JANUARY 2015 98193 EA+EE: Enhancing the World Bank’s Energy Access Investments Through Energy Efficiency TABLE OF CONTENTS Executive Summary............................................................................................................................................................. 4 Introduction and Context................................................................................................................................................... 6 EA+EE at WB......................................................................................................................................................................... 8 Methodology & Limitations.......................................................................................................................................... 8 Definitions......................................................................................................................................................................... 8 EA+EE: The Basics.......................................................................................................................................................... 9 Integrating EA+EE by WB Program Type................................................................................................................11 Barriers to EA+EE..........................................................................................................................................................12 Recommendations..............................................................................................................................................................15 Appendix: Case Studies.....................................................................................................................................................19 Lao People’s Democratic Republic Rural Electrification Project Phase I/II.................................................20 Bangladesh Renewable Energy for Rural Economic Development .............................................................. 23 Sri Lanka Renewable Energy for Rural Economic Development ................................................................... 27 Peru Rural Electrification Project..............................................................................................................................31 Mongolia Renewable Energy and Rural Electricity Access Project ...............................................................34 Bolivia Decentralized Electricity for Universal Access Project........................................................................ 37 References............................................................................................................................................................................39 2 LIST OF ACRONYMS AFR Africa BoP Base of the Economic Pyramid CFL Compact fluorescent lamp EA Energy access EAP East Asia Pacific EE Energy efficiency ESCO Energy service company ESP Energy service provider GDP Gross domestic product ICR Implementation Completion and Results Report LAC Latin America and Caribbean LED Light emitting diode NGO Non-governmental organization PAD Project Appraisal Document PV Photovoltaic RE Renewable energy REP Rural Electrification Project REAP Renewable Energy and Rural Electricity Access Project RERED Renewable Energy for Rural Economic Development SAR South Asia SEAD Super-efficient Equipment and Appliance Deployment SHS Solar home system SME Small- and medium-sized enterprise SSC Sales and service center TTL Task Team Leader WB World Bank Wp Watt-peak WTS Wind turbine system 3 EXECUTIVE SUMMARY series of recommendations for how efficiency More than 1.2 billion people around the globe can amplify and help to lock in the impacts lack access to electricity, and another billion of upcoming WB EA projects. These recom- suffer from unreliable access. Energy poverty mendations include: is all too common among the world’s poorest > LEAD WITH EFFICIENCY: Develop tools, 4 billion people—a group collectively known analytics, and models that equip project as the Base of the Economic Pyramid (BoP)— staff, clients, and implementers to first and is particularly prevalent among econom- manage supply- and demand-side ineffi- ically and socially vulnerable communities, ciencies through EE, and then develop the disproportionately affecting women, children, generation needed to cover supply gaps. and ethnic and/or religious minorities. > COMMUNICATE THE BENEFITS OF EA+EE: According to the International Energy Agen- Develop tools, resources, educational cy, access to energy (energy access or EA) modules, and communications materials “plays a strong role in poverty eradication, to highlight and reinforce the importance reducing infant mortality, improving educa- of EA+EE to WB staff, technical contrac- tion, ameliorating gender inequality, attaining tors, and clients. environmental sustainability, and accelerating > SET GOALS TO MAXIMIZE EA+EE: Establish global economic growth and prosperity.”1 project success and performance indica- Energy efficiency (EE) is a powerful, regularly tors to appropriately reflect EA+EE prin- overlooked driver of EA, and it has the poten- ciples and properly incentivize delivery of tial to fundamentally reshape and accelerate energy service at least cost. global efforts to deliver modern energy ser- > IMPROVE PRODUCT PROCUREMENT: Equip vices to BoP communities. Energy service— project staff and clients with a procure- not energy supply—is what accomplishes ment system that drives purchases based the goals of energy access, and efficiency on energy and life-cycle performance as can maximize the delivery of energy service well as price to overcome procurement while minimizing the financial, social, and challenges and inspire competition and environmental costs of energy supply. innovation among vendors. The World Bank (WB) has for many years > LEAVE EA+EE MARKETS BEHIND: Build been financing and conducting work to in- market infrastructure for efficient prod- crease access to modern energy services ucts by training new and existing vendors, among energy poor communities, and its creating appropriate market forces, and efforts vary greatly from project to project, educating consumers on the benefits of based largely on client-country context, re- efficiency. quests, and needs. In mid-2014, CLASP eval- > RETHINK SUBSIDIZED ENERGY TARIFFS: uated a selection of recent WB EA projects Support markets for energy efficient prod- to identify opportunities to expand and more ucts and behavior by exposing end-users effectively integrate and operationalize EE, to the true cost of energy; off-set costs a process and set of principles we refer to as through energy efficiency subsidies, re- EA+EE. Following a review of project docu- bates, and incentives funded by tariffs. ments, interviews with project managers, and extensive project evaluation, we prepared a > EDUCATE CONSUMERS: Train new and ex- isting customers on how energy usage 4 will impact their energy bill or the perfor- Moreover, an important, though perhaps not mance of their off-grid systems, and en- readily intuitive, outcome of EA+EE is that courage them to demand energy efficient positive energy efficiency outcomes—not just products. energy access outcomes—often come of it. EE is, in many cases, a necessary condition for meaningful, cost-effective, and affordable The WB currently incorporates EE principles EA, and has grown essential to many access and practices into many of its EA projects, efforts (particularly in off-grid contexts)—this and in many cases this has proven to be dynamic has driven some remarkable EE out- highly impactful. However, full and optimal comes, and will continue to do so. utilization of EE is often limited by a lack of resources, capacity, or understanding of the This evaluation, and the associated recom- options available and the role that efficiency mendations, is intended to help the WB can play in improving project outcomes. Ad- consider the development of an actionable dressing these gaps can help accelerate the EA+EE strategy. It is, we hope, a beginning achievement of WB project goals and ampli- of a larger conversation about the role that fy their impacts, drive technical and market energy efficiency can and will play in energy innovations, and save consumers, clients, and access, and vice versa. projects money. FIGURE 1: Percentage of National Population Unelectrified Percentage of Population Unelectri ed 1% 20% 40% 60% 80% 99% Source: United Nations Environment Programme en.lighten Country Lighting Assessment, 2013 5 INTRODUCTION AND In un-electrified rural or peri-urban regions, CONTEXT distributed (“off-grid”) energy technologies Worldwide, approximately 1.2 billion people offer cost-effective, reliable modern energy lack access to electricity, and another billion services that improve quality of life, displace lack reliable access. Energy poverty and ex- pre-modern fuels, and drive socioeconomic treme poverty are tightly correlated, and en- development. In under-electrified regions, ergy-poor people are frequently among the where households and businesses are unable world’s poorest 4 billion, a group collectively to get adequate energy service due to high known