time polls allowed tracking of stakeholder views. Among the findings,participants agreed on principal requirements for scaling up rural energy activities(annex III). By type of rural investments, stakeholders recommended the followingorderofpriority(respectedintheSREP):villagemini‐andmicro‐grids;individualsolarPVsystems;solarlanterns;andgridextension.

SREP supportwill be technologyandbusinessmodelneutral.All technologieswill beeligible(mini‐hydro,solarPV,biomass—asinoneoftheanalyzedpromisingkeySREPcaseexamples—andwind).SolarPV,duetoitssiteflexibilityandscalability,islikelytobethemostcommonoption,at least forstand‐aloneusers.Theproposed instrumentswillbuildinflexibilitytosupportmultiplebusinessmodelstoincentivizeprivatesectorinnovation and not to crowd out potentially viable business models by narrowingsupport to only a few selected “winners.” However, the parallel technical assistance(TA), including South–South exchanges, will be used to support, particularly, thoseapproachesappearingthemostpromisingtoachievescaleandimpact.

The share of each technology and business model will ultimately be determinedthroughout the whole SREP implementation duration by private sector demand forSREP support and by implementation performance in each of the market segmentssupported by SREP. The component differs from the on‐grid Component 1 (and alsofromComponents2and4),wherethefinal“optimal”technologymixwillbedeterminedduring each component preparation, based on the detailed analysis possible at thatstage.

The pace of mini‐grid development can also be affected by the regulatory risk.Regulatoryriskismoresignificantforvillagegrids(however,despitethisrisk,severalprovidersalreadystartedpilotswhicharethekeycasesanalyzedforSREPpreparation)andclosetozeroforsolarstand‐alonesuppliers.Thetechnologymixmentionedabovewill not only be determined by private sector performance as such, but also by thevelocitywithwhichvillagegridregulationscanbeimprovedandclarified.

LeveragingSynergiesamongCo‐financiers

The component will leverage existing and planned financing instruments to exploitsynergies between market segments and maximize development potential. Theseinclude:

The existing IDA‐financed Haiti Rebuilding Energy Infrastructure and Access Project(PRELEN),whichhasdevelopedanapproachforoff‐gridelectrificationofschoolswithsolarPV,whileimprovingeducationaloutcomesbyintegratinginnovativeinformationtechnology (IT) solutions (Smart Boards) and related educational content. SREP/IDA

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cofinancing will scale up this model and will develop similar approaches for otherpublicservices(particularlyhealth).

TheCTF‐eligibleModernEnergyforAllProjectisdevelopinganaccesstofinancefacilitytobemanagedbyacompetitivelyselectedfinancialintermediary(FI)tochannelcapital(loan and equity) to the emerging off‐grid electricity enterprises serving rural areas.TheprojectisexpectedtobepresentedtoCTFinMay/June2015(annexV).

CTFwill support commercially driven and commercially viable off‐grid electrificationbusinesses,buildingontheexistingmarketforsolarlanternsandpromisingpilotswithservices‐oriented approaches using pay‐as‐you‐go (PAYG) SHS and retrofitting ofmunicipal diesel grids with renewables. Thus CTFwill only be able to capture thosesegmentsoftheruraloff‐gridmarketsthatcanbedevelopedoncommercial(oralmostcommercial) terms. SREP will complement CTF efforts by expanding off‐gridelectrification to areas requiring a greater share of public funding, including PPP forgreenfieldREmini‐grids.

IFCisconsideringvariousapproachestosupportthedevelopmentofasolarPVleasingsolution to medium to large industrial and commercial private entities (box A1).However, if IFC‐SREPsupportwillbe technologyneutral,as longsother technologiescanmeettheComponentobjectives.SREPfundingwillleveragelargerIFCinvestmentsandevenlargerotherprivatesectorinvestmentsinthisscheme(expectedleveragingis1:7). If successful, it could be adapted for rural off‐grid enterprises, building on theinitialstructureandFIcapacitydevelopedbytheCTFproject.

FigureA5.SynergiesbetweenSREP,IDA,CTF,andIFCinstruments

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Sub‐Components

TheSREPcomponentwillhavefoursub‐components.Thecostbreak‐downisindicative.

1.Scalingupvillagesystems.VillagesystemsrefertobothREandhybrid(renewables+diesel) mini‐ and micro‐grids developed for rural towns and villages. The villagesystemsmay include a combinationof a village grid and individual systems formoredispersedhouseholdsinandaroundthevillage.

TheSREPcomponentwillbuildonalready‐promisingexperienceswithvillagemicro‐grids (including solar PV, micro‐hydro, and biomass) and scale up primarily twoemergingbusinessmodels,suitable fordifferentvillagesocioeconomiccharacteristics:PPPbetweenmunicipalitiesandtheprivatesector;andruralcooperatives(annexIV).

Estimatedcosts:SREPUS$4million;IDAUS$2million;CTFUS$4million.

2. Scaling‐up individualrenewableenergy systems inruralareas. Not all off‐grid ruralpopulationswithoutservicearemini‐gridable.ThedemandassessmentcarriedoutfortheSREPHaiti InvestmentPlanhasestimatedthatthemajorityofoff‐gridhouseholdswill require individualsystemsolutions (totalSREPpotentialof300,000households).Inaddition,SREPcouldreacharound1000agri‐businessesandotherruralenterprises,and schools and small clinics outside rural towns that will require individualsolutions—replacingorretrofittingthedieselsystemsorfirst‐timeelectrification.

Productiveuses—SREPwillprovideresults‐basedincentivesforadoptingREforagribusinessesandotherruralenterprises

Social uses—SREP will finance packages for electrifying schools and clinics(based on national prioritization criteria) with results‐based incentives forsustainableO&M

Household uses—these will mainly be financed through the CTF access tofinance facility.However, to support fasterprogression from lanterns to largerpay‐as‐you‐go solar kits/home systems, very limited and market‐friendlyresults‐basedincentivesmaybecontemplated.

Estimatedcosts:SREPUS$3million;IDAUS$4million;CTFUS$7million.

3. Scaling‐up individual renewable energy systems in urban areas. To overcome hightransaction cost of financing individual RE systems and working directly withfragmentedend‐users,financingcanbeprovidedtoprivatesectoraggregatorswhoarepursuingdifferentbusinessmodels.SREPfundscanbeusedtoexpandfinancingoptionsavailabletoprivatecompaniessellingorleasingREsystemsand/ortobusinessesthatwishtopurchasethesystems.Forexample,financingcanbeprovidedtoREdistributedgenerationleasingvehicleservingoff‐gridindustrialandcommercialcustomersinHaiti.SREP fundscan thenbestructured to support theexpansionof theseaggregators/FIsintoREspaceandprovideneededprotectionagainstperceivedandrealrisks,overtimeprogressivelygrowingthescopeofend‐userstheseinstitutionsarecomfortableserving.Some element of TA for capacity building of the aggregatorsmay be sought in smallamounts, associated to the above. If successful, the project could reach tens of US$millionsinscaleoverthree‐fiveyears..SeeboxA1foranexampleofactivitiesthatSREPwillsupport.

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4.Technicalassistance.Thissubcomponentwillcomplementbroaderpolicy,regulatory,andcapacity‐buildingactivitiesincludedinComponent5oftheSREPInvestmentPlan,by focusing specific TA tasks directly related to implementing specific off‐gridsubprojectsfinancedundertheComponent,including:

i)Marketdevelopmentactivities—buildingapipelineofsubprojects

ii)Settingupandenforcingqualitystandards

iii)TAtoserviceprovidersandusers, includingTA forenergyefficientuseofoff‐gridelectricity (including the use of smart technology, dissemination of energy efficientappliances, intelligentusercommunication,simpledemand‐orientedtariffsolutions invillagegrids,andsupportforproductiveapplications

iv)verificationandmonitoringandevaluation(M&E),includingsettingupmechanismsfor beneficiary feedback. Estimated costs: SREP US$1million; IDA US$2million; CTFUS$0.5million.

Results

Thekeycomponentresultsareexpectedtoinclude:

At least 200,000 people provided with access to electricity At least 10 MWp of RE installed Enterprises provided with cheaper electricity or/and access to electricity Community facilities (schools and clinics) provided with access to electricity Private sector financing leveraged Opportunitiescreatedforfemaleentrepreneursandworkforce GHG emissions reduced or avoided

Implementationarrangements

SREPComponents1and2includingIDAcofinancingwouldbemanagedbyMTPTC,incharge of implementing the component. CTF access to finance facility cofinancingComponents 1 and 2 will be channeled through a competitively selected FI. TAComponent2willbemanagedbyMTPTC,withsomefunctionsbeingdelegatedtotheFImanagingCTF’saccesstofinancefacility.Aprivatesectorsupportfacility(Component3)willbemanageddirectlybyIFC.

The component will target clients not served by EDH, and EDH therefore will not be involved in implementation, although it will be involved in the planning stage to avoid including areas scheduled for EDH grid connection.

ThecomponentwillbesupportedbytheWorldBank(Components1,2,and4)andIFC(Component3).

Sustainability

Sustainabilityissuesinoff‐gridelectrificationprojectshaveusuallyarisenforoneofthefollowingreasons.

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Inadequatetariffsinvillagegrids

The component will support cost‐recovery tariffs. To reduce the burden on ruralhouseholds, however, it will provide subsidies for grid infrastructure (to remain amunicipalassettobeeventuallyconnectedtotheEDHgridwhenitarrives).

Lowcapacitytooperatevillagesystems

Thesubprojectswillneedtosubmitabusinessplan,includingademonstratedcapacityto carry out the investments and operations before they can receive SREP or CTFsupport.Comprehensivetechnicalsupportandadvicewillbeprovidedtothem.

Lackofafter‐salesservices

After‐sale serviceswill be required for all individual systems. The componentwill inparticularsupportservice‐orientedapproaches,suchasPAYGbusinessmodels—whichfocus on providing electricity service to customers as opposed to just selling thesystems.

Lackoffinancingforspareparts

This can be an issue for households and institutional clients. For households, thisproblem often occurs in heavily subsidized projects, where a solar home system isprovidedtoahouseholdforfreeorataverylowprice,butthehouseholdthencannotaffordtobuyanewbatteryorotherspareparts.Toavoidthisproblem,theSREPandCTFprojectwillfocusonbuildingthecommercialmarketforSHS.Thesubsidies,ifany,would be minimal and target market development. The affordability issue would bedealtwith, rather than via subsidies, by supporting user‐finance approaches, such asPAYG,whichallowhouseholdstospreadpaymentsovertime;andsupportingdifferentsizesofsystems—fromlanternstoSHS.

A similar problem often arises with projects supporting electrification of publicinstitutions. To avoid it, SREP investments will be linked to long‐term maintenancecontracts.ThecomponentwilluseITsolutionstotracksystemfunctioningandtodetectpotentialproblematanearlystage.

Poortechnicalqualityofsystems/components

Thecomponentwillhaveastrongqualityassurancecomponent.Forindividualsystems,supportwillberestrictedtosystemscertifiedonlybyLightingGlobal,orequivalentforlarger systems. For mini‐grids, the component will apply a new quality assuranceframework,currentlybeingdevelopedbytheUnitedStatesDepartmentofEnergyandNationalRenewableEnergyLaboratorywithpartners,andwillprovidesupporttothemini‐grid operators to support quality of service. For IFC‐led activities, the systemsshould be subject to due diligence to ensure satisfactory quality requirements andassociated warranties. To the extent possible, exposure of the aggregators to somelimiteddegreeofoff‐takeriskwillensuretheiralignmentofinterestwiththedonorsontheequipmentselected.

Componentreadiness

Componentcanbedevelopedandappraisedinabout9monthstime.

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COMPONENTBRIEF4.SMALLHYDROPOWERREHABILITATION

Background

ThemainproviderofelectricityservicesinHaiti is EDH. It generates roughly 15% oftheenergyproducedinHaiti,withtherestcoming from IPPs and TripartiteCooperation(Haiti–Venezuela–Cuba).69Theelectricity infrastructure is aging and hasbeen poorly maintained. Installedgeneration capacity is about 320MW, ofwhichonly176MWisavailable.

Most (81%) of the power is suppliedthrough oil‐based thermal generation(diesel and fuel oil), with hydropowercontributing the rest (19%). The

hydropowerplantsareownedandoperatedbyEDH.ThelargesthydroplantisPéligre(54MW but operating at half capacity), which connects to the metropolitan areathrougha115kV transmission line.Theplantand the transmission linearecurrentlyundergoingrehabilitation.

ApartfromPéligre,EDHoperatessixsmallerhydroplantsunder2.5MWeach,butonlyoneisfullyoperational.Thepoweroutputfromtheothersisseverelyconstrainedduetotheneedforurgentrepairsandrehabilitation(tableA2).

TableA2.Smallhydropowerrehabilitationplan

Hydropowerplant Installedcapacity(kW)*

Costestimate(US$million)

Délugé 1,100 3.6Saut‐Mathurine 1,600 0.6Caracol 800 2.1Onde‐Verte 950 0.4Gaillard 500 1Drouet 2,500 3Totalcostestimate 10.7*LargelynonoperationalSource:EDH,2015.

There is a substantial potential for additional investment in new micro‐ and smallhydropowerinHaiti,withpotentialabove100MWestimatedbyseveralstudies70(tableA3).

Photocredit:UNEP–MarcSteed

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TableA3.Estimatesforremaining“additional”pico‐to‐smallhydropowerpotentialinHaitibyregion

Source:Worldwatch(2014)basedonSoleo(2012).

EDH is facing huge technical and commercial challenges. Technical and nontechnicallosses are at 65%—a large part of which can be accounted for by illegal gridconnections. In addition, the collection rate is only at two thirds—meaning thatbetween technical and commercial losses, EDH recovers only 22% of the value ofelectricityitgenerates.Thegovernment’sapproachtoaddressthissituationconsistsoftwoparalleltracks:

Reduce EDH losses by targeted investments in rehabilitation of existingtransmissionanddistributionlines(carriedoutwithsupport fromWorldBankandIDB),andacomprehensiveplantoreducecommercial losses,startingwithimprovingcollectionsthroughinstallationofnewmeters.

Increase availability and reduce costs of power supply, decreasing EDHdependencyontheexpensivefossil‐fuelgenerators.

Objectives

The componentobjective is to increasehydropowergeneration inEDHgrids throughrehabilitatingexistingsmall‐hydroplantsoperatedbyEDH.

This rehabilitation is a cost‐effective option for increasing RE generation capacity. Itwouldhavean important impact,especiallyonthesmallerremotegridEDHoperates,becausetheseremotegridsarenowpoweredalmostexclusivelybydiesel,someofthemfacing additional diesel supply constraints due to their remoteness and transportbottlenecks,particularlyduringtherainyseason;andbecausemostoftheexistingsmallhydropower plants andmuch of the additionalmicro‐ to small hydropowerpotentialareclosetotheseremotegrids.

Improved power supply can facilitate access expansion. It has been estimated in thisInvestment Plan that at least 300,000 new connections could be achieved throughexpandingEDH’s11remotegrids.

Approach

EDHhas identifiedsixsmallhydropowerplants thatarecandidates forrehabilitation.Implementationwouldresultinincreasinggenerationbyabout20GWhayear.

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Inaddition,thecomponentwouldattempttodevelopatleastoneortwonewmini‐tosmallhydropowerplants,basedonidentifiedpotential(seeTableA4).

The component would also develop and pilot different PPP arrangements for therehabilitation/new investments andO&M,dependingonparticular conditionsof eachhydropowerplantandthegriditoperateson.SomeplantsmaycontinuebeingoperatedbyEDH,whileforothersanO&Mcontractorafullconcessioncouldbeexplored.

Sub‐Components

TheSREPcomponentwillhavethefollowingsub‐components:

1.Investmentstudiesandothertechnicalassistance,includingdetailedfeasibilitystudies,design of PPP arrangements, procurement and contracting, supervision of works,developmentofarrangementsforsustainableO&M,etc.Estimatedcosts:US$3million.

2.Rehabilitation/construction.Estimatedcosts:US$15million.

Results

Increased hydropower generation (kWh) Arrangements for sustainable O&M GHG emissions reduced or avoided

Implementationandsustainabilityarrangements

The component will be implemented by EDH—the owner and the operator of smallhydro plants, with support from the MTPTC’s Energy Cell. However, given EDH’smaintenancedeficiency in thepast, thecomponentwill focuscloselyonensuring thatcredible arrangements are in place to ensure futuremaintenance of the rehabilitatedfacilities, such as setting up a maintenance fund with obligatory EDH contributions,outsourcingO&Mtotheprivatesector,orconcessioningthehydroplantstotheprivatesector.

Thecomponentcanalsobedevelopedinphases,thusEDHhasidentifiedthreepriorityinvestments: Drouet: (2.5MW resulting total)—for which funds have already beenmobilized from IDA, followed by Gaillard (0.5MW), and Caracol (0.8MW), at anestimatedtotalcostofUS$6million.

Componentreadiness

Componentcanbedevelopedandappraisedinabout18monthstime.

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COMPONENTBRIEF5.BUILDINGENABLINGFRAMEWORK,CAPACITIESANDSKILLSFORRENEWABLEENERGYSCALE‐UP

Background

REinHaitiisstillinitsnascentstageandfaces high barriers to development.Further, constraints to RE investmentsare similar across all RE types. All REinvestments suffer from the lack of atransparent and consistent regulatoryframework,mustdealwithfiscalpoliciesthat favor fossil fuels, and mustovercome capacity and skill constraintsat professional and technical levelsthroughoutthesupplychain.

RE scale‐up requires comprehensive,systematic, and consistent efforts to

eliminatethesebarriersatnationallevelforalltypesofREinvestments.

Throughout the consultation processes (annex III), RE stakeholders (government,privatesector,civilsociety,andacademia),identifiedthemainbarriersforscale‐up,ofwhich regulatory and capacity issues were highlighted as a priority for SREP.Sectorwide—specifically SREP‐wide—M&E is another crosscutting issue that will beincludedinthiscomponent.

Regulatoryissues

Despite favorable RE resource endowments and a strong interest from the privatesectorasmanifestedinitsstudyingREprojects(particularlywindandsolar),therehasbeennoprivateinvestmentyetingrid‐connectedrenewablesandnoPPAsigned.

From the private sector perspective, EDH’s financial situation poses significant risks,even if the PPA can be backed by government guarantee. In addition, there is noregulatory framework for RE—no feed‐in tariff or similar certainty on tariff level, nostandard PPA, no regulatory agency—providing regulatory protection to investors.Consequently,allcontractsandregulatoryissuesaredealtwithcasebycase,reducingcertainty for project developers. Stakeholder participants agreed that improving thefinancial performance of EDH and developing a regulatory framework and riskmitigationinstrumentsshouldbeahighpriority.

Similarly for off‐grid renewables, regulatory issues were highlighted as the mainbottleneck to investments in the sector. In particular, the legal and regulatoryframework for mini‐ and micro‐grids lacks transparency and discourages privatefinancing.Forexample, theOrganicLawofElectricityprovidesEDHwithamonopolyforpurchase,transmission,anddistributionofpoweronallHaitianterritory.However,the2006LawonDecentralizationallowsmunicipalgovernmentstoproduce,distribute,andcommercializeenergy,aswellasmanageenergyinfrastructure,atmunicipallevel.In addition, cooperatives also seem to be permitted to self‐supply to theirmembers.Moreso,theLawonEconomicFreeZonesprovidesthepossibilityforathirdpartytosellelectricityinthefreezonewithouthavingtoacquireaconcession.

Photocredit:UNEP–MarcSteed

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Therelationshipsandhierarchyamongthesedifferentlawsareunclearandaffects, inparticular,potentialmini‐grid investorswhoarereluctantto invest instrandedassetsthat could be expropriated or lose value. In addition, there is no clarity on whethermini‐grid operators are free to set tariffs or whether they will be subject to anygovernmenttarifforqualityofserviceregulation.Finally,thereisnoprovisionofwhatwouldhappentotheassetsiftheEDHgridarrivesinthevillage.Consultationsstressedtheneedforaninstitutionalset‐upwithclearrolesandresponsibilitiesforruralenergy(accountability)andaclearlyspelledoutNationalElectrificationStrategy.

Both grid‐connected and off‐grid renewables are held back by a discriminating fiscalpolicy,which favors fossil fuelsoverRE.Whilediesel fuelandkeroseneenjoyexplicitandimplicittaxincentives,REequipmentaresubjecttoimportdutiesandvalue‐addedtax (VAT). Cumulatively, various duties and taxes can amount to over 30% of theproduct value. This impacts negatively on the relative competitiveness of renewablesvis‐à‐visfossilfuels,andincaseofoff‐gridrenewablesimposesanadditionalburdenonthepoor.Forexample, solar lanternsare typicallyclassifiedatcustomsas flash lights(torches),withanevenhigherdutycategorythansolarpanels.Consequently,poorruralhouseholdswanting to switch from polluting and hazardous kerosene lamps to solarlanternshavetopayapremiumof30‐40%forimportdutiesandtaxes.Thishasbeenafrequentlycitedbarrier inallconsultations,withgovernment,privatesector,andcivilsociety stakeholders all agreeing that the government should level the playing fieldbetweenrenewablesandfossilfuels.

