1 S c a l i n g U p A c c e ss t o E l e c t r i c i t y : The Case of Bangladesh 2014/21 88702 A KNOWLEDGE NOTE SERIES FOR THE ENERGY PRACTICE THE BOTTOM LINE Scaling Up Access to Electricity: Since its inception in 2003, Bangladesh’s solar The Case of Bangladesh home system program has installed about three million electrification systems in rural Why is this case interesting? the most dynamic off-grid electrification program in the world. Solar households, two-thirds of them home systems are small, household-level electrical systems powered in the last three years. The Off-grid electrification is crucial to reaching by solar energy. They consist basically of a solar panel, inverter, and program is the most dynamic universal access battery. Depending on their size, they can power various domestic off-grid electrification program appliances, including lights, radios, TVs, fans, and refrigerators. Worldwide, 1.2 billion people lack access to electricity. Many live far in the world, benefitting more This success evolved from a small pilot introduced in 2002 from the existing electrical grid. To ensure them access to electricity than 15 million people and by the World Bank’s Rural Electrification and Renewable Energy by 2030, two-thirds of future energy investments will have to scale contributing about 130 MW in Development (RERED) project. RERED initially relied on subsidies, up off-grid options as well, including mini-grids and stand-alone renewable energy generation but these have been phased out over time as system prices declined systems (IEA 2013). capacity. thanks to economies of scale and technological advances. Today, the Achieving universal access to modern energy services is one of the three complementary objectives of the Sustainable Energy for All solar home systems are provided practically on commercial terms. (SE4ALL) initiative. Formally launched in the UN General Assembly in A modest subsidy is available only for small systems designed for the September 2012 and co-chaired by the president of the World Bank poorest households. Zubair Sadeque is a senior energy specialist Group and the UN Secretary-General, SE4ALL calls on governments, in World Bank’s South businesses, and civil society to address urgent energy challenges, including universal access, by 2030 (SE4ALL 2012). Box 1. Key facts Asia Energy practice. Dana Rysankova is a Despite significant challenges in its power sector (box 1), • Population: 161 million senior energy specialist Bangladesh has succeeded in developing the largest and most • Population density: 1,238 persons per km2 in the World Bank’s dynamic national off-grid electrification program in the world, yield- • GDP per capita: US$ 752 Energy Practice. ing lessons that may be applicable to other countries considering off-grid solutions to improve access to electricity. • Electrification rate: 55 percent Raihan Elahi is a senior energy specialist in Since its inception in 2003, Bangladesh’s solar home system Bangladesh’s electrification rate is 90 percent in urban areas, but just World Bank’s Africa 43 percent in rural areas (2011), where four in five Bangladeshis live. (SHS) program has installed household electrification systems The country’s power sector faces numerous challenges, including Energy Practice. in three million rural households, two-thirds of them in the last inadequate generation capacity, dependence on high-cost emergency Ruchi Soni is an energy three years. In the same time period, the country’s rural electricity power, weak financial conditions and governance structure of power specialist consultant in cooperatives have extended access to the national electrical grid to sector entities, and limited technical capacity. the World Bank’s Energy about 1.3 million households. Currently, the SHS program is providing The installed generation capacity is about 6,500 MW against a peak Practice. demand of 8,000 MW, resulting in widespread power outages. electricity to about 50,000 new households each month, making it 2 S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h Some aspects of the Bangladeshi SHS program may be unique to targets. Although rural cooperatives extended power to many rural Bangladesh and difficult to replicate in other countries. For example, households, by the early 2000s concerns about the pace and costs the program has benefitted from a strong pre-existing network of of rural grid electrification had arisen. competitive microfinance institutions (MFIs) with deep reach in rural It was estimated that at the prevailing pace of grid electrification, areas, including the world-known Grameen Shakti MFI. Other factors Bangladesh would take 50 years to reach universal access. The REB contributing to the program’s success were (i) the high density of was connecting four to five hundred thousand consumers annually “By 2002, it had become Bangladesh’s rural population, which fostered competition and to the grid—far fewer than required to reach universal access—and apparent that an off-grid economies of scale; (ii) rising rural incomes and remittances from connection costs were rising. Given that rural households tended to approach was needed to abroad, which stimulated demand for the off-grid solar systems; and use electricity primarily for lighting, the government was interested in (iii) the existence of entities interested in doing business with rural exploring more cost-effective solutions for remote households. The complement