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Challenge

Over 1.2 billion people¡ªjust under 20 percent of the world¡¯s population¡ªare without access to electricity, most of them concentrated in about a dozen countries in Africa and Asia. Another 2.8 billion rely on wood, charcoal, dung and coal for cooking and heating, which results in over four million premature deaths a year due to indoor air pollution. Shortages in power supplies, and their unreliable and poor quality, due to underinvestment, are also major challenges facing developing countries. Electricity access must be reliable as well as environmentally and socially sustainable. Ensuring these depends on business models robust enough to mobilize financing, as well as policy and institutional frameworks that ensure that electricity access projects are both economically viable and sustainable from a climate perspective.   

Solution

The Bank Group supports development of energy systems based on least-cost options with an emphasis on renewable sources, such as hydropower, wind, solar and geothermal, while also promoting energy efficiency. Projects support achievement of universal access to electricity and modern household fuels, as well as improved utility performance and sector governance. The Bank Group also provides financing and advice to countries on oil and natural gas extraction, production, processing, transmission and distribution.

Representative projects include support for grid expansion in India, rural electrification in Ethiopia, hydropower projects in Senegal and Cameroon, increased geothermal capacity in Kenya and Indonesia, off-grid solar home systems in Bangladesh and Mongolia, and support for off-grid lighting solutions in Africa.

Results

During 2000-13, the Bank supported projects for the construction and rehabilitation of about 98,362 kilometers of transmission and distribution lines and about 13,499 megawatts of generation capacity to improve access to reliable energy.  Bank-supported programs have provided some 42 million people with new access to electricity, 17.5 million with direct access (roughly equivalent to the population of Cameroon) and 24.4 million (roughly equivalent to the population of Ghana) through inferred access (access assumed to have been created through the addition of new generation capacity).

Some examples of results achieved with IDA and IBRD-financed projects are as follows:

To extend power to India¡¯s nearly 400 million people currently without electricity requires a massive expansion of transmission capacity. World Bank financing has helped India expand transmission across the country¡¯s regions by 52 billion kilowatt-hours. It has also supported a five-year program from 2008-12, led by India¡¯s Power Grid Corporation to increase its circuit by 40,000 km to reach 100,000 km, raising inter-regional electric power transfer capacity from 21 to 37 gigawatts. A $1.0 billion IBRD-financed project has supported expansion of five regional transmission systems, to enable transfer of power from energy-surplus regions to towns and villages in under-served regions. This expansion has helped to integrate the national grid, resulting in a more reliable system and reduced transmission losses.

With rising energy demand, reliance on imported fuel exposed Turkey to vulnerabilities by increasing the current account deficit as well as environmental consequences. As a result, the government developed a policy framework for attracting investments in the energy sector.  As of August 2012, the Private Sector Renewable Energy and Energy Efficiency Project had supported construction of 969 megawatts of renewable energy and financed 20 energy-efficiency projects - resulting in energy savings of 1,840 tera calories (TCal) or about 1 percent of electricity consumption in Turkey in 2009. Within this portfolio, the Clean Technology Fund (CTF) financing had supported development of nine small hydroelectric power plants, as well as six wind, one geothermal, and 20 energy efficiency projects. The investments supported under the project are expected to contribute to greenhouse gas emissions reduction of 3.3 million tons per annum over the life of the project. Going forward, the World Bank Group (WBG) is preparing an energy-efficiency project aimed at promoting commercial bank lending to small and medium enterprises (SMEs) for energy-efficiency investments.

Mexico has achieved an energy efficiency milestone by distributing almost 23 million energy-saving light bulbs for free. The national program, partially financed by $185 million from the Global Environment Fund, established over 1,100 exchange points in 2011-12 at which customers replaced their incandescent bulbs with compact fluorescent lamps (CFLs).  In total, more than 5.5 million Mexican families now use energy-saving lamps that consume only 20 percent of the energy and last 10 times longer than a traditional light bulb. The first stage of the program, partially financed by the World Bank, resulted in savings of 1,400 gigawatt hours (Gwh). The program also enables families to save up to 18 percent of their electric bill.  When the second stage ends in 2014, it is estimated that the saving will be of 2,800 Gwh per year, preventing about 1.4 million tons of CO₂ emissions.

In 2002, only 7,000 Bangladeshi households were using solar panels. Today, more than 1.4 million low-income rural households in Bangladesh have electricity¡ªdelivered by solar photovoltaic (PV) panels. Installations of the panels under the IDA-supported Rural Electrification and Renewable Energy Development Project have doubled since 2010 to 40,000 a month. A $130 million IDA credit in 2009 and another for $172 million in 2011 followed earlier IDA financing that launched the project in 2002. 

Competitively priced solar PV panels and a well-designed financing scheme have combined to deliver life-changing¡ªand zero-carbon¡ªelectricity to rural families on a scale that was inconceivable only a few years ago. Under the program, non-governmental (NGO) partner organizations install the systems in households following standards, with the households paying 10-15 percent down with the rest financed by a microcredit loan.  Funds from IDA, among others, re-finance part of the microcredit extended to the households. 

In addition to IDA support, the solar home systems program in Bangladesh has received financing from the World Bank-managed Carbon Finance Unit, the Global Partnership on Output-Based Aid, and several other donors including the Asian Development Bank, and the German agencies KfW and GIZ. The program has delivered off-grid solar power to 2.8 million households since 2002 - contributing to a 9% increase in access to electricity in Bangladesh, while also promoting mini-grids for rural consumers. Currently, over 50,000 households are buying the systems every month.  In addition to delivering power to un-served communities, the program is helping to reduce carbon emissions from avoided use of kerosene and diesel for lighting. The solar electrification industry and its supply chain in Bangladesh have also helped create, directly and indirectly, about 50,000 jobs. Going forward, the program aims to reach 6 million homes or provide 20% of the population access to electricity through solar home systems.