Capacityissues

Despite some improvements in the last 10 years, formal education rates inHaiti areamongthelowestintheWesternHemisphere.Haiti'sliteracyrateofabout53%(55%for males and 51% for females) is below the 90% average literacy rate for LatinAmericanandCaribbeancountries.Thecountryfacesshortagesineducationalsuppliesandqualifiedteachers.Theruralpopulationislesseducatedthantheurban.The2010earthquakeinHaitiexacerbatedmattersbydestroyinginfrastructureanddisplacing50‐90% of the students (depending on locale). The educational sector is under theresponsibilityoftheMinistryofNationalEducationandVocationalTraining(Ministèrede l'Éducation Nationale et de la Formation Professionnelle; MENFP). The ministryprovides limited funds to support public education and hence is constrained in itsabilitytoimprovethequalityofeducation.Theprivatesectorhasbecomeasubstituteforgovernmentpublicinvestmentineducation,asopposedtoacomplement.

Higher education is provided by the universities and other public and privateinstitutions. The university system is composed of four or five private institutions inaddition to the State University of Haiti. All higher education institutions are in thecapital city. Theyoffer five‐year degrees in various disciplines, including engineering.Veryrecently,basicshort‐termskillsdevelopmentwasdeveloped.TheStateUniversityofHaitialsointendstolaunchatwo‐yearcourseonREfrom2016.Therearealsosome200schoolsthatoffertrainingforelectricians.Nevertheless,agraduateprogramandaprogramofshortcycleoroftechnicaltrainingonREarenotoffered.

Thelackofskillsisalsoanissueatprofessionallevel—engineersandotherspecialistswithREorientationsarescarce.Privateenterprises in theREsectorwidelyrecognizetheshortageofskilledworkersandexperts.ThestakeholderconsultationsunderSREP(annexIII)revealedthatthismajorbarrierisalsorecognizedbygovernmentagencies,multilateralinstitutions,NGOs,andacademia.

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Objectives

Theobjectiveofthecomponentistostartbuildinganenablingregulatoryframework,capacities,andskillsforsupportinggrid‐connectedandoff‐gridREscale‐up.

Approach

Regulation.ThecomponentwillfocusondevelopmentandtestingofregulatoryandriskmitigationinstrumentsthatinitiallycanserveSREPComponents1to4,buteventuallycan be developed into a regulatory framework, with standard instruments that thegovernmentadoptsandappliesforfutureREinvestmentspostSREP.Thefocuswillbeon learning by doing—developing instruments, testing them, and adapting them tosupportfuturescale‐up.

Thekeyissuestobeaddressedare:

Development of a an overall regulatory structure for the sector, includingsupportforsettinguparegulatoryagency

FiscalpolicyadjustmentstoleveltheplayingfieldforREandfossilfuels Specific instruments for grid‐connected renewables, such as feed‐in tariffs and

PPAs,anddesignofriskmitigationinstruments Specific instrumentsforoff‐gridrenewables,especiallymini‐grids,rules, tariffs,

servicequalitystandards,andwhathappensifthegridarrives,etc.

Capacity/skills.TheapproachwillbetosupportnationwidebuildingofcapacitiesforREdeploymentatalllevelsofthesupplychain,bothacademictrainingatuniversitiesandvocational training for technicians. The focus will again be on learning by doing(includinginvolvinguniversitiesinimplementingsomeSREPinvestments,suchasPort‐de‐Paixwind/solarplantorruralmini‐grids).

The following priority areas have been identified as potential actions, which will befurtherelaboratedduringcomponentdesign:

Support the creation of a pool of skilled technicians in rural areas. Private enterprises repeatedly raise the shortage of skilled technicians for installation and O&M of renewable and decentralized energy systems. SREP will support ongoing initiatives that offer potential for replication.

Support development and actualization of certified technical training and professional courses specializing in RE in Haiti. Develop an inventory of programs, courses, and curricula, as well as certification. The courses and training should ideally cover social, environmental, and gender aspects, as well as standards and norms for RE projects. SREP’s interventions might complement and build on the activities implemented under the Renewable Energy Education Network (RENET).

Establish a coordination platform for engaging the private sector in curricular development and facilitate matchmaking of internships, apprenticeships, and placement of graduates. The coordination platform would: incentivize regular exchanges between MENFP, the utility EDH, MTPTC, Institut National de la Formation Professionnelle (INFP), the future Haitian Renewable Energy Industry Association and all the relevant institutions to ensure a complementarity of efforts; and engage the private sector to ensure that the curricula are adequate and appropriate to the skills requirements of the private sector. Further, at the crossroads between the private sector and academia, the coordination platform would also support the matchmaking of internships and apprenticeships for students and for placement of graduates at RE companies.

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Develop lessons learned and experience sharing, as well as multicountry or regional efforts and South–South knowledge exchanges for fast diffusion of emerging lessons on, for instance, PAYG and similar innovative business models (such as those in Tanzania, Kenya, Uganda and Bangladesh); as well as on how to approach the education sector as a whole (especially with Burkina Faso and Mali), including documentation and experience-sharing on gender-sensitive RE project design.

Designawidespreadconsumer‐awarenesscampaignof thebenefitsand futurepotential of RE in Haiti, including outreach to women as energy users andpotentialentrepreneurs

Onapproval,andinthecontextofthecoordinationplatform,theimplementingagencieswilldevelopsequenced,capacity‐buildingactivities.

Implementation will be closely linked to implementation of the four investmentcomponents, which will provide a real‐life RE market development laboratory fortesting and fine‐tuning the regulatory instruments and for learning by, for example,involvinguniversitiesinrunningsomeREinvestments.Capacity‐buildingwillincludeagender dimension. It is expected that the effect of this component on removinginformation asymmetries and other market inefficiencies will help “lift” several REmarket segments to a new, more efficient level, which would bring down the risk‐adjustedfinancingcostsofnewREprojects.71

Thecomponentwillhavethefollowingsubcomponents:

1.Improvinglegal,regulatoryandfiscalframeworks

2.Comprehensivecapacityandskill‐buildingprogram

3.BuildingM&EtoolsforSREPprogramandsectorwidemonitoring

Estimatedcosts:SREPUS$1million;IDAUS$2.5million;CTFUS$0.5million.

Results

Thekeyresultswouldinclude:

Enabling regulatory frameworks for both grid-connected and off-grid renewables Increased hands-on experience and capacity of university graduates specializing in RE A pool of technicians in rural areas Comprehensive M&E of SREP activities, including application of the SE4ALL Multi-

tier Framework

Implementationarrangements

The componentwillbe implementedby theMTPTCEnergyCellwith themembersofthe SREP Task Force and the Coordination Platform that will be developed for thiscomponent, including universities with RE programs, such as the State University ofHaiti andQuisqueyaUniversity, and theGender andEnergy InteragencyCommission.ThecomponentwillbesupportedbytheWorldBank.

Componentreadiness

Componentcanbedevelopedandappraisedinabout6monthstime.

 

ANNEXIIASSESSMENTOF

COUNTRY’SABSORPTIVECAPACITY

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ANNEXII.ASSESSMENTOFCOUNTRY’SABSORPTIVECAPACITYMACROECONOMICANDFISCALSITUATIONOver the last 10 years, Haiti managed to keep a relative macroeconomic and fiscalstability,despite thedisruptionscausedby the2010earthquake, the2008hurricanesand the tensepolitical context.GDPgrowthrate in2007‐14averaged2.2percentperyear.Withpopulationgrowthrateofaround1.3percent, this impliedpositive, if low,growthinincomepercapita.

TheJanuary12,2010earthquakecausedunprecedentedlossof lifeanddestructionofphysical capital. Before the earthquake, the political and security situation had beengradually improving and foreign investors’ interest in some areas (including tourismandtextilemanufacturing)hadbeguntomaterialize.Aftertheearthquake,totaldonorpledgesofaidfor2010‐12amountedtoUS$8.1billion(37percentof2010‐12GDP),ofwhich US$1.2 billion (18 percent of 2009 GDP) corresponded to debt relief, whichsignificantlyreducedHaiti’sexternalindebtedness.

Haiti’s twin fiscalandcurrentaccountdeficitsbothremainedbelow3percentofGDPformostofthetimebutthedeficitunexpectedlyincreasedto7.1and6.3percentofGDPinFY2013andFY2014,respectively.Thisdeficitovershootmainlyreflectedtransferstothepublicelectricitycompany(EDH),whichamountedtoabout1.5percentofGDPinFY2013andthefuelretailpricefreezethathadafiscalcostofalmost2percentpointofGDP.The counterpartof the rising fiscal deficitwas a risingexternal current accountdeficit,whichwas largely financedbyconcessional flowsfromVenezuela(Petrocaribeprogram).

Haitibenefittedfromsignificantdebtreliefduring2009‐11,withexternaldebtdecliningfrom29percentofGDPin2008to9percentin2011.Debthassincereboundedtoanestimated 23 percent of GDP in 2014 reflecting larger‐than‐expected Petrocaribeborrowing, which currently accounts for 84 percent of total external debt. DebtsustainabilitymaybeachallengegivenHaiti’snarrowexportbaseandlowgovernmentrevenue.Inaddition,HaitiisvulnerableduetoitsdependenceonPetrocaribefinancingfromVenezuela.Asuddenstop inPetrocaribe financingmaycauseasevere fiscalandbalance‐of‐paymentsadjustment,compromisingpublicinvestmentandgrowth.67

Atightermonetarystance isconstrainingcredittotheprivatesector.Awidercurrentaccount deficit is putting pressure on Haiti’s currency. The BRH, the central bank,respondedtothesedownwardpressuresintheforeignexchangemarketbyincreasinglegal reserve requirements and raising the policy rate (the 90‐day bond rate). Thistightermonetarystancereducedexcessreservesandbanklendinggrowthslowed.Anyfurther credit growthwould be tightly linked to expansions of the deposit base andconcernsarerisingthatprivatesectorcreditmaybecrowdedout.68 

GOVERNMENT’SABSORPTIONCAPACITYINTHEELECTRICITYSECTOR

Post‐2010earthquake,thedevelopmentassistancehasbeenchanneledprimarilyintheformofgrants.Morerecently,concessional loansarealsocontemplated.Forexample,GovernmenthasrecentlysignedanMOUwiththeChineseprivatecompanySinohydro(signedinFebruary10,2015)fortheconstructionofanew32MWhydropowerplant,theArtibonite4Cpowerplant,locatedontheArtiboniteriverbetweenexistingPeligrehydropower plant and Port‐au‐Prince. This project was identified in all hydropowerassessments done for Haiti and would include a dam for irrigation and electricity

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generation;borrowingfromChinesefinancialinstitutionsisenvisionedforfinancingofArtibonite 4C project. The main development partners supporting Haiti’s electricitysectoraretheWorldBankandIDB.Bothdevelopmentpartnershavefocusedprimarilyon the rehabilitation of key assets and on helping EDH improve its financialperformance,whilealsobeginningtobuildconditionsforexpandingenergyaccess.

WorldBankissupportingtheMTPTCandEDHthroughaUS$90millionIDARebuildingEnergyInfrastructureandAccessProject(PRELEN).EffectivesinceFebruary2013,theobjectives of the project are to (a) strengthen the Government’s energy policy andplanning capacity; (b) improve the sustainability and resilience of the Recipient’selectricitysectorandrestoreandexpandaccesstoreliableelectricityservices;and(c)provide financial assistance in case of an Energy Sector Emergency. To that end, theprojectisfinancingseveralcomponents,including:

Strengthening the institutionalcapacityofMTPTCandEnhancingenergysectorgovernanceandtransparency,

Improvingoff‐gridelectricityaccess, ImprovingEDHperformanceandRehabilitatingEDHgrids.

IDB’smain interventions in theenergysectorare the ‘Rehabilitationof theElectricityDistributionSysteminPort‐au‐PrinceProject’,aUS$18milliongranttotheGOHsignedin2008toenhance impactonthe lossesreduction,andthe ‘PeligreHydropowerDamRehabilitationProject’, thathasbeenapprovedin2010withagrantofUS$78milliongrantfromIDB,aUS$13.7milliongrantfromKfWandaUS$15millioninconcessionalfinancingfromOFID,OPEC’sinternationaldevelopmentfund.Thisrehabilitationprojectwas decided before the 2010 earthquake, and the upgrade of the hydropower plantfrom35to54MWhadtheobjectivetoprovidemorecleanandcheapelectricityinthemetropolitan area. Additional financing from IDB is currently envisioned to completesustainablytherehabilitation(sedimentsremoval,ruraldevelopmentaroundthesite).In2014,IDBalsoapprovedaUS$23.4milliongrantfortherehabilitationofthe115kVtransmissionlinebetweenPeligreandPort‐au‐Prince.SmallerIDBtechnicalassistanceactivitiesinHaiti’soff‐gridenergysectoraresummarizedinannexVI.

TheseprojectsarecoordinatedontheHaitianauthorities’sidebyauniquecoordinationunit,whichexperienceandefficiencyhasprogressivelyincreasedsincethefirstprojectsin 2007. This Electricity sector Project Implementation Unit (PIU) is now composedwith eight staff and consultants, experts in energyprojectmanagement, procurementand fiduciarymanagement; financedmainlyby theWorldbankand IDBprojects, thisteamhasbenefitedfromtheinstitutions’trainingthroughouttheyears(onSafeguards,Procurement, Monitoring and Evaluation, and Communication), and has beenconsidered in 2014 as the best Government’s team for financial reporting of donorfundedprojects,allsectorswide.

Nevertheless, these projects have been experiencing delays in their initialimplementation,mainlyduetodifficultiestocoordinatewithEDHandMTPTCtechnicalteams for the development of planned activities. In 2014, complementary capacitybuilding provided by the PRELEN project has now improved both MTPTC and EDHcapacity,andtheimplementationprogresshasdrasticallyacceleratedin2015.

AdditionaldevelopmentpartneractivitiesaredescribedinannexVI,butmostofthemarenotchanneledthroughtheGovernment.

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Asdiscussedabove,oneofthekeychallengefortheGovernment’sfiscalsustainabilityarerelatedtothelargelossesofEDHwhicharecoveredfromtheGovernmentbudget(aboutUS$200millionayear),whichtogetherwithfossilfuelsubsidiesamountto3‐4percent of GDP. With the implementation of EDH 2015 commercial recovery andperformanceactionplan,deepstructuraltransformationinthechainofcommandandtransformationoftheutility’sorganizationalstructurehasbeeninitiated;fromthelocalcommercialagenciestotheEDHBoard,reshufflingofstaffandDirectorsstartedtotakeplacesinceFebruary2014andwillcontinuethisyear,with themid‐termobjective toimprovethecompany’scommercialrevenues,acceleratethedecisionprocessfordonorfunded projects and hold staff and managers more responsible and accountable onimplementationtimelinesandobjectives.

Therefore,fromthefiscalpolicystand,Government’sshortandmediumtermprioritiesfor the development assistance are to reduce EDH financial losses and country’sdependencyonfossilfuels;theGovernmentishencestronglyconvincedthatincreasinghydropower and promoting alternative renewable energy sources is a must in thiscontext,andisexpectingSREPinvestmentstodirectlycontributetothesegoals.

 

ANNEXIIISTAKEHOLDERSCONSULTATIONS

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ANNEXIII.STAKEHOLDERSCONSULTATIONSThe SREP Haiti Investment Plan is the product of a comprehensive participatoryprocess involving many institutional, national, and international actors, led by theGovernment and primarily represented by the Minister of Public Works,Transportation, and Communication, with the support from the multilateraldevelopmentbanks(MDBs).Themainstagesoftheprocessareasfollows:

The MTPTC appointed a SREP Task Force representing the key publicstakeholdergroupsandestablishedamechanismforfurtherconsultationswiththeprivatesector,civilsocietyandacademia.

Holdingmultiple technicalmeetingsduring theScopingMission, JointMissionsand Technical Missions with the development partners, nongovernmentalorganizations (NGOs), private sector and end‐users (October 2014, February2015andMarch2015);

Holding two SREP consultative workshops with academia, civil society andprivatesectorduring the jointmission(February2015),aswellasadedicatedone‐dayworkshopondefiningthecapacityneedsandpossiblesolutions(August2014);and

Putting the draft Investment Plan on the Ministry of Public Works,Transportation and Communication (MTPTC) website for two weeks to allownational stakeholders to review and comment on the proposed investments(March2015).

The lists of stakeholders consulted during the jointmissions are available in variousAide‐Mémoire posted on the Climate Investment Funds (CIF) websitewww.climateinvestmentfunds.org

Private‐SectorFeedback forRenewableEnergyDevelopment,November2014andFebruary2015

The SREP consultations for private sector were launched at the Haiti Rural EnergyForum, organized on November 24 and 25, 2014 by MTPTC, with support from theWorldBankandIDB.TheForumgatheredapproximately200ofthekeygovernmental,privateandNGOstakeholdersinvolvedintheplanning,financingandprovisionofruralenergy services. Participating energy experts commented on the unusually andremarkablyhighqualityofstakeholderdiscussionsduringthisevent;andseveralreal‐timepollsallowedefficienttrackingofcurrentstakeholderviews.Amongthefindings,participantsagreedonprincipal requirements for scalingupruralenergyactivities inHaitiandindicatedthefollowingpriorityneeds:

Establish a conducive regulatory framework and an institutional set‐up withclearrolesandresponsibilitiesforoff‐gridenergy

Facilitateaccessto‘lessrisk‐averse’andcommercialfinance Develop a National Electrification Strategy/Plan and provide other necessary

‘doingbusiness’information,and Supportcapacitybuilding,includingthecreationofapoolofskilledtechnicians

inruralareas.

InFebruary2015,theGovernmenthostedaSREPconsultativeworkshopthatbroughttogether some 60 participants from government agencies, the private sector, NGOs,academic institutions, and development partners. The government presented the

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proposedinvestmentstonationalstakeholdersandencouragedthemtoprovideinputsand comments. Two working sessions—for academia (11 February) and privatesector/civil society (12 February)—were organized to discuss aspects of the SREPInvestmentPlaninmoredetail.

The stakeholders concurred with the priorities selected for seeking SREP support.Several privatedevelopersnoted the risksof EDH’s subpar technical and commercialperformance, and the resulting dampening of interest to invest in renewable‐energyprojectsboundbythepowerpurchaseagreements(PPAs)withEDH.TheyalsoraisedtheimportancefortheGovernmenttohaveaclearandstrongvisionforthesuccessfulandsystematicdeploymentofrenewableenergytechnology inthecountry.SuccessofSREPHaitiiscontingentonincreasinginvestorconfidence.

Private companiesworking in the renewableenergy fieldwhowere consultedduringpreparationoftheSREPInvestmentPlanofferedthefollowingsuggestions:

Specifya clearpathway forprivate‐sectorengagement inscalinguprenewableenergy. The private sector emphasized the necessity of a longer term strategythat outlines the role of theprivate sector and encouraged theGovernment toaddressthisrequirementinenergydevelopmentplansandpolicies.

For the private companies interested in entering and/or scaling up as IPPs,streamlining processes and removing bottlenecks are essential to speed updevelopmentandreducetransactioncosts.

Policy,which favorsquality assuredproducts (such as those that are ‘LightingGlobal’approved),isencouraged.ThisisaresultofHaitialreadyhavingastrongmarket for solar lanterns with several companies competing in the market;however,theyarefacingdifficultiesasaresultofaninfluxofcheaperlowqualityproductsandthefactthatkeroseneisdutyfree.

Access to finance for both the ability for the companies to scale‐up businessmodels,aswellasaccesstofinanceforend‐userstobeabletoaffordinvestinginREtechnologysystems.

Trainingandavailabilityofskilledtechniciansthroughoutthecountryisneededtoaddressserviceandmaintenanceissuesthatinevitablyaccompanytheuseofrenewableenergytechnologies,bothatthelevelofpicoPVsystemsuptolargergrid‐connectedprojects.

Consumer awareness of solar/RE and its benefits highlighting the longer termeconomicbenefits.

ManyofthesesuggestionswerealsoraisedatprojectvisitsintheSouthregionduringtheJointMissionon21‐23November2014.Themissionteamvisitedthefirstsuccessfulprivatesector‐andcommunity‐ledmicro‐grids;includingthefirststand‐aloneprepaiddiesel/solar hybrid micro‐grid (Les Anglais) and the new, formally registered ruralelectriccooperative(CEAC)whichwilloperatethesingle,upgradedelectricdistributionsystemofthetownsofPort‐a‐Piment,CoteauxandRoche‐a‐Bateaux(foratotalof2,655households).