efforts to customers and the country’s entrepreneurial culture. reliability of grid power had also been a concern, with grid-connected extend the grid. A pilot was But Bangladesh’s experience also conveys many lessons that households facing frequent power outages because of insufficient introduced to test whether are applicable to any off-grid electrification initiative. Among those generation. solar home systems could lessons: By 2002, it had become apparent that an off-grid approach help reach more remote • The presence of a competent and passionate local champion was needed to complement efforts to extend the grid. A pilot was with a strong capacity to promote and manage an off-grid introduced to test whether solar home systems could help reach rural households.” elecrification program more remote rural households. When the World Bank’s first RERED project was being designed • Technical and financing solutions that match the target in 2002, a two-pronged approach was adopted to promote the population’s ability to pay use of solar home systems in rural areas, thereby leveraging the • The quality of the solar home system and consumers’ awareness country’s renewable energy potential, while continuing to help the of its availability REB and rural cooperatives improve their operational and financial • The patience to allow the program to evolve over time to reflect performance. new technologies and market trends. What approach was taken? What challenges were faced? An ownership model based on microfinance Extension of the national grid to rural areas was proved most successful slow and costly The first approach tested by the RERED project was the “owner- Bangladesh’s rural electrification program was initiated in 1977 with ship” approach that had previously been successful in Sri Lanka the creation of the Rural Electrification Board (REB). The program was (Govindarajalu, Elahi, and Nagendra 2008). In that model, private modeled after the rural cooperatives system of the United States. dealers in solar home systems would make agreements with MFIs to The REB oversees rural electric cooperatives (palli bidyut samity), extend financing to eligible customers. which are autonomous organizations that own and operate rural This model was considered in Bangladesh, but there were distribution systems in specific areas. The REB arranges financing to concerns about the ability of private dealers to gain household build the distribution lines and hands over the finished infrastructure trust. Instead, the SHS program opted for a modified approach that to the cooperatives for commercial operations (billing, collection, leveraged the strong presence of Bangladesh’s MFIs in rural areas. and regular maintenance). The performance of the cooperatives is These MFIs (most of which are nongovernmental organizations, monitored by the REB under agreements that specify performance NGOs) became dealers, responsible for all aspects of the solar home 3 S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h system business (technical, commercial and financial). The Figure 1. The microfinance ownership model for solar home systems advantage of this approach was that these MFIs already had established relationships with their clients to whom Provides approval Technical Suppliers Standards they could offer yet another service. For this approach to Seek approval Committee work, however, it was necessary to ensure that the MFIs Supply equipment Pay for gained proficiency in the new market. This was addressed equipment “The partner organizations by substantial training in technology, supplier-selection, PO Apply Partner Provides grants and loans Selection IDCOL Organizations offer a buy-back guarantee and after-sales services. Committee Selects POs - Seek grants and loans n io s This unique feature of Bangladesh’s approach has at ns Sell that gives customers an er ion op olut tio SHS and Pay down- Grants and s k ds olu soft term Repayment proven difficult to replicate in other countries, where MFIs e Se late e s provide payment option to sell their system re o v i d service and credit in general have been reluctant to venture outside of their Pr installments back … if the household core role of financiers. Operations Households Donors Committee obtains a grid connection The second approach was a “fee-for-service” approach within a year. Most to be implemented by REB and the cooperatives. This Source: Presentation by IDCOL at Energy Week, 2013. customers have preferred model built on the cooperatives’ strong presence in rural SHS = solar home system(s) areas. Instead of extending the grid, the cooperatives to keep their solar system, would provide solar home systems to more remote because grid electricity All partner organizations are private (mostly NGOs with a strong households and charge a monthly fee for the use of the systems. base in microfinance), ranging from large, well-known organizations remains unreliable.” Because each approach had merits, the RERED project piloted such as Grameen Shakti to very small entities operating in specific them both. The microfinance model proved more dynamic, primarily areas. They procure solar home systems from various suppliers and because of the greater commitment and interest of the implement- sell them to households and small businesses on microcredit terms ing agency (Infrastructure Development Company Limited, IDCOL) spelled out in purchase contracts. They are expected to prefinance