as the Base of the Economic Pyramid costs, energy generation shortfalls, or other (BoP). Energy poor BoP consumers tend to market failures, grid extension, supply en- be extremely economically and socially vul- hancement, pricing / tariff reforms, and other nerable, and are disproportionately women, energy sector reforms are reliable interven- children, and ethnic and/or religious minori- tions, while off-grid technologies can serve ties. The map on the previous page illustrates as an important stop-gap for consumers the global scale and distribution of energy awaiting the benefits of these interventions. poverty. In nearly any context, EE can greatly amplify Energy poverty is a fundamental barrier and accelerate the impacts of EA. Energy ser- Energy to eradicating global poverty and building vice, not energy supply, is what is demanded service, shared prosperity.2 The costly, dirty fuels (e.g. by energy poor consumers. Energy efficiency kerosene, charcoal, and diesel) used by ener- maximizes the delivery and utility of energy not energy gy poor BoP consumers to meet daily needs service while minimizing the costs and neg- supply, is have major negative health, environmental, ative social and environmental impacts of what is and financial consequences, greatly exac- energy supply. As such, EE is an enormously erbating their already precarious socioeco- potent tool in efforts to deliver modern clean demanded by nomic status. According to the International energy services—and the resulting improve- energy poor Energy Agency, Energy Access (EA) “plays a ments to quality of life—to the billions of en- strong role in poverty eradication, reducing ergy poor people around the world. consumers. infant mortality, improving education, ame- liorating gender inequality, attaining environ- The World Bank & Energy Access mental sustainability, and accelerating global The World Bank (WB) has for many years economic growth and prosperity.”3 been financing and conducting work to in- crease access to modern energy services. The technologies and processes needed to The WB’s EA efforts vary greatly from project provide energy poor BoP consumers with to project, based largely on client-country access to many modern energy services ex- context, requests, and needs. However, they ist, and include grid extension, generators, typically fall into three main categories: solar home systems (SHSs), small wind tur- 1. Financial and operational reform of energy bine systems (WTSs) and renewable mini-/ sector; micro-grids. These technologies displace pre-modern fuels and greatly reduce their 2. Increased or enhanced grid connectivity social and environmental impacts. The chal- and reliability; or lenge lies of EA in delivering these technolo- 3. Provision of energy service to off-grid gies to underserved BoP markets reliably and consumers and communities. affordably. 6 At the request of WB, CLASP has reviewed is simultaneously driving improved EE out- and evaluated a range of WB energy access comes. projects and made recommendations for how to optimize future and ongoing EA proj- “The LED lamp holds great promise for ect impacts through better integration of EE. increasing the quality of life for over 1.5 This report will refer to this nexus of energy billion people around the world who access and energy efficiency interventions as lack access to electricity grids. Due EA+EE. to low power requirements, it can be powered by cheap local solar power.” EA+EE is already reshaping and accelerat- ing global efforts to deliver modern energy ­ Royal Swedish Academy of Sciences, — announcing the 2014 Nobel Prize in Physics services to those who need them most. Throughout the developing world, high- ly-efficient light emitting diode (LED) tech- The WB already incorporates EE principles nologies are enabling affordable access to and practices into many of its EA projects, modern lighting for un- and under-electrified and in many cases quite successfully. communities by dramatically reducing ener- However, utilization of energy efficient gy investment costs; this principle of efficien- technologies and interventions is too often cy unlocking affordable access extends to limited by a lack of resources, capacity, or other, non-lighting applications. EE minimizes understanding of the role that EE can play consumer and energy supply costs and is a in improving EA project outcomes and of technical and financial requirement of many how to incorporate it. Much more can be (primarily off-grid) EA business models. done with regards to EA+EE to amplify the While EE drives improved EA outcomes, EA impacts of WB efforts, and to accelerate energy’s role in eradicating global poverty and building shared prosperity. TABLE 1: WB Projects Analyzed STATUS TITLE COUNTRY REGION TYPE SETTING Rural Electrification Project Peru LAC Grid Rural Enhancement Renewable Energy Mongolia EAP Off-grid Rural for Rural Access CLOSED Renewable Energy Sri Lanka SAR Off-grid Rural for Rural Econ. Dev. Household Energy Mali AFR Off-grid Rural / and Universal Access Peri-Urban Decentralized Bolivia LAC Off-grid Rural Electricity for Universal Access Project Rural Electrification Laos EAP Grid Rural Enhancement ACTIVE OR and Off-grid PIPELINE Rural Electrification Bangladesh SAR Off-grid Rural and Renewable Energy Development Rwanda Electricity Rwanda AFR Grid Rural / Access Scale-up Enhancement Urban 7 EA+EE AT WB SOME OF THE BENEFITS OF EA+EE4 Project Methodology & Limitations The WB provided CLASP with documenta- • REDUCE PEAK LOADS – EE lowers tion—including Project Appraisal Documents the investments needed to meet (PADs), Implementation Completion and Re- demand during peak hours and sults Reports (ICRs), and other project docu- frees up resources to supply energy ments—for more than 40 on- and off-grid EA to more people. projects. CLASP conducted an initial review • REDUCE ENERGY COSTS – of these documents to inform the selection Households can afford more energy of projects for closer study and Task Team services or save on total energy Leader (TTL) interviews. In consultation with costs. the WB, CLASP identified projects to repre- • SAVE GOVERNMENTS MONEY – Lower sent both past and current projects from four energy consumption reduces target regions: Latin America and Caribbean government expenditure where (LAC), East Asia Pacific (EAP), South Asia tariffs are subsidized and/or supply (SAR), and Africa (AFR). is tight. • PREVENT TECHNOLOGY LOCK-IN – CLASP reviewed documents and conducted Appliances and other energy-using interviews with the TTLs responsible for the devices can stay in developing eight projects identified in Table 1. CLASP world markets for years beyond asked TTLs questions about project back- their expected useful life. Deploying ground and design, and how EE was or might highly efficient technologies have been integrated into the project. From prevents the long-run lock-in of these projects, CLASP developed seven case inefficient products. studies, which can be found in the Appendix. The recommendations for greater integration part of this effort, nor was in-depth project of EA+EE that are included in this report are data or techno-economic analysis. Such anal- based on these case studies, and are intend- ysis may be appropriate in developing the ed to assist the WB as it considers the scope educational and communications tools and and goals of future EA projects. CLASP in no modules recommended here, and CLASP rec- way intends this report, or any evaluation or ommends it as an area for future study. recommendations in it, to be critical of past or ongoing projects. Rather, the purpose is Definitions to provide ideas on how the WB, its project Energy access is an extraordinarily diverse teams, and its clients might optimize the im- field, and the meaning of the term varies pacts of future projects through EA+EE. widely across national jurisdictions and WB projects. Depending on context, a great Limitations to This Analysis many market and policy interventions can be CLASP’s analysis and the recommendations leveraged to achieve EA goals. For any given made here are based on publicly-available EA intervention that is considered, a distinct project planning and review documents, as suite of EE interventions will be applicable. well as interviews with the TTLs of a relatively small group of WB EA projects. A review of For purposes of this report, “energy access” every WB EA project was not scoped as a means that previously un- or under-served 8 households, businesses and communities That is, at least historically, the wealthier the have achieved or been granted new or en- economy, the more energy the average citi- hanced access to reliable, affordable, and zen would tend to consume. adequate modern energy services, either through grid-connected service or off-grid This observation is no doubt historically ac- systems. By “energy efficiency” we mean curate, but it does not provide guidance for a decreased amount of energy required to a future, energy-constrained world. Nearly maintain or improve the level of energy ser- every advanced economy is working to vice provided to households, businesses and decrease per capita energy consumption communities. through energy efficiency and other mea- Energy sures, and to decrease dependence on fossil