Academia and Educational sector Feedback for Renewable Energy Development,August2014andFebruary2015

The consultations with academia and the educational sector were launched at theWorkshoponCapacitiesandProfessionalTraininginthefieldofRenewableEnergyonAugust26,2014 inHaiti.TheWorkshopwasorganizedbytheWorldBank,underthe

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auspices of theMinisterDelegate to thePrimeMinister inChargeofEnergySecurity,Ministry of Public Works, Transportation and Communications, and gatheredapproximately 70 stakeholders from academia and the educational sector, aswell asfromprivatesector,civilsocietyandgovernmententities.AdditionalconsultationswithacademiawereheldinFebruary2015.ParticipantswereinformedthatSREPenvisagesacrosscuttingcomponentoncapacity‐buildingandlessonssharingwhichwasstronglysupported. During consultations, it was confirmed that the scale‐up of renewableenergy in Haiti requires a new approach for capacity‐building and training.Stakeholdersidentifiedthefollowingcapacityandtrainingneedsandgapsinthesector:(i)technicalandmanagementcompetencies(engineerandtechnicianlevel),(ii)conciseinformation about existing training programs, (iii) opportunities for graduates(internships/jobs),(iv)collaborationbetweeneducationandprivatesector.Asaresult,participants identified the following potential solutions: (i) to establish an internshipprogram for graduates, (ii) to strengthen training centers with equipment andadditionalspecializedtrainingforthetrainersinrenewableenergytechnology,(iii)tosupport universities and training centers with the development of curricula andacademic programs including courses on standards/norms and environmental andsocialaspects,(v)supporttoresearch.

Furthermore, Workshop discussants observed that shared learning and experience‐sharing were underscored as key components required for creating an enablingenvironment for designing and implementing the proposed renewable‐energyinvestments. The stakeholders expressed interest in learning from others that haveimplementedprojects in theproposedareas.Theyalso expressed interest in learninggood practices from other countries that have already begun to implement the SREP(Honduras,Tanzania,andMali)toavoidrepeatingmistakesandtoenhancereplicationofinnovativeideas.

Financial‐SectorFeedbackforRenewableEnergyDevelopment,November2014andMarch2015

Financial institutionsproviding financingoptions tobusinessesandconsumers (somewith experience lending for thepurposeof renewable energy technologies, and somewithoutexperiencebutinterestedinthepotential)consultedduringpreparationoftheSREPInvestmentPlanofferedthefollowingsuggestions:

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Theneedtogeneratedemandforloansthroughagreaterawarenessofsolar/REand its benefits. Themorepeople that knowabout the benefits ofRE, and theincrease in demand such awareness will generate, is essential for financinginstitutes to see a value in incorporating lending schemes aimed at REcompanies.

StaffwillrequirespecificREtechnologytrainingtobeabletooriginate,priceandmarketREloansappropriately.

AdditionalcapitalrequirementstosupportREloanoffers. Partial risk guarantee fund will enable the financing institutes to lend more

generously to start up RE companies,which currentlymostMFIs only lend towell‐establishedcompanies.

Adequateaftersalesservicecriticaltoreducedefaultratewhenproductsfail.

End‐user Beneficiaries Feedback for Renewable Energy Development, February2015

Potential end‐user beneficiaries’ consultations of SREP interventions were launchedduring the Investment Plan preparation phase. Consultations were held in order toreceive perceptions and views on the country’s renewable‐energy development, itseconomic and social impacts, as well as the current energy supply situation of thepopulation.

Amission team, comprised of Government andWorldBank staff, travelled to severalplacesintheCentralDepartmentandArtiboniteDepartmentwheretheyconsultedwithgroups of potential end‐user beneficiaries of SREP interventions. The communitiesvisitedwereamixof grid‐connected, completely isolatedand thosehavingelectricitythroughREtechnologies.

Thebeneficiaries consultedrepresented (i) regional leaderswithanawarenessof thelocal energymatters, (ii) groups—consisting ofmen andwomen between 20 and 60years,(iii)individuals,(iv)businessowners,and(v)youth.ThemissiontookplacefromFebruary 25 to 27, 2015. Below are themain outcomes from themission aswell asexemplaryvoicesfromtheconsultations.

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Mainoutcome

Most of the urban areas have access to the grid, and there are some plannedextensions.Butaccesstoelectricityisstillveryminimal,aselectricityisprovidedonlyafewhoursatnight(ifthat)

Even the urban areas can benefit from hybrid system to address the unmetelectricitydemandsduetotheinefficiencyoftheactualgrid

ThereispotentialtosupplementtheexistinggridwithhybridREinter‐ties Inareaswherethereisnogrid,REcanbeinterconnectedtoexistingdieselgen‐

setsystemstoestablishedindependentmini‐grids/SHS Thereappearstobepotentialsformicrohydroenergygeneration Alternative energy generation (complimenting the EDH grid where grid exists

and providing access to electricity where there is no grid) is seen as veryopportunisticandcanbehighlybeneficialforanimprovedlifeingeneral

Solarenergyiswidelyknown,howeverthefullspectrumofthebenefitsarenotfullyunderstood

PeopleoftenarefamiliarwithREtechnology,butawarenesstotheextentofitsbenefits is lacking—a strong consumer awareness campaign is thereforestronglysuggested

TheinitialinvestmentcostforSHS‐typetechnologyistooexpensive,whichlimitspotentialREaccessindicatinganeedtodevelopuserfinancemodalities,suchasmicrofinanceorPAYG.

Voicesandspecificbeneficiaryfeedback

RegionalLeaderforenergymattersofpopulationsintheCentralDepartment(basedinHinche):

“(…) This Department has 112 municipalities, nine of them have access to electricitythroughout the grid. About the other ones, Savanet and Cerca La Source don’t have anyelectricity; but Belladere has a grid build by EDH but electricity is flowing thanks to ageneratorfromtimetotime.Themunicipalitiesthathaveelectricityfromthegridonlyhavefew hours at night, and sometimes, just some of them. Electricity is rare during the day,whichisslowingdevelopment inthisareaanddisturbsoffice’saffairs. Intheurbanareasandinsomeotherremoteplacesaround,theyareawareofREthatcanbeusedtogenerateelectricity,suchassolarandhydro.Someprivatehomes,fewclinicsandschoolsusesolarenergy.Thereareseveralmicro‐creditorganizationstherewherepeoplecouldreachouttoforcreditinordertobuytheirownsolarhomesystem‐ ifeverthedemandisexpanding.ThethreemainonesareFonkoze,ACME,andCOOPECLAS.(…)”

“(…)Aboutthebenefits,peopleseethattypeoftechnologyisnecessaryevenwhenEDH’sgrid is available as electricity is not available 24/7. Also durability and sustainability isexpected, which can lower operational costs and help develop other services andbusinesses such as communication (computer science and services through internet),coolingsystemfordrinks,restaurants,entertainment,etc.PopulationinthecityofHinchethinksthatenergyistheirmainpriorityatthemoment..(…)”

Groupmeetingwithadozenpersons,between20‐60years,atBassinZim,Hinche.Thissmall town has at least 300 people and started benefiting from EDH grid. There aresomemetersinstalled.Andelectricityisprovidedduringtheday,notatnight.

“(…)TheywereverypositiveaboutsolarsourceofelectricitywhichtheywerewellawarethatismuchmorereliablethantheactualEDHgrid.Theythinkthatsuchenergywouldhelp

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themdevelopother businesses in the area such as bars for tourists and also that such asystemwillkeepthetouristslongerintothenight,ascurrently,someusetheircar’slighttobrighten the place after dark. They think that such systemwill have very positive socialimpacts especially for their kids—as they will be able to study at night and enhanceentertainment.(…)”

AdditionalbeneficiarieswerevisitedintheCentralDepartment,including(i)abusinessowneroperatinga club,bar, concessionaryand lotteryand, (ii) a familyof sixpeopleoperatingagrain‐packingbusiness.

(i)“(…)Electricityiscriticalforhisbusiness.HeisconnectedtothegridbutthedaybeforeEDHtookthebreakersoforthemomenthedidn’thaveelectricity.Thebusinessismostlyopendaysandnightsastheownerhasdifferenttypesofbusinessoperatingintojustoneplace.First,thelotteryneedselectricitybecausethelotterysystemisusedthroughaniPadthat needs to b recharged. Second, the nightclub needs electricity for music, lights, andother kind of entertainment during the day such as movie projection, or soccer gameprojection(sopeoplepayattheentrancealso).Andthethirdoneisastorewherepeoplebuycooldrinks.Withoutelectricityhecan’t runanybusiness.Becauseof irregularitiesofthegrid,hehadtobuyhisowngeneratorandforonenightcanspend400gourdesongas.Heisinfavorofsolarsystembutishavingsomeconcerns.Oneofthemistheinvestmentofsuchasystemandtheotheroneisabouthismanagementandmaintenance.Anotherofhisconcernwasthatifeverthepeoplewillpayforsuchasystemastheyareclosetothegrid,andsuggestthatwemakearealcampaignsotheywillknowthetruebenefitsofrenewableenergy.(…)”

(ii)“(…)Thereisnogridatall.Notevensolarstreetlights.Asfortheneedsofthisarea,firstthingthatcameoutwaselectricity.Theythinkthatelectricity,especiallysolar,willhelpdevelopeconomicalactivitiesrelatedtoagricultureorelse,likewelding,wherepeopleintheareawouldn’thavetogomilesawayintothecitytogetthoseservices(forexample,gettingabedfixed,oracookstove).Electricitywillalsohelpwiththetradeofsometomatoandlettuceculture,etc.(…)”

Other beneficiaries’ voices in La Chapelle (Artibonite Department) included twobusinessmen(onebusinesscenterandonehardwarestore)and fouryoungmenwhoarerunninganentertainment(DJ)andchargingbusinesswithPVsystem.LaChapelleiswhereapilotsolarhomesystemprojectwasimplemented,butstoppedsinceDecember2014whenthegridarrived.

“(…)Evenwhenthegridarrived,theyexpressedtheneedofhavingaback‐upsystemthatwill allow their business to run all day long. Some are still using their own gen‐sets andsharethecostsandelectricitywithneighbors inordertobeabletoworkduringtheday.Somebusinessesevensellsolarpanelsandbatteries.Bydrivingaround,wecouldrealizethat many small businesses such as lottery, cooler, and others have at least one panelconnectedtotheirsystemandbeingusedduringtheday.Evensmallhouseswith“plasticroof”havesolarpanel.Wealsoranintosolarlanternsandwehavebeentoldthattherearesome stores that also sell those. Concerns were that solar systems require much moreinvestmentsandcapacity.(…)”

Two businessmen (one restaurant and one tailor) were consulted in MarchandDessalines(ArtiboniteDepartment).Thetowndoeshaveanexistinggrid,butelectricityisavailableonlyatnight.

“(…)Thegridisthere.InLaChapelle,peopleusingthegridaretheonesbeingbythemainroad.Soevenwithintheurbanplaces,somehousesorofficesdon’thaveaccesstothatgrid.

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Wehave seen somemeters from time to time butnot in everyhouse. Peoplenever stopcomplainingaboutEDHpoorqualityservice.TheyareawareofSolarsystemsandarereallyopentoit.(…)”

Adiscussionwasheldwith a groupof 20men fromdifferent ages in SaintMichel del’Attalaye(ArtiboniteDepartment),agridconnectedtown.

“(…) The residents don’t really have access to electricity. In the urban area, electricity isprovidedsometimesatnight,whichhindersproperfunctioningofbusinesses.Inoneruralarea that we drove by, electricitywas only provided each January 25th to celebrate thecity’sanniversary,throughadieselgen‐setthatstillexistsbutnotusedbecausetheclosestgasstationismilesaway,causingthefueltobereallyexpensive.Theywerepayinga100gourdesfeeforelectricity.Theyareawareofothersourcesthatcangenerateelectricityandmentionedbothhydro and solar.Thepeoplewere really open tohavingmore electricitythroughsolarmostly.Theyexpressthatwithaccesstoelectricitymanyothersmallorbigbusinessopportunitiescouldbedeveloped.(…)”

CommentsReceivedontheDraftInvestmentPlanPostedonMTPTCWebsite

In order to facilitate reviewby national stakeholders, the Investment Planwasmadeavailable on theMTPTCwebsite fromMarch 30 to April 10, 2015. Comments can besummarizedasfollows:

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TableA4.HaitiSREPInvestmentPlan:Matrixofcommentsandanswers

Commentsreceivedfrompeerreviewers:GerardBoulos(HomeControlPresident—company);AndrewMorton(UNEP‐HaitiSustainableEnergyManager);andAllisonArchambault(EarthSpark)GeneralThankyou for theopportunitiesto reviewthisdocument.Iwill makeaneffort tobe sincereanddirect. I believedthefinal5 SREPprojectsarelegitimateand urgent,the objectiveareclear and welldefined.(GB)Wenotethatcomponents1to4allentailsignificantrisk.TheexperienceofUNEPinenergyinHaitiisthatdiversificationintoatleast3fullydisconnectedcomponentsareneededtoreduceriskattheportfolioscale(assomecomponentswillpartiallyorfullyfail,butitisimpossibletoaccuratelypredictwhichcomponentatprojectdesignstage).Inbalance,investmentintomorethan4componentscanspreadtheinvestmenttoothinlyforimpact.Inthiscasewesuggestatotalof4componentsanddeletingcomponent2.(AM)BasedonEarthSpark’sexperience,“learningbydoing”isexactlywhatisneededtounlockthemodelsthatwillbeabletoscale.(AA)

Thankyou.ThefinalversionoftheproposalSREPfundswillnotgoingtofinancecomponent4(smallhydro),butcomingfromexternalfunds.WeagreeandthisisthekeyaspectoftheproposedIP.

REforthePort‐au‐PrincemetropolitanareaTheproposedREinvestmentsforcomponents1.and2.needtomanagethetechnicalandfinancialaspectsofintermittentREinjectionintoagridwithlimitedandunpredictableoperatinghoursandfrequentblackoutsandrestarts.Feedintariffsandtakeorpayarrangementsaredesignedforfunctionalgrids,whichisnotthecaseforthePauPandPaPaixgrids.Hencebothtechnicalandfinancialprotectionmechanismsneedtobebuiltintothedesignsandcontracts.(AM)

Agreedandnoted.Thedesignofanyassociatedtariffswillbedonesoinafunctionalway.

REforthePort‐de‐PaixremotegridAsmentioned in the study,Port‐de‐Paix couldbe a model for future scale up for energyprojectinHaiti,thereforeitisimperativethatitisconceivedand designedaccordingly.‐Thisproject should benefit from the latestconceptional and technological innovationof the energy landscape such as DistributedGeneration, Energy Storage, configurationsuchas microgrid and technology like smartinverter for better frequency and voltageregulation, smart metering forbi directionaland time of used pricing, Advance SCADA forsupervisory and control, Demand Responseforenergymanagement.(GB)

TheproposedREinvestmentsonallscaleswillonlydeliverenergyaccessbenefitsiflinkedtoafunctionaldistributionsystemincludingmetering.

Thanksfortheideas.Weagreetechnologychoiceiscriticalandyoursuggestionswillbeworthexploringatthetimeofimplementation.ThisisdetailedintheIPannex.Theinvestmentswillincluderehabilitationoftheexistingnetwork(reductionoftechnicallosses)andmeasurestoincreasecollection(e.g.installationofmetersforallcustomers).

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ThisisnotthecaseforthePauPandPaPaixgrids.Mitigationmeasuresforthisarementionedforcomponent1butnotcomponent2.(AM)

Unitcosts[forcomprehensiveinvestmentinbothdistributionandorganizationalcapacitybuilding]isexpectedtobebelowUS$1500perhousehold.ThisanalysisinfersthataproposedinvestmentofuptoUS$4MforREintoPortaPaixwillbesimplytoosmalltohaveatransformativeimpact.ThebudgetneedstoincludeallocationsforRE,thermal,distribution,meteringandorganizationaldevelopment.AmoreappropriateprojectbudgetwouldbeintheorderofUS$20M+.(AM)

ThelessonlearntisthatinvestmentsininfrastructurewhichareleftinthecareofEDHregionalcentresarepartlywastedandwillnotlast.HencewewouldrecommendthatanymajorinvestmentinthePortauPaixgridisaccompaniedbyoutsourcingoperationofthegridaswell,viaaPPP.(AM)

ThePort‐de‐Paixprojectwillbeco‐financedbyIDA.ThetotalprojectbudgetisestimatedbySREPstudiesat$14MbutIDAfinancingcanbeincreasedifthefinalprojectdesignarrivesathighercosts.APPPwillbeexploredasdetailedintheIPannex.

Off‐gridelectricitycomponentProductiveUsesofEnergy:InadditiontoC+I,minigridsalsounlockproductiveusesofelectricityforcottageindustriesandSMEs.(AA)

WeagreeandthisisoneofthereasonswhytheComponent3putsagreatweightondevelopmentofmini‐grids.

RehabilitationofexistingsmallhydroplantsWealsosuggestthatSautMathurineisincludedasaprioritySSHsiteforrehabilitation.Atpresentitgenerateslessthan50%ofitspotentialandhasseveralmaintenance‐rehabilitationprioritiesthatifnotaddressedcouldseeitceaseoperationsduringtheSRPEproject.SMisagoodcaseforanalysisofthepinchpointsforREinjection—theLesCayesswitchyardiscompletelydysfunctional,whichlimitsthepotentialforSMtoinjectenergy.(AM)

Thankyoufortheidea.Astheprojectdesignadvances,thisoptioncanbeconsidered.

BuildingenablingenvironmentsforREscale‐upBasedonEarthSparkexperience,“informationandcapacityconstraints”areindeedsignificant.(AA)

Weagreeandthatiswhywehaveincludedasignificantcapacitybuildingcomponentintheprogram.

M&EWeapplaudtheuseofthemulti‐tierframework.(AA) Thankyou

KeyrisksBeinginthesector formorethan 40 years, I ampessimistic regarding governmentcommitmentto integraterenewableenergytothe grid.(GB)

WearefullyawareofthelimitationsandcomplicationscurrentlyexistingwithintheGovernment/EDHthathavesincehinderedtheincorporationofREintothegrid.Asaresult,theSREPprogramwillworkcloselywiththeGovernmentthroughtheEnergyCelltoaddresssuchbarriers(whichhasnotyetbeendoneinthehistoryofHaiti)encouragingREintegration.Weunderstanditisnotafixthatwillhappenovernight,buttheGovernmentiscommittedtomakethischangehappen.

 

ANNEXIVRENEWABLEENERGYBUSINESSMODELS

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ANNEXIV.RENEWABLEENERGYBUSINESSMODELSINHAITIThe 12 renewable energy (RE) market segments targeted by SREP Haiti and theirrelatedgenericbusinessmodelshavebeendescribed inthesectionsabove.Thesearebased in large part on real business case studieswe have analyzed inHaiti. Some ofthesearedescribedbelow(seeannexVfortheCTF).

HAITIBUSINESSCASEEXAMPLE1—EMERGINGPARTNERSHIPBETWEENTHEMFIFONKOZEANDTHELANTERNDISTRIBUTORMICAMASOLEY

FonkozeisHaiti’slargestmicrofinanceinstitution,offeringafullrangeoffinancialanddevelopmentservicestoHaiti’sruralpoor.Since2004,ithasworkedtoprovidetensofthousandsofHaitianwomenwithacomprehensiveapproachtopovertyalleviation.OnesuchenablingpartnershipiswithMicamaSoley.Createdin2009asasocialdivisionofSAFICO, a longstanding Haitian trading and manufacturing company, MicamaSoleysupportsproductsthatimprovethelivesofruralHaitians.Inajointeffort,FonkozeandMicamaSoleyempowerwomantohaveaccesstosolar‐poweredlights.

How itworks:Fokonze has 60,000 credit customers who are affiliated within 2,000credit centers throughout rural Haiti. At each center an elected chief managesoperations. MicamaSoley visits the branches of Fonkoze and sells the solar lanternswholesaletothechiefs.Thechiefsthensellthelanternsretailtomembersoftheircreditcentersunder eitherawomen’s group‐lending schemeor as an individual credit line.Under this burgeoning partnership, Fonkoze makes a 6% commission on sales;women—via access tomicrofinance options—improve rural livelihoods; and throughthischannelMicamaSoleyhassoldover47,000lanternstodate.

HAITIBUSINESSCASEEXAMPLE2—RE‐VOLTSERVICEAPPROACHWITHINDIVIDUALPVSYSTEMS

Re‐Volt,an innovativestart‐upoff‐gridutility,aimstoprovideahighlyefficientdirectcurrent (DC), pay‐as‐you‐go, solar‐powered energy service to Haiti’s residents ataffordable prices. Re‐Volt was conceived in 2012 and the first two yearswere spentrefining the concept and visiting successful international programs of similar intent(OMCinIndia,Off‐GridElectric,M‐Kopa,M‐Power,andd.LightDesigninEastAfrica).In2014Re‐VoltbeganpilotingtheprograminHaiti.

Re‐Volt has a memorandum of understanding with Digicel, the maintelecommunicationsproviderinHaiti,tointegratewithitsTchoTchomobilepaymentssystem and use its Machine‐to‐Machine (M2M) SIM cards in the Re‐Volt Systems toallowmonitoring of the performance of the units and to track the amount of energycreditpurchasedandused.

Re‐Voltdistinguishesitselffromcommonsolarhomesystembusinessesbyprovidingaserviceratherthana“box”—Re‐Voltcustomersareguaranteed98%availabilityoftheirsystems,haveaccesstoa24/7callcenter,willbenefitfrompromotionsandupgrades,andwillgetaccesstohighlyefficientDC‐poweredappliancesanddevices.