and MFIs to promote solar home systems as a core business line, the systems, for which they can often obtain supplier credit. They whereas for REB and the cooperatives solar home systems remained also install the systems using their own technicians. peripheral to extension of the grid. By 2009, MFIs had installed Once the systems are installed, IDCOL verifies the installations 320,000 systems, compared to just 14,000 systems installed by the and refinances a portion of the partner organizations’ credit to the cooperatives. The fee-for-service approach was then discontinued, households. It may also release a subsidy to the partner organization. and the focus shifted to fine-tuning and scaling up the ownership The refinancing and subsidies that IDCOL provides are drawn from model. its financiers—originally the World Bank but now other development IDCOL is a government-owned financial intermediary with the partners as well. mandate to provide long-term financing for private infrastructure Partner organizations remain in contact with customers during projects. Although owned by the Ministry of Finance, IDCOL is gov- the loan repayment period (typically 2–3 years), collecting payments, erned by an independent board of directors drawn from government providing maintenance, and training customers in both operation and and the private sector. maintenance. Once the loan is repaid, the partner organizations offer IDCOL works with development partners, suppliers of solar service contracts for an annual fee. They also extend a buy-back home systems, and participating MFIs, which are considered partner guarantee that gives customers an option to sell their system back to organizations. IDCOL sets technical specifications, certifies products IDCOL at a depreciated price if the household obtains a grid connec- and components, and selects partner organizations based on clear tion within a year of purchase. Most customers have preferred to eligibility criteria. keep their solar system, because grid electricity remains unreliable. 4 S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h The SHS ownership program has been successful primarily The market-development approach worked in Bangladesh, as because it has provided technical and financing solutions to users economies of scale brought unit costs down. At the same time, the that matched their needs. global costs of solar home systems fell, reflecting lower prices for Financing. The program has made systems affordable through photovoltaic panels and other components, efficiency improvements, a combination of consumer credit and (declining) subsidies. The idea and the emergence of more efficient appliances, including LED lights. was to bring monthly expenditures as close as possible to existing When the SHS program started, the average subsidy was $90 “From the start, the SHS household spending on kerosene and dry cells. Subsidies were per system. By 2006 it had been halved and by 2013 eliminated program emphasized initially required to bring the overall costs of the systems down, but except for the smallest systems (table 1). The remaining $20 subsidy quality assurance in they have been gradually phased out. for systems of 30 Wp and below is to enable poorer households to Partner organizations provide microfinance loans to households. participate in the program. order to build consumer Households are required to make a downpayment equivalent to The program has also provided indirect subsidies in the form confidence in solar home 10–15 percent of the cost of the system. The remainder is repaid in of cofinancing for consumer training and awareness building. systems, which were not 2–3 years at prevailing market interest rates (typically 12–15 percent). These activities were developed on a cost-sharing basis, with the yet widespread in rural Sixty to eighty percent of the credit that the partner organization partner organizations bearing 20 percent of the cost. The partner areas.” extends to the household is eligible for refinancing from IDCOL at organizations are now responsible for most consumer training and the prevailing market interest rate of 6–9 percent, with a 5–7 year awareness building. repayment period and a 1–1.5-year grace period. After technical and In addition, the RERED project financed training for partner other verifications, IDCOL releases the credit to the partner organiza- organizations and a comprehensive media campaign to promote the tion, along with any applicable subsidy, within 21 days of the claim. use of solar home systems throughout the country. These activities Partner organizations also often receive supplier credit of up to helped build consumer confidence in solar home systems in a way three months as a sort of bridge loan while awaiting refinancing by that partner organizations could never have done on their own. IDCOL. IDCOL continues to train partner organizations on topics such as Subsidies have evolved over time with regard to both purpose cash flow management, business planning, and technical features. and amount. Originally conceived as market-development tools, Technical features. From the start, the SHS program empha- subsidies were designed to help partner organizations market the sized quality assurance in order to build consumer confidence in systems by making them more affordable, while also covering the solar home systems, which were not yet widespread in rural areas. costs that new partner organizations incurred