efficiency EA+EE: The Basics fuels for reasons as diverse as national se- enables faster Designing EA projects to strategically em- curity and climate change mitigation. Taking achievement phasize and leverage EE benefits from their these global issues into account, a method outset will improve project outcomes and by which to meaningfully measure the dis- of energy help accelerate the pace of progress toward tinction between energy consumption and access goals the Sustainable Energy for All goal of deliver- energy service would very likely demonstrate by maximizing ing universal access to sustainable energy by that per capita energy service is a stronger the energy 2030. By creating new markets and models indicator of GDP per capita than per capita service for EE products and interventions, EA proj- energy consumption. ects can, in turn, help drive global EE gains. that can be Incremental Costs of Energy Efficiency achieved by Fundamental to the theory of EA+EE is the In developed economies, the purchase of en- any given recognition that the provision of energy ergy efficient technologies is often disincen- energy access does not, in itself, accomplish energy access tivized because the efficient option – typical- investment. goals—rather, these goals are accomplished ly a newer, more technologically advanced by the services that energy enables. Energy product – is marginally more expensive than poor BoP consumers do not want a diesel inefficient products that provide the same generator, or a SHS, or a connection to a service. In developed economies, this upfront mini-grid; instead they want the services cost of EE has been and continues to be a that these technologies enable. To put this barrier to the proliferation of efficient prod- another way, consumers do not want a ucts. kilowatt-hour, they want a kilowatt-hour’s worth of reliable lighting, or entertainment, But this need not be the case in the con- or productivity. Energy efficiency enables text of WB EA projects, and evidence from faster achievement of energy access goals by working EA markets suggests that it is not. maximizing the energy service that can be Investments in new energy supply account achieved by any given energy access invest- for the vast majority of EA costs, and energy ment. efficient end-use devices and appliances dra- matically reduce the amount of energy sup- Energy Service vs. Energy Consumption ply required to provide service. The resulting A commonly made point in discourse sur- decrease in energy supply costs more than rounding energy access is that gross domes- makes up for the incremental costs of energy tic product (GDP) per capita is highly cor- efficient technologies. In fact, forthcoming related with per capita energy consumption. research from Lawrence Berkeley National 9 FIGURE 2: Access Impacts of Efficiency Interventions ACCESS (EA) OBJECTIVES ENERGY SECTOR REFORM GRID EXTENSION & ENABLING NEW GRID CONNECTIONS OFF-GRID ACCESS Grid Infrastructure Rehabilitation EFFICIENCY (EE) INTERVENTIONS Consumer Education Deployment of Efficient End-Use Devices Energy Audits and Building Envelope Retrofits Efficiency Program MV&E INDICATIVE IMPACTS IMPROVED POLICIES DEVELOPMENT AND IMPROVED QUALITY OF REDUCED COST OF AND PROGRAMS EXPANSION OF ENERGY SERVICE ENERGY SERVICE > Enhanced development MARKETS > Enhanced development > Reduced energy outcomes > Expanded addressable outcomes supply investment > Improved project BOP market > Extended run-times/ costs finance > Energy efficient service > More cost-effective > Climate pollutant services/product > Load shedding/peak service delivery mitigation market development demand reduction > Enhanced development > Enhanced policy > Enhanced industrial > Enhanced energy outcomes environment and SME productivity security > Enhanced industrial and SME productivity 10 Laboratory and Humboldt State University Integrating EA+EE indicates that super-efficient off-grid appli- by WB Program Type ances can reduce the cost of off-grid energy In the sections below, we discuss how EE has service by up to 50%. One need only to look contributed, and can further contribute, to at the uptake of LEDs – a relatively costly, but WB EA project success. Many WB EA proj- super-efficient, lighting technology – in the ects include a combination of the interven- Bangladeshi SHS market for evidence of this tion strategies that follow. dynamic. Energy Sector Reform In grid-connected settings, large proportion In many countries, energy generation and of WB EA investments are in generating transmission infrastructure is insufficient to supply development and grid enhancements. serve existing customers, let alone new ones. While techno-economic analysis is needed to In these countries, electric grids often fail to model impacts on existing and prospective satisfy demand due to aging infrastructure; WB projects, theory and evidence from the demand that outstrips available supply; and field suggests that large-scale market pene- sub-optimal management. Load shedding, tration of highly efficient end-use products brownouts, and blackouts are common, as reduces necessary supply and grid invest- are high energy rates/tariffs. ments. WB energy sector reform projects often EA+EE: Coupling Access and Efficiency include supply-side infrastructure improve- Interventions ments such as retrofitting power plants, The ideal WB energy access project would replacing old power lines, and installing new, focus first on cost-effectively optimizing EE highly efficient transformers. These efforts in an economy or sector – getting the most typically offer strong return on investment service possible from each unit of energy because they tend to have a few discrete, produced – and would then adjust supply to high-impact points of intervention. Energy respond to any shortfalls. Cost-effective effi- sector reform projects often “take back” as ciency interventions can often stretch exist- much as 10% of an existing grid’s wasted en- ing energy supplies, lower generation costs, ergy supply and lower generation costs. Sup- reduce consumer tariffs, improve financial ply-side efficiency gains improve the financial performance of a utility or sector, reduce performance of the energy sector, and help peak demand, mitigate the need for load ensure that more megawatts generated be- shedding, reduce the need for fuel imports, come megawatts consumed. These impacts and grant more people access to energy ser- help drive the socioeconomic goals of EA; vices. The WB recognizes this, and many WB reduced fuel imports and peak load drive its EA projects feature strong EE components. environmental goals. Figure 2, previous page, provides an indic- Grid Extension and New Connections ative list of common WB energy access in- Many WB demand-side EA efforts focus on terventions, the efficiency interventions that connecting new customers to energy service have been or might be coupled with them, infrastructure, and ensuring that those cus- and expected impacts. tomers who are connected receive reliable service. These interventions can improve the ability of an energy sector to satisfy demand, 11 obviate costly peak and supplementary pow- energy services, displacing pre-modern fuels er generation, and reduce the need for fuel and their negative impacts, and facilitating imports. Here again, energy efficiency can be socioeconomic development. used to amplify and accelerate EA impacts. Off-grid energy systems can be quite ex- Eliminating inefficient end-use devices pensive for poor BoP consumers, and their (e.g. lighting and appliances) through mar- ability to pay is one of many market barriers ket-based approaches (e.g. product rebates, limiting the uptake of these technologies. As subsidies, market development and con- illustrated in Figure 3, off-grid appropriate, sumer education programs) or systematic super-efficient appliances convey the same replacement programs can greatly reduce (and often improved) level of energy service peak demand, thereby lowering generation as inefficient alternatives. Efficient appliances costs and freeing up capacity in the grid so radically reduce the size and cost of the sys- that more consumers can be provided ener- tems needed to provide a household or com- gy service. The use of efficient lighting and munity with energy services, as system costs appliances also tends to lower consumer are driven largely by the cost of solar panels energy bills, leaving consumers with financial and batteries. The upfront cost of a typical flexibility for other basic needs. This serves off-grid energy system could be reduced by the socioeconomic development goals of EA. as much as 50% if super-efficient appliances and right-sized solar PV and batteries are Enabling Off-Grid Access used, while delivering the same or greater The cost-benefit analysis of last-mile grid ex- energy service. In this way, energy efficiency tension is often unfavorable, so connectivity has made—and will continue to make—mod- to traditional grid-based energy infrastruc- ern energy services available to vast new ture is unlikely to be a viable near-term op- segments of the BoP consumer market. tion for many energy poor BoP consumers. Small off-grid energy systems such as mini- Barriers to EA+EE and micro-grids and SHSs can provide these Many of the TTLs interviewed for this report consumers with many of the benefits modern understand very well that there are benefits Global O -Grid Appliance Super-E ciency & Clean Energy Access LEAP FIGURE 3: Off-Grid Appliance Super-Efficiency & Clean Energy Access Lighting and E nergy A ccess Partnership ENHANCED MORE SERVICE AFFORDABLE An energy system with a The same system paired with Appliance super-e ciency 40 Wp solar panel and super-e cient o -grid also enables much smaller, 70 Ah battery will power: appliances provides greatly more a ordable energy ● a 25 W incandescent light bulb enhanced energy service: systems to provide (250 – 400 lumens) ● 2 LED lighting fixtures equivalent, and even superior, for 5 hours/day (≈900 lumens) for 5 hours/day service. ● a 13 W TV for 3.5 hours/day ● For example, a 10 Wp solar panel ● a 6 W fan for 4 hours/day and 2 – 5 Ah battery can power a LED ● a 1 W mobile phone charger for lighting fixture (200 – 300 lumens) 4 hours/day up to 8 hours/day ● a 1 W radio for 5 hours/day Source: Global LEAP Initiative. Analysis courtesy of Humboldt State University’s Schatz Energy Research Center. 