TheinitialRe‐Voltproductisasolar‐powered,“DCEnergySystem”thatfeaturesthreeLEDlightfixturesandachargingplugformobilephonesandothersmalldevice.Largersystemswillbeaddedafter thepilotstage.Re‐Volt isalsoexploring localassemblyofthe products after the initial pilot stage. Post‐installation customers will receive alifetime“utilitylike”servicefromDCEnergySystems.

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How itworks:Customer sign up to the service at one of many Re‐Volt Power AgentlocationsorareapproacheddoortodoorbyRe‐Voltagents.Re‐Voltwillchargeasmalldepositor“connectionfee”whichincludesinstallationofthesystemandbasictrainingonhowtouseitefficiently.ThecostisUS$10.

Oncethesystemisinstalledathome,customerscantopupthecreditontheirRe‐Voltinasimilarfashiontobuyingprepaidcreditonamobilephone.

Re‐Voltasacompanyexpects togrowstronglybetween2014and2018.Basedon itsinitial estimates, the company sees potential for up to 500,000 units to be installedduringthefirst fiveyearsofoperationinHaiti (aroughly20%marketshareonaperhousehold basis). By year five, Re‐Volt expects production costs to decrease andrevenue per user permonth to increase as additional services are launched, such asInternet/communications, entertainment, refrigeration, and a range of other DCappliances.

HAITIBUSINESSCASEEXAMPLE3—OFF‐GRIDELECTRIFICATIONFORIMPROVEDPUBLICSERVICESThe IDA‐financed Rebuilding Energy Infrastructure and Access Project (PRELEN)(2012) is expanding an innovative pilot for using off‐grid renewable energy forimprovingeducationoutcomes,currentlycarriedoutbyanNGOHaitiFutur.TheWorldBankteamvisitedaschool intheSouthernProvinceofruralHaiti inNovember2014.TheschoolisequippedwithaSmartBoard,solarpanelsandabatterybankfundedbytheNGOHaitiFutur.TheSmartBoardisaninteractivewhiteboardthatfunctionsasacomputer screen providing digital contents to pupils in rural schools. The digitalcontents are in French, soon to be translated into Creole, and are aligned with therequirementsoftheMinistryofEducation.

Allcoursesareavailableonline,freeofcharge(opensource).Thecostofonesystemisestimated at US$3,000. The challenge for the smooth operation of the Smart Boardconnected to aprojector is reliable electricity.Most of the schools (85%) inHaiti areprivateandtypicallydonothaveelectricity.Therefore,electricityfromsolarenergywillbe essential to the success of the scale‐up. Haiti Futur has trained technicians tomaintainthesystemsandhasset‐upacontentsteaminPort‐au‐Prince.ThecontractforO&MiswiththeMinistryofEducation.

Interviews with teachers where the systems have been installed point to two mainbenefits: increased interest in learningbythechildren;andgreaterconfidenceamongteachers as a resultofbetteraccess to educationmaterials,which in effect leads to agreatervarietyofsubjectscovered.

Based on positive experiences from Haiti Futur, PRELEN is envisaging scaling thismodelinupto500schools.

HAITIBUSINESSCASEEXAMPLE4—EARTHSPARKMICROGRIDEarthSpark,anonprofitworkingasanincubatorforcleanenergyenterprises,isleadinganinnovativeapproachtodeliveringsustainableenergyservicesinoff‐gridHaiti.

Inpartnershipwiththegovernment,localofficials,andtheUnitedNationsEnvironmentProgramme,EarthSparkhaslaunchedanexamplemicro‐gridinthetownofLesAnglais,Haiti,thatprovidesaffordable,reliable,andenvironmentallysensitiveelectricityservicethroughEKoPwòp—EarthSpark’smicro‐utilityenterprise.

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Launched in November 2012, the EKo Pwòp grid has been providing continuouselectricity to 52 households and is now being scaled up to 430 customers—theexpanded grid is being tested and expected to start full operation byMay 2015 Thesolar/diesel hybridmicro‐grid taps into the excess capacity of amobile phone towerfromDigicel,oneofthelargestcompaniesinHaiti,butwillbeprimarilysolarpoweredafterexpansiontobecompletedinearly2015.

TheEKoPwòpmini‐grid uses another innovative technologydeveloped in house, theSparkMeter. The SparkMeter micro‐grid metering system enables utilities to haveprepayment as well as real‐time monitoring and control on micro‐grids and centralgridsalike.The low‐costsystemconsistsof fourhardwarecomponents,acloud‐basedoperator interface, and a mobile money or cash‐based prepayment system. Datacollected over the local wireless network is uploaded over the cellular network toSparkMeter’s servers. Micro‐grid operators can then access and monitor customerusage and system status information over SparkMeter’s secure cloud‐based userinterface.TheSparkMetermicro‐gridmeteringsystemalsogivesoperatorsflexibilitytochooseandcreateuniquebillingstructurestosuittheirapplication.Tariffsandservicelevels are infinitely customizable, andbilling canbe conductedonapre‐orpost‐paidbasisforenergyconsumption,hourlyconsumption,orwithflatmonthlyfees.Operatorscanalsocreate“credit”accountsforcustomerstopaybackfixed‐costexpenses,suchasconnectionfeesorappliances,outoftheirtariffpayments.

EarthSpark is using the SparkMeter technology as a prepay system that has enabledimproved access to its micro‐grid customers. Large lump‐sum utility bills areproblematicbecausetheydonotfitwiththewaythatruralHaitianpeoplecanaffordtopay.Prepaymentallowscustomerstopurchaseelectricityastheypurchasekerosene—insmallquantitiesandastheyneedit.ThisservicemimicshowmostHaitianspurchasecreditformobilephoneminutes,withprepayscratchcardsordirectmobiletop‐ups.

EarthSpark is also enabling accessby supportingwhat it calls “deep efficiency.”Deepsystemefficiency—encompassingend‐use,gridmanagement,andpowergeneration—enableshigh‐qualityenergyserviceswith lowgenerationcosts.Withenergyefficiencyat its core, the Les Anglais EKo Pwòpmini‐grid can deliver high‐quality service at alower,moreaccessiblecosttoitsruralclients.

HAITIBUSINESSCASEEXAMPLE5—ARURALCOOPERATIVE

NRECAInternational,bydesigningdistributiongrids,constructinglines,andapplyingasetofstandardsthatmeettheneedsoftheoff‐gridpopulation,haspioneeredlow‐costrural electrification inHaiti. To ensure long‐term success, NRECA‐Haiti also providescomprehensivetrainingprogramstolocalinstitutionsinallaspectsofutilityoperationsandmanagement to ensure that the employees can effectively and efficiently operateandadministerafunctioningandeconomicallyviableutility.

InsouthwesternHaiti,NRECA’sHaitiRuralElectricCooperativeprojecthashelpedthecommunities in three towns to establish the Coopérative Electrique del’ArrondissementdesCoteaux(CEAC),anot‐for‐profit,memberownedcooperativewithsupport from the United Nations Environment Programme—whose financing comesfrom the Norwegian government and the United States Agency for InternationalDevelopment (USAID).Still in theearlystages,CEAC isgovernedby itsmembers,andwillprovidemember‐ownersinthreetownswithaffordableandreliablepower.NRECAis partnering with Solar Electric Light Fund (SELF) to design and construct a solar‐

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dieselhybridsystemforCEACthathasregisteredmorethan670membersandintendstoserve1,600ormoreconsumers.WhileCEACfacesmanychallengesintheroadahead,itrepresentsahugeopportunityforcommunitiesacrossHaitithatthatareunderservedbythestateutility,EDH.

In2011,NRECAprovided electric supplydesign and construction to interconnect thenewNationalTeachingHospitalatMirebalais,amajorprogramoverseenbyPartnersinHealth.Nowfullyservicedbyreliable24/7electricity,thishospitalprovidesservicesto185,000peoplewhopreviouslyhadlimitedaccesstohealthcare.

 

ANNEXVPROJECTINFORMATIONDOCUMENTFORTHE

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ANNEXV.PROJECTINFORMATIONDOCUMENTFORTHEPROPOSEDCTF‐SUPPORTEDMODERNENERGYFORALLPROJECT

I. Introduction and Context

Country Context

Haiti is located on the island of Hispaniola in the Caribbean, which it shares with theDominicanRepublic.Ithasapopulationofabout10.4millionpeopleonaterritoryof27,750km2,whichmakesitoneofthemostdenselypopulatedcountriesintheLatinAmericaandCaribbean (LAC) Region. In addition, at least 2.5million Haitians are estimated to liveabroad.TheHaitiandiaspora isan importantsourceofremittances,which isestimatedtoamounttoover$1.8billionannually.ThisiscomparableinmagnitudetoonethirdofHaiti’sGNP.

Haiti is the poorest country in the LAC region and one of the poorest in theworld,withsignificantneeds inbasic services.GDPper capita stoodat$820 in2013 ‐ compared toaLAC average of close to $12,000 (PPP, 2011). According to the latest household survey(ECVMAS2012), almost60%of thepopulation ispoor (livingunder thenationalpovertylineof$2perday)andalmostaquarterofthepopulationisextremepoor(below$1aday).

Haiti'sdevelopmenthashistoricallybeenhamperedbyfragilityandcharacterizedbysocialfracture.Deepsocialandeconomicinequities,intenseconcentrationofwealthandpowerinthehandsofafew,andalackofsocialjusticeandoftheruleoflawhaverepeatedlyledtospikes of violence. Longstanding lack of transparency and the absence of service deliveryhaveledtocitizens'lowtrustingovernment.Governancechallenges‐includingruleoflaw,theabsenceofclearrulesformarket‐basedcompetitionandcorruption‐havebeenmajorconstraintsongrowthandinvestment.

In addition to the internal structural issues, Haiti’s development has been affected by itsvulnerability to external shocks, including food and fuel price fluctuations and naturaldisasters.Themostdevastatingimpactwasregisteredfromthemagnitude‐7earthquakeonJanuary 12, 2010,which killed 230,000 people and displaced 1.5million inHaiti’s capitalandnearbytowns,makingitoneofthedeadliestnaturaldisastersonrecord.Itresultedindamage and losses of around $8 billion (120% of GDP). One third of the country’s civilserviceandmostofgovernmentbuildingsweredestroyedintheearthquake.Althoughmostof the official reconstruction efforts have been completed, much remains to be done toensure sustainable development and improvements in living standards of the Haitianpopulation.

Despite these setbacks, therehasbeen somemodestprogress since2000.At thenationallevel, the extremepoverty rate fell from31% to24%between2000 and2012.Access tosome basic services, especially education and sanitation, has also improved during thisperiod. Other infrastructure services, including electricity, however, remain highlyinadequateandhavenotregisteredmuchprogressinthepastdecade.

HaitiisalsothemostunequalcountryintheLACregion.Therichestquintileholdsover64%ofthetotalcountryincome,whilethepoorestquintileholds lessthan1%.Asof2012,theGinicoefficientwas0.61,thehighestintheregion.Therearealsostrongdisparitiesbetweenurbanandruralareas.

The poverty reduction of the last decade have been almost exclusively driven byimprovementsinurbanareas,thankstotheirbetteraccesstonon‐agriculturalemploymentopportunities,largerprivatetransfers,narrowinginequality,andgenerallybetteraccessto

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goodsandservices.

In rural areas, where half of the Haitian population lives, there has been practically noprogressinreducingpovertyinthelast10years.Stilltoday,38%ofthepopulationinruralareasareunabletosatisfytheirnutritionalneedsandalmost70%ofruralhouseholdsareconsideredchronicallypoor(bothbelowpovertylineandlackingaccesstobasicgoodsandservices), which makes it especially difficult for them to emerge from poverty. Of thoseclassifiedasextremelypoor,80%live inruralareas. (WorldBank:CreatingOpportunitiesforPovertyReductioninHaiti,2015).

Sectoral and Institutional Context

Haitihasthelowestelectrificationrateintheregion—withanofficialelectrificationrateof30%.However, estimates varydue to unreliable statistics. Theper capita consumption ismore than80 times lower than the average for theLAC region, reflective of the very lowincomelevels,lowaccesstoelectricityandsupplyconstraints.Thedistributionofelectricityaccess is also highly unequal. While about 40% of people in Port au Prince have gridelectricity (althoughmany of them only for a few hours a day), only an estimated 5%ofrural residents are estimated to have access to electricity (estimates vary due to lack ofreliabledataandincreasingaccesstooff‐gridelectricitywhichistypicallynotaccountedforinofficialstatistics).

Institutionalframework

The institutional structureof thepowersector isveryweak, characterizedby fragmentedleadership, anunclear regulatory framework and severe capacity constraints. There is nospecificagencyordepartmentforruralelectrification/energyaccess.Someexpertiseinthatareaexistsbut is scatteredamongdifferent institutions/departments.OfficialoversightofsuchactivitiesareintendedtobehandledbytheofficesoftheMTPTCthroughthe‘EnergyCell‘thatwascreatedinlate2012.

Gridelectricity

ThemainofficialproviderofelectricityservicesinHaitiisthenational,Government‐ownedutilityElectricitéd’Haiti(EDH),whichhasamonopolyoverthepurchase,transmissionanddistributionofelectricity.EDHoperates6separategrids,servingabout240,000customers(1). Most of these customers are on the main grid covering Port‐au‐Prince and thesurrounding areas. Five smaller grids are serving other parts of the country with powermostly supplied intermittently by diesel units and some hydro power, both with severeO&Mproblems.

EDHowns100%ofthetransmissionanddistributionnetworks(withtheexceptionofafewmunicipal grids and individual systems for self‐supply—see below), but generates onlyabout 15% of the energy produced in Haiti, with the balance coming from IPPs andTripartiteCooperation(Haiti‐Venezuela‐Cuba).Generationcapacityisat212MW,ofwhichonlyabout160MWisavailable.Thisisinsufficienttomeettheestimatedpeakloaddemandof more than 250MW in the metropolitan area, resulting in frequent load‐shedding andservice interruptions.Mostof thepower issupplied throughoil‐basedthermalgeneration(85%),withhydropowercontributing15%.Theaveragetariffis31c/kWh($).

EDH faces considerable technical, managerial and financial challenges. Technical andcommercial lossesamountto66%.Inaddition,thecollectionrateis65%whichtranslatesintoEDHrecoveringonly22%ofthevalueofelectricityitsupplies.Consequently,EDHfacesdifficulties to pay for fuel, basic maintenance services and other operating costs, andremunerationtoIPPs.TobridgethisgapEDHisheavilyrelyingonGovernmentsubsidies.In2012 alone, budgetary transfers to support the sector were above $200million, which

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equals4%ofthenationalbudget.

The lack of reliable power is also costly for households and businesses, as they typicallyhavetoresorttoalternativesourcesofpowertocovertheirneeds—eitherasaback‐uporas themainpowersource. It isestimatedthat thecumulativecapacityof individualdieselgen‐sets in the country is more than 200MW ‐ much more than the 160MW capacitysupplied throughEDH.Poorerhouseholds typicallyusekeroseneorcandlesas theirmainlighting source.More recently, solar powerhas started to emerge as anewalternative tofossil fuelgeneration—withvariouscompaniessupplyingsystemsranging froma fewWp(e.g.solarlanternsforruralhouseholds)tohundredsofkWpscale(e.g.forcommercialandindustrialclients).

TheRebuildingEnergy Infrastructure andAccessProject is assisting theGovernmentandEDHtoimproveEDHperformance—includingrehabilitationofelectricitygridsinordertoreduce technical losses, deployment of meters and management systems and otherimprovementsincommercialperformance.Progress,however,hasbeenslow,andevenifallactivitiesaresuccessfullyimplemented,itwilltakealongtimebeforeEDHisabletoembarkonalarge‐scaleexpansioninruralareas,consideringtheunmetdemandinthemetropolitanareasandsurroundings.

Off‐gridelectricity

InvestmentsinruralelectrificationinHaitihaveremainedscarceoverallinthelast30years,resultinginaruralelectrificationratekeptmoreorlessconstantataround5%.WithEDHabsent throughoutmostof theruralareas, localgovernmentsandusershavebeen leftontheir own to find solutions to their electricity needs. Up until recently, individual dieselsystemsandkeroseneweretheonlyavailablelighting/powersolutionsformostpeopleandbusinesses in rural areas.Over30 smaller townshavediesel‐poweredmini‐gridsbuiltbythemunicipalgovernments,butonlyafewofthosearestillinregularoperation.Formostpeoplelivinginruralareas,adieselgen‐setisnotaffordable,andtheyrelyonkeroseneandcandlesforlighting,andchargetheirphonesatcommercialchargingstations.

In the frameworkof theprojectpreparation, a telephonesurveyof1,400householdswasconductedincollaborationwithDigicel,Haiti’scellphoneprovider.The2014WBG/Digicelphonesurveyconfirmedafairlyhighlevelofelectricity‐substitutableexpenditureofHaitianhouseholds(withatleastonemobilephone).Thesurveyfoundthatthesehouseholdsspendmorethan20$permonthonaverageonelectricityorelectricity‐substitutableexpendituressuchaslighting,cellphonechargingandbatteries(comparedto7$permonthoncellphonepayments).(2)ThisisinlinewithlessrobustenergyexpenditureestimatesmadebyHaiti’sprivatesectorplayers.

Morerecently,renewableenergytechnologies,especiallysolarPV,havetakenoffasanewalternative for off‐gridenergy access.This reflects global trends, including falling costs ofthe solarPV technology, availabilityofmoreefficientLED lighting,andemergenceofnewbusiness models aiming at serving the base of the pyramid customers (more details aregiveninthetechnicalannex).

Paradoxically,theearthquakeservedasthecatalystforthisnewdevelopmentinHaiti.Withmuch of the electricity infrastructure destroyed, solar lanterns were brought into thecountry as a part of the post‐earthquake assistance (including through an earlier WorldBank project). Many of these lanterns, originally used by displaced people in the camps,have eventually found their way to rural areas and have in effect triggered demand forsimilar products. The four leading lantern distributors alone (mostly local SMEs) havecumulatively distributed well over 150,000 Lighting Global quality‐certified lanterns,providingbasicelectricityservicestomorethanhalfamillionpeople.Accordingtothe2014WBG/Digicelphonesurveyof1,400households,thepenetrationofsolarlanternsandsmallkitsisextremelyhighininternationalcomparison,atwellover20%.(3)

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Thepost‐earthquakeassistancebythedonorcommunityhasalsotriggeredabove‐standardinvestments insolarstreet lighting.Originallystartedasapost‐earthquakereconstructioneffort, the program has eventually been expanded to rural areas, and has actively beensupportedby theGovernment.There are about13,500 solar street lights installed in 140‘communes’ofHaiti’s10‘departments’.

Inaddition,variousdonorsandNGOshavebeensupportingelectrificationofschools,clinicsand other public institutions (mostlywith solar PV systems). The IDARebuilding EnergyInfrastructure and Access Project also includes an off‐grid electrification component($7.83million),whichisprimarilyusedtoelectrifyschoolsandprovidestreetlighting.

The increased involvement of the diaspora, NGOs and the private sector has led to thedevelopment of new, innovative approaches to support provision of sustainable energyservices in off‐grid areas. The technical annex describes examples of these Haiti‐growninnovativebusinessmodels—whichrangefrommicro‐financeforwomenretailersofsolarlanterns,toleveragingmobilepaymentsplatformsforprovidingoff‐gridenergyservices,todeployment of smart village micro‐grids. Many of these diverse initiatives meet keyattributes for replicability and scalability ‐ but all suffer from the absence of supportiveregulatoryandfinancingframeworksthatwouldallowthemtogrowfasterandultimatelyscale‐upsignificantly.

TherecentHaitiRuralEnergyForum,organizedonNovember24and25,2014byMTPTC,with support from the World Bank and IADB, gathered approximately 200 of the keygovernmental, private and NGO stakeholders involved in the planning, financing andprovision of rural energy services. Participating energy experts commented on theunusually and remarkably high quality of stakeholder discussions during this event; andseveralreal‐timepollsallowedefficienttrackingofcurrentstakeholderviews.Amongstthefindings,participantsagreedonprincipalrequirementsforscalingupruralenergyactivitiesinHaiti(technicalannexprovidesdetails)andindicatedthefollowingpriorityneeds:

i. Establish a conducive regulatory framework and an institutional set-up with clear roles and responsibilities for rural energy,

ii. Facilitate access to ‘less risk-averse’ and commercial finance,

iii. Develop a National Electrification Strategy/Plan and provide other necessary ‘doing business’ information, and

iv. Support capacity building, including the creation of a pool of skilled technicians in rural areas.