in setting up a new IDCOL’s technical standards committee prepares specifications business line in solar home systems. and certifies products. Specifications are periodically updated to Table 1. The gradual reduction of subsidies for the installation of solar home systems, 2003–14 (in US dollars) Year 2003 2004/05 2006/07 2008/09 2010/11 2012 2013/14 Capital buy-down grant 70 55 40 40 25 25 20* Institutional development grant 20 15 10 5 3 — — Source: Authors. * Applies only to solar home systems below 30 Wp. An institutional development grant of $3 per system applies to new and smaller partner organizations only. 5 S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h reflect new technical advances. Product warranties are required for the subsidy and refinancing released. IDCOL has 21 days from the all key components (panels, batteries and charge controllers). date of a partner organization’s claim to carry out the verifications. It In the program’s early stage, every installation was verified employs more than 100 technical inspectors to carry out the verifica- by IDCOL. Since the program reached the 50,000 target in 2005, tions and maintains a call center to handle customer complaints. installations have been verified on a sample basis. IDCOL verifies that Partner organizations are responsible for providing maintenance the installations are in eligible areas, that the partner organizations and customer training during the loan-repayment period. They also “When the program have used certified products, and that the installations are consistent offer after-sale service contracts to households that have repaid their started, batteries were the with technical requirements and are fully operational. Only then are loans. only component produced The SHS program has offered different system sizes to match customers’ willingness to pay. In the early years, the smallest eligible in Bangladesh. Today, all system was 40Wp, as smaller systems were considered unreliable. components (including Box 2.  World Bank support for the Rural Electrification and The best-selling system was 50Wp. Over time, technical improve- Renewable Energy Development (RERED) program solar panels on a limited ments have driven system sizes down. Today, the program offers scale) are produced Preparation of the Bank’s first RERED project was supported through systems as small as 10Wp. The best-selling system is 30Wp, reflecting locally.” various grants, including a grant of $340,000 from the Global the fact that a 30Wp system today can offer more end uses (includ- Environment Facility to IDCOL to test the proposed microfinance ing powering a color TV) than a 50Wp system could in 2003. approach. IDCOL bought 250 solar home systems and provided 50 Since the first RERED project was approved in 2002, the World systems each to 5 selected partner organizations. The performance of these partner organizations in installation, loan collection, and other Bank has provided continuous support (box 2). Funding has been challenges was tracked to hone the project design and selection used to provide (i) a credit line to IDCOL to refinance microfinance criteria for partner organizations. loans made by partner organizations; (ii) an output-based subsidy, RERED 2002. About $16 million from a larger credit from the and (iii) technical assistance, including for training and implementa- International Development Association was allocated for the solar tion of a consumer-awareness campaign. home system program, complemented by an $8.2 million grant from GEF. The original credit supported 650,000 grid connections and In addition to providing financing, the Bank has offered critical 236,000 solar home systems. advisory services and helped the government to obtain funding RERED 2009. Additional financing of $130 million supported sale of from other development partners. The SHS program is now also another 300,000 solar home systems, in addition to other support supported by the Global Partnership for Output-Based Aid, the for lighting and generation of electricity (including from renewable Asian Development Bank, the Islamic Development Bank, the sources). Japan International Cooperation Agency, KfW, GIZ (German Federal RERED 2011. Additional financing of $172 million supported installation of about 630,000 solar home systems. Development Corporation), and the U.S. Agency for International Development. RERED II (2012). Beyond supporting additional 550,000 solar home systems, the project (valued at $155 million) is also extending the IFC is also contributing to the development of the off-grid elec- solar home system model to additional areas, including (i) solar trification market in Bangladesh. Grameen Shakti was first exposed irrigation pumps, (ii) renewable mini-and micro-grids), and (iii) cleaner to solar home systems in 1998 through an IFC-financed program cookstoves, including biogas digesters for cooking. for small and medium-sized enterprises. Today, IFC’s Lighting Asia RERED II (2014). Additional financing of $78.4 million is supporting program is testing an introduction of solar lanterns (smaller than sale and installation of another 480,000 solar home systems. 10Wp) to further enhance the affordability of good-quality lighting The program has also received funding from GPOBA, a World Bank– for the poorest of the poor, and to develop micro-grids for more administered trust fund, for output-based subsidies ($7.2 in original funding in 2010 and $6.75 in additional funding in 2011). concentrated populations. 