In Ethiopia three IDA credits totaling $440 million helped expand electricity to community services in about 4,300 towns and villages, benefiting over 30 million people by powering streetlights, local flour mills, water pumping and irrigation installations, telecommunications, businesses, schools and clinics in five years.  The Electricity Network Reinforcement and Expansion Project, approved by the World Bank in May 2012, extends this work by upgrading and extending the grid in order to improve the overall service delivery of the Ethiopian electricity network. The last project is expected to benefit 385,000 people. 

About 500,000 people in Mongolia have gained access to solar power through a program launched in 2006 by the Mongolian government with support from the World Bank and the Government of the Netherlands. Thanks to the National 100,000 Solar Ger (Yurt) Electrification Program, 70 percent of Mongolia¡¯s herders now have access to modern electricity.

Bank Group Contribution

Since 2008, the Bank Group has provided $48.6 billion for energy projects, with $24 billion from IBRD, and $11.4 billion from IDA. Of the total Bank Group financing, $12.4 billion¡ª25.6 percent¡ªwas for renewable energy projects and programs, reflecting the determination of many countries to seek lower-carbon energy solutions. Energy efficiency, and transmission and distribution accounted for nearly one-third of energy financing. About 16 percent of the portfolio since 2008 is devoted to fossil fuel projects. 

Partners

The , co-chaired by UN-Secretary-General Ban Ki-moon, and World Bank Group President Jim Yong Kim, is a global coalition of governments, private sector, civil society and international organizations that aims to achieve three goals by 2030: 1) Universal access to electricity and modern cooking solutions, 2) Double the rate of improvement in energy efficiency, reducing the compound annual growth rate of energy intensity to -2.6%.3) Doubling the amount of renewable energy in the global energy mix from its current share of 18% to 36% and  Since 2012, some 80 partner countries from the developing world have signaled their commitment to SE4ALL.

Existing investments in energy totaling about $409 billion a year need to be increased by an additional $600-800 billion every year till 2030 to achieve the above goals. Specifically, that is $45 billion more for electricity expansion, $4.4 billion more for cooking solutions, $394 billion for energy efficiency, and $174 billion for renewable energy. These estimates are in a Global Tracking Framework for the Sustainable Energy for All Initiative, produced in 2013 by a team of experts from 15 agencies co-led by the World Bank Group and the International Energy Agency In addition to its leadership role in the corporate governance of the initiative, and the on-going US$7 billion annual lending program, the WBG is contributing to the three overall objectives through a number of additional initiatives:

• (ESMAP) is a global knowledge and technical assistance program administered by the World Bank. ESMAP provides analytical and advisory services to low- and middle-income countries to increase their know-how and institutional capacity to achieve environmentally sustainable energy solutions for poverty reduction and economic growth. ESMAP is funded by Australia, Austria, Denmark, Finland, France, Germany, Iceland, Lithuania, the Netherlands, Norway, Sweden, and the United Kingdom, as well as the World Bank. The WBG in partnership with ESMAP will provide SE4ALL Technical Assistance for the preparation of Investment Prospectuses in 10 of the 80 SE4ALL partner countries to identify critical energy projects and help to facilitate the associated financing. ESMAP will also support the Global Geothermal Development Plan, Renewable Energy Mapping program and Energy Efficient Cities Initiative
• ľ¹ÏÓ°Ôº-led (GGFR) initiative is a public-private partnership that brings together representatives from major oil-producing countries and companies. The GGFR aims to minimize the flaring of natural gas associated with oil production by fostering critical collaboration between governments and industry so together they can address policy challenges and specific project implementation.  These efforts are starting to pay off. Since 2005, flaring of gas has dropped worldwide by almost 20 percent, preventing over 270 million tons of CO₂ emissions, equivalent roughly to taking some 52 million cars off the road. GGFR will step up flaring reduction efforts over next four years to improve the efficiency of the energy supply industry.
• is a joint IFC and World Bank program that works towards improving access to better lighting in areas not yet connected to the electricity grid. Lighting Africa catalyzes and accelerates the development of sustainable markets for affordable, modern off-grid lighting solutions for low-income households and micro-enterprises across the continent. Lighting Asia and Global LEAP (Lighting and Energy Access Partnership) will build on Lighting Africa success in providing solar lanterns as a first step toward access.

Moving Forward

The 2013 Energy Sector Directions Paper articulates the Bank¡¯s strategic priority for the energy sector as providing the affordable, reliable and sustainable energy needed to end poverty and boost shared prosperity. The Bank¡¯s engagement in energy is guided by five key principles: 1) to ground our client country engagement in a holistic ¨C long term system wide ¨C view of power sector requirements; 2) to work towards improvements in the financial, operational and institutional environment in the sector; 3) to seek market solution and foster private sector investment; 4) to embrace a multi-stakeholder inclusive approach to energy projects; 5) to tailor interventions to individual country circumstances.

ľ¹ÏÓ°Ôº continues to share leadership with the UN of the Sustainable Energy for All initiative to achieve the three SE4All goals. The levers in achieving this target would be partnership with The Energy Sector Management Assistance Program, Global LEAP and the Global Gas Flaring Reduction Partnership.