Relationship to CAS

TheproposedProjectisfullyconsistentwiththecurrentWorldBankGroup'sHaitiInterimStrategyNoteforFY13‐FY14(ReportNo.71885‐HT)thatwasdiscussedbytheWorldBank(WB)ExecutiveDirectorsonSeptember27,2012.TheStrategydefinestheprogramofthesecond tranche of the $500million allocated toHaiti in response to the 2010 earthquakefromtheIDA16CrisisResponseWindow.ItsoverarchingobjectiveistosupporttheGOHinimplementing sustainable post‐earthquake reconstruction and shift from emergencyresponse to development, with a focus on: (i) reducing vulnerability and increasingresilience;(ii)encouragingsustainablereconstruction;(iii)buildinghumancapital;and(iv)promotinginclusivegrowth.

TheproposedProjectwill inparticularhelpsetconditionssupportingtheobjective(iv)ofinclusivegrowthinruralareas.Inaddition,underthestrategicobjective(iii),theproposedProjectwillalsostrengthenthecapacityofboththeGovernmentandtheoff‐gridelectricityprovidersinruralareas.

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II. Proposed Development Objective(s)

Proposed Development Objective(s) (From PCN)

TheProjectDevelopmentObjectiveistojump‐startrenewableoff‐gridelectricitymarketinorder to facilitate the scale‐up of access tomodern energy services for rural households,enterprisesandinstitutions.

Renewableenergy‐basedoff‐gridelectricityserviceswillcompriseavarietyoftechnologiesandbusinessmodels, including individual systems, suchas solar lanterns and solarhomesystems, and community‐based systems, such as mini‐ and micro‐grids, powered byrenewable energy or hybrid sources (renewables with a diesel back‐up and/or batterystorage).

This objective will be achieved primarily through assisting the Government with thecreation of an enabling regulatory framework and theprovisionof funding to theprivatesector (including NGOs and cooperatives) for commercially viable off‐grid electrificationinvestmentswithapotentialforreplicabilityandscale‐up.

Key Results (From PCN)

ThePDOindicatorswouldinclude

Numberofenterprises thatstartedand/orscaleduptheiroff‐gridelectrificationactivitieswithassistanceoftheproject

People provided with access to electricity under the project by household connections‐OtherRenewableEnergy—Off‐grid(#)*

Enterprises provided with access to electricity under the project‐ Other RenewableEnergy—Off‐grid(#)

Numberofdirectbeneficiariesofwhicharefemale

Jobscreated

FinancingleveragedthroughCTFfunding($million)**

Installedcapacityforpowergeneration(MW)**

TonsofGHGemissionsreducedoravoided**

*Coresectorindicator;**CTFcoreindicator

The intermediate outcome indicators will be developed during project preparation, butwould include among others the enactment of the regulatory framework, progress in thedevelopment of the investment pipeline, progress in awarding and disbursing loans, andoutputsofmarketdevelopmentandcapacitybuildingactivities.

TheprojectwillalsoapplytheMulti‐TierFramework(asintroducedbytheSE4ALLGlobalTracking Framework, World Bank, 2013) for measuring access to reflect different service levels provided by different off-grid electricity technologies and business approaches.

III. Preliminary Description

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Concept Description

Theprojectwillhavethe4followingcomponentswhicharesummarizedhereafter:

(i) Enablingenvironmentandprogramoversight

(ii) Accesstofinancefacility

(iii) Qualitypremiumgrants

(iv) Technicalsupportandcapacitybuilding

Component1:Enablingenvironmentandprogramoversight

(CTF$0.5million)

Thelackofaclearregulatoryenvironmentisconsideredthemainbottlenecktoscalinguprural energy activities.The legal framework is currently unclear,with several legislationscontradicting each other. The component will contribute to GOH’s effort to clarify thelegislation, facilitate permitting process and work towards creating a level playing fieldbetween fossil fuels and renewable energy options in rural areas. In addition, thiscomponentwillprovidesupporttoMTPTCtostrengthennotonlytheexistingstructurebutalsotocreateawell‐functioningsupervisorystructure—inordertooverseetheinvestmentschanneledthroughthefinancialintermediary.MTPTCiscurrentlyexpandingitscapacitytomanagethesector,andtheprojectwillprovidefurthersupporttodothiseffectively.

Component2:Accesstofinancefacility

(CTF:$10million)

Thecomponentwillbemanagedbyacompetitivelyselectedfinancialintermediary(FI),andwill consist of a credit line or other access to finance facility channellng funds to privatesectorprovidersofrenewableenergyservicesandproducts(includingNGOs,cooperatives,ruralretailersandMFIs)forinvestmentinoff‐gridrenewableenergyprojects.Thedetailsofthecreditlineareunderdevelopmentwiththeassistanceofahighlyqualifiedconsultancyteamoffinancialexperts.

Tobeeligible,theprojectswillneedtodemonstratethat

‐theprojectusesrenewableenergy(includinghybridsystems),

‐ the project will expand access to power to rural households, businesses and/or publicinstitutionsinruralareas(whichwillbesubjecttoverification)

‐ theprojecthasaviablebusinessplan,demonstratingsustainabilityof investments,clearandworkableO&Marrangements,andshowingreplicabilityand/orscale‐uppotential,

‐therenewableenergyequipmentandthesystemmeetsminimumtechnicalstandards,and

‐theprojectsponsorisalegalentityandpassesacreditriskassessmentcarriedoutbythefinancialintermediary(tobedevelopedwiththefinancialintermediary).

In addition, the credit line clients will be obliged to provide users with readilyunderstandableinformationontheservicelevelsprovidedbythesolutionstheyoffer,andmake costs transparent upfront. Detailed eligibility criteria and procedures will bedevelopedinOperatingGuidelines.

Component3:Qualitypremiumgrants

(CTF:$1million)

High quality lanterns and other pico/micro PV products are currently facing significantregulatoryandmarketconstraints,whicharethreateningtoreversetherecentHaitimarket

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progress.Notonlyare theseproducts facingunfaircompetition fromthesubsidized fossilfuels (kerosene and diesel) ‐ increasingly, they have also been threatened by an influx ofverylowqualityoff‐gridlightingproducts,whichareoftenchanneledthroughtheinformaleconomy(thusmostlyun‐taxed),whiletheformalpicoPVenterprisesaresubjecttoimportdutiesandtaxesthatcanbeashighas36%.Thereisaconsensusthatthecurrentsituationis contributing to market spoilage: uneducated users choose lower cost products, whichturnoutnottoworkasexpected,creatinganegativeimpressionforothersolarandoff‐gridrenewable products. This worrying trend (which confirms the rationale behind earlyLighting Global and GIZ quality assurance measures) seems to already affect 2014 Haitisalesofhighqualitysolar lanterns,asperstakeholderreportsduringthe2014Forum.Tolevel the playing field for theproducts of appropriate quality, theprojectwould considerofferingqualitypremiumgrantsforhighqualityoff‐gridproducts(LightingGlobalcertifiedorequivalent).

Component4:Technicalsupportandcapacitybuilding

(CTF:$1million)

Thiscomponentwillprovidetechnicalsupport,capacitybuildingandmarketdevelopmentservicestothevariousnascentoff‐gridrenewableenergymarketsdescribedinthetechnicalannex. This component will finance a dedicated technical team to set up at the financialintermediarylevel;andwillinclude:

i)settingupandenforcingqualitystandardsrequiredforaccessingcredit line fundingfordifferentsystemtypesandbusinessmodels;

ii)TAtotheFIcreditofficersfortheevaluationofproposals;

iii) TA to service providers and users including TA for energy efficient use of off‐gridelectricity (including the use of smart technology, dissemination of energy efficientappliances, intelligentusercommunicationandsimpledemand‐oriented tariff solutions invillagegrids)andsupportforproductiveapplications;

iv)verificationofserviceprovides

v)developmentandimplementationofconsumerawarenesscampaigns;

vi)promotinggender‐sensitiveapproachesinoff‐gridelectrificationsub‐projects;

vii) further pipeline development for credit line financing, including awareness buildingaboutthecreditlineopportunitiesamongthepotentiallocalSMEs.

viii) implementation of South‐South knowhow exchange for fast diffusion of emerginglessonsonPAYGandsimilardisruptivebusinessinnovations.

IV. Safeguard Policies that Might Apply

Safeguard Policies Triggered by the Project Yes No TBD

Environmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

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Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waterways OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X

V. Financing (in USD million)

Total Project Cost: 12.00 Total Bank Financing: 0.00

Financing Gap: 0.00

Financing Source Amount

Borrower 0.00

Clean Technology Fund 12.00

Total 12.00

VI. Contact point

World Bank

Contact: Frederic Verdol

Title: Sr Power Engineer

Tel: 473-6566

Email: fverdol@worldbank.org

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Contact: Dana Rysankova

Title: Senior Energy Specialist

Tel: 458-9514

Email: drysankova@worldbank.org

.

Borrower/Client/Recipient

.

Name: The Republic of Haiti

Contact: Jacques Rousseau

Title: Minister of Public Works, Transportation, and Communication (MTPTC)

Tel: 50937270414

Email: hubejack@gmail.com

.

.

Implementing Agencies

.

Name: MTPTC—Energy Cell

Contact: Jacques Rousseau

Title: Minister MTPTC

Tel: 50937270414

Email: hubejack@gmail.com

 

ANNEXVIADDITIONALDEVELOPMENTACTIVITIES

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ANNEXVI.ADDITIONALDEVELOPMENTACTIVITIESSREPwillcomplementMDBcurrentactivitiesintheenergysector,aswellasadditionaldevelopmentactivitiessupportedbythedevelopmentpartnersthatcancomplementorsupplement the SREP investments in grid‐connected renewable energy and for ruralelectrification.

Agency Projects

WorldBank

ThroughtheIDA‐financedRebuildingEnergyInfrastructureandAccessProject,theWorldBankaimsatstrengtheningenergysectorinstitutionsandincreasingenergyaccess.Theprojectincludesseveralcomponents,including(i)technicalassistancetotheGovernmentforpowersectorplanningandreform,(ii)financialandTAsupporttoEDHforreducingtechnicalandcommerciallosses,(iii)rehabilitationofonesmallhydroplant, and rural energy component focusingprimarilyonoff‐gridelectricityforschoolsandstreetlighting.

Additionally, theWorld Bank is preparing another projectwith co‐financing fromthe CleanTechnology Fund (CTF). The CTF‐fundedModernEnergy for All Projectwill (i)establishanaccessto finance facility foroff‐gridelectrificationenterprises,(ii)establishanaccesstofinancefacility(provisionofworkingcapitalandmedium‐term credit) for commercially‐driven and commercially‐viable off‐gridelectrification projects, building on the existingmarket for solar lanterns and (iii)offers promising pilotswith service‐oriented approaches using pay‐as‐you‐go SHSand retrofittingofmunicipal diesel gridswith renewables. SREPwill broaden thisscopetoadditionalareas,whichmayrequire largerpublicsectorfunding,butalsopromise higher socio‐economic benefits. CTF will co‐finance SREP off‐gridelectrificationactivities. Seeannex IProjectBrief3 formore informationonSREPandCTFcomplementarityandsynergies

InternationalFinanceCooperation(IFC)

In collaborationwith theHaitianGovernment, the IFChas beenexploring variousrenewable energy interventions in Haiti, including on‐grid and off‐grid. Thus, IFChas been in discussion with experienced RE developers to possibly support thefinancinggreenfieldIPPs,whichwouldrelyonanEDHoff‐take.TheprogressofIFCis somewhat slow and is constrained by the PPA payment capacity of EDH(standalone or with sovereign guarantee). IFC will continue pursuing thesediscussions with an understanding of the EDH's ability to take adequate steps toimproveitsoperationsandperformance.

Inparallel,IFChasbeenactivelyinvolvedinassessingpossibilitiesofimplementingvariousoff‐gridschemes.Inmanycases,however,workingdirectlywithfragmentedend‐usersinvolvessignificanttransactioncost,whichcanbeovercomebyworkingthrough private sector aggregatorswho are pursuing innovative businessmodels.Among themodels IFC is currentlydevelopingaredistributedgenerationschemesrelying on leasing, providing financing to financial institutions for on‐lendingtowardsREequipment,channelingfinancingtowardscertainmini‐gridcomponents,

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andothers.

Inter‐AmericanDevelopmentBank(IDB)

SustainableEnergyStudiesforHaiti.TheInter‐AmericanDevelopmentBank(IDB)issupporting a US$3million Technical Cooperation (TC) to help the Government ofHaiti in achieving a sustainable energymatrix that promotes access to electricitythroughrenewableenergy (RE)sourcesandenergyefficiency (EE)measures, asaway to reduceHaiti’s dependency on fossil fuels, encouraging efficient use of thisnon‐renewable resource. The resources for this TC come from the HaitiReconstruction Fund (US$2million), the IDB’s Sustainable Energy and ClimateChange Initiative (US$500,000) and the IDB‐administered Korea Fund forTechnology and Innovation (US$500,000). The TC has several components; theyinclude studiesandpilotprojects in rural areas—aseriesof feasibility studiesarecurrently being developed under the TC, including Distributed GenerationFeasibility Studies, Solar/Wind Generation Feasibility Studies, and Overall GridPotentialforIntermittentGeneration.

Solar Energy. IDB partnered and hired SELF to install a variety of solar energysystems to serve the rural population of Haiti in a project designed to providemodels for meeting Haiti’s energy needs in the under‐served rural areas of thecountry.Thefollowingtypesofsolarsystemswillbeinstalled:(i)LargeMicro‐GridatPort‐a‐Piment,CoteauxandRoche‐A‐Bateau;(ii)SmallMicro‐GridatFeyoBien;(iii)SolarCookingDemonstration;(iv)SolarWaterHeaterDemonstrationinPort‐a‐Piment;and(v)SolarLanternDistribution.

Mini‐GridHybridSystemSolarandDiesel.RegardingtheLargeMicro‐GridatPort‐a‐Piment,CoteauxandRoche‐A‐Bateau,theIDBwillco‐fundthisprojecttogetherwithUNEP. The lead implementing organization will be the National Rural ElectricalCooperative Association (NRECA) for UNEP’s funding. SELF is the implementingorganization on behalf of the IDB. The planned micro‐grid will serve the threecommunitiesthathaveacombinedpopulationofapproximately53,000people.Thepopulationinitiallyservedbythemicro‐gridwillrangefrom1,000to2,600people.Thegridwillmakeuseofsomeexistingpowerlines,leftfromanownon‐functioningmicro‐grid,aswellassomenewlinesandsomeupgradedexistinglines.Themicro‐gridwillbepoweredbyahybriddieselgenerator/photovoltaicpowerplant.

Mobile Money for Mini‐Grid Hybrid System Solar and Diesel users. IDB is alsopartnering and hiring NRECA to perform a demonstration project intended toevaluatethebenefitsandoperationalimpactofaHaitianmini‐gridserviceproviderofferingitscustomerstheoptionofpayingforelectricityservicewithmobilemoneypayments

ElectricitySystemAssessmentandGISMap. IDBhaspartneredandhiredNavigantConsulting (inassociationwithHOMEREnergyand JMConsulting) to createaGISmapforHaiti.TheGISMapwillincludeamongotherthingsagreatdealofdetailedinformationongeneration,transmission,substation,distributionandload.

Rural Electrification Plan. IDB andNavigantwill identify the “off‐grid” areaswithpopulationsnotservedwellbytheexistingorplannedsystem,andtodevelopaplanfor meeting those needs with renewable energy. This activity will concentrateprimarily on plans for advancing Micro‐grid Systems, while also developing an

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approach that incorporates both Micro‐grid Systems and Stand‐Alone Systemswhere each modality makes sense based upon customer concentration, energyconsumption,andlocalinstitutionalcapacity.

Efficientuseoffossilfuels—feasibilitystudies.Theapproachofthisfeasibilitystudywould be to analyze the potential of incorporating natural gas intoHaiti’s energymatrixinordertoreducethecountry’sdependencyondieselandheavyfueloil.

SolarPVprogramsforpublicfacilities.Inresponsetothe2010earthquake,theBankimplemented12photovoltaicsystemsonhealthcentersintheSouthDepartmentofHaitiduringMarchandAprilof2012andsolarstreet lights intworefugeecamps.This initiativewaspartof theEmergencyProgramforSolarPowerGeneration forHaiti,whichwassetuptosupportHaitiintheprovisionofcleanenergythroughtheuseofphotovoltaicpanels

USAID

USAID is currently carrying out wind studies at a site in the North of Haiti (theCaracolIndustrialParkarea).ThesestudiesareplannedtocommencebyApril/May2015andwillcollectwinddataforatleastoneyear.Subjecttofundavailability,thedatamaythenbeusedtodevelopasmallwindenergyproject.

Solar energy. USAID might also develop a pilot project using solar energy tosupplementthePowerPlantattheCaracolIndustrialPark.

Household energy. The US$8.7million USAID Improved Cooking TechnologyProgram(ICTP),alsoknownasRechoPaw,ranfromFebruary2012toJanuary2015and benefitted more than 110,000 new beneficiaries with improved cookingtechnology.

Agricultural waste to energy. In February 2014, USAID awarded a DevelopmentInnovation Ventures grant to B2D S.A. for its proposal of an innovative businessmodel that increases access of rural Haitians to a reliable, cost‐effective energysource. The ag‐waste‐to‐energy project seeks primarily to test a business modelthat,ifsuccessful,B2DS.A.planstoexpandinHaitiandbeyond.

EuropeanUnion

Windenergy.TheEUfinancedthepreparationoftwowindstudies.Thefirstonein2006 supported the creation of a wind atlas. Terms of Reference for a feasibilitystudyof threemicro‐windsystems for theNorthandNorth‐EastProvince,namelyPort‐de‐Paix, and CapHaïtienet Fort Liberté. The 2010wind study carried out incollaborationwith the Bureau ofMines and Energy assessed the potential for thethree sites in Cap Haïtien, Jacmel and LacAzuei. Both studies highlighted theopportunitiesforwindenergybeingintegratedintothenationalgrid.

Householdenergyandrenewableenergyinruralareas.Since2011,theEUfinancedtheMLAL‐MPP Project, an objective of which is to implement an energy efficientplanfortheusageofwoodenergyinruralareasoftheHincheCommunity.

Climatechange.TheAP3CProgramsupports themainstreamingofclimatechangeintothenationaldevelopmentofHaitibetween2014and2019.

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CanadianInternationalDevelopmentAgency(CIDA)

CanadahasbeenactiveintheenergysectorinHaitisincethe1970sinavarietyoffieldsandinvestedapproximatelyCAD$60million.Earlyinterventionsrangedfromhydroelectric resources mapping to direct technical assistance to EDH. The mostrecent projects include semi‐autonomous centers (SAC) in Jacmel (2005‐2011),whichwasthethirdphaseofaTechnicalAssistancetoEDHinitiatedin1995,aswellasinLesCayes(2007‐2013)toreplicatethepromisingresultsachievedinJacmel.

The SAC projects amounted to CAD$28.9million, focused on the followingcomponents:(i)Businesscomponent:improvedcustomermanagement;optimizingmeter reading; regularization of illegal consumers; increased levels of billing andcollection, (ii) Technical component: increasing electricity production in Jacmel (anew diesel generator and repairing the Gaillard power station) and in Les Cayes(rehabilitationof SautMathurinehydropower station); rehabilitation/extensionofLes Cayes electricity grid; installing a new switchyard in Bourdet old station, (iii)Financial component: increase in revenue through the trade and technicalcomponents, improving financialmanagement and securing semi‐autonomyof thecenters. (iv) Capacity strengthening: training executives; technical andadministrative staff in planning; management and operations; distribution andbusinessmanagement,accountingandaccountability."

Norway

NorwayissupportingtheGovernmentwiththedevelopmentofgrid‐connectedandoff‐grid renewable energy—eitherdirectlyor through implementingpartners (seeactivities’outlineinUNEPandSELFsectionsbelow).Thenewbudgetcycle forthenext three years is currently being prepared. Some recent activities in the energysectorinclude:

Therehabilitationandconstructionofhydropowerplants.Norwayissupportingtheplannedrehabilitationofonehydropowerplantandtheconstructionoftwoothersmall‐hydropowerplantsintheSouthDepartment.ThePowerPurchaseAgreementis currently being discussed with the Government. Once consensus has beenreached, Norway’s Development Banks will make funds available to providefinancing (AAArating) to theHaitian company that is supposed to renovate,buildandoperate thepowerplants. Inaddition,Norwaymadeavailable throughan IDBadministered escrow account, an amount of US$3million as guarantee funds forrenewableenergyprojectsintheSouth,startingwiththehydropowerplantsprojectmentionedabove.

RuralElectrificationwithrenewableenergy.NorwaypartneredwithUNEPandSELFasthemainimplementingentitiesoftheiractivities.FocusfortheactivitiesismainlytheSouthDepartment.

GreenEnergymechanism.The amount of fundspotentially availablehasnot beenconfirmed,butmight involve a cooperationbetweenUNEP,UNOPSand theUNDGMulti‐DonorTrustFundinordertocreateanewstructure(potentiallyatemporaryfund) for the competitive selection and support of promising small to mediumprojectsandenterprisesinthesocialandprivatesector.Thepotentialfundcouldbeeasilysupplementedbycontributions frommultipleotherdonorssuchasbilateral

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agencies.Assuch,thePhaseIIoftheNMFAprojectcanbeconsideredasabridgingsolution between the Phase I pioneering work and the longer term entry ofGovernmentwithSREPandCTFfunds.