6 S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h Figure 2. Solar home systems installed each year, 2003–14 900000 852,388 Smaller LED Subsidy eliminated 800000 systems except for systems introduced under 30 Wp 700000 Buy-back 643,812 “Overcoming the scheme 600000 introduced 1 million affordability barrier for solar home systems installed by Bangladeshi households 500000 First target: mid-2011 469,572 Start of 50,000 reached through a combination 400000 IDCOL program 324,775 of consumer credit, 300000 subsidies, and product 200000 169,916 172761 choice opened the way 103,301 100000 69,562 to widespread adoption 11,697 20,635 27,579 37,151 of solar home systems. 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (through March) Rural households will pay Systems installed each year for a solar home system Source: IDCOL. if monthly payments are commensurate with their What was the outcome? and fine-tuning approaches. That focus pays off in later stages, as current expenditures for evidenced by the exponential market growth in Bangladesh from alternative energy sources.” Installations of solar home systems have 2006 onward. mushroomed When the SHS program started, it had five partner organizations, Household access. In 2003, when the SHS program started, no with Grameen Shakti holding a dominant market share. At present, more than 12,000 solar home systems had been installed throughout the program works with 49 organizations, contributing to the creation Bangladesh. The original target of the program was to install 50,000 of a vibrant renewable energy sector, although Grameen Shakti still systems by 2008. That target was achieved three years earlier than accounts for the majority of sales (figure 3). anticipated at a cost that was $2 million less than anticipated. By Initially, batteries were the only component produced in mid-2011, the program had installed a million systems, and as of Bangladesh. Today, all components (including solar panels on March 2014, that figure had risen to 2.9 million, benefitting more a limited scale) are produced locally. In 2013, the International than 15 million people and contributing about 130 MW in renewable Renewable Energy Agency (IRENA) ranked Bangladesh as having the energy generation capacity. The program is currently installing more sixth-largest renewable energy–related workforce in the world—with than 50,000 systems per month. IDCOL’s target is to reach a total of 6 114,000 jobs. million solar home systems by 2016. An impact evaluation study (Samad and others 2013) confirmed Off-grid electrification programs typically have an “S” shape a variety of benefits from solar home systems. It estimated that (figure 2). In the initial phases, the pace of connections tends to be household access to the systems increases per capita food slow, as the program concentrates on building enabling conditions expenditure by 9.3 percent, per capita nonfood expenditure by 4.7 7 S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h Figure 3. Market share of partner organizations, 2013 What have we learned? Others, 14% Some conditions are unique to Bangladesh but BRIDGE, 1% Grameen Shaktki, 56% many key lessons are transferable UBOMUS, 2% Hilful Fazal, 3% Some program features may be unique to Bangladesh. “The program’s final design Srizony, 4% Strong microfinance support from established grassroots MFIs/ is a good example of how NGOs helped penetrate rural markets. The SHS program leveraged BRAC, 5% international experience an extensive MFI network that has historically provided microfinance for income-generating activities in rural areas. Early on, the program and local know-how can benefitted from the extended network and reputation of Grameen come together to yield RSF, 15% Shakti, but as it evolved, additional MFIs have become solar home an innovative design system dealers, deepening penetration in rural areas. that suits the country’s Source: Samad and others 2013. Rising rural incomes helped reduce the need for subsidies. Improved agricultural productivity and the huge influx of remittances circumstances.” from Bangladeshi workers abroad have made solar home systems more affordable than they were a few years ago, a factor that has percent, and total per capita expenditure by 5.1 percent, because made it possible to reduce subsidies almost to the vanishing point. of savings derived from the solar home system or time freed up for The feasibility of phasing out subsidies, of course, depends on what productive activity. The study also found that evening study hours is happening with household income levels. for both boys and girls have increased thanks to the installation of High population density has enabled economies of scale, contrib- solar home systems. Solar power was also found to have a positive uting to the price reductions. As one of the most densely populated health impact, especially for women, partly owing to avoidance of countries in the world, Bangladesh was able to leverage economies kerosene fumes. Adopting a solar home system reduced respiratory of scale. The average cost of a 40 Wp solar home system, which is disease in women by aged 16 and above by 1.2 percent. Separately, enough to run a few lights, a mobile phone charger, and a TV, is about a gender-responsive social assessment of RERED carried out in 2012 $300. This is less than half the cost of a similar system in Uganda, for