1 Designing Credit Lines for Energy Efficiency 2014/11 88185 A KNOWLEDGE NOTE SERIES FOR THE ENERGY PRACTICE THE BOTTOM LINE Designing Credit Lines for Energy Efficiency Attractive opportunities to invest in energy efficiency are often passed up for lack of Why is this issue important? How do the credit lines work? commercial financing. Donors Investments in energy efficiency depend on the Four design features are critical to success and governments can solve availability of credit Appropriate financing terms. The donor or government agency this problem by setting up Many economically attractive opportunities to invest in energy usually extends the credit line to a participating financial institution dedicated credit lines that allow efficiency are forgone because of various market barriers, notably (typically a bank) at its standard rate and tenor. The financial financial institutions (often local banks) to on-lend funds to the limited availability of commercial financing for energy efficiency institution then on-lends to project developers at terms specified entities wishing to improve their projects. Once a government decides, as a matter of policy, to scale in legal agreements between the donor or government and insti- energy efficiency. The success up energy efficiency, it typically must engage commercial banks to tutions. For example, World Bank credit lines typically require that of a credit line depends to a provide financing to the private end users who will carry out the on-lending occur at market rates to avoid creating market distortions great extent on the selection energy efficiency projects needed to make the national policy a reality. and competitive advantages and that the participating institution of competent and committed Credit lines help banks establish an energy efficiency business provide cofinancing on a one-to-one basis or better (table 1). For financial institutions. A technical line by mitigating the perceived high financial risk of energy efficiency many projects, cofinancing has equaled or significantly exceeded assistance component built into projects and of the energy service companies that carry them out, Bank lending, but in at least one case it was less than 20 percent the credit line helps lower the and sometimes by building into the credit line a technical assistance of the loan amount. Using its standard project-appraisal criteria, technical and financial risk of component to improve understanding of the fundamentals of energy the financial institution will typically finance about 70 percent of a projects. efficiency projects. They also reduce the transaction costs of project project’s total investment costs, requiring the project host or energy finance by standardizing the process of project appraisal and loan service company to finance the remaining 30 percent through equity processing. For project developers, credit lines expand the pool of investments. The participating financial institution will also demand commercial debt financing for their projects. The technical assistance collateral, often 120 percent or more of the loan amount, because it Ashok Sarkar is a component helps lower the perceived technical and financial risks of assumes all repayment risks. In this way, a credit line can leverage senior energy specialist energy efficiency investments. funds both from the financial institution and the project developer. in the World Bank’s Energy efficiency credit lines make funds available to participating When the donor agency providing the credit line is an interna- South Asia region. financial institutions (including local banks). Typically the credit line is tional financial institution, funds for the line are either lent to the Jonathan Sinton is a extended to the financial institution as a low interest rate loan by a participating financial institution via the national government or senior energy specialist in the World Bank’s donor (such as a multilateral development bank or other international directly to the institution with an accompanying guarantee from the Energy Practice. financial institutions) or by government. The recipient institution then government. The exchange rate risk is typically borne by the par- Joeri de Wit is an on-lends the funds to borrowers (industries and other private entities) ticipating financial institution. Repayment occurs through the same energy analyst in the to invest in energy efficiency projects (figure 1). Targeted support for channels followed to disburse the credit line (as shown in figure 1). same practice. energy efficiency investments is warranted because current invest- There is a risk that an energy efficiency credit line may end up ment levels are suboptimal (Taylor and others 2008). subsidizing participating financial institutions, since financing from 2 Designing Credit Lines for Energy Efficiency Figure 1. Typical design of an energy efficiency credit line Credit line with PFI External Credit line with and developer financing Credit line PARTICIPATING PFI cofinancing financing DONOR FINANCIAL International PUBLIC AGENCY INSTITUTION SUB-BORROWER PROJECT financial Low interest Government (PFI) Market or End users “There is a risk that an institution rate Bank concessional rate Dedicated Unit energy