12 to incorporating EE into the EA projects they remove one of the key barriers to energy manage. Nevertheless, they are often held efficiency investment in Sri Lanka. However, back from doing so because of resource ca- this component received only 0.9% of the pacity constraints, conflicting client-country project’s total financing. The project’s TTL and stakeholder priorities, and structural lim- indicated that the component was not suffi- itations in their projects. ciently funded to warrant the attention such a complex task required.5 Further, the tools Client & Stakeholder Engagement at the project team’s disposal related to this Despite clear benefits, defining a substantive component were not well-aligned to the proj- EE+EA contribution to projects has been a ect’s overarching EA goals. challenge for many TTLs. The political and economic incentives motivating clients and The EE component remained a part of the stakeholders drive many projects toward ac- project until the project’s end, but its impacts tivities and milestones with visible, immedi- were modest. The project’s ICR suggests that ate impacts. As a result, many large EA proj- “to reduce complexity and remain focused, ects focus on increased generation capacity it would have been better to limit the project through new power plant and renewable to renewable energy and address energy energy construction, grid extension, and the efficiency in a more significant manner in a provision of off-grid solutions. different project supported by the Bank or other development institution.”6 Improving energy service through EE has longer time horizons, is less visible, and is Challenges to Effective Product harder to quantify. Moreover, by virtue of Procurement needing EA interventions, many client coun- Many WB-financed EA projects have a bulk tries do not have a robust marketplace of procurement component, whereby project EE stakeholders to help inform project and staff or implementing partners purchase policy design. For these and other reasons, large orders of products like compact fluores- when seeking financing for large EA projects, cent lamps (CFLs) or SHSs. Effective product clients tend to have greater interest in brick- procurement requires complex management and-mortar projects that expand or improve of technical specifications, price proposals, energy supply. vendors, local policy, and local markets; ef- ficient product procurement difficulties and Insufficient Resources/Capacity delays have challenged more than one WB Devoted to EE Components EA project component. Many EA projects dedicate extensive financ- ing to the expansion or improvement of ener- For example, Bangladesh’s RERED included gy supply infrastructure. In cases where EE is a massive CFL deployment initiative wherein included in such projects it can be viewed not Bangladeshi utilities were responsible for as integral to the project’s success but rather procuring CFLs. However, a strong market as an additive, marginal task or burden. for CFLs did not exist in Bangladesh and the utilities had no previous experience with bulk For example, the Sri Lanka RERED project procurement of efficient products. The prod- included an EE component to support the ucts procured proved to be extremely low development of an energy service company quality and ill-suited for Bangladesh’s spotty (ESCO) market that would, over time, help electric grid. A survey revealed that 34% of 13 the products had failed within a few months, For example, many WB projects focus on and laboratory tests revealed that product providing both on- and off-grid electricity lifetime was significantly less than that called services to rural communities, and promoting for in the WB technical specifications. A sec- end-use EE to these communities presents ond phase of CFL procurement suffered from significant challenges. It can be difficult bidders submitting fraudulent performance to build functional competitive markets in guarantees or not submitting them at all, and sparsely populated regions with limited retail was ultimately abandoned. options. Consumer awareness and outreach programs to educate rural consumers on the Getting EE procurement right is crucial to benefits of EE can be expensive and time both project success and the achievement consuming; many governments of develop- of larger EA goals. In developing countries, a ing economies don’t have the political and product procured by a WB-financed project financial resources to coordinate national EE is often a consumer’s first experience with a campaigns for their existing energy infra- new technology and, even if subsidized, often structure. requires a significant financial investment. Products that perform poorly or fail quickly Moreover, lessons and smart practices from can hinder the development of future mar- other WB projects are not necessarily ap- kets for those products, and can negatively plicable to every new project. There is an impact markets for related products. More- extraordinary amount of variability among over, inefficient products and product mar- markets in the countries, regions, and ju- kets get locked in, limiting EA benefits until a risdictions served by WB projects, and the market for competitive efficient products can rationale for and methods of EA+EE vary develop. accordingly. The procurement process may also be a place where project and WB requirements are contrary to EA+EE principles. TTLs who have overseen bulk EE procurement by cli- ents in EA projects report that procurement decisions are typically made on an initial cost basis, whereas a life-cycle cost basis would be far more appropriate from a EA+EE per- spective. Market Readiness The goal of every WB EA project is to foster markets through which energy service is made available – both technically and eco- nomically – to un- and under-served BoP consumers. However, creation and mainte- nance of a self-sustaining markets requires a good deal of infrastructure that is often lack- ing in WB project countries. 14 RECOMMENDATIONS CLASP recommends that the WB develop To help the WB identify solutions to the bar- tools, resources, educational modules, and riers to EA+EE listed above, with the ultimate communications materials to highlight and goal of maximizing the outcomes of future reinforce the importance of EA+EE to WB WB EA projects, CLASP suggests several staff, implementers, and clients. CLASP efforts that might be undertaken at the WB also recommends that the WB make institutional level and at the project imple- EA+EE an internal strategic priority, and mentation level. perhaps include consideration of EE inter- ventions and outcomes as a requirement Institutional Recommendations in project design and reporting. 1. LEAD WITH EFFICIENCY 3. SET GOALS TO MAXIMIZE EA+EE Energy efficiency offers clear benefits to WB EA objectives and indicators are often energy access projects. It maximizes the structured around enhancing or improving delivery of energy service while minimiz- energy supply capacity (e.g. adding addi- ing its economic, social and environmental tional megawatts to the grid) not electric costs. Energy access is not the provision or energy service. While structuring EA of energy, but the facilitation of energy project milestones in this way makes service. Scenarios where supply is inad- sense in many regards, it may disincentiv- equate, unreliable, or too expensive are ize EA+EE. anathema to EA efforts—and EE is the Project indicators drive project team ac- fastest, easiest, most cost-effective tool to tion, and therefore should reward projects mitigate these scenarios. that are designed to maximize the bene- The ideal approach of any EA initiative fits of energy service while minimizing its would be to first manage supply- and de- costs, instead of those that simply maxi- mand-side inefficiencies through EE, and mize supply or consumption. For example, only then adjust supply as needed to meet a project objective of “Increase in mega- demand. CLASP recommends that the WB watt hours consumed for commercial use” begin to develop the tools and models to might very well disincentivize project staff both convince and equip project staff, cli- and