Publication: Scaling Up to Phase Down: Financing Energy Transitions in the Power Sector
Loading...
Files
23,393 downloads
888 downloads
384 downloads
78 downloads
949 downloads
Date
2023-04-20
ISSN
Published
2023-04-20
Author(s)
Editor(s)
Abstract
The Scaling Up to Phase Down approach is a contribution by the World Bank to the ongoing debate on how to accelerate energy transition in low- and middle-income countries (LICs and MICs)—as called for by the 2015 Paris Agreement on climate change—while simultaneously widening access to the reliable and affordable energy that underpins countries’ development goals. The approach is intended to be a bridge between the challenges facing World Bank clients who are seeking to transition their power sectors and the development partners supporting their efforts.
The energy transition is the process of shifting the global energy system away from the consumption of fossil fuels and toward low-carbon technologies in order to support international goals of limiting climate change. In the next decade, much of this transition will first occur in the power sector because solutions using newer technologies have the potential to become cost competitive with appropriate interventions, and also because the power sector is a powerful pathway for decarbonizing other sectors—most notably transport, buildings, and industry. The power sector is therefore the focus of this report.
The power sector transition will advance energy efficiency and decarbonize the energy supply by expanding renewable energy and strengthening electricity networks in order to integrate renewable energy, demand-side management, and end-use electrification. In LICs and MICs, this transition aims to meet the rapidly growing demand for energy in a way that supports inclusive development consistent with net-zero global emissions by mid-century, and builds resilience to the changing climate. A just transition in the power sector should address the needs of workers and communities who are affected by the shift away from fossil fuels; provide modern energy access to millions of people; and protect vulnerable customers from unaffordable energy prices.
For the first time, the World Bank has outlined a vision for how the international community can support LICs and MICs to overcome critical barriers that are paralyzing the power sector transition. Drawing on findings of the first set of Country Climate and Development Reports produced by the World Bank, and decades of engagement with energy sector development, this approach distills understanding of the unique challenges that LICs and MICs face in undertaking this transition at the scale and pace required to meet their development and climate needs. The approach may help both World Bank clients and development partners in preparing a roadmap to catalyze and sustain a virtuous cycle that unleashes urgently needed investment in power sector transition.
Chapter 1 explains that the capital-intensive nature of clean energy investments, combined with the lack of access to affordable capital, have a disproportionate and distorting effect on the power sector transitions of LICs and MICs. Even where renewable energy has the potential to provide a more affordable energy supply and improve energy security and health, the up-front capital costs that must be borne leave LICs and MICs locked into using costly fossil fuels.
Chapter 2 discusses additional barriers to the scaling up of clean energy and the concomitant phasing down of coal. The commitment of governments will be essential in order to foster the policies, regulations, and institutions needed to prepare a pipeline of projects that can attract private capital. This chapter argues that concessional finance is essential in order to overcome the barriers to investments of private capital at the necessary levels.
Chapter 3 discusses how public and concessional support must be deployed with a disciplined approach in order to scale up clean energy and energy efficiency.
Chapter 4 explains the need to phase down the use of unabated coal, and the instruments to do so in a manner that manages losses and protects the most vulnerable.
Chapter 5 concludes the paper with a discussion of how larger and sustained volumes of concessional capital could be more effectively structured within country-based programmatic approaches and technology demonstration partnerships in order to scale up the financial resources and political momentum for transitioning the power sector.
