roadmap to universal energy access: the ofid view€¦ · 17-04-2018 · uniting against poverty...

Uniting against Poverty

Roadmap to Universal Energy Access: The OFID View Fuad M. F. Siala (On behalf of Mr. Suleiman Jasir Al-Herbish, OFID Director General) Nigeria Energy Forum 2018 Lagos, Nigeria April 17-18, 2018

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Uniting against Poverty Uniting against Poverty

Established in 1976 by OPEC Member Countries

The Vision: To aspire to a world where sustainable development centered on human capacity-building is a reality for all.

The Mission: To foster South-South partnership with fellow developing countries worldwide with the aim of eradicating poverty.

134 developing country partners

Committed more than US$21 billion for around 3600 projects in all fields

OFID….. “Uniting Against Poverty”

2


Alleviation of energy poverty is a central theme in OFID’s work.

November 2007: Declaration of the 3rd

OPEC Summit

June 2008 Workshop in Abuja

June 2012: Ministerial Declaration on Energy Poverty

Since 2008, total energy approvals reached $US 3.6 billion (including rollover)

This represents 26% of all operations for the period

Pioneer in Fighting Energy Poverty

3 enter footnote

Cumulative Approvals

- 2,000 4,000 6,000 8,000 10,000 12,000 14,000

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

58

372

697

928

1,358

1,857

2,306

2,519

2,964

3,428

3,564

Cumulative Investments $US, million

Energy

Other

Source: OFID Database


Energy is a prerequisite to prosperity

4

Energy poverty footprint

2.00

2.50

3.00

3.50

4.00

4.50

3.00 3.50 4.00 4.50 5.00Lo

g (E

ner

gy u

se, k

g o

il eq

. per

cap

ita)

Log (GNI per capita (const. 2010 US$))

Energy consumption directly proportional to income

Sub-Saharan Africa

Nigeria World

-

17

17 588

239

200

780

783

57

11

561

307

Source: IEA 2017 Database Source: World Bank Open Data


In Sept. 2015, the 2030 Agenda with its SDGs became the global development framework

OFID and others efforts were successful and central in including energy as SDG7

Universal Access to affordable, reliable and modern energy services first target under SDG 7

Recognition that human development and energy use go hand in hand

2030 Agenda

5


Understanding Energy Poverty

6

Vast demand for electricity in both urban and rural areas.

But lack of access to electricity is primarily a rural problem.

In sub-Saharan Africa the rural electrification rate is only 22% vs. 71% in urban areas.

0%

20%

40%

60%

80%

100%

0% 20% 40% 60% 80% 100%

Pop

ula

tio

n w

ith

no

ele

ctri

city

(% o

f to

tal

po

pu

lati

on

)

Rural population (% of total population)

Source: IEA 2017 Database


Energy is linked to all sectors of the economy, and access to energy across all sectors for productive uses is necessary.

Improving energy access should go beyond “basic access”, focusing only on providing the minimum energy.

Beyond basic access

7

0

3,000

6,000

9,000

12,000

15,000

18,000

0% 20% 40% 60% 80% 100%

Elec

tric

ity

con

sum

pti

on

, kW

hr/

cap

.

Electrification rate

Source: World Bank Open Data/IIEA 2017 Data


Electricity consumption

8

Vast differences between developed and developing countries.

60% of world population at less than world average.

Full electrification does not mean necessarily adequate electrification

-

10,000

20,000

30,000

40,000

50,000

60,000

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00

Elec

tric

ity

con

sum

pti

on

, kW

h p

er c

apit

a

Commulative population, billion

Iceland

USA

China Nigeria

World average:

3,125 kWh/cap.

Mauritius: Electrification

rate: 100% Consumption:

2,183 kWh/cap.

Source: World Bank Open Data


Distributed systems will need to play major role in alleviating energy poverty in rural settings and locations.

Use mini-grids whenever costs are lower than grid extension and stand-alone systems

Potential to provide more than 40% of new capacity required to achieve universal electricity access, by 2030

Much work needs to be done Structural barriers in governance, finance and

business models are constricting a large scale mini-grid market

Tailoring the Solution

9


Guiding Principles

10

Access to affordable and reliable modern energy services is a prerequisite to sustainable development.

The aim is to alleviate energy poverty – universal energy access.

The approach should be pragmatic, based on the technology-neutral principle.

Projects should target productive uses of energy and be income generating.

Projects should target inclusive development and promote local ownership.

Universal energy access requires all sources of funding, and private sector must play a significant role.

Respects choices of beneficiary countries and respond to their wishes based on their own priorities.

Sustainable development

Universal Access

Technology Neutral

Productive Use

Local Ownership

Private Sector

Country Choices


Very little investment in clean cooking solutions

Very low investment in distributed generation

Despite improvement over the years, still a large gap to close

Investment flows

11

9

19.4

0

5

10

15

20

25

30

35

40

45

50

2012 Average 2013, 2014B

illio

n d

olla

rs/y

ear Required

investment

Actualinvestment

45 45

10.1

4

3.6

1.6 0.2 0.1 0.1

0

4

8

12

16

20

Average 2013, 2014

Bill

ion

do

llars

/yea

r

Nuclear

Mini-grids

Off-grid

Market support

Transmission & distribution

Grid-connected fossil fuels

Grid-connected renewables

Clean cooking

0.1 0

1

2

3

4

5

2012

Bill

ion

do

llars

/yea

r

Required

Actual investment

4.4

Electricity access

By type of assets

Grid extension is the dominant model. considered a precondition for development

Requests to finance large centralized power plants and grid extension schemes dominate; requests, either from governments or from private sector for distributed solutions projects rare.