clients from pursuing EE interventions ents, and implementers to approach EA in and technologies. On the other hand, a this way. project objective of “Percent of population served by reliable off-grid clean energy 2. COMMUNICATE THE BENEFITS OF EA+EE system” may have positive EA+EE impli- EA+EE is an emerging concept, and the cations, as EE can expand off-grid clean benefits are not presently obvious to proj- energy markets. ect designers and managers. EA experts are not necessarily EE experts, and vice CLASP recommends that the WB develop versa. If EE’s benefits are not well under- and establish project success indicators stood, or are not clearly communicated, that appropriately reflect EA+EE princi- EE can seem like an additional burden to ples, and properly incentivize delivery of the project or, worse, irrelevant to project energy service at least cost. aims. 15 est priced bid. While this is a sound and reasonable process, it may not support Setting EA+EE Goals: Rwanda EA+EE principles or help to build markets The Rwanda Electricity Access Scale-up for the most impactful products. and Sector-wide Approach (SWAp) project is the only WB access project analyzed as While purchasing on least-cost makes part of this report that explicitly connects sense from a project finance perspective, an energy efficiency component to energy it may be contrary to EA project goals. The access outcomes. This project focuses on marginal incremental costs of a super-ef- national grid extension to improve access to ficient product may be cause for dis- electricity in Rwanda. The two main barriers qualification in a least-cost procurement to achieving universal access in Rwanda scheme, while a procurement process are constrained generation at the national based on life-cycle cost analysis would level and the high cost of electricity.7 reveal the product to be of vastly superior value. CLASP recommends that the WB To help reduce the cost of electricity for develop procurement and accounting consumers and to reduce the impact on tools that encourage or require clients to the national grid when new connections are procure products based on least life-cycle made, approximately 900,000 CFL bulbs8 cost to maximize delivery of EA benefits will be distributed to households by the over the long term. national energy service provider Rwanda Electricity Corporation (RECO). The ratio- A smarter, more flexible procurement nale for this approach was that by distribut- system may also offer important second- ing CFLs to new customers the total impact ary benefits. Product procurement under on the grid would be smaller and the ener- WB-financed projects represents a sizable gy cost for customers would be reduced, market opportunity. Procurement rules thus helping to achieve the project’s goal that drive purchases based on energy and of improved access to reliable and cost-ef- life-cycle performance as well as price fective electricity.9 The indicators that are could inspire competition and innovation used to measure the increased adoption of among vendors, and help build out vital energy efficient technologies are “percent EA+EE market infrastructure worldwide. of new customers receiving CFLs” and “es- timated load reduction from EE investments Project Design Recommendations in GWh”.12 5. LEAVE FUNCTIONAL EA+EE MARKETS BE- HIND 4. IMPROVE PRODUCT PROCUREMENT WB projects are short-lived by design, and The bulk procurement process for prod- project financing is limited. To optimize ucts purchased for WB-financed EA human development and environmental projects (i.e. SHSs, CFLs) tends to be con- impacts, it is important that projects leave sistent project-to-project. First, a product behind self-sustaining market and policy specification is developed and bids are infrastructure. Functional markets drive solicited. Once the bids are in, any prod- competition, which in time leads to more ucts that do not meet the specification affordable, higher quality, more efficient are removed from consideration. Finally, products and services for consumers. the vendor is selected based on the low- While market readiness varies greatly 16 among the WB’s client countries, some smart practices are evident. And, while EA+EE Markets: Mongolia replicating the markets that have enabled Mongolia’s Renewable Energy and Rural the success of certain WB EA programs Electricity Access Project (REAP) estab- may be impossible, building analogous lished regional service centers for SHSs that market infrastructure and capacity is rela- helped to overcome some of the barriers tively straightforward. that service provider’s and project manag- er’s face when providing off-grid energy to CLASP recommends that, where EA+EE rural, dispersed populations. Prior to invest- market infrastructure does not exist, the ing in a SHS, it is important for consumers WB prioritize making the necessary in- to know that they will have an accessible vestments. resource to purchase replacement parts and receive repairs covered by warranties. EA+EE Markets: Bangladesh In addition to these services, the regional One of the best examples of the power of service centers provide customers with energy efficiency to deliver access out- more options for purchasing appliances comes can be observed in the Bangladeshi that are compatible with their SHSs, includ- SHS market. ing EE lighting and other equipment. Among other interventions, the program 6. RETHINK SUBSIDIZED ENERGY TARIFFS provided subsidies to make SHSs more Many governments in developing coun- affordable, and several partner organiza- tries subsidize energy to make it more tions were set up to be distributors for the affordable, or for political gain.11 While sub- systems. These organizations competed sidies do make energy more affordable, heavily on price for customers—factors that they tend to hide the true cost of energy contribute to lower prices included falling and discourage up-front spending for en- cost of photovoltaic (PV) panels and com- ergy efficient technologies. ponents, and efficiencies gained from scale and market experience. But nothing im- In many WB client countries, reducing pacted the price of energy service, and the subsidies may not be feasible or desirable market, as significantly as the introduction because doing so would raise consumer of light emitting diodes (LEDs). electricity costs. However, if the political will exists, it’s possible to avoid subsidies By using LEDs with a SHS, equivalent or and nevertheless pass savings on to con- better levels of energy service can be ob- sumers through rebates and incentives tained with a SHS that uses a much smaller tied to EE. Doing so helps meet EA goals battery and PV panel. The resulting reduc- by freeing up grid capacity and lowering tion in system cost more than covers any household energy cost, but does not hide marginal increase in cost from improved the true cost of energy and disincentivize appliance efficiency, and the entire SHS EE. The Super-efficient Equipment and system is much more affordable. The rapid Appliance Deployment (SEAD) Initiative is expansion of Bangladesh’s SHS market has currently working with the government of led to high demand for LEDs, and a notably Mexico to implement such an approach.12 strong marketplace of LED manufacturers has emerged in Bangladesh. CLASP recommends that the WB weigh opportunities for similar approaches at the outset of client country engagement. 17 7. EDUCATE CONSUMERS Many WB EA projects include EE consum- It is important that clients and project er education through leaflet distribution, teams are well-educated about EA+EE. trainings by installers, radio and SMS ad- However, building robust self-sustaining vertisements, etc., but there is still room markets that will continue to advance for improvement. For example, in the EA+EE goals after WB financing and Rwandan project CFLs are distributed to project teams leave requires that con- each house newly connected to the grid, sumers understand the benefits of energy but educational materials are not distrib- efficiency and make purchase decisions uted to explain the differences between based on that understanding. When a new CFL and incandescent bulbs. This lack of electric connection is made—either on- or a consumer education component may off-grid—it is important for customers have significant implications for the CFL to receive training on how to use ener- market, energy system, and consumer gy-consuming products safely and effi- ecosystem in Rwanda in years to come. ciently. Energy efficient behaviors may be CLASP recommends that, in designing unfamiliar to newly connected consumers, and implementing EA projects, the WB and project outcomes will be amplified if prioritize educating consumers on EE. The these customers understand how usage long-run implications of a cohesive effort will affect their energy bill or the perfor- to this effect could be astonishing. mance of their off-grid systems. 