found that owning a solar home system increased mobility and example. High population density also promotes competition in the entrepreneurial ambitions among women. market, as dealers compete vigorously to provide attractive credit In many places around the world, the “ownership” model has packages to consumers. While economies of scale can be achieved been as unsustainable because of the need for after-sale service. in less densely populated countries, the approach to achieving the This has not been the case in Bangladesh. Optional after-sale scale may need to be different (competition for customers is likely to services are provided by partner organizations that have a strong be more limited). local presence and are both willing and able to provide such services Many of the program’s lessons may be applicable in to their customers. other countries. Finding a competent and passionate local Financial sustainability has also been strengthened through the champion is important. One of the early challenges that the program presence of MFIs with strong financial track records. Partner orga- encountered in Bangladesh was that the traditional financiers of nizations have an average loan-collection efficiency of more than the partner organizations were unwilling to finance “nonproductive 90 percent while servicing their debts to IDCOL on time. Meanwhile, loans” such as those for solar home systems. An alternative source dependence on subsidies has been significantly reduced. of funding was found in IDCOL, which at the time was facing a 8 S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h slowdown in its core financing activities and was looking for a households hesitated to buy a solar home system if they new area in which to expand. IDCOL has turned out to be both an believed that they would soon be connected to the grid. To enthusiastic promoter of off-grid solutions and an extremely effective deal with this twin challenge, dealers introduced a guarantee to implementer. Its professional management is overseen by a qualified repurchase the solar home system within a year if the household board. obtained a grid connection. The buy-back scheme has proved “Scalability is more The program must take into account the target population’s very persuasive. In reality, the guarantee has rarely been called important than scale. ability and willingness to pay. Overcoming the affordability barrier upon, as grid electrification has been slow and even most for Bangladeshi households through a combination of consumer electrified households elect to keep their solar systems due to In other words, it is less credit, subsidies, and product choice (different system sizes to match the unreliability of the grid. important to aim at varying consumer needs) opened the way to widespread adoption Successful programs must evolve over time to reflect new developing a “a large-scale of solar home systems. Rural households will pay for a solar home technologies and market trends. The Bangladeshi SHS program program” than to focus system if monthly payments are commensurate with their current adapted its technical specifications over time to take advantage of expenditures for alternative energy sources. Although microfinancing new technology developments. The program often faced trade-offs on developing scalable hinges on having institutions willing to lend for solar home systems between the desire to bring new technologies to customers quickly solutions.” (which is not the case in all countries), alternative payment methods and the need to maintain the reputation for reliability of solar home are possible, such as pay-as-you-go schemes. systems—it has typically chosen the cautious approach. For exam- Even with affordable financing, actions to foster consumer trust ple, the program initially offered only systems of 40Wp and larger, in the new technology are needed. If consumers are expected to owing to the reliability problems of the smaller systems then avail- invest a significant share of their income in a solar home system, able. Over time, however, the program introduced smaller systems they have to know that the system will work. That confidence has that increased affordability, while updating technical specifications to been built in Bangladesh through a combination of several parallel allow new components, such as LED lighting. efforts: Operational lessons from the World Bank’s RERED I and II • Ensuring technical quality. The need to set standards and provide projects. RERED took about two years to prepare. Time was needed quality assurance for solar home systems was recognized early. to adapt the model the Bank had used in other countries, to find Stringent quality standards were set, including a 20-year warranty implementing agencies and develop institutional arrangements in for the solar panel and a 5-year warranty for batteries, and the a country in which solar home systems were not widespread, and standards were strongly enforced. Optional after-sale services to test the new approaches. Ultimately, the time spent in project have helped keep customers satisfied with the systems. preparation hastened implementation. The SHS program reached its initial target three years ahead of schedule. • Consumer awareness and training. Consumer awareness The program’s final design is a good example of how interna- and training in the use of new solar home systems promote tional experience and local know-how can come