Windpower/biomass.Norway,throughUNEPwillcontinuetoassessthepotentialforwindpower,aftermixedresultsinaspecificareaoftheSouth.Anotherareahasbeenidentifiedthat,ifsuccessful,wouldbethebasisforamini‐gridbasedonwindforanadditional commune in theSouthDepartment.Thepotential forbiomass intheSouthisbeingreviewedtowardspossiblecooperationwiththeprivatesector.

Crosscuttingthemes—trainingofskilled labor.NorwayjustprovidedUS$1millionto SELF to establish the first training center on solar energy for technicians andengineers in Haiti. This center should be operational by 2016 and willsupport/complementSREPcapacitybuildingcomponent.

UNEP

Householdenergy.UNEPhas the implementingresponsibilityof theNMFAProject(describedinNorwaysection).

UNEP is financing capacity building of a Haitian social enterprise Eneji Pwop,developedby theUSANGOEarthSpark International. EP sells solar lanterns, solarhomesystemsandefficientcookstoves.Thissupportwillbecompletedin2015.

UNEP is financing the rollout of a battery rental franchise scheme in the SouthDepartmentbytheUSANGOSironaCaresFoundation.Theschemewillentailupto21chargingstationseachservicingupto100households.ThepowersupplyusedisacombinationofsolarPVandgrid—wheretheLesCayesgridispresentandwhenitisactive.

Based on a technicalUNEP study of the options for improvedmanagement of theforestenergysectorintheSouthDepartment(aspartoftheNMFAProjectPhaseI),UNEP is currently investigating the relative costs of LPG and fuel wood forcommercial use. In addition, the NMFA Project Phase II might finance a pilot forimprovedkilnsforenergyplantations.

UNEP is now commencing a series of new small‐scale partnerships for feasibilitystudiesandthedevelopmentofbusinessplans.TheUSAPublicPrivateFoundationforRuralDevelopmentwillbefinancedforproductdevelopmentworkonanethanolstove and local distillation supply chain. The USA andHaitian NGO Carbon RootsInternational will be financed for a feasibility study on charcoal briquetting ofvetiverrootsforsaleontheopenmarket.TheNGOEarthSparkwillbefinancedforabusinessplanforamini‐gridinTiburon.

UNEPisdevelopinganewpartnershipwiththeUniversityofQuisQueya,thenewlyformedHaitianInstituteforEnergy(HIE)andtheHaitianEducationandLeadershipProgram (HELP) for the development of a national level energy communicationsplatform.Thescopeofthepartnershipwillextendtotechnicalcapacitybuildingforcivilsociety,businessandtheuniversitysector.

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SolarElectricLightFund(SELF)

SELF, founded in1990, is aWashington,D.C.‐basednonprofitwhosemission is todesignandimplementsolarenergysolutionstoassistthoselivinginenergypovertywiththeireconomic,educational,healthcareandagriculturaldevelopment.

Solar PVprograms for public facilities and training center. The SouthDepartmentnow hosts 10 health clinics with solar PV battery power supplies. These wereinstalled in2012by SELFusing IDBpost‐earthquake reconstruction funds and allare still operating anddelivering substantial benefits. SELF receives support fromIDBtoseveralofitsPVprograms.ThePVprogramsinclude,interalia,solarpoweredstreet lights, solar energy to power schools (lights and computers), fish farms, asolarpoweredmarketgardenandamicro‐enterprisecenter.Furthermore,SELFwillestablishHaiti’sfirstvocationaltrainingcenteronsolarenergyfortechniciansandengineers(financedbyNorway).

PanAmericanDevelopmentFoundation(PADF)

Private sector empowerment. PADF successfully implements renewable energyrelated activities via the USAID‐funded Leveraging Effective Application of DirectInvestments(LEAD)ProgramsinceJuly2011.ByJuly2015,thevolumeamountstoUS$15million.Therigorouslyimplementedbusinessplancompetition,comprisingafund ofUS$5.5million, providesmatching grants to entrepreneurs and SMEs on aminimum1:1basisrangingfromUS$50,000uptoUS$200,000.Thefourenterprisesthat received a grant from LEAD and operate in the field of renewable energy inHaitiare:SWITCHS.A.,D&EGreenEnterprises,PalmisEnejiandGlobalRecyclingS.A. LEAD funding is based on the assumption that the initial grant support willallow enterprises to grow to the next level which will allow them to accesscommercial sources of funding for expansion. LEAD‐supported enterprises wouldthereforeconstituteapotentialpipelineforCTFandSREPscale‐upfinancing.

On‐GridEnergyAccess.PADFisfurthercommittedtoelectrificationprojectsunderthe World Bank‐funded via the Haitian Government’s Bureau for Monetization(BMPAD)UrbanParticipatory CommunityDevelopment Project (PRODEPUR). Theobjectiveof theprojectwastoelectrify thewholeneighborhoodofDelmas32andstrengthenthecapacityoftheexistingmanagementcommittee(ComitédeGestiondeCourantdeDelmas32,CGCED32)originallyset‐up in2002.Amainmeterwasinstalled for the neighborhood from which the committee extends and sellselectricity via cable to households and local businesses. The committee has amanagement contract with the EDH and is in charge of working with localtechnicians accredited by EDH to handle the connections. It is also in charge ofmaintenance,billingandcollection.

 

ANNEXVIIEDH—MAINGENERATIONANDDISTRIBUTIONASSETS

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ANNEXVII.EDH—MAINGENERATIONANDDISTRIBUTIONASSETS

Source:EDH,2014.

 

ANNEXVIIIINDEPENDENTREVIEW

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ANNEXVIII.INDEPENDENTREVIEW

CLIMATE INVESTMENT FUNDS

SCALING-UP RENEWABLE ENERGY PROGRAMME (SREP)

INVESTMENT PLAN FOR HAITI

Review undertaken by

Dr Mike Allen

9th April 2015

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INTRODUCTIONThe review of the Investment Plan for Haiti has been undertaken ahead of the submission of the plan to the SREP Sub-Committee of the Strategic Climate Funds, within the Climate Investment Funds at the World Bank.

These notes are based on a review of the draft plan provided in late March 2015 and an update received on 8th April 2015.

It should be noted that the reviewer has not visited Haiti nor been involved in the preparation of this plan. The lack of a visit to Haiti and any contact with the ministries, agencies, institutions and various stakeholders necessarily limits the personal background knowledge but the nature of the situation is common to many such economies. The reviewer is familiar with the energy issues facing Haiti (in particular through involvement with the SREP Expert Panel in May 2014) and the wider energy situation in the region from other personal engagements.

The overall impression of the Investment Plan is that is thorough, well prepared and comprehensive.

A high level of detailed evaluation of options, including at least preliminary economic analysis of the potential projects being considered, provides a rational base for the technical and financial comparison and justification for these projects.

Recognising the unique situation that faces Haiti post the 2010 earthquake, it is however important that cognizance be given to a critical assessment of the capacity of the government and its relevant ministries and agencies to undertake what is clearly a demanding, and in places perhaps optimistic, programme.

The Investment Plan (IP) does explain the importance that renewables can make to the reconstruction and upgrading of the existing electric power system in Haiti; it does however also highlight the considerable challenges that have been faced within Electricité d’Haiti (EDH) given the financial stress that it has been under. The report notes:

EDH faces considerable technical, managerial and financial challenges. Technical and non-technical losses are at 65%, large part of which can be accounted for by the illegal grid connections. In addition, collection rate is only at two thirds—meaning that EDH recovers only 22% of the value of electricity it generates. The losses contribute to an annual financial deficit of US$200 million—equivalent to 4% of the national budget.. Consequently, EDH faces difficulties to pay for fuels, basic maintenance services and other operating costs, and is relying on Government subsidies to bridge the gap.

In itself this situation should not be allowed to undermine the positive aspirations laid out in the IP but equally the pressure that this may bring against a significant private sector engagement needs to be acknowledged. Again the report notes:

All IPPs produce power from thermal sources (diesel and heavy fuel), with a Power Purchase Agreement (PPA) with EDH. The private sector has also been exploring opportunities for grid-connected renewable energy (mostly solar and wind), with several developers discussing potential projects with the Government, but so far no PPA for renewable energy has been signed as potential RE IPPs are constrained by the PPA payment capacity of EDH (and the GoH in case an attached sovereign guarantee), which is a result of EDH’s high technical and commercial losses and low payment-collection efficiency.

During the review correspondence with the team assisting in the preparation of the IP Has allowed an opportunity to discuss these issues and it is acknowledged that there has been some recent progress to address these concerns in light of the activities around SREP preparations and other parallel programmes.

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As noted, the activities proposed under the IP are significant and will require a clear and well managed implementation plan. With limited knowledge of the current on-the-ground project activities in the sector, it is difficult to assess how those proposed under the IP will integrate with efforts by other donors. A number of projects are anticipating co-funding and/or are dependent on separately funded activities by others.

Challenges around donor collaboration are recognised as an issue in any development programme; these challenges are no doubt heightened given the breadth of donor activity within Haiti and may well be complicated within the electricity/energy sector by the concerns about EDH’s capacity and performance and this influence on attracting private sector engagement. The report suggests that various electricity/energy support programmes are underway with support from, amongst others:

World Bank International Finance Cooperation (IFC) Inter-American Development Bank (IDB) USAID European Union Canadian International Development Agency (CIDA) Norway UNEP Solar Electric Light Fund (SELF) Pan American Development Foundation (PADF)

What is apparent is from the summaries in the IP is that, although there are a large number of donor programmes underway, the themes highlighted for each do appear to demonstrate that there is limited overlap and a good coverage of the identified areas of key concern. It will however be important that the SREP programme includes a critical evaluation to ensure that its contribution is providing real additive value to the work being undertaken by others.

SPECIFICCOMMENTSONINVESTMENTPLAN

TheCountryEnergyPolicy

It is noted in the IP that:

The Government vision for the energy sector is based on the Strategic Plan for the Development of Haiti (SPDH), which sets a path for Haiti to become an emerging economy by 2030.

The SPDH plan envisages, inter alia, to strengthen the private sector and the provision of basic services to the population including electricity. The Martelly administration has identified energy as one of its five priorities—the five ‘E’s (alongside education, employment, environment and rule of law—‘état de droit’). The January 2012 Draft Energy Policy Report (Avant-Projet de Politique Energétique d’Haïti) defined the Government’s five key objectives of its energy policy as follows: (i) Ensure sufficient supply to meet demand and support economic growth; (ii) Promote energy savings and efficiency; (iii) Promote development of indigenous renewable sources of energy; (iv) Pursue exploration of fossil fuel sources in Haiti; and (v) Create a regulatory framework to encourage the development of supply while protecting the environment.

The present National Energy Sector Development Plan for the period 2007-2017 recommends specific improvement and development measures for the energy sector but is now rather outdated, as it was completed before the 2010 earthquake which dramatically altered the energy sector development needs. EDH is in the process of developing a new Electricity Master Plan, which should be available in late 2015.

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The January 2010 earthquake exacerbated the challenges faced by the sector by worsening EDH’s financial situation and undermining institutional and managerial capacities. The earthquake also damaged or destroyed a wide range of electricity infrastructure, increasing the emphasis on the physical inventory and the need to rehabilitate assets.

In the post-earthquake years, the Government therefore focused on rebuilding the essential infrastructure and making sure that critical loads were supplied in short- and medium- term. The reconstruction now being mostly completed, the Government is moving to longer-term priorities embodied in the SPDH plan.

and

…… Haiti’s main planning tool is the National Energy Sector Development Plan (PNDSE) for the period 2007-2017. However, the PNDSE is outdated and EDH is currently developing a new Electricity Master Plan, which should be available by late 2015. The PNDSE recommends an additional capacity of about 400MW, including 10% of renewable energy capacity. This low proportion of renewable energy integration is in part due to the unavailability of appropriate technical and economic data on RE at that time. The new Electricity Master Plan, informed by the ongoing study on integrating intermittent renewables to the EDH grid, will provide new recommendations for an optimal mix of renewable energy over time, which is expected to target a higher share of RE.

Given the current situation, as planning proceeds for projects under the IP / SREP, it will be important that the effective integration of any projects within the national energy plans is clear before final commitments to their implementation. Part of the IP’s justification for SREP support is that the proposed projects will assist as practical demonstrations of what could be achieved through the various SREP supported projects. This will need to be reassessed as each project is better defined.

ProposedSREPProgramme

An abbreviated summary of the SREP programme rationale and design highlights a number of positive considerations and recognition of the challenges that will be faced:

The underdeveloped state of the energy sector is both a challenge and an opportunity. It is a challenge because the electricity sector has still a long way to go until it will be able to power the Government’s ambition of becoming an emerging economy with universal access to electricity by 2030. This transformation will not happen through one program but will require long-term consistent support……

The SREP program is designed specifically to address these challenges and opportunities, intending to:

Identify immediate, cost-effective, readily implementable opportunities for renewable energy investments with the best success probability, replication and scale-up potential………………

Demonstrate how renewable energy can fill the gaps in the development of all electricity systems levels, by explicitly working on all these levels in parallel: from (i) the EDH main grid, to (ii) EDH isolated grids, (iii) existing (mostly non-operational) rural municipal grids, (iv) smaller green-field off-grid investments for productive, social and household uses or smaller villages without anchor clients, to (v) the smallest “PicoPV systems” sold via innovative business models. …………

Start small, but think big by reducing barriers to renewable energy investments………. Complement SREP investment with other energy sector interventions. Both IDB and the WB

are currently assisting the Government through MTPTC and EDH in overall sector development and reforms, capacity-building, rehabilitation of existing generation,

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transmission and distribution assets and actions to improve EDH commercial performance and reduce losses. ………

Complement investments with a strong TA and capacity-building program going beyond the needs of individual projects in order to build a nation-wide framework, capacities and skills to support more ambitious and sustainable renewable energy scale-up (during and after the SREP time frame)…………..

Build on and coordinate closely with other donors. SREP will coordinate closely with all stakeholders interested in supporting renewable energy, such as UNEP, Norway, USAID, and Pan-American Development Foundation. …….. SREP will focus on filling the gaps that these organizations are not covering…………

Overall, the development of the energy sector in Haiti will be a long-term process, in which SREP can play an important role. In order to lift Haiti’s electricity sector from the current emergency situation, investments in additional generating capacity for the grid will have to be sequenced with adequate policy reforms, which in Haiti—similarly to other fragile/post-conflict-disaster contexts—will be an adaptive and incremental process. The combination of IDA/IDB/IMF support for EDH technical, financial and commercial performances, alongside SREP support to start decreasing the gap between tariff and cost of production, is currently the only viable approach for setting the stage for the electricity sector growth, as well as for liberating the current subsidies to EDH for better uses in the Government poverty eradication efforts, including for rural electrification.

This outline provides reassurance that the issues around the need for, design and proposed implementation of interventions with SREP support have been carefully considered.

ProposedProjects

The table that follows is extracted from the IP to summarise the understanding of the 5 projects being proposed.

SREP Project Priority level

1. Integrating RE in the main grid

High priority—important transformational potential in terms of experience and capacities for integrating renewables in EDH grid, which will inject much needed RE generation capacity to the EDH grid and help unlock future investments in RE. Need to ensure adequate maintenance if owned by EDH.

2. RE-based expansion of Port-de-Paix grid

Medium/high priority—less replication potential due to limited size of isolated grids, but can be replicated in other five isolated grids; provides a good learning potential (cooperation with academia etc.) and has a strong justification from a development impact perspective (implemented in the poorest and most isolated department, which, however, has significant development potential for which lack of electricity is a constraining factor).

3. Off-grid electricity services for productive, social and household uses

High priority—transformation of rural areas where electrification rates have been stagnant in the past 30 years; potential to support agriculture productivity improvements and other productive uses; complements a parallel engagement under IDA and CTF

4. Rehabilitation of small hydro plants

Medium priority –cost-effective intervention but limited replication/scale up impact. Need to ensure adequate maintenance if owned by EDH

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5. Enabling environment, capacities, skills

High priority- Crosscutting—essential complement of projects 1, 2, and 3 and for the scaling-up beyond the SREP projects

Financing

The table that follows summarises the anticipated SREP financing, co-financing and potential private sector financing leverage. Overall the wider SREP programme is seen as requiring funding as follows:

The total estimated budget for the Haiti SREP Program is US$173.5 million with a SREP contribution of US$30 million for Components 1,2,3 and 5 (Component 5 is a part of the SREP program package but will seek additional financing from other sources). The program is seeking co-financing from the participating MDBs and other development partners, including US$28.5 million from the World Bank to support all five components and US$10 million from the IFC to support Component 3. In addition, it is expected that a parallel Modern Energy Services for All project, eligible for CTF financing, will also complement and co-finance SREP activities (pending CTF approval). Finally, the SREP Haiti program is expecting to mobilize about 80 million from private sector. The overall SREP leveraging factor is expected to fall between 1:3 and 1:4, mainly depending on the final design and the deal structure of the on-grid component (Component 1).

It is understood that the commitments to co-financing are at different stages and that some will only be confirmed once the SREP funds are available. As is often the case, this may mean that both SREP and co-financing may be conditional on the confirmation of matching sources.

The assumption has been made that the SREP funds will be disbursed through the World Bank and IFC, as indicated in the attached table. This will influence procedures for final applications, timing and delivery of funds but, given the current activities of both organisations under existing (or planned) programmes, this should help the efficiencies around disbursement and programme management.

In both components 1 and 3 implementation will be dependent on a substantial private sector investment and the challenges around securing such financing has already been recognised in this review and throughput the IP.

SREP Financing Summary:

SREP financing Co-financing (excl. private) Total co-financing

Private sector

financing leveraged

SREP IP Project SREP Via WB

Via IFC

WB-IDA

WB-CTF IFC Others

RE for the metropolitan area

10 9 1 6

6 30

RE for Port-de-Paix remote grid

4 4

8

8 4

Off-grid electricity for productive, social and household uses

15 8 7 8 11.5 10

29.5 45

Rehabilitation small-hydro

0

4

14 18 0

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Building enabling framework, capacities and skills for RE scale-up

1 1

2.5 0.5

3 0

Total 30 22 8 28.5 12 10 14 64.5 79

CommentsonComponents

Overall the five components proposed for SREP support, and summarised in 2.3 above, appear to offer a balanced approach to the overall programme.

The IP notes that it is planned that there will be consolidation and sequencing of components:

In order to have an efficient and effective SREP Haiti rollout, the 5 components will be sequenced. Components 3 and 5 are natural expansion of activities already carried out by the IDA project (and IFC in case of the IFC-managed activities under Component 3) and can therefore be developed quickly.

Components 1 and 2 are new and will require further studies and preparation efforts, and are therefore likely to be implemented only in the second round.

Component 4 will be implemented in the third round, as additional financing for its implementation is mobilized.

To facilitate project processing and implementation, the World Bank-supported components are likely to be bundled into two projects. The First Project will include Components 3 and 5, and the Second Project will include Components 1 and 2.

This approach should allow an early start, building on existing activities, providing the SREP programme the opportunity to test the base from which to launch subsequent components. Again it will be important that there is a critical assessment of progress as each new component is being considered.

Renewable energy for the Port-au-Prince metropolitan area

The IP suggests that the preferred option for this project is that it be implemented through a PPP arrangement. Recognising the tensions that this may create given the current financial status of EDH, if such a project can be undertaken successfully it must provide a valuable pilot for public private collaboration for future power generation developments.

At this stage the likely structure of the project financing and ownership has to be determined; it is suggested that SREP funds may be used either to buy down the initial cost and/or provide some form of guarantee against payments under any PPA with EDH. While the market may seek guarantees it is understood that to date all payments under existing PPAs have been met despite the financial weakness of EDH.

Whatever structure is chosen it is recommended that the replicability of such a scheme be carefully considered to ensure that the demonstration value of this first RE PPP can be realised. It is understood that IFC will provide advisory services to assist in the design and execution of the financing for this component.

Renewable energy-based expansion of Port-de-Paix remote grid

This project is similar to component 1 but will address the opportunity to explore private sector engagement, possibly through a PPP, on an isolated grid. The suggestion of a solar/wind hybrid would test not only the ability of EDH to implement such a project (after a poor record on an earlier small scale wind development in the same location) but again could provide an opportunity for private sector participation, if not at an ownership level, at least under an O&M contract.

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Again the structure of this project has yet to be defined but its replicability will be of key importance if EDH and the electricity market are to gain real value from the SREP intervention.

Off-grid electricity for productive, social and household uses

This component will help reinforce existing programmes in off-grid situations where EDH has no presence (nor current interest). It will support IDA and IFC efforts and has the potential to provide the most substantive impact in terms of delivering electricity to those who have limited access to power today.

During the IP preparation the team has explored a wide number of business models and it is the intention that this component will draw on significant private sector input and investment. The predominant use of solar PV is anticipated; it is fortunate that there are already many examples of successful business models around the sale, financed supply and/or leasing of solar facilities. IFC’s existing involvement and commitment to provide significant co-financing will be a key to the success of this programme.