efficiency credit line Repayment Repayment Repayment Repayment may end up subsidizing participating financial Technical assistance institutions, since financing • Lack of liquidity in financial • Perception of high financial risk of • Perception of high technical and ADDRESSED from international financial Technical BARRIERS markets for commercial debt energy efficiency projects financial risks of energy efficiency organizations financing of energy efficiency investments among energy users institutions is generally and experts projects • Inadequate expertise and capacity to evaluate energy efficiency projects • Limited interest in using internal less costly than from other and understand financing needs financing for energy efficiency projects sources.” • High transaction costs for processing project financing N.B. Thickness of arrow represents relative size of financial flows to depict leveraging. Public agencies may offer credit lines without the aid of external donors (dashed border). international financial institutions is generally less costly than from often target industry and large firms rather than smaller businesses other sources and participating financial institutions are required to and the residential sector. (This is the case for the World Bank credit lend at market rates. The logic behind the cheaper credit provided lines described in table 1.) In part the bias toward larger enterprises by the international financial institution is that it partially offsets the is a consequence of the risk assessment and financial evaluation costs incurred by participating financial institutions in establishing procedures that financial institutions use to determine whether a the new business line in energy efficiency lending. Since many project developer will be eligible to borrow from it. Borrowers need energy efficiency investments have shorter payback periods than to be creditworthy in the eyes of the lender, and most lenders do not the typical tenors of loans from international financial institutions, recognize cash flow from energy savings as an acceptable form of there is also a risk that funds provided for the credit line could be collateral. The emphasis on asset-based or balance sheet financing used simply to finance the balance sheets of participating financial limits lending to certain borrowers such as larger firms. Public sector institutions once the initial energy efficiency investments are fully agencies have rarely been the target of energy efficiency credit lines, repaid. One potential remedy is to require the participating financial those that KfW offers in Eastern Europe being an exception. Most institutions to roll over funds to new project lending. Another is commercial lenders are reluctant to provide debt financing to public for international financial institutions to shorten the tenor of loans sector agencies; reciprocally, most public agencies lack the inclina- for credit lines. A third solution may be to exploit the potential to tion and capacity to borrow commercial funds on market terms. combine credit lines for energy efficiency and renewable energy. Project eligibility criteria. The criteria for determining project Accurate targeting of end users. The selection of the eligibility can vary greatly depending on the end-use sectors targeted end-use sector to be targeted depends on the policy goals to which by the credit line, the amount of energy the user consumes, and the the credit line is designed to contribute. In practice, credit lines more technical, social, and environmental characteristics of the project. 3 Designing Credit Lines for Energy Efficiency The criteria may also include minimum energy savings or percentage planning tools; and supporting business development among energy savings. Portfolio risk management criteria usually preclude the com- service companies. To date, the most common focus of technical mitment of a large share of the total amount of financing available assistance has been building the capacity of participating financial through the credit line to any single project or company. (It would be institutions. undesirable to have the success of the credit line depend too heavily An example of how these features work in practice is provided in on just a few investments.) box 1. “Portfolio risk management Technical assistance. The type of technical assistance needed criteria usually preclude to support a new credit line depends on the sectors targeted, the What have we learned? the commitment of a large capacity of the participating financial institutions, and the availability share of the total amount of other technical-assistance resources. The range of technical-as- Financial institutions are both the strength sistance activities is broad: conducting market studies; developing and the weakness of credit lines of financing available appraisal procedures to assess energy efficiency cash flows and through the credit line risks; developing financial products for energy efficiency projects; Credit lines are just one mechanism for financing energy efficiency to any single project or training staff of participating financial institutions; supporting pilot investments. Others include demand-side management by utilities, company.” programs; marketing, monitoring