together to yield an sustainability. Fostering a sense of ownership helps ensure innovative design that suits the country’s circumstances. The Bank’s proper maintenance and upkeep. Consumer awareness has initial design ideas were similar to the approach applied in the earlier included a broad set of activities from face-to-face interactions to Sri Lanka project, but insights from IDCOL and partner organizations media campaigns, particularly in the early stages of the program. produced the microfinance ownership approach, which leveraged • Risk perception. Initially, the partner organizations followed the the country’s unique strengths. REB’s electrification plans to avoid areas that were scheduled The project’s design was flexible (with a range of subsidies and to be electrified, but they soon found that they were missing system sizes, for example), allowing for quick adaptation to evolving customers that they could have served. Conversely, many technology and market conditions—and to consumer feedback. 9 S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h Details of the pilot implementation were left flexible, which made it Kumar, Geeta, and Zubair Sadeque. 2012. Output-Based Aid in MAKE FURTHER possible to adapt quickly to experience without resorting to restruc- Bangladesh: Solar Home Systems for Rural Households, 2012, CONNECTIONS turing or other lengthy administrative processes. OBApproaches 42, Global Partnership on Output-Based Aid, Scalability is more important than scale. The Bangladesh SHS World Bank, Washington, DC. https://www.gpoba.org/node/648. Live Wire 2014/9. “Tracking program, the largest off-grid electrification program ever supported Samad, Hussain A., Shahidur R. Khandker, M. Asaduzzaman, Access to Electricity,” by by the World Bank, began as a modest pilot aimed at reaching 50,000 and Mohammad Yunus. 2013. “The Benefits of Solar Home Sudeshna Ghosh Banerjee and connections over a five-year period. This experience shows that it is Systems: An Analysis from Bangladesh.” Policy Research Elisa Portale. less important to aim at developing a “a large-scale program” than to Working Paper 6724, World Bank, Washington, DC. http:// focus on developing scalable solutions. The approach was devel- documents.worldbank.org/curated/en/2013/11/18640651/ Live Wire 2014/20. “Scaling Up oped in several phases, as detailed in box 2. The SHS program was benefits-solar-home-systems-analysis-bangladesh Access to Electricity: The Case scalable because its design leveraged Bangladesh’s strengths while SE4ALL (Sustainable Energy for All Initiative). 2012. In Support of the of Lighting Africa,” by Daniel effectively addressing the identified barriers and allowing for careful Objective to Achieve Universal Access to Modern Energy Services Murphy and Arsh Sharma. and timely adjustments to insights gained during implementation. by 2030. Technical Report of Task Force 1: New York. http://www. sustainableenergyforall.org/about-us. Live Wire 2014/22. “Scaling Sharif, Islam, and Marufa Mithila. 2013. “Rural Electrification Using Up Access to Electricity: The Case of Rwanda,” by Paul References PV: The Success Story of Bangladesh.” Energy Procedia 33: 343–54. http://www.sciencedirect.com/science/article/pii/ Baringanire, Kabir Malik, and Govindarajalu, Chandra, Raihan Elahi, and Jayantha Nagendra. 2008. S1876610213000854. Sudeshna Ghosh Banerjee. “Electricity Beyond the Grid: Innovative Programs in Bangladesh and Sri Lanka.” Energy Sector Management Assistance Program, World Bank, Washington, DC. The peer reviewers for this note were Migara Jayawardena (senior energy IEA (International Energy Agency). 2013. World Energy Outlook 2013. specialist, Latin American and Carribean Energy Practice, World Bank), Monali Paris. Ranade (senior environmental specialist, Climate Change Policy and Finance IFC (International Finance Corporation). Lighting Asia: Solar Off- Group, World Bank, and Chandrasekar Govindarajalu (senior energy specialist, Grid Lighting—Market Analysis of India, Bangladesh, Nepal, Sustainable Business Advisory Practice, IFC). Pakistan, Indonesia, Cambodia, and Philippines. New Delhi. http://www.ifc.org/wps/wcm/connect/topics_ext_content/ ifc_external_corporate_site/ifc+sustainability/publications/ publications_report_lightingasia. 10 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. Each Live Wire delivers, in 3–6 attractive, highly readable pages, knowledge that is immediately also be undertaken on relevant to front-line practitioners. 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Once a year, the Energy Practice takes stock of all notes that appeared, reviewing their quality and identifying priority areas to be covered in the following year’s pipeline. https://openknowledge.worldbank.org 1 U n d e r s ta n d i n g C O 2 e m i s s i O n s f r O m t h e g lObal energy seCtOr 2014/5 A KNOWLEDGE NOTE SERIES FOR THE ENERGY PRACTICE THE BOTTOM LINE Understanding CO2 Emissions from the Global Energy Sector the energy sector contributes about 40 percent of global 2014/4 emissions of CO2. three- Why is this issue important? xas The Case of Te renewable ene rgy T o T h eof quarters r i d : emissions gthose Mitigating climate change requires knowledge of the Figure 2. energy-related CO2 1 TransmiTTing come from six major Figure 1. 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. 11 D o y o u h av e s o m e t h i n g t o s ay ? S ay 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,