Link to Data Set
Citation
“World Bank. 2023. Scaling Up to Phase Down: Financing Energy Transitions in the Power Sector. © World Bank. http://hdl.handle.net/10986/39689 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Regional Power Sector Integration : Lessons from Global Case Studies and a Literature Review(Washington, DC, 2010-06)Developing countries are increasingly pursuing and benefitting from regional power system integration (RPSI) as an important strategy to help provide reliable, affordable electricity to their economies and citizens. Increased electricity cooperation and trade between countries can enhance energy security, bring economies-of-scale in investments, facilitate financing, enable greater renewable energy penetration, and allow synergistic sharing of complementary resources. This briefing note draws from the experiences of RPSI schemes around the world to present a set of findings to help address these challenges. It is based on case studies of 12 RPSI projects and how they are dealing with key aspects of RPSI, such as: (i) finding the right level of integration; (ii) optimizing investment on a regional basis; (iii) appropriate regional institutions (iv) technical and regulatory harmonization; (v) power sector reform and integration (vi) the role of donor agencies (vii) reducing emissions through RPSI; and (viii) RPSI and renewable energy.Publication Financing Energy Efficiency Measures for Residential Building Stock : Scaling Up Energy Efficiency in Buildings in the Western Balkans(World Bank Group, Washington, DC, 2014-05)Within the Western Balkans region, a secure energy supply is critical to sustaining economic growth. Currently, the region relies heavily on imported hydrocarbons and maintains high energy intensity relative to Gross Domestic Product, or GDP. This places a huge burden on companies, which require affordable and reliable infrastructure services to be competitive; the public sector, which spends significant budgetary resources on energy; and households, which have to pay a high portion of their income for energy services. As energy pricing is further rationalized, a higher burden will be placed on all sectors, especially poorer households. The residential sector is a significant energy consumer. Its share of total final energy consumption ranges from 28 percent to 32 percent (compared with the EU average of 27 percent). Fairly simple renovations such as insulation, heating system upgrades, and improvements to windows and lighting could reduce consumption in this sector by some 9 percent, with payback periods generally less than 8 years. Such improvements could help ease the impact of future tariff increases while helping reduce the region's projected energy supply and demand gap.Publication Political Economy of Power Sector Subsidies : A Review with Reference to Sub-Saharan Africa(World Bank Group, Washington, DC, 2014-07)Power sector subsidies in Sub-Saharan Africa are substantial and highly regressive. While subsidies can be quick, easy, and politically expedient to implement, they are equally quick to take root and challenging to remove. Optimal policies that are technically sound and welfare-enhancing over the long run have nevertheless been found difficult to launch and even more challenging to sustain. Of the barriers to reform, those associated with political economy are among the most powerful, yet their analysis is often lacking due consideration in the reform design process. This paper reviews the literature on power subsidies and their reform with emphasis on the political economy of such reform. It examines pricing principles in the power sector and different types of subsides; drivers for subsidies, benefits and costs of subsidy reform, and their distribution; and approaches to political economy analysis, tools available, and methodological issues. The paper draws examples from Sub-Saharan Africa and elsewhere, and presents case studies from the literature.Publication Private Sector, Small Scale, Grid-connected Renewable Power Generation in Sri Lanka : A Review of the Experience of the Past Decade 1996 to 2006(Washington, DC, 2008-01)The objective of this report, therefore, is to provide a comprehensive analysis of the development of the renewable power generation sector in the country over a period of ten years, from 1996 to 2006, as a reference for the design of future policy and market interventions in Sri Lanka and other countries. This analysis aims to assist stakeholders to assess the potential for growth in terms of energy contribution from indigenous renewable resources, private sector investment and rural infrastructure development. The report also serves to reveal the conflicting priorities of stakeholders, which impact the development of indigenous energy resources, and thereby create a platform for constructive debate towards realizing a sustainable and optimal outcome for the country.Publication Power and People : The Benefits of Renewable Energy in Nepal(World Bank, 2011)A large section of the Nepalese population is deprived of electricity coverage despite huge hydropower potential, particularly in rural areas. About 63 percent of Nepalese households lack access to electricity and depend on oil-based or renewable energy alternatives. The disparity in access is stark, with almost 90 percent of the urban population connected, but less than 30 percent of the rural population. Nepal has about 83,000 MW of economically exploitable resources, but only 650 MW have been developed so far. This study has been designated to organize an evaluation system that measures the impact of micro-hydro installations on rural livelihoods and to establish a monitoring system for Alternative Energy Promotion Center (APEC) to continually measure the results of the results of the renewable energy programs against the targets.