and evaluating programs; dissemi- utility-funded consumer financing, energy efficiency funds, risk-shar- nating experience and lessons learned; adapting and disseminating ing programs, energy saving performance contracting, and equity Table 1. World Bank energy efficiency credit lines Is the line Cofinancing specific World Bank (percentage Disbursement Launch Close Number to energy financing (US$ Cofinancinga World Bank Total financing rate Country year year of PFIs efficiency? Target sector millions) (US$ millions) financing) (US$ millions) (percent) China 2008 2013 2 Y Large and medium industry 200 200 100 400 89 China 2010 2014 1 Y Large and medium industry 100 500 500 600 20 China 2012 2016 1 Y Industry, buildings, SMEs and ESCOs 100 200 200 300 0 China 2011 2016 3 Y Industrial 133 134 101 267 11 China 2012 2018 2 Y Buildings 100 100 100 200 0 Tunisia 2009 2014 2 Y Industrial 40 80 200 120 18 Turkey 2009 2014 2 N Industrial 600 550 92 1150 100 Turkey 2012 2016 2 N Industrial 500 150 30 650 44 Ukraine 2011 2016 1 Y Industrial, commercial and municipal 200 n/a n/a n/a 32 Uzbekistan 2010 2016 2 Y Industrial 24 4.8 20 28.8 49 Turkey 2013 2018 3 N Energy-intensive SME subsectors 201 50.25 25 251.25 7 Uzbekistan 2013 2016 3 Y Industrial 99 43 43 142 14 Source: Limaye 2013. Note: PFI = participating financial institution; SME = small and medium-size enterprise; ESCO = energy service company a. Excludes financing from end users. 4 Designing Credit Lines for Energy Efficiency Box 1. Example of credit line characteristics: China Energy Efficiency Financing project (2008–14) In the China Energy Efficiency Financing (CHEEF) project, the World Bank Project eligibility. Investments must be in renovation or rehabilitation. has provided a line of credit to three commercial banks in China—China Any new construction must be within the boundaries of the existing EXIM Bank, Minsheng Bank, and Huaxia Bank—to enable them to finance premises. The cash flow benefit arising from energy savings associated energy efficiency projects. with the project, as reviewed by the participating financial institution, must “The unique feature of Financing terms. The line of credit was structured as a financial be adequate to repay the total investment cost of the subproject within 10 years. The sub-borrower must obtain approval from the appropriate credit lines is their use intermediary lending operation with a sovereign guarantee from China’s Chinese environmental authorities. Ministry of Finance. The World Bank loan was based on the London of an existing delivery Interbank Offer Rate (LIBOR), was denominated in U.S. dollars, and has a Technical assistance. The GEF grant is used to train personnel in variable spread. East of the three banks received $100 million to be repaid participating financial institutions; to develop new financial products mechanism: the lending in 17.5 years, including a grace period of five years. The funds were on-lent for energy service companies; to adapt loan appraisal and underwriting framework of the by the Ministry of Finance to the three banks at the same financial terms criteria to energy efficiency investments; to conduct market-segment and conditions, and were in turn loaned by the banks at market rates to studies to broaden the end-use sectors and technologies in the portfolio; participating financial industrial enterprises and energy service companies. The participating to build partnerships and engage selected bank branches in market institution.” banks are responsible for debt servicing and bear all of the financial development and in generating deals; and to develop market aggregation risks associated with the World Bank loan. The World Bank required each tools for projects and for small and medium-size enterprises. Policy- bank to invest an additional $100 million or more of its own resources in related technical assistance focused on helping the National Development energy efficiency projects overall, while the participating banks required and Reform Commission to develop market-based mechanisms, such enterprises to which they made project loans to contribute about 30 as schemes for trading energy savings certificates; developing and percent of project costs. The banks in turn required loan recipients to implementing high-priority energy conservation programs during the contribute about 30 percent of the project costs. A Global Environment 12th Five-Year Plan (2011-2015); and strengthening the National Energy Facility (GEF) grant was used to provide technical assistance. Conservation Center. Targeted end users. The targeted end users are medium and large The credit line leveraged $462 million from participating banks and industrial enterprises in China having total annual revenues of at least industrial enterprises—a leverage ratio of 1:4. The investments made CNY 30 million ($4.7 million), based on audited income statements no possible by the credit line are expected to save 1.7 million tons of coal more than two years old. Under CHEEF III, sub-borrower eligibility was equivalent (1.2 million tons of oil equivalent) and to reduce CO2 emissions expanded to include industrial enterprises of all sizes, energy service by 4.2 million tons each year. companies (including leasing companies), and