18 Appendix: Project Case Studies 19 CASE STUDY Lao PDR REP Phase I/II TITLE: Lao People’s Democratic Republic (PDR) Rural Electrification Project (REP) Phase I APPROVAL: 27 Apr 2006 CLOSE: 31 Mar 2012 CLIENT: Government of Lao PDR (GoL) IMPLEMENTING AGENCY: Electricité du Laos (EDL); Ministry of Energy and Mines (MEM) Project Background & Overview REP’s TTL identified three ways in which Amidst an expanding economy and declining energy efficiency enables improved energy poverty rates, rural electrification rates in Lao access outcomes: Technical performance, fi- PDR rose dramatically from 16% in 1995 to nancial performance, and enhanced consum- 46% in 2004. Realizing the socioeconomic er trust in energy service providers. benefits of electrifying the highly rural coun- try, GoL set a goal to electrify 90% of the REP’s TTL also shared experiences from country by 2020, with intermediate goals of working on a WB energy access project in 70% by 2010 and 80% by 2015. At the same Nepal. Lao PDR and Nepal face similar chal- time, GoL sought to expand the availability lenges in expanding rural electrification; how- of surplus hydroelectric power – a key export ever, for several reasons Lao PDR has been for the country – and improve the perfor- better able to provide reliable energy access mance of its state-owned, vertically integrat- and incorporate energy efficiency. ed utility, Electricité du Laos (EdL). Driving Access & Sector Reform with Energy Efficiency To support GoL’s rural electrification ef- forts and its goal to improve EdL’s financial IMPROVED SUPPLY-SIDE EFFICIENCY is sustainability, REP was structured to drive low-hanging fruit in energy access projects. access through grid extension, off-grid SHS Improving supply side efficiency means re- deployment, and supply- and demand-side ducing the energy losses of an energy sector efficiency gains for EdL. The project has suc- or utility by replacing inefficient transmission ceeded in expanding energy access to rural and distribution technologies and overhaul- communities, and has helped to improve ing sectoral or utility performance. Every EdL’s reliability and financial performance. electron gained through such efficiency measures can be sold to consumers without Project Highlights and Lessons constructing or purchasing additional energy The experience of Lao PDR REP is illustrative supply. Because the scale is so large, and of the role that energy efficiency plays in ex- the points of intervention are relatively few, panding energy access, even if the linkages supply-side efficiency is an obvious, typically and impacts are not obvious or direct. cost-effective place to start when energy 20 supply is inadequate to meet consumer de- most successful in integrating EA and EE are mand. In many cases, megawatts of a utility those that establish markets and policy infra- or energy sector’s energy supply can be re- structure in which EE is valued and growing. claimed. These markets can be established deliberate- ly, or they can grow out of other policies and In the case of Lao PDR REP, EdL was able to reforms that encourage and enable consum- reduce system losses from more than 19% ers to purchase high-quality, affordable, and in 2005 to about 10% in 2011. This freed up energy efficient products. significant supply, allowing EdL to provide electricity to more consumers and improve EA+EE and Financial Reform the reliability of access for those who were EdL is a vertically integrated, state-owned already connected to the grid. By compari- utility, and its priorities are set by GoL policy. son, approximately 46% of people in Nepal Its vision and mission include the promotion are connected to the grid, but only 20% of of “Lao PDR’s socio-economic development those connected have reliable access to en- through the provision of reliable power sup- ergy because of load shedding and efficiency ply throughout the country.” As supply-side losses.13 efficiency gains made EdL more financially stable, system costs were lowered, allow- Whereas supply-side efficiency improve- ing the utility to subsidize local household ments mitigate energy supply losses to bet- connections through the Power to the Poor ter meet consumer demand, (P2P) program. P2P was a program designed to finance connection fees, which were often IMPROVING DEMAND-SIDE EFFICIENCY ad- too expensive for consumers to pay upfront. dresses the technical and behavioral losses The program provided eligible households stemming from how consumers use energy with a meter and an interest-free three year to better accommodate supply. In the con- loan to finance grid connection. text of energy sector reform projects that have energy access as a goal, it has much EA+EE and Consumer Trust the same effect: en masse, demand-side Delivering more reliable energy service to efficiency improves access and reliability, more people has improved EdL’s relation- lowers costs, and reduce load shedding—thus ship with its customers. This, in turn, has mitigating the need for additional supply. In given EdL latitude to undertake many of energy access, supply-side and demand-side the reforms needed to improve the utility’s efficiency efforts are complementary forces. financial performance and sustainability, such as tariff increases and infrastructure improve- However, in developing countries with highly ments. dispersed population centers and limited energy infrastructure, implementing de- By contrast, Nepal’s state-owned utility suf- mand-side efficiency measures can be chal- fers from efficiency losses of 26% and loses lenging. The market infrastructure needed $0.02 on each kWh sold as its production to effect significant demand-side change costs outstrip its tariffs.14 To be financially – products, distribution channels, market sig- sustainable, the utility needs to raise tariffs, nals, technical expertise, and policy support – but it cannot do so because it lacks the sup- is often lacking. The programs that will be the port of its customers. Without additional 21 revenue, the company is limited in its ability economic reasons, they greatly prefer build- to invest in its distribution and transmission ing power plants over avoiding the necessity systems, which leads to further distribution to build them. To develop support for EA+EE losses, load shedding, and customer distrust. interventions, it is important to fully consider a project’s goals and context and articulate Takeaways to Inform Future where EE can help clients accomplish their Project Design goals and serve their constituents. LEAD WITH EFFICIENCY – The goal of EA is to provide reliable, affordable, adequate mod- In the case of Lao PDR REP, for example, sup- ern energy services to households, business- ply-side efficiency enhancements reduced es and communities without those services. the cost of energy service and improved the Pouring additional energy into an inefficient financial performance of EdL. This afforded system can result in a huge drain on financial EdL the flexibility to run programs like P2P resources, and can run counter to the goals and improve energy service in rural areas of EA. – thereby advancing a GoL objective and building customer and political support for Efficiency improvements to both the supply- necessary increases in EdL tariffs. and demand-sides of the energy sector can, depending on the context: EA+EE is not just about the benefits of lower consumer costs, reduced CO2 emissions, or zz Improve energy service providers’ system reliability—it is about all of these ben- finances; efits and more. When scoping projects with zz Lower prices for consumers; clients, consider the various ways EE can help zz Improve system and service reliability; them accomplish their EA goals. zz Mitigate load shedding; zz Reduce reliance on erratic global fuel markets; and zz Give utilities and system operators the financial flexibility and customer and political support to make high-impact decisions. The ideal EA effort will manage the existing energy system first, and then add to the sys- tem with additional supply as needed. This is the least-cost approach to energy access. CONSIDER THE SECONDARY BENEFITS OF EA+EE – Making the case for EE is not always straightforward or easy. To many policymak- ers and stakeholders in WB project client countries, the object of energy access is building new infrastructure. For political or 22 CASE STUDY Bangladesh RERED TITLE: Renewable Energy for Rural Economic Development (RERED) APPROVAL: 31 Dec 2002 CLOSE: 30 July 2008 CLIENT: Government of Bangladesh (GoB) IMPLEMENTING AGENCIES: Infrastructure and Development Company Ltd. (IDCOL), Rural Electrification Board (REB) Project Background & Overview gy access, as well as the impacts energy ac- As recently as 2002, only 30% of the 129 mil- cess can have on energy efficiency markets. lion people living in Bangladesh had access to electricity. Nonetheless, the country was RERED CFL Deployment Program experiencing GDP growth of more than 5% At the time of RERED’s first additional fi- annually – a rate of growth that continued nancing in 2009, peak electricity demand in through the end of the decade. This created Bangladesh was approximately 5,200 MWs, a demand for energy that far outstripped the well above the country’s generating capacity country’s expanding but inadequate electrici- of 3,600 - 4,300 MWs. This persistent supply ty generation capacity.15 Through the deploy- shortfall, and the attendant unreliability of ment of distributed renewables and energy the grid, prompted the GoB to slow down efficient end-use devices, energy sector re- or stop new grid connections by 2007. Rec- form, and new grid