Users also downloaded
Showing related downloaded files
Publication Poverty and Shared Prosperity 2018(Washington, DC: World Bank, 2018-10-17)The World Bank Group has two overarching goals: End extreme poverty by 2030 and promote shared prosperity by boosting the incomes of the bottom 40 percent of the population in each economy. As this year’s Poverty and Shared Prosperity report documents, the world continues to make progress toward these goals. In 2015, approximately one-tenth of the world’s population lived in extreme poverty, and the incomes of the bottom 40 percent rose in 77 percent of economies studied. But success cannot be taken for granted. Poverty remains high in Sub- Saharan Africa, as well as in fragile and conflict-affected states. At the same time, most of the world’s poor now live in middle-income countries, which tend to have higher national poverty lines. This year’s report tracks poverty comparisons at two higher poverty thresholds—$3.20 and $5.50 per day—which are typical of standards in lower- and upper-middle-income countries. In addition, the report introduces a societal poverty line based on each economy’s median income or consumption. Poverty and Shared Prosperity 2018: Piecing Together the Poverty Puzzle also recognizes that poverty is not only about income and consumption—and it introduces a multidimensional poverty measure that adds other factors, such as access to education, electricity, drinking water, and sanitation. It also explores how inequality within households could affect the global profile of the poor. All these additional pieces enrich our understanding of the poverty puzzle, bringing us closer to solving it. For more information, please visit worldbank.org/PSPPublication Falling Long-Term Growth Prospects(World Bank : Washington, DC, 2024-02-01)A structural growth slowdown is underway across the world: at current trends, the global potential growth rate is expected to fall to a three-decade low over the remainder of the 2020s. Nearly all the forces that have powered growth and prosperity since the early 1990s have weakened, not only because of a series of shocks to the global economy over the past three years. A persistent and broad-based decline in long-term growth prospects imperils the ability of emerging market and developing economies to combat poverty, tackle climate change, and meet other key development objectives. These challenges call for an ambitious policy response at the national and global levels. This book presents the first detailed analysis of the growth slowdown and a rich menu of policy options to deliver better growth outcomes.Publication Unlocking the Power of Healthy Longevity(Washington, DC: World Bank, 2024-09-12)Noncommunicable diseases (NCDs) are among the major health and development challenges of our time. Every year, about 41 million people die due to NCDs. This makes up about 74 percent of all deaths globally, the majority of which are in low- and middle-income countries (LMICs). Countless more people live with NCDs every day. Yet, NCDs are largely treatable and preventable. The risk of developing NCDs and deaths from them can both be lowered with appropriate attention to prevention and treatment. However, weak health systems and limited access to affordable care and information, especially in LMICs, contribute to lapses in seeking and receiving appropriate and timely care. This compendium is a compilation of 18 chapters, each exploring a different but related topic in the nexus of NCDs, human capital, and productivity. It is based on a series of analytical work taken up by the World Bank to support the Healthy Longevity Initiative (HLI) - a collaborative effort between the World Bank, the University of Toronto, and key academic and development partners including the Harvard University and the University of Washington. The HLI presents one of a growing set of efforts to increase the urgency of policy response to NCDs across the world.Publication Choosing Our Future(Washington, DC: World Bank, 2024-09-04)Education can propel faster and better climate action in two crucial ways. First, education can galvanize behavior change at scale - not just for tomorrow, but also for today. Second, education can unlock skills and innovation to shift economies onto greener trajectories for growth. At the same time, education needs to be protected from climate change. Extreme climate events and temperatures are already eroding hard-won progress on schooling and learning. Climate change is causing school closures, learning losses, and dropouts. These will turn into long-run inter-generational earnings losses putting into jeopardy education’s powerful potential for spurring poverty alleviation and economic growth. Governments can act now to adapt schools for climate change in cost-effective ways. This report outlines new data, evidence, and examples on how countries can harness education to propel climate action. It provides an actionable policy agenda to meet development, education, and climate goals together, recognizing that tackling climate change requires changes to individual beliefs, behaviors, and skills – changes that education is uniquely positioned to catalyze.Publication World Development Report 2004(World Bank, 2003)Too often, services fail poor people in access, in quality, and in affordability. But the fact that there are striking examples where basic services such as water, sanitation, health, education, and electricity do work for poor people means that governments and citizens can do a better job of providing them. Learning from success and understanding the sources of failure, this year’s World Development Report, argues that services can be improved by putting poor people at the center of service provision. How? By enabling the poor to monitor and discipline service providers, by amplifying their voice in policymaking, and by strengthening the incentives for providers to serve the poor. Freedom from illness and freedom from illiteracy are two of the most important ways poor people can escape from poverty. To achieve these goals, economic growth and financial resources are of course necessary, but they are not enough. The World Development Report provides a practical framework for making the services that contribute to human development work for poor people. With this framework, citizens, governments, and donors can take action and accelerate progress toward the common objective of poverty reduction, as specified in the Millennium Development Goals.