owners of buildings. Source: Wang and others 2012. funds. All of these mechanisms work best within a context of clear may restrict the pool of borrowers that can be reached by the credit national objectives for energy efficiency and supporting policies that line. Still, for donors, credit lines entail minimum risk, as the funds are create a market pull for investments in efficiency. guaranteed by the national government. Furthermore, credit lines The unique feature of credit lines is their use of an existing can be instrumental in developing the market for energy service delivery mechanism: the lending framework of the participating providers. financial institution. This delivery mechanism presents both advan- Accumulated experience with energy efficiency credit lines is tages and limitations. Where the existing lending framework has leading to the identification of good practices for design and imple- well-established project-appraisal procedures and institutions have a mentation. In general, as with all types of support mechanisms, a deep fund of professional expertise, implementation of the credit line credit line should be adapted to context, which includes the national may be quick and easy. Where participating financial institutions have economic, financial, legislative, and regulatory framework, as well limited capacity to manage energy efficiency projects, the credit as the specific characteristics of participating financial institutions, line’s effectiveness may be limited, and project-appraisal procedures project developers, and targeted projects. 5 Designing Credit Lines for Energy Efficiency The overall success of a credit line depends to a great extent On the operational front, simplifying project review and appraisal on the selection of competent and committed financial institutions. procedures wherever possible and integrating them into the financial Institutions need management with an interest in and willingness to institution’s own systems can accelerate deployment of the credit engage in energy efficiency as a new business line, as well as good line. The best example of this is JICA’s credit line to SIDBI (India), in access to, knowledge of, and relationships with the target market. which simple eligibility criteria (projects were eligible if they included Institutions should already be familiar with the sectors they intend preapproved technologies or equipment) allowed loan officers to “Concessional funding to target. To deploy credit lines targeting small and medium-sized quickly appraise a project, enabling SIDBI to make a large number of remains a major factor enterprises in India, JICA and KfW worked with the Small Industries sound loans very quickly. in securing the interest Development Bank of India, which had the requisite experience with A last word. It should be kept in mind that a credit line that is such customers. It is essential, too, that the institutions develop or jointly offered for both renewable energy and energy efficiency may of small and medium work with a technical team that is experienced in energy efficiency tend to find more uptake in renewable energy investments than in enterprises in energy technologies and their benefits. The energy efficiency business line energy efficiency investments, possibly because renewable energy efficiency.” should be handled by the department responsible for commercial projects are larger, have proportionally lower transaction costs, and loans to the target clients. Staff in the department should be moti- involve assets that are easier to use as collateral. vated to develop business through performance incentives and other commercial management tools. Technical assistance can help many financial institutions get the References credit line working faster. To create a market conducive to sustained Limaye, D. 2013. “Energy Efficiency Credit Lines: A Synthesis Paper.” energy efficiency investments, capacity building for participating Sustainable Energy Department, World Bank, Washington, DC. financial institutions and for the broader energy efficiency network Taylor, R. P., C. Govindarajalu, J. Levin, A. S. Meyer, W. A. Ward. 2008. is recommended. Technical assistance offered to end users and Financing Energy Efficiency: Lessons from Brazil, China, India and government can help develop the broader energy efficiency market, Beyond. Washington, DC: World Bank. http://elibrary.worldbank. stimulate interest in energy efficiency projects, disseminate the org/doi/book/10.1596/978-0-8213-7304-0 positive results obtained from the credit line, and encourage other Wang, X., R. Stern, D. Limaye, W. Mostert, and Y. Zhang. 2012. banks and local financial institutions to increase their lending for Unlocking Commercial Financing for Clean Energy in East Asia. energy efficiency projects. Washington, DC: World Bank. http://elibrary.worldbank.org/doi/ Concessional funding remains a major factor in securing the book/10.1596/978-1-4648-0020-7. interest of small and medium enterprises in energy efficiency. Because the appraisal criteria of most financial institutions favor This note is based on original work by Ashok Sarkar and Dilip Limaye the financing of larger, more creditworthy energy users with strong (president, SRC Global), with updates and additional material prepared by balance sheets, a credit line targeted at small and medium enter- Joeri de Wit and Jonathan Sinton. The peer reviewers for this note were Jas prises or public sector projects may require credit-enhancement Singh (senior energy specialist in the World Bank’s Europe and Central Asia techniques and much more forceful market-development efforts. region), Gailius Draugelis (lead energy specialist in the Bank’s East Asia and Pacific region), and Luiz Maurer (principal industry specialist, IFC). 