connections, the RERED ognizing the constraints that this shortfall project worked to address these issues. placed on the country’s energy access and GoB’s socioeconomic development goals, Project Highlights and Lessons GoB launched the Efficient Lighting Initiative of Bangladesh (ELIB). Through a well-publicized CFL swap-out pro- gram and the development of the country’s ELIB emerged from GoB’s realization that world-leading off-grid SHS market, RERED new electric generating capacity would be dramatically transformed Bangladesh’s en- long in coming. Moreover, new generation ergy landscape. The energy access lessons would be limited in its impacts due to the from RERED are justifiably qualified due to need to backfill existing shortfalls and com- several factors—e.g. the country’s popula- pensate for demand that was growing con- tion density; its rich framework of pre-ex- sistently at 8-10% each year. With assistance isting microfinance institutions (MFIs) and from RERED, the Bangladeshi power sector non-governmental organizations (NGOs); had already addressed supply-side efficien- and relatively high household cash flow due cy through significant loss reduction and to remittances from the many Bangladeshis rationalization initiatives, so demand-side working abroad. Nevertheless, RERED offers management was the best available tool to relatively straightforward lessons on the role address this issue. of energy efficiency in on- and off-grid ener- 23 ELIB was structured to encourage Bangla- efficiency in general, which in turn raised deshi ratepayers to exchange incandescent demand for efficient products like CFLs. This lamps for energy-efficient CFLs. Up to that heightened demand inspired a new, compet- point, market uptake of CFLs had been low in itive market for efficient products in Bangla- Bangladesh due to limited consumer aware- desh that continues to pay dividends, saving ness, high initial costs, and market spoiling Bangladeshi ratepayers money, reducing caused by poor quality products. Through peak demand, and providing a variety of pos- ELIB, Bangladeshi utilities procured millions itive social and environmental externalities. of CFLs which, at the urging of the GoB, they planned to exchange for ratepayers’ THE CHALLENGES OF APPROPRIATE PRODUCT incandescent bulbs in one day. Schools, com- PROCUREMENT – The rush to get a “quick munity centers, and other highly trafficked, win” from the program resulted in some de- centralized points were used as distribution sign flaws that severely limited its impacts. centers. Bangladeshi utilities were responsible for procuring the CFLs, yet they had no expe- Though hampered by several challenges, rience with bulk procurement of efficient the CFL distribution program was successful products. Additionally, the procured products in many regards. More than 5 million CFLs proved to be low quality and ill-suited for were distributed, and rolling out the entire Bangladesh’s spotty electric grid. A survey program in one day required a good deal of revealed that 34% of the products had failed logistics and publicity, which GoB and Ban- within a few months, and laboratory tests gladeshi utilities handled admirably. revealed that the CFL’s lifetime was signifi- cantly less than what was called for in the INSPIRING CONSUMER DEMAND – The pro- program’s technical specifications. A second gram’s publicity raised consumer awareness phase of procurement suffered from bidders about energy-efficient products and energy submitting fraudulent performance guaran- Figure 4: Verified SHS Sales in Bangladesh, 2002–2013 $80 900,000 $70 Per-unit subsidy (US$) 800,000 LEDs introduced 700,000 $60 600,000 $50 500,000 $40 400,000 >70 Wp $30 51–70 Wp 300,000 30–50 Wp $20 <30 Wp 200,000 $10 100,000 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Beginning in 2013, the per-unit subsidy was available only for SHSs smaller than 30 Wp. Source: IDCOL, Zadeque, S. et al. “Scaling Up Access to Electricity: The Case of Bangladesh.” 24 tees, or not submitting them at all. The sec- a broader set of customers was welcome. ond phase was ultimately abandoned. Falling solar PV and component prices – as well as the efficiencies gained from scale and RERED SHS Program market experience – helped to lower prices, A good deal has been written about the but nothing impacted the price of energy success and particularities of Bangladesh’s service, and the IDCOL market, as significant- world-leading SHS marketplace.16 For the ly as the introduction of LEDs. purposes of this report, which focuses on underscoring the potential of incorporating On average, low-voltage DC batteries and energy efficiency into energy access projects, solar PV account for nearly 60% of Bangla- it is perhaps enough to say that there is no deshi SHSs.17 By providing an equivalent better example of the power of EA+EE than level of service that requires far less energy, the Bangladeshi SHS market. super-efficient appliances like LEDs dramat- ically reduce the size of the battery and PV The experience with SHSs in Bangladesh module an SHS needs. Thus, a 20 watt-peak began with the country’s recognition that (Wp) system with super-efficient appliances achieving universal grid access would take can serve a household that would have once decades. Off-grid SHSs offered a faster, more needed a much more costly 50 Wp system. cost-effective way to extend basic modern This reduction in system cost more than cov- energy services – lighting, television, mobile ers any marginal cost increase from improved phone charging, etc. – to rural and remote appliance technology, and the entire SHS is households. The program began with a much more affordable to many more people. modest goal of deploying 50,000 SHSs and utilized an ownership model managed by Since IDCOL POs’ introduction of LEDs in IDCOL involving many of Bangladesh’s MFIs, 2009, the market has seen a remarkable which became IDCOL Partner Organizations shift toward smaller, more affordable SHSs (POs), as well as a “fee for service” model led – and, consequently, a marked increase in by the REB. By 2009, POs had sold 390,000 households with modern electric services. systems compared to the REB’s 14,000. This IDCOL POs have now sold more than 3 mil- demonstrated the effectiveness of the own- lion SHSs—and the vast majority of those ership model, and the fee for service model have been sold since smaller, more affordable was discontinued. LED-bundled SHSs hit the market. EFFICIENT OFF-GRID APPLIANCES & COMPET- The rapid expansion of Bangladesh’s SHS ITIVE SHS MARKETS – Most of IDCOL’s initial market has led to high demand for LEDs, and POs were existing MFIs, and they had long a notably strong marketplace of LED manu- competed for the trust and business of rural facturers has emerged in Bangladesh. Several customers. Subsidies lowered the prices that Bangladeshi LED manufacturers performed consumers faced for much of the program, very well in the 2014 Global LEAP Awards, an and a $20 USD per system capital buy down international off-grid appliance competition grant is as of this report still in place for the that recognizes off-grid compatible LED ap- smallest systems. Nevertheless, POs compet- pliances and televisions for their affordability, ed heavily on price for customers. Any tech- performance, and energy efficiency. nical or business model improvement that could bring down prices and help POs reach 25 Takeaways to Inform Future gy- and money-saving potential of CFLs, Project Design the program created significant demand PRIORITIZE EFFICIENCY IN OFF-GRID PROJ- for CFLs—and, presumably, other energy ECTS – Many factors have contributed to the efficient products. A competitive commer- remarkable success of the IDCOL-managed cial market emerged to satisfy this demand, SHS market in Bangladesh, but few if any of which continues to drive RERED and GoB them are as transferable as energy efficiency. energy access goals. LEDs and other super-efficient appliances like TVs and fans dramatically and cost-effec- The WB’s EA impacts will be longest lasting tively lower off-grid energy costs, enabling where its projects establish markets and poli- demand and driving sales. cies that continue to drive an EA+EE agenda. FACILITATE STREAMLINED, SMARTER PRODUCT Any project featuring off-grid energy systems PROCUREMENT – Challenges with product like SHSs should prioritize the efficiency of off-grid appliances. Efficient off-grid appli- procurement and bulk purchasing have been ances dramatically lower the prices consum- the undoing of too many WB project compo- ers face, spurring market growth and EA. nents. In the case of Bangladesh RERED, the first round of CFL deployment was impaired WHEREVER POSSIBLE, BUILD EA+EE MARKET by the utilities’ lack of experience in bulk INFRASTRUCTURE – The Bangladeshi SHS procurement; consequently, its demand man- market is perhaps unique for the fecundity agement and energy access impacts were of the market- and policy-ecosystem from lessened. The second round was ultimately which it grew—at the time, perhaps no coun- closed when project managers were unable try in the world was as ready for a successful to find reliable vendors. off-grid energy market as Bangladesh. From the outset, Bangladesh had reliable distribu- In many WB EA projects, as was the case tion