Source: SEforALL Source: SEforALL Source: SEforALL


Respond to the demand from beneficiary countries

However, achieving universal access to modern energy services needs to be higher on the development agendas of countries

Structural barriers constrain more investment in energy access, including:

enhancing local and regional capital markets,

developing appropriate policy frameworks and

strengthening human capacity to develop project pipeline

Finance is necessary…but not sufficient

12


Energy, water & food are linked

13

They are interdependent and entwined.

By 2030 we will need 30% more water, 40% more energy and 50% more food

The entwining will become even more manifest

Water

Food Energy

Energy needed to produce Food

Food can be used to produce Energy

In “silo approach”, risks and uncertainties arise if policies and interventions made without cross-sectoral coordination.

Nexus planning focuses on interdependence and potential consequences of one sector on another.

An EWF nexus approach can identify potential policy trade-offs that will need consideration to satisfy future demand in ways that are technologically appropriate, economically responsible, environmentally justifiable, politically acceptable, and socio-culturally defendable.


OFID 2016-2025 Corporate Plan

14 enter footnote

Theme: Food-Energy-Water Nexus

70% of activities dedicated to the 3 critical

sectors: Energy, Water and Agriculture; transportation enabling sector.

Adopting a nexus perspective in development intervention lies with development planners in our partner countries.

17 %

20 %

14 %

49 %

xxx

xxx

Energy

Agriculture

Transport

Water

xxx


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@OFIDnews

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enter footnote 15


Annex – OFID Examples


Promoting Access to Modern Energy through Mini-Grids in Africa and Asia

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Supporting Mini-grids:

In 2015, OFID signed an agreement with the Alliance for Rural Electrification (ARE).

To supporting accelerated deployment of mini-grids in Bangladesh, India, Mali and Mozambique.

Links to Guiding Principles:

promoting the productive use of mini-grids.

encouraging the private sector involvement in the mini-grids market.

hybrid mini-grids to minimize LCoE

Country Location Project owner

Project technical characteristics

Bangladesh

Muradpur Island

Rahimafrooz Renewable Energy Ltd

hybrid mini-grid; 80 KWp PV and 40 KW diesel

India Bankai, Sikoh, Larba, Jikirma and Dumardih

Association Mlinda

5 hybrid mini-grids; each 10 KWp PV and 7.5 KW diesel

Mali Blendio ACCESS S.A.R.L.

hybrid mini-grid; 32 KWp PV and 68 KW diesel

Mozambique

Titimane Energias de Portugal, S.A.

hybrid mini-grid; 100 KWp PV and 60 KW biomass


Support to investments in energy technologies in agrifood

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The OFID-REEEP Revolving Pool

Returnable grant to bring solar irrigation to smallholder farmers in Kenya

Deploy 825 solar irrigation pumps on small farms and test three alternate microfinance products

Private sector investment to unlock scale, potentially reaching 20,000 smallholder farmers

Returnable grant to install two pilot “pay-as-you-go” solar farms for renting to the agro-food sector in Tanzania

Develop a fully operational food processing-focused marketing and sales channel and

Demonstrating use of food-processing plants as mini-grid anchor

Attract sufficient private sector investment to finance the scale-up of the service, potentially to 5.2 megawatt peak

Biogas-based Nexus Projects

Provide 500 small-scale farmers in Tanzania and Kenya— each with 5–20 dairy cows—with an affordable and durable milk chilling solution; by-product solid waste is as fertilizer

Sanitation and Sewage Treatment for Boarding Schools: To demonstrate an affordable biogas system

OFID subsidized installation n 28 schools to benefit 14,000 school children and staff. Biogas is collected and used for cooking in the school kitchens. By-product solid waste is sold as fertilizer to generate income streams A proven concept for upscaling to a further 1,000 schools in Kenya and 500 in Tanzania


Distributed solutions must go beyond relying on grant money for finance.

Governments do not prioritize distributed solutions and it is often difficult to prove the business case for the private sector participation.

Clarity and stability of political priorities – Example:

A PV/biomass hybrid mini-grid had to be cancelled in Mozambique when Government denied license to SPV

Assurance that distributed energy systems schemes will not be superseded by grid extension – Example:

5 mini-grids had to be cancelled in India

Involvement of the end-user, development of local technical capacities and ability to pay

Tariffs must be accepted by all parties

Subsidies can be effective, but need to be smart

A good understanding of demand and demand analysis is a pre-requisite for designing sustainable systems that are financially/economically viable and helps reduce dependence on subsidies

Lessons learned

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roadmap to universal energy access: the ofid view€¦ · 17-04-2018 · uniting against poverty...

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