6 Get Connected to Live Wire Get Connected to Live Wire Live Wires have been designed for easy reading on the screen and for The Live Wire series of online knowledge notes is a new initiative of the World Bank Group’s downloading and self-printing “Live Wire is designed Energy Practice, reflecting the emphasis on knowledge management and solutions-oriented in color or black and white. knowledge that is emerging from the ongoing change process within the Bank Group. for practitioners inside Professional printing can and outside the Bank. 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CO2 emissions sources of CO2 emissions by sector emissions by country economies. although coal-fired LICs plants account for just Identifying opportunities to cut emissions of greenhouse gases 0.5% requires a clear understanding of the main sources of those emis- 40 percent of world energy Residential Other were Esions. N E R Carbon G Y P R A C T dioxideICE(CO2) accounts for more than 80 percent of 6% sectors Other MICs production, they S FOR T H E LEDGE NOTE SERIE 10% 15% A KNOW total greenhouse gas emissions globally, primarily from the burning 1 China responsible for more than Other HICs 30% of fossil fuels (IFCC 2007). The energy sector—defined to include Energy 8% 70 percent of energy-sector Energy to the Grid: fuels consumed for electricity and heat generation—contributed 41 Industry 41% Japan 4% emissions in 2010. if warming is Transmitting Renewable 20% Russia to be limited to two degrees percent of global CO2 emissions in 2010 (figure 1). Energy-related 7% USA THE BOTTOM LINE CO2 emissions at the point of combustion make up the bulk of such Other transport Road India 19% Celsius, therefore, steep 7% EU The Case of Texas emissions and are generated by the burning of fossil fuels, industrial 6% transport 11% states reductions will have to be made Texas leads the United 16% waste, and nonrenewable municipal waste to generate electricity with 9,528 mw of installed in the use of coal to generate face? and leakage emissions What challenge did they and heat. Black carbon and methane venting Notes: Energy-related CO2 emissions are CO2 emissions from the energy sector at the point wind power capacity—a electricity in the larger bunkers, domestic note. of combustion. Other Transport includes international marine and aviation ? are not included in the analysis presented in this level exceeded by only four Why is this case interesting economies. t was contingent on aviation and navigation, rail and pipeline transport; Other Sectors include commercial/public Transmission investmen yet needed to precede it tion, and other emissions not specified elsewhere; Energy = fuels consumed for electricity and and heat genera- services, agriculture/forestry, fishing, energy industries other than electricity countries. The state needed and accelerate more infrastructure to transmit Texas needed to prioritize Where do emissions generation come ents commitm from? HIC, MIC, and LIC refer to high-, middle-, wind sites tremendous needs for trans-heat generation, as defined in the opening paragraph. electricity generated from development of remote EmissionsTexas are faced the challenge of meeting concentrated in a handful of countries from and low-income countries. producer of generation renewable sources, but the century, Texas was a major e triggered by the scale-up Source: IEA 2012a. During much of the twentieth is now taking advantage and primarily mission come infrastructur from burning coal infrastructur e can take longer to regulator could not approve States. The state of petroleum in the United Vivien Foster is sector renewable sources. Transmission projects wind.for the Sus- leads It currently The geographical pattern of energy-related CO2 emissions closely transmission expansion a major renewable energy resource:manager only 0.5 percent by all low-income of power capacity middle-income countries, and in the absence of financially 9,528 MW of installed wind Depart- tainable Energy mirrors the distribution of energy consumption (figure 2). In 2010, To solve the United States with ment at the fifth World rank in wind Bank two zones energy with the countries put together. committed generators. were a country, would almost half of all such emissions were associated competitive renewable a (ERCOT 2011) and, if it (vfoster@worldbank.org). Figure 1. Texas’s five Coal is, by far, the largest source of energy-related CO2 emissions the problem, Texas devised largest global energy consumers, and more than three-quarters quickly generation worldwide. Daron program in 1999, it vowed to were associated with the top six emitting countries. Of the remaining Bedrosyan globally, accounting for more than 70 percent of the total (figure 3). planning process that When Texas reformed its energy works energy mix. It now uses a energy-related CO2 emissions, about 8 percent were contributed for London This reflects both the widespread use of coal to generate electrical connects energy systems increase the role of renewables in its Toronto. to increase Economics in utilities power, as well as the exceptionally high CO2 intensity of coal-fired to the transmission system. portfolio standard to require energy by other high-income countries, another 15 percent by other the renewable Previously, he was renewable sources. an To minimize power (figure 4). Per unit of energy produced, coal emits significantly The system is based on their energy generation from eligible energy analyst with the energy program created more CO2 emissions than oil and more than twice as much as natural designation of “competitive the state’s renewable Practice. Greenhouse Gas Inventory costs to the taxpayer, World Bank’s Energy rely on the private sector United Nations Framework Convention 1 on Climate Change, gas. renewable energy zones. energy zones that Data—Comparisons By Gas (database). http://unfccc.int/ghg_data/items/3800.php competitive renewable and trans- e and operations for generation to provide infrastructur and regulation provides planning, facilitation, mission, while the state (figure 1). electricity pro- standard mandated that The renewable portfolio by 2009. 2,000 MW of additional renewable energy viders generate and was followed Marcelino Madrigal met in just over six years (mmadrigal@worldbank This 10-year target was and mandated 20, which raised the targets .org) is a senior energy up in 2005 by Senate Bill reach 5,880 energy generation must specialist in the World that the state’s total renewable Furthermore, the 2015 and 2025 respectively. Bank’s Energy Practice. MW and 10,000 MW by energy target 500 MW of the 2025 renewable With Rhonda Lenai Jordan legislation required that sources other than wind. (rjordan@worldbank.org) be derived from renewable in is an energy specialist Source: ERCOT 2008. the same practice. 7 D o y o u h av e s o m e t h i n g t o s ay ? Sa y i t i n L i v e W i r e ! Contribute to If you can’t spare the time to contribute to Live Wire, but have an idea for a topic, or case we should cover, let us know! Do you have something to say? We welcome your ideas through any of the following Say it in Live Wire! channels: Via the Communities of Those working on the front lines of energy development in emerging economies have a wealth of Practice in which you are technical knowledge and case experience to share with their colleagues but seldom have the time to active write for publication. By participating in the Energy Live Wire offers prospective authors a support system to make sharing your knowledge as easy as Practice’s annual Live Wire possible: series review meeting • Trained writers among our energy sector staff will be assigned upon request to draft Live Wire By communicating directly stories with staff active in operations. with the team (contact • A professional series editor ensures that the writing is punchy and accessible. Vivien Foster, vfoster@ • A professional graphic designer assures that the final product looks great—a feather in your cap! worldbank.org) Live Wire aims to raise the profile of operational staff wherever they are based; those with hands-on knowledge to share. That’s your payoff! It’s a chance to model good 2014/4 Texas d: The Case of rgy To The gri “knowledge citizenship” and participate in the ongoing change process at the Bank, 1 TransmiTTing renewable ene where knowledge management is becoming everybody’s business. A KNOWLEDGE NOT E SERIES FOR THE ENERGY PRACTICE Energy to the Grid: Transmitting Renewable gy sector 2014/6 1 s u lt s o f W o r l d B a n k l e n d i n g i n t h e e n e r M e a s u r i n g t h e r eLINE THE BOTTOM The Case of Texas states Texas leads the United with 9,528 mw of installed face? wind power capacity—a What challenge did they level exceeded by only four G Ethis E S Einteres case ting? was contingent on A KNOW WhyL E D is NOT RIES FOR THE ENERGY PRACTICE Transmission investment countries. The state needed Texas needed to prioritiz e and accelerate yet needed to precede it more infrastructure to transmit generation commitments wind sites for trans- electricity generated from development of remote faced the challenge of meeting tremendous needs Measuring the Results of World Bank Your Name Here THE BOTTOM LINE producer Texas of generation from renewable sources, but the century, Texas was a major mission infrastructure triggered by the scale-up During much of the twentieth e take longer to regulator could not approve States. The state is now taking advantag sion infrastructure can renewable sources. Transmis Lending in the Energy Sector petroleum in the United this note is the first report of leads n projects resource: wind. It currently of energy-sector indicators transmission expansio of a major renewable energy ly power capacity Become an author in the absence of financial 9,528 MW of installed wind reflecting the World Bank’s the United States with rank fifth in wind zones committed generators. To solve were a country, would the effort ive renewable energy to measure broad lending patterns during (ERCOT 2011) and, if it What challenges were faced Figure 1. in Texas’s five competit the problem, Texas is this a Whydevised issue important? fy 2000–13. to compile it, generation worldwide. 