Rehabilitation of existing small hydro plants

While the benefits that could be derived from the rehabilitation of existing hydro plants and the potential development of new facilities are noted, it is understood that this component is heavily dependent on additional funding. While it is being promoted under an SREP umbrella, this component appears to be of lower priority and subject to further analysis and funding.

Building enabling environments, capacities and skills for renewable energy scale-up.

The IP recognises that this work is a key element of the overall intervention by SREP:

All renewable energy investments currently suffer from the lack of transparent and consistent regulatory framework, fiscal policies favoring fossil fuels, and capacity and skill constraints at both professional and technical levels throughout the supply chain. Renewable energy scale-up therefore requires comprehensive, systematic and consistent efforts to eliminate these barriers at the national level for all types of renewable energy investments.

For that reason, the SREP Investment Plan includes a specific project for these crosscutting issues, as opposed to including a TA/capacity-building component in each project, which would be the more usual approach, but which could lead to fragmentation of efforts and potential inconsistencies. The project will cover a broad range of enabling activities, but the key focus will be on two areas, which the stakeholder consultations revealed as the main bottlenecks, (i) lack of enabling regulatory and fiscal frameworks, and (ii) lack of local capacities and skills for the implementation of renewable energy projects.

In reviewing the IP and the work being undertaken by others it is clear that these issues permeate all efforts to support the growth of energy investments in Haiti. This component is important, but although a modest investment, it will be important that there be a careful balance between efforts directed into this component and the implementation of projects under others. We all recognise that there is no “quick fix” for many of these concerns; the declared intent of the IP that it is seeking to move quickly to demonstrate solutions is important. The cross cutting nature of the issues has been identified and needs to be effectively managed through a mix of stakeholders to ensure equitable progress can be made while avoiding unnecessary programme delays.

COMPLIANCEWITHSREPGOALSKey focuses within the SREP programme can be summarised under the following headings; the response of the IP to each of these aspects is noted in the following comments.

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Catalyseincreasedinvestmentsinrenewableenergy

The plan outlines how it is anticipated that SREP investments and programme support will help attract other donor and private funding. The engagement with the private sector is recognised as a significant challenge given the current financial situation of the electricity sector in Haiti. It is however believed that the IP sets out appropriate and reasonable strategies as to how this will be attempted.

Enablingenvironment

The IP acknowledges that there are a considerable number of unaddressed hurdles to renewable implementation; there are strategies and an allocation of responsibilities to particular agencies to address these. Without prior engagement with these agencies it is hard to assess whether these tasks can reasonably achieved by these entities. This process will require close monitoring as the success in establishing a sound enabling environment will be a key control on the value of the SREP investments.

Increaseenergyaccess:

Access to energy in Haiti is very low. The work being proposed under the IP, in collaboration with other donors active in Haiti, is seeking to start to build a more robust model to address this issue. The historical access to energy has been poor and this has been exacerbated by the 2010 earthquake, although this has provided some much needed focus on accelerating programmes to increase access.

Implementationcapacity

The track record of EDH in implementing power developments has not been strong. There are however a number of current initiatives being promoted by the government to address serious shortcomings. Within the Ministry of Public Works, Transportation and Communications a specialised Energy Cell has been established and is tasked with managing energy access programmes. Recent reports suggest that institutional capacity and capabilities are being reinforced and there is a clear commitment to remove a number of obstacles to project implementation. Private sector capacity is believed to be reasonable and this will be key in building the off grid market.

Improvethelong‐termeconomicviabilityoftherenewableenergysector

The renewable energy sector in Haiti is clearly at a very early stage. The SREP funded activities are therefore more focused on establishing a strong and sustainable basis for future growth; there may be limited private sector engagement initially but the market strength is growing and appropriate legal and regulatory changes and enhancement of the enabling environment should help ensure future growth in the sector.

Transformativeimpact

The targeted nature of the proposed SREP investments in Haiti is seen as pragmatic given the current energy market status, limited electricity access and a need to enhance the enabling environment. Given the renewable sector is relatively immature it is not to be expected that there will be major transformations in the market through SREP alone but if well managed and executed the proposed programme should help further develop the renewable energy sector in the country.

COMMENTSANDRECOMMENDATIONSAs noted earlier, a considerable amount of effort has gone into the background research, stakeholder consultation and evaluation of potential options that could be supported under SREP funding in Haiti.

The Investment Proposal in itself is thorough and comprehensive. To the extent possible, initial economic evaluations of proposed projects has been undertaken to give a sense of the relative benefits of the various components being proposed.

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The project implementation capacity within The Ministry of Public Works, Transportation and Communications and EDH is of concern particularly as there are a number of parallel energy programmes underway. Discussion with the SREP team suggest that there are a number of major efforts underway to help strengthen these organisations and the calibre of staff is high and there is a good level of engagement amongst them.

The attraction of the private sector into larger grid connected projects is recognised as challenging but part of the SREP programme is to test the practicality of PPP projects and this experience can only be of value in determining the best models for future expansion of the energy sector.

Off grid activities appear to be better supported by the private sector and there seems to be a good level of sharing of experiences with other countries with nascent renewable off grid markets. If this segment of the market can be well catalysed by SREP and others then it may well help address some of the reluctance to participate in grid connectehd activities.

While component 5 of the SREP programme notes close engagement with academic stakeholders, the oversight of the SREP programme may benefit from the inclusion of private sector representatives on any Steering Committee. Engaging the private sector at this level may bring longer term benefits as they become more actively involved in the renewable energy sector.

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HaitiSREPInvestmentPlanMatrixofCommentsandAnswers

Commentsreceivedfrompeerreviewers:MikeAllen(IndependentReviewer)General

ItshouldbenotedthatthereviewerhasnotvisitedHaitinorbeeninvolvedinthepreparationofthisplan.ThelackofavisittoHaitiandanycontactwiththeministries,agencies,institutionsandvariousstakeholdersnecessarilylimitsthepersonalbackgroundknowledgebutthenatureofthesituationiscommontomanysucheconomies.ThereviewerisfamiliarwiththeenergyissuesfacingHaiti(inparticularthroughinvolvementwiththeSREPExpertPanelinMay2014)andthewiderenergysituationintheregionfromotherpersonalengagements.Theoverall impressionof the InvestmentPlan isthat is thorough, well prepared andcomprehensive.Ahighlevelofdetailedevaluationof options, including at least preliminaryeconomicanalysisof thepotentialprojectsbeingconsidered, provides a rational base for thetechnical and financial comparison andjustificationfortheseprojects.RecognisingtheuniquesituationthatfacesHaitipostthe2010earthquake,itishoweverimportantthatcognizancebegiventoacriticalassessmentofthecapacityofthegovernmentanditsrelevantministriesandagenciestoundertakewhatisclearlyademanding,andinplacesperhapsoptimistic,programmeTheInvestmentPlan(IP)doesexplaintheimportancethatrenewablescanmaketothereconstructionandupgradingoftheexistingelectricpowersysteminHaiti;itdoeshoweveralsohighlighttheconsiderablechallengesthathavebeenfacedwithinElectricitéd’Haiti(EDH)giventhefinancialstressthatithasbeenunder.InitselfthissituationshouldnotbeallowedtounderminethepositiveaspirationslaidoutintheIPbutequallythepressurethatthismaybringagainstasignificantprivatesectorengagement

Noted.

Thankyou.

UndertheIDAEnergyproject,wehaveinitiatedin2014abroadassessmentofthetrainingneedsfortheHaitiEnergysector,andplantohaveaspecificfocusoncapacitystrengtheningforREdevelopmentco‐financedbyIDAandSREP.

Yes,asnoted,thiswehaveaddressedintheIP.

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needstobeacknowledged.Withlimitedknowledgeofthecurrenton‐the‐groundprojectactivitiesinthesector,itisdifficulttoassesshowthoseproposedundertheIPwillintegratewitheffortsbyotherdonors.Anumberofprojectsareanticipatingco‐fundingand/oraredependentonseparatelyfundedactivitiesbyothers.Challengesarounddonorcollaborationarerecognisedasanissueinanydevelopmentprogramme;thesechallengesarenodoubtheightenedgiventhebreadthofdonoractivitywithinHaitiandmaywellbecomplicatedwithintheelectricity/energysectorbytheconcernsaboutEDH’scapacityandperformanceandthisinfluenceonattractingprivatesectorengagement.WhatisapparentisfromthesummariesintheIPisthat,althoughtherearealargenumberofdonorprogrammesunderway,thethemeshighlightedforeachdoappeartodemonstratethatthereislimitedoverlapandagoodcoverageoftheidentifiedareasofkeyconcern.ItwillhoweverbeimportantthattheSREPprogrammeincludesacriticalevaluationtoensurethatitscontributionisprovidingrealadditivevaluetotheworkbeingundertakenbyothers.

Agreed.ThusthereasonfortheconsistentcollaborationwiththeprivatesectorduringtheentireIPpreparationprocess(whichwillcontinueduringimplementation),andasaresult,weareconfidentthatastheSREPprogramisdesigneditwillbedoneinawaythattheprivatesectorisabletosupport.

Agreed.However,fromourexperience,donorcollaborationinHaitiismuchmorecongruentthaninmanyotherdevelopingcountries,andduringtheIPpreparationstheMDBshavebeenverycollaborative,thus,withcontinuedeffort,weexpectthecollaborationtocontinue.DonorsandNGOs(e.g.,UNEPorUSAID)alreadyactiveinenergyaccessandrenewableenergywarmlywelcomedtheSREPinitiativeinHaiti,becauseofthepotentialpositiveimpactslinkedtomarketscale‐up.

ThecoordinationbetweenWBandIDBprojectsisalsoveryclose.TheseprojectsarecoordinatedontheHaitianauthorities’sidebyauniquecoordinationunit,whichexperienceandefficiencyhasprogressivelyincreasedsincethefirstprojectsin2007.ThisElectricitysectorProjectImplementationUnit(PIU)isnowcomposedwith8staffandconsultants,expertsinenergyprojectmanagement,procurementandfiduciarymanagement;financedmainlybytheWorldbankandIDBprojects,thisteamhasbenefitedfromtheinstitutions’trainingthroughouttheyears(onSafeguards,Procurement,MonitoringandEvaluation,andCommunication),andhasbeenconsideredin2014asthebestGovernment’steamforfinancialreportingofdonorfundedprojects,allsectorswide.

Agreed.AndastheSREPprogramisfurtherdesigned(post‐approval),arobustevaluationassessmentwillbecarriedout,includingapplicationoftheSE4ALLmulti‐tierframework.Theprogram‐wideM&Eactivities

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havebeenincludedandbudgetedforinComponent5.

TechnicalqualityoftheInvestmentPlan(IP)

Asnotedearlier,aconsiderableamountofefforthasgoneintothebackgroundresearch,stakeholderconsultationandevaluationofpotentialoptionsthatcouldbesupportedunderSREPfundinginHaiti.TheInvestmentProposalinitselfisthoroughandcomprehensive.Totheextentpossible,initialeconomicevaluationsofproposedprojectshasbeenundertakentogiveasenseoftherelativebenefitsofthevariouscomponentsbeingproposed.

Thankyou.

Prioritization/fitwithcountryconditions/priorities

Giventhecurrentsituation,asplanningproceedsforprojectsundertheIP/SREP,itwillbeimportantthattheeffectiveintegrationofanyprojectswithinthenationalenergyplansisclearbeforefinalcommitmentstotheirimplementation.PartoftheIP’sjustificationforSREPsupportisthattheproposedprojectswillassistaspracticaldemonstrationsofwhatcouldbeachievedthroughthevariousSREPsupportedprojects.Thiswillneedtobereassessedaseachprojectisbetterdefined.[The IP] provides reassurance that the issuesaround the need for, design and proposedimplementation of interventions with SREPsupporthavebeencarefullyconsidered.

Agreed.Furthermore,GovernmentplansaretoreleasetheNewenergyMasterPlanbytheendof2015,andasSREPwillworkcloselywiththisplanitwillensurecompatibility.Atthesametime,thePlanwillbuildontheinitialleast‐costplanningassessmentalreadycarriedoutforthisIP.Andcontinualassessmentofprojectviabilityandappropriatenesswillbedesignedintotheimplementationplan.

Thankyou.

Approach

OverallthefivecomponentsproposedforSREPsupport,appeartoofferabalancedapproachtotheoverallprogramme.Thisapproachshouldallowanearlystart,buildingonexistingactivities,providingtheSREPprogrammetheopportunitytotestthebasefromwhichtolaunchsubsequentcomponents.Againitwillbeimportantthatthereisacriticalassessmentofprogressaseachnewcomponentisbeingconsidered.ThetargetednatureoftheproposedSREPinvestmentsinHaitiisseenaspragmaticgiventhecurrentenergymarketstatus,limited

Agreed.Andasnotedabove,astheSREPprogramisfurtherdesigned(post‐approval),arobustevaluationassessmentwillbeincludedthatwillascertaintheviabilityandappropriatenessofeachcomponent.

Weagree,andthusthereasonforsubmitting

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electricityaccessandaneedtoenhancetheenablingenvironment.GiventherenewablesectorisrelativelyimmatureitisnottobeexpectedthattherewillbemajortransformationsinthemarketthroughSREPalonebutifwellmanagedandexecutedtheproposedprogrammeshouldhelpfurtherdeveloptherenewableenergysectorinthecountry.DuringtheIPpreparationtheteamhasexploredawidenumberofbusinessmodelsanditistheintentionthatthiscomponentwilldrawonsignificantprivatesectorinputandinvestment.ThepredominantuseofsolarPVisanticipated;itisfortunatethattherearealreadymanyexamplesofsuccessfulbusinessmodelsaroundthesale,financedsupplyand/orleasingofsolarfacilities.IFC’sexistinginvolvementandcommitmenttoprovidesignificantco‐financingwillbeakeytothesuccessofthisprogramme.

toSREP.

WeagreeandhavebeenfavorablyworkingcloselywiththeIFCthroughoutIPpreparations.

REforthePort‐au‐Princemetropolitanarea

TheIPsuggeststhatthepreferredoptionforthisprojectisthatitbeimplementedthroughaPPParrangement.RecognisingthetensionsthatthismaycreategiventhecurrentfinancialstatusofEDH,ifsuchaprojectcanbeundertakensuccessfullyitmustprovideavaluablepilotforpublicprivatecollaborationforfuturepowergenerationdevelopments.Atthisstagethelikelystructureoftheprojectfinancingandownershiphastobedetermined;itissuggestedthatSREPfundsmaybeusedeithertobuydowntheinitialcostand/orprovidesomeformofguaranteeagainstpaymentsunderanyPPAwithEDH.WhilethemarketmayseekguaranteesitisunderstoodthattodateallpaymentsunderexistingPPAshavebeenmetdespitethefinancialweaknessofEDH.Whateverstructureischosenitisrecommendedthatthereplicabilityofsuchaschemebecarefullyconsideredtoensurethatthedemonstration

WehavedecidedtogowiththePPPoption,andthisisnowreflectedintheIP.Initialmarketsoundingwasdone,whichconfirmthattherearepotentialinvestorsiftherightconditionscanbeputinplace.ThefinalfeasibilityandthestructureofthePPPoption,however,needstobeconsideredbythetimetheprojectisbeingdeveloped,andwillalsodependonthestatusoftheEDHlossreductionprogram.However,thePPPoptioncanonlybepursuediffeasiblefromboththeprivatesectorandGovernmentside(e.g.thefinaltariffneedstobeacceptabletotheprivatesector,butalsobeneficiarytoEDH).

Agreed.TheprojectwillthuspayastrongattentiontodevelopingaregulatoryframeworkunderPPAs.ItisexpectedthatthePPPoptionwillincludepublicinvestmenttobuydownthecostoftheprojectfortheprivatesector,aswellasaguaranteeorotherriskmitigationinstrumentfortheprivatesector.TheexactnatureofthePPAandtheseinstrumentswillneedtobedevelopedduring

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valueofthisfirstREPPPcanberealised.ItisunderstoodthatIFCwillprovideadvisoryservicestoassistinthedesignandexecutionofthefinancingforthiscomponent.

theprojectpreparation.

Agreed.Theprojectwillpaykeenattentiontoensuringreplicability,thusareasonforComponent5.ThePPPDivisionintheMinistryofEconomyandFinancewillalsoprovidefeedbackfromPPPinotherinfrastructuresectors,tofullybenefitfrombestpractices.

REforthePort‐de‐Paixremotegrid

Thisprojectissimilar[Port‐au‐Princeremotegrid]butwilladdresstheopportunitytoexploreprivatesectorengagement,possiblythroughaPPP,onanisolatedgrid.Thesuggestionofasolar/windhybridwouldtestnotonlytheabilityofEDHtoimplementsuchaproject(afterapoorrecordonanearliersmallscalewinddevelopmentinthesamelocation)butagaincouldprovideanopportunityforprivatesectorparticipation,ifnotatanownershiplevel,atleastunderanO&Mcontract.AgainthestructureofthisprojecthasyettobedefinedbutitsreplicabilitywillbeofkeyimportanceifEDHandtheelectricitymarketaretogainrealvaluefromtheSREPintervention.

Agreed.Thisisouranticipationaswell.

Agreed.Andassaidabove,theprojectwillpaykeenattentiontoensuringreplicability,thusareasonforComponent5.

Off‐gridelectricitycomponent

Thiscomponentwillhelpreinforceexistingprogrammesinoff‐gridsituationswhereEDHhasnopresence(norcurrentinterest).ItwillsupportIDAandIFCeffortsandhasthepotentialtoprovidethemostsubstantiveimpactintermsofdeliveringelectricitytothosewhohavelimitedaccesstopowertoday.Offgridactivitiesappeartobebettersupportedbytheprivatesectorandthereseemstobeagoodlevelofsharingofexperienceswithothercountrieswithnascentrenewableoffgridmarkets.IfthissegmentofthemarketcanbewellcatalysedbySREPandothersthenitmaywellhelpaddresssomeofthereluctancetoparticipateingridconnectedactivities.

Agreed.

Agreed.TheprivatesectorinvolvementandinterestduringIPpreparationsstronglysupportsthis.

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Rehabilitationofexistingsmallhydro plants

Whilethebenefitsthatcouldbederivedfromtherehabilitationofexistinghydroplantsandthepotentialdevelopmentofnewfacilitiesarenoted,itisunderstoodthatthiscomponentisheavilydependentonadditionalfunding.WhileitisbeingpromotedunderanSREPumbrella,thiscomponentappearstobeoflowerpriorityandsubjecttofurtheranalysisandfunding.

DuetothelevelofexpertiseinhydropowerengineeringandoperationinHaitiandtheGOHwillingnesstouseoptimallytheSREPresourcetoscale‐upuntappedrenewableenergysources,rehabilitationofsmallhydroplantspriorityhasbeenloweredforSREPfunding.Otherreasonisalsopotentialavailabilityofotherfundsforthistask,includingIDAandNorway(botharebeingexplorednow).Unliketheothercomponents,thiscomponentcanalsobedevelopedinphases,startingwithavailablefundingwhilefundraisingforadditionalfunds.

BuildingenablingenvironmentsforREscale‐up

InreviewingtheIPandtheworkbeingundertakenbyothersitisclearthatthese[technicalassistance]issuespermeatealleffortstosupportthegrowthofenergyinvestmentsinHaiti.Thiscomponentisimportant,butalthoughamodestinvestment,itwillbeimportantthattherebeacarefulbalancebetweeneffortsdirectedintothiscomponentandtheimplementationofprojectsunderothers.Weallrecognisethatthereisno“quickfix”formanyoftheseconcerns;thedeclaredintentoftheIPthatitisseekingtomovequicklytodemonstratesolutionsisimportant.Thecrosscuttingnatureoftheissueshasbeenidentifiedandneedstobeeffectivelymanagedthroughamixofstakeholderstoensureequitableprogresscanbemadewhileavoidingunnecessaryprogrammedelays.TheIPacknowledgesthatthereareaconsiderablenumberofunaddressedhurdlestorenewableimplementation;therearestrategiesandanallocationofresponsibilitiestoparticularagenciestoaddressthese.Withoutpriorengagementwiththeseagenciesitishardtoassesswhetherthesetaskscanreasonablyachievedbytheseentities.Thisprocesswillrequireclosemonitoringasthesuccessin

Agreed.ThusthereasonforincludingaTA/enablingenvironmentaspectundereachcomponent.Althoughinvestmentinthiscomponentismodest,itisexpectedthatitwillbecomplementedbyjointeffortsfromalldonorpartnersandgoodcoordinateddialogueinthesector.

Agreed.DuringIPpreparationsstakeholderinvolvementhasbeenremarkablyhigh.Thisisanticipatedtocontinuethroughimplementationensuringtheavoidanceofunnecessarydelaysduetotheprogramscross‐cuttingnature.