1999, it vowed to inresults? energy projects back to fy 2000 planning The need for accountability process that quickly has made When Texas reformed it critical its energyfor the program of Live Wire and energy mix. It now uses a to be retrieved and aligned for connects energy systems results of renewab les in its Data back to FY 2000 had were manually screened Energy Practice to measure increase the role utilities to increase results data comparable with to the transmission system. renewable portfolio standard to require energy with the new CSIs the tracks the outcomes on Bank of its projects in order to le sources. To minimize the standardized indicators The system is ThebasedWorld n from eligible renewab their energy generatio poverty le energy endingrenewab program created project in the energy sector had devised its own “competitive the goals of state’s each contribute to your how well they are advancing Previously, now used in the Bank’s designation of understand costs to the taxpayer, the zones. shared prosperity. For some years now those on the private sector which made it difficult to report the Bank’s corporate scorecard. in the renewable energyand promoting competitive renewab le energy zones that rely indicators of results, Corporate Scorecard s for generatio n and trans- in terms that were both broad and precise. With the outcomes have been reported in a Bank-wide and operation achievements future, automation will make to provide infrastructure that measure and n,of n Corporate Scorecard, however, the clear advantages of regulatio based on a set of so-called core sector indicators (CSIs) provides planning, facilitatio advent the it easier to collect, aggregate, mission, while the state practice and career! impact at the project level and permit aggregation of standardized being able to demonstrate results led the Energy Practice to examine and analyze data on project (figure 1). pro- data across the Bank. Each CSI is anrenewab indicator of output or outcome d that energy projects back to FY 2000 and, to the extent electricity Bank’s outcomes. The le portfolio standard mandate the to a particular sector or theme, such as l renewab le energy possible, to by 2009. retroactively harmonize or align the indicators used in that is strategically relevant MW of additiona Madrigal viders generate 2,000 years and was followed with those devised for the Corporate Scorecard. The Marcelino the energy sector. was met in just over six those projects (mmadrigal@worldba nk This 10-year target Energy Practice, targets and mandated exercise are reported in this note. Three CSIs are particularly central to the Bank’s Bill 20, which raised the results of this “archaeological” .org) is a senior energy up in 2005 by Senate must reach 5,880 here for the fiscal years 2000–13 are the because they reflect its engagement state’s in every step of the energy generationThe results reported specialist in the World that the total renewable energy the value chain—from generation to transmission and distribution (T&D) by 2015 and 2025 respectiv ely. first Furtherm such reportore, of energy-sector indicators reflective of the broad Sudeshna Ghosh With Bank’s Energy Practice. MW and 10,000 MW are: renewable energy target the World Bank during this period. customer connections. The to “last mile”Jordan three indicators that 500 MW of the 2025 lending patterns of Banerjee is a senior Lenai legislatio n required energy specialist in the Rhonda of people provided with access to electricity le sources other than wind. through To compile the report, all World Bank projects approved in the • The number (rjordan@w orldbank.o rg) be derived from renewab World Bank’s Energy specialist in connections energy space between FY 2000 and FY 2013 (approximately 70–80 household is an energy Source: ERCOT 2008. Practice (sgbanerjee@ same practice. projects per year on average) were screened to extract those the• T&D lines constructed or rehabilitated, measured in kilometers worldbank.org) that had adopted indicators similar enough to those used in the (km) Ruchi Soni (rsoni@ Corporate Scorecard that they could be mined for comparable data. worldbank.org) is an • Generation capacity constructed, measured in megawatts (MW). Information was extracted from two types of project documents: energy analyst in the More recently, additional indicators have been developed cov- the Implementation Completion and Results Report (ICR) for same practice. ering measurement of energy efficiency in heat and power (lifetime closed projects and the most recent Implementation Status and Elisa Portale (eportale@ savings, captured in MWh). Results Report (ISR) for active projects. In some cases, information worldbank.org) is an was referred back to project staff for confirmation or, where energy consultant, also discrepancies had been spotted, for correction. In a few cases in the Energy Practice. where indicators were not explicitly mentioned in the ICR or ISR, 8 D o y o u h av e s o m e t h i n g t o s ay ? Sa y i t i n L i v e W i r e !