Agreed.ThestrategiesandallocationofresponsibilitiestoparticularagenciestoaddresspotentialhurdlesasoutlinedintheIP

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establishingasoundenablingenvironmentwillbeakeycontrolonthevalueoftheSREPinvestments.Whilecomponent5oftheSREPprogrammenotescloseengagementwithacademicstakeholders,theoversightoftheSREPprogrammemaybenefitfromtheinclusionofprivatesectorrepresentativesonanySteeringCommittee.Engagingtheprivatesectoratthislevelmaybringlongertermbenefitsastheybecomemoreactivelyinvolvedintherenewableenergysector.

wasputforthaftermanyindepthconsultationswiththerespectiveagencies,thuswefeelthesuggestedmitigationapproachisappropriateandviable.

Thanksfortheideas.Weagreeitisworthexploring.

Financingplan/allocationacrosscomponents

Itisunderstoodthatthecommitmentstoco‐financingareatdifferentstagesandthatsomewillonlybeconfirmedoncetheSREPfundsareavailable.Asisoftenthecase,thismaymeanthatbothSREPandco‐financingmaybeconditionalontheconfirmationofmatchingsources.TheassumptionhasbeenmadethattheSREPfundswillbedisbursedthroughtheWorldBankandIFC,asindicatedintheattachedtable.Thiswillinfluenceproceduresforfinalapplications,timinganddeliveryoffundsbut,giventhecurrentactivitiesofbothorganisationsunderexisting(orplanned)programmes,thisshouldhelptheefficienciesarounddisbursementandprogrammemanagement.Inbothcomponents1and3implementationwillbedependentonasubstantialprivatesectorinvestmentandthechallengesaroundsecuringsuchfinancinghasalreadybeenrecognisedinthisreviewandthroughputtheIP.

TheIDAco‐financingisconfirmedasitisfromanalreadyapprovedHaitiInfrastructureRebuildingandAccessProject(PRELEN),activitiesofwhichhasnowbeenre‐prioritizedtofittheSREPprioritizedcomponents.Allindentifiedco‐financingcanbelegallycarriedoutundertheexistingproject.IncasePRELENprojectisrestructuredbasedonthemid‐termreviewresults(June2015),theamountofco‐financingmayevenincrease,inparticularforComponent3.IFCco‐financingisalsoverylikelytomaterializeasitisbasedontheexistingprojectIFCispursuing.

Noted..

Yes,ouractivedialogueduringtheSREPconsultationsprovidedpromisingsignalsonprivatesectorparticipation.

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Keyrisks

TheplanoutlineshowitisanticipatedthatSREPinvestmentsandprogrammesupportwillhelpattractotherdonorandprivatefunding.TheengagementwiththeprivatesectorisrecognisedasasignificantchallengegiventhecurrentfinancialsituationoftheelectricitysectorinHaiti.ItishoweverbelievedthattheIPsetsoutappropriateandreasonablestrategiesastohowthiswillbeattempted.AccesstoenergyinHaitiisverylow.TheworkbeingproposedundertheIP,incollaborationwithotherdonorsactiveinHaiti,isseekingtostarttobuildamorerobustmodeltoaddressthisissue.Thehistoricalaccesstoenergyhasbeenpoorandthishasbeenexacerbatedbythe2010earthquake,althoughthishasprovidedsomemuchneededfocusonacceleratingprogrammestoincreaseaccess.ThetrackrecordofEDHinimplementingpowerdevelopmentshasnotbeenstrong.Therearehoweveranumberofcurrentinitiativesbeingpromotedbythegovernmenttoaddressseriousshortcomings.WithintheMinistryofPublicWorks,TransportationandCommunicationsaspecialisedEnergyCellhasbeenestablishedandistaskedwithmanagingenergyaccessprogrammes.Recentreportssuggestthatinstitutionalcapacityandcapabilitiesarebeingreinforcedandthereisaclearcommitmenttoremoveanumberofobstaclestoprojectimplementation.Privatesectorcapacityisbelievedtobereasonableandthiswillbekeyinbuildingtheoffgridmarket.TherenewableenergysectorinHaitiisclearlyataveryearlystage.TheSREPfundedactivitiesarethereforemorefocusedonestablishingastrongandsustainablebasisforfuturegrowth;theremaybelimitedprivatesectorengagementinitiallybutthemarketstrengthisgrowingandappropriatelegalandregulatorychangesandenhancementoftheenablingenvironmentshouldhelpensurefuturegrowthinthesector.

Thanks.Weemphasizeagainherethenecessaryconditionsthathavetobeinplace(progressintheimplementationofEDHlossreductionplan)toallowengagementwiththeprivatesectoronon‐gridRE.

Agreed.Inaddition,GOHclearlymadethelinkbetweenitsvowtobeanemergingnationandtheimplicationintermsofaccelerationoftheenergyaccessagenda.

Sincethedevelopmentprogramoftheexistinghydropowerplants,EDHhasnotbeenbuildingnewgenerationcapacity,whichwasleftuptotheIPPs.However,EDHactiveroleintheSREPtaskforceawokewillingnesstobeproactiveonsectorplanningandtrainingonnewtechnologies.

CapacitybuildingwillbeanessentialcomponentoftheSREPprogram,andwillbenefitallkeygovernmentalandnon‐governmentalstakeholders.

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TheprojectimplementationcapacitywithinTheMinistryofPublicWorks,TransportationandCommunicationsandEDHisofconcernparticularlyasthereareanumberofparallelenergyprogrammesunderway.DiscussionwiththeSREPteamsuggestthatthereareanumberofmajoreffortsunderwaytohelpstrengthentheseorganisationsandthecalibreofstaffishighandthereisagoodlevelofengagementamongstthem.TheattractionoftheprivatesectorintolargergridconnectedprojectsisrecognisedaschallengingbutpartoftheSREPprogrammeistotestthepracticalityofPPPprojectsandthisexperiencecanonlybeofvalueindeterminingthebestmodelsforfutureexpansionoftheenergysector.

ThecapacityhasalreadybeenstrengthenedunderthePRELENproject,withanintroductionandstrategicstaffingoftheEnergyCell,andthisprocesswillcontinueinthefuture—supportedbothbyIDAandSREP.

Agreed.ThatiswhySREPsupportissought—toestablishaviablemodelthatcouldbereplicatedalsoforfuturetransactions.

 

ANNEXIXMDBREQUESTFOR

PAYMENTOFIMPLEMENTATIONSERVICESCOSTS

174

SCALING UP RENEWABLE ENERGY PROGRAM IN LOW‐INCOME COUNTRIES 

MDB Request for Payment of Implementation Services Costs 1.  Country/Region: Haiti/Latin America and 

the Caribbean

2. CIF Project ID#: (Trustee will assign ID)

3.  Project Title: Renewable Energy for the Metropolitan Area 

4.  Request for project funding (USD millions:

At time of country program submission

(tentative): Grant of US$8‐10 million At time of project approval: n/a

5.  Estimated costs for MDB project implementation services (USDmill.):

Initial estimate ‐ at time of Country

program submission: US$428,000  Final estimate ‐ at time of project approval:

MDB: IBRD

Date: April 2015

6.  Request for payment of MDB Implementation Services Costs (USD.mill.):

  First tranche: US$128,000 

Second tranche: n/a

7.  Project/program financing category:

a ‐ Investment financing ‐ additional to ongoing MDB project 

b‐ Investment financing ‐ blended with proposed MDB project 

c ‐ Investment financing ‐ stand‐alone 

d ‐ Capacity building ‐ stand alone 

8.  Expected project duration (no. of years):

5 years

9.  Explanation  of  final  estimate  of MDB  costs  for  implementation services:

If final estimate in 5 above exceeds the relevant benchmark range, explain the exceptional circumstances and reasons: n/a

10. Justification for proposed stand‐alone financing in cases of above 6 c or d: n/a

 

 

 

 

 

 

175

 

SCALING UP RENEWABLE ENERGY PROGRAM IN LOW‐INCOME COUNTRIES 

MDB Request for Payment of Implementation Services Costs 1.  Country/Region: Haiti/Latin America and 

the Caribbean

2. CIF Project ID#: (Trustee will assign ID)

3.  Project Title: Renewable Energy and Access for All

4.  Request for project funding (USD millions:

At time of country program submission

(tentative): Grant of US$11‐14 million At time of project approval: n/a

5.  Estimated costs for MDB project implementation services (USDmill.):

Initial estimate ‐ at time of Country

program submission: US$428,000  Final estimate ‐ at time of project approval:

MDB: IBRD

Date: April 2015

6.  Request for payment of MDB Implementation Services Costs (USD.mill.):

  First tranche: US$128,000 

Second tranche: n/a

7.  Project/program financing category:

a ‐ Investment financing ‐ additional to ongoing MDB project 

b‐ Investment financing ‐ blended with proposed MDB project 

c ‐ Investment financing ‐ stand‐alone 

d ‐ Capacity building ‐ stand alone 

8.  Expected project duration (no. of years):

6 years

9.  Explanation  of  final  estimate  of MDB  costs  for  implementation services:

If final estimate in 5 above exceeds the relevant benchmark range, explain the exceptional circumstances and reasons: n/a

10. Justification for proposed stand‐alone financing in cases of above 6 c or d: n/a

176

SCALING UP RENEWABLE ENERGY PROGRAM IN LOW‐INCOME COUNTRIES 

MDB Request for Payment of Implementation Services Costs 1.  Country/Region: Haiti/Latin America and 

the Caribbean

2. CIF Project ID#: (Trustee will assign ID)

3.  Project Title: Off‐grid Electricity Services for Productive, Social and Household Uses Project 

4.  Request for project funding (USD millions:

At time of country program submission

(tentative): Grant of US$7‐9 million At time of project approval: n/a

5.  Estimated costs for MDB project implementation services (USDmill.):

Initial estimate ‐ at time of Country

program submission: US$440,000  Final estimate ‐ at time of project approval: n/a

MDB: IFC

Date: April 2015

6.  Request for payment of MDB Implementation Services Costs (USD.mill.):

  First tranche: zero (the full amount of US$440,000 will be requested at the time of SREP Sub‐Committee approval of the IFC Program proposal) 

7.  Project/program financing category:

a ‐ Investment financing ‐ additional to ongoing MDB project  b‐ Investment financing ‐ blended with proposed MDB project  c ‐ Investment financing ‐ stand‐alone 

d ‐ Capacity building ‐ stand alone 

8.  Expected project duration (no. of years):

5‐10 years

9.  Explanation  of  final  estimate  of MDB  costs  for  implementation services:

If final estimate in 5 above exceeds the relevant benchmark range, explain the exceptional circumstances and reasons: n/a

10. Justification for proposed stand‐alone financing in cases of above 6 c or d: n/a

 

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Worldwatch. 2014. Haiti Sustainable Energy Roadmap: Harnessing Domestic Energy Resources to Build a Reliable, Affordable, and Climate-Compatible Electricity System http://www.worldwatch.org/system/files/Haiti-Roadmap-English.pdf

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Coveranddividerphotocredits:UNEP–MarcSteedandiiDevelopment–KilianReiche 1HaitiCensus,20032FonkozeSocialImpactReport,20123HaitianInstituteofStatisticsandInformatics(IHSI)4WorldBank,20145WorldBank.LACCountryData,20136DecreeofFebruary1,2006,articles114–1157MoreprecisedemandgrowthprojectionsarebeingdevelopedunderthenewElectricityMasterPlan.8BankoftheRepublicofHaiti9UNEP,2013.HaitiEmissionsReductionProfile10Since2007,theBolivar–Pétion–MartíConvention(Venezuela–Haiti–Cuba)confirmedtheparticipationoftheVenezuelanInternationalBrigadeinwhatisdefinedas“integraldevelopment”:cooperationfortransformingthestructuralproblemsofHaiti.Thatsameyear,theTripartiteIntergovernmentalCooperationOfficeHaiti–Cuba–VenezuelawasinstalledinPort‐au‐Prince.Plansincludecooperationinhealth,education,agriculture,andfairtrade,aswellasthree“grannacional”projectsonenergyresources.11EDH,March201512EDHCIAT13ForEDH,“active”describescustomersconnectedlegallyandregularlypayingbills.Thetotalwithelectricityaccess(including“irregular”users)isnearlyhalfaslargeagain,estimatedatmorethan350,000.14PrivateSectorAssessmentofHaiti,IDB,201415WorldBankestimates,201516Navigant,201517BanqueNationaledeCrédit,BanquePopulaireHaitienne,Banquedel’UnionHaitienneS.A.,CapitalBankS.A.,CitibankN.A.Haiti,TheBankofNovaScotia,SociétéGénéraleHaitiennedeBanqueS.A.andUnibankS.A.18HaitianMicrofinanceIndustryMarketAnalysis,200819PresidentialandlegislativeelectionsstartedinNovember2010andendedinMay2011,withtheswearing‐inofPresidentMichelJosephMartelly.Hewasthefirstoppositioncandidateinthecountry’shistorytoaccedetothepostinademocratictransition.20EtatdedroitistheFrenchfor“ruleoflaw.”21TheWordBankECVMAS2012surveyandtheDigicel/iiDevelopment2014survey(adepartment‐stratifiedsurveyof1,400cellphoneuserscarriedoutintheframeworkofpreparingtheSREPInvestmentPlan)suggestafarhigheraccessratein2014(approaching50%),especiallyifillegalconnectionsandsolarhomesystemsarefullyaccountedfor.ECVMASestimateditat35%in2012,andDigicel/iiDevelopmentfoundevidence(dependingondefinition)inDecember2014ofaround45%,afteraccountingfortheinherentphonesurveybias.However,bothofthesewerenotprimarilygearedtowardmeasuringgridaccessrates,sotheyonlyprovideroughindicationsofnationalaccessgrowth.TheSREPbaselinesurveys(Chapter10)willestablishmoreexactfigures.22ECVMAS2012andDigicel/iiDevelopment201423BasedontheDigicel/iiDevelopmentphonesurveyof1,400urbanandruralhouseholds24Digicel/iiDevelopmentSurvey,201425SalesreportedbyHaiti’ssolarlanterndistributors26WorldBank:CreatingOpportunitiesforPovertyReductioninHaiti,201527The energy survey has been used to determine the distribution of “current substitutable energyexpenditures” ‐ that is,currenthouseholdspendingon(i)electricityand(ii) fuelsandenergyservices thatwould be substituted by electricity, such as cell phone charging or candles. These current substitutableenergyexpendituresarethemostcommonestimateforminimum(sic)willingnesstopay(WTP)forthe“fuelswitch”optionsintroducedbyelectrificationprojects.MoresophisticatedmethodsfordemandanalysishavebeenappliedinadditionandareprovidedinaseparateAppendix.28WorldBank:CreatingOpportunitiesforPovertyReductioninHaiti,201529Fonkozewasfoundedin1994–95.ItsnameisanacronymfortheHaitianCreolephrase“FondasyonKoleZepòl”meaning“Shoulder‐to‐ShoulderFoundation.”In2012,Fonkoze's“SolidWomen”videowonaDo‐

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GooderawardforitsstoryoffiveHaitianwomenwhousedFonkozemicroloanstohelprebuildtheircommunityafterthe2010earthquake.https://www.youtube.com/watch?v=tq8uSiP6_lQ.30WorldBankesitmates,201531Worldwatch,201432ExceptapilotprojectlaunchedinPort‐de‐Paixin1978withsupportofGermanDevelopmentCooperation.Itstoppedrunningin1991duetolackofmaintenanceandofoperationalskillsbylocalEDHstaff.SeeProjectBrief2.33http://www.indexmundi.com/energy.aspx?country=ht&product=hydro&graph=production34EDH,1977andSoleo,201235EDH,1977andSoleo,201236UNEP,2006.Report:BackgroundDataCollectiononBio‐energyintheCaribbeanandCentralAmerica37WinrockInternational,2008.Presentation:DiversifyingtheEnergyMatrix:TheRole&OpportunitiesforBiofuels38AccordingtoastudybyBelgianCompany3Ein2010.PotentialwasestimatedforthreesitesinHaiti:CapHaïtien,Jacmel,andLacAzueï(EtudedeventdanstroissitesenRepubliqued’Haiti.E3,2010).39<http://www.bme.gouv.ht/Carte%20des%20vents/PR_PR101252_Final_report_part2_PotentielDeProduction_final.pdf>40http://irena.masdar.ac.ae/41Worldwatch(2014)listsotherpotentialsites42Thelocationofthe150kWwindfarmpilotproject.43Commercialandindustrialuserspartlyorfullyself‐supplyinggivengridunreliability,andwishingtocomplementcurrentexpensivedieselgenerationwithPVasacogeneration“fuelsaver.”44Nexant.2010.Report:CaribbeanRegionalElectricityGeneration,Interconnection,andFuelsSupplyStrategy45GIZ2013&2014a,IEA2014,RMI201446WEC201448GIZ/ESMAP201449SimilarbenefitsareillustratedforthecaseofBrazil,GermanyandItalyinGIZ(2014b)50TheresultsofthisstudyareavailableinseparatebackgrounddocumentsonDigicel/iiDevelopment2014energysurveyanalysiswith1,400respondents,includingdetailedanalysisofthecosts(cash‐flowanalysis)andbenefits(consumersurplus).51TiersaredefinedintheMulti‐tierFrameworkintroducedintheWorldBank/SE4ALLGlobalTrackingFramework(2013)andupdatedinthe2015edition.53BasedonReiche,Rysankova,Fraatz201554Forexample,preliminarywindspeedestimatessuggestthata10MWpwindgeneratoratLacAzueïorabiomasscogenerationIPPinPort‐au‐Princewouldhavelowerhigherreturnsthana10MWpPVplant.55Forexample,aninvestorinasolarfuel‐saverschemewouldpriceinlessoff‐takeriskthanasolarIPP.56Withoutputheldconstant,forcomparability.57Forinstance,oncethebestwindorhydrositeshavebeencommissioned,costsperMWhforadditionalcapacitywillrise,whilecapexperMWhstaysstableforPVforapracticallyunlimitedcumulativecapacity.58Forexample,averagefuelsavingsperMWhinjectedvariablerenewablesfromwindandPVusuallyincreasefrom0%capacitysharetoacertainplateau(GIZ2013and2014)andthenstartfallingbeyondacountry‐specifictippingpoint.59Forexample,windcapexremainedlargelystableoverthelastfewyears,whilesolarcapexkeptfallingfast.60Consultantsandexpertswereaskedtoprepareindependentscoresbecausescorecardsinherentlyhaveasubjectiveelementduetothe(implicitorexplicit)needtoweighteachsubsidyperformanceindicatorforatotalscore(Teplitzetal.2009).61ItmapsREresourcestovillagesandinfrastructure,similartothecurrentREmappingeffortsofESMAPandIRENA.62RatherthanincludingaTAorcapacity‐buildingcomponentineachproject.Thiswouldbemoreusual,butcouldfragmenteffortsandleadtoinconsistencies.63AnoverviewoftheSE4ALLMulti‐tierFrameworkisathttp://www‐wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/05/24/000445729_20130524104654/Rendered/PDF/778890v20GTF0o0Official0Use0Only090.pdf

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64TheTaskForceconsistsoftheMinistryofEnvironment,MinistryofEconomyandFinance,MinistryofAgriculture,NaturalResourcesandRuralDevelopment,MinistryofPlanningandExternalCooperation,EDH,CIAT,andBME.65ThetypeofRAPwilldependonthenumberofpersonsaffectedbyresettlementeffectsexperiencedasaresultoftheproject.66FromGaptoOpportunity:BusinessModelsforScalingUpEnergyAccess,IFC,2012/DevelopingEffectiveNetworksforEnergyAccess,USAID,2013/StimulatingqualityinvestmentinSE4ALL,IIED,2013/Public‐PrivateRoundtablesattheFourthCleanEnergyMinisterial,CEM,2013/IFC‐WorldBankLondonInvestor’sConferenceonPrivateSectorLedOff‐GridElectrification:ExecutiveSummary,TheWorldBankGroup,201367InternationalMonetaryFund:“Haiti:EighthReviewUndertheExtendedCreditFacilityandRequestforWaiverofNonobservanceofPerformanceCriterion‐StaffReport;PressRelease;andStatementbytheExecutiveDirectorforHaiti”,CountryReportNo.15/3,Washington,DC,2004.68InternationalMonetaryFund.2014c.“Haiti:ExPostAssessmentofLonger‐TermProgramEngagement”,CountryReportNo.15/4,WashingtonDC.67Thefinalcapacitydependsontechnology(mix),finaldealstructuresandresultofongoingwindstudies.Thetechnologymix,inturn,willdependonfinalgridabsorptionstudiesandin‐depthvREvaluecalculationbysubstation,whichwillbefinalizedatprojectstart.68iiDevelopment201569Since2007,theBolivar–Pétion–MartíConvention(Venezuela–Haiti–Cuba)confirmedtheparticipationoftheVenezuelanInternationalBrigadeinwhatisdefinedas“integraldevelopment”:cooperationfortransformingthestructuralproblemsofHaiti.Thatsameyear,theTripartiteIntergovernmentalCooperationOfficeHaiti–Cuba–VenezuelawasinstalledinPort‐au‐Prince.Specificplansincludecooperationinhealth,education,agriculture,andfairtrade,aswellasthree“grannacional”projectsrelatedtoenergyresources.70EDH1997,Soleo2012,Worldwatch201471AsdescribedinGIZ2014bforPVmarketsinBrazil,Germany,andItaly.