channels, relatively robust technical and with RERED, procurement decisions are dic- laboratory capacity, an eager and supportive tated first by the projects’ or clients’ technical government, consumer finance, and private specifications and second by least-cost prin- actors with rational interest in a successful, ciples. While this is completely reasonable, it competitive market. While replicating the may not be the best framework for the pur- degree of success of the Bangladeshi SHS poses of EA+EE. Many energy-using devices market may be impossible, developing the el- last many years, and so their quality, durabili- ements of market infrastructure that enabled ty, and energy performance are fundamental it is comparably straightforward. to the value they provide to consumers, client government objectives, and social and envi- In some regards, RERED’s CFL distribution ronmental goals. program failed to meet expectations. The program was hampered by procurement A tool or series of tools to help project man- challenges, and it failed to meet its demand agers, clients, and stakeholders quickly and reduction goal due to the high number of easily compare and purchase commonly-pro- lamp failures. However, in terms of market cured EA products on the basis of the charac- development and consumer education, the teristics that matter most to EA+EE principles program exceeded expectations. By edu- will save time and money, and help deliver cating the Bangladeshi public on the ener- project impacts. 26 CASE STUDY Sri Lanka RERED TITLE: Renewable Energy for Rural Economic Development (RERED) APPROVAL: 7 Oct 2002 CLOSE: 31 Dec 2011 CLIENT: Government of Sri Lanka (GoSL) IMPLEMENTING AGENCY: DFCC Bank Project Background & Overview Project Highlights and Lessons At the time of RERED’s origination, GoSL was Leveraging market infrastructure and lessons eager to avoid an energy crisis. The island learned developed by the earlier WB-backed nation was electrifying relatively quickly, hav- Energy Services Delivery (ESD) project, ing set a goal to achieve 75% electrification RERED’s components were designed to im- by 2007, but many rural Sri Lankans – par- prove Sri Lanka’s RE enabling environment, ticularly in the less developed eastern prov- extend electricity to off-grid populations, inces – were still without power. Moreover, diversify and secure grid supply through RE Sri Lanka’s grid often suffered generating project finance and technical assistance, and capacity shortfalls and was heavily reliant enhance the country’s EE and demand side upon conventional hydroelectric supply—any management (DSM) capacity through con- unexpected fluctuations in water levels could sumer awareness and training of ESCOs. easily disrupt grid supply and economic development, risking political unrest. At the Enhancing Grid Supply through Re- time, Sri Lanka’s best recourse during such newable Energy disruptions was the deployment of back-up Due to lack of familiarity and perceived risk, generators using costly imported fossil fuels. commercial banks in Sri Lanka were hesitant Expanding and diversifying the electric sup- to finance RE projects and loans to develop- ply through indigenous renewable energy ers were in short supply. The limited available (RE) sources, which were deemed least-cost, finance came at unfavorable rates. Through was a government priority. the initial project and additional financing, RERED sought to supply financing to private RERED’s stated objectives were to (1) im- sector developers sufficient to install 135 MW prove the lives of unelectrified rural Sri Lank- of grid-connected RE generation, an increase ans through the deployment of distributed of 400% of the 31 MW installed at the time of RE technologies such as off-grid SHSs and project origination. minigrids and (2) provide comparatively at- tractive financing to encourage private sector This component was highly successful. As development of grid-connected RE supplies. of the time of the project’s ICR in 2012, 147.8 MW of grid-connected RE had come online, 27 with another 36.5 MW under construction. cus on the project’s larger, more impactful Between 2003 and 2011 there was a period of components was in order. The component’s rapid electrification in Sri Lanka, and 48% of challenges were attributable to the relatively this new capacity was from RE. The impacts limited resources allocated – it received just are manifold: Sri Lanka now has a relatively 0.9% of the project’s total financing – and diverse, more resilient power generation competition for the services offered by the mix that is less reliant upon costly imported component from a larger, more favorably fossil fuels, and the country has developed financed Environmental Friendly Solutions “a world-class renewable energy (mainly Fund (E-Fund), an initiative to drive EE in Sri mini-hydro) industry that is now expanding Lanka supported by the Japanese govern- its services and investments to Africa and ment. other Asian countries.”18 Despite the challenges and ultimate shut- Extending Service to tering of its EE component, RERED offers Unelectrified Populations constructive opportunities to consider the RERED’s off-grid component faced unfore- role of energy efficiency in energy access, the seen challenges, and the goal of electrifying impacts of energy access upon market and/ rural households with off-grid energy sys- or sectoral energy efficiency, and how WB tems was revised from 161,000 to 113,500. Be- access and efficiency interventions might in tween 2005 and 2008, demand for and sales the future be better tailored to complement of SHSs fell from 2000/month to 800/month, one another. due in large part to the country’s remarkable expansion of grid services, a tightening of EA+EE & PROJECT STRUCTURE – Per RERED’s loan availability due to frequent borrower de- ICR and conversations with the project’s TTL, faults, and consumer perceptions about SHSs from the outset it was difficult to give the tainted by SHS vendors not honoring warran- project’s EE component adequate attention. ties and after-sales service obligations. First, the component was relatively small, accounting for just 0.9% of total budget. Despite these challenges, this component Signals to RERED team members about successfully delivered electricity to many Sri what would “make or break” the project Lankans who may still be without electricity were clearly aligned with the project’s larger, had they been forced to wait for the grid. As supply-side components. Successfully imple- per the ICR, nearly 116,000 SHSs had been menting EE market transformation programs deployed with RERED support. can be quite challenging—doing so while driving much larger supply-side initiatives Energy Access + Energy Efficiency would be a tall order for any team. By raising awareness and providing training to small businesses, RERED’s EE component Second, focused as RERED was on mitigating was designed to support the development issues like electricity generation shortfalls, of an ESCO market, thereby removing one it was the project team’s sense that the role barrier to energy efficiency investment in Sri of the project’s EE component in the larger Lanka. sectoral reform strategy wasn’t adequately articulated. GoSL had several goals related For several reasons this component was to the provision of energy to its citizens, but challenging, and it was decided that a refo- its most pressing goal was the development 28 and reliability of supply side resources. While The project’s TTL reports that visits to rural the development of EE market infrastructure off-grid communities that had benefitted is valuable in and of itself, it’s not clear that from the project’s SHS efforts showed that RERED’s EE component targeted the parts of nearly all households and SMEs with SHSs the Sri Lankan market that would optimally were using CFLs. How CFLs came to this seg- address this goal. ment of the market is unclear. Given the lim- ited income of most off-grid people and the It might be that a refinement of component marginally higher upfront cost of CFLs, it’s scope, tools or data related to the beneficial fair to assume that the CFLs’ use was driven role of EE in supply-side enhancements, and/ by the energy capacity needs of the SHSs. or better communication of the component’s Because of the capacity limitations of off- contribution to GoSL and RERED objectives grid energy systems, these households and might have facilitated greater GoSL, market, SMEs would not be able to power multiple and project team engagement. appliances had they continued using incan- descent lighting. STAKEHOLDER ENGAGEMENT & PARTNER- SHIP – RERED’s progenitor, ESD, emphasized Takeaways to Inform Future energy access through off-grid RE systems Project Design and spurring private sector investment in STRUCTURE MATTERS – Where EA+EE is de- grid-connected RE supply development. In sired or essential, the WB would be wise to making the request that resulted in RERED, design components such that they’re suffi- GoSL was motivated to sustain the successes ciently funded and the role of EE in EA, and and private sector engagement achieved by vice versa, is evident in project reporting indi- ESD, and ESD stakeholders were convened to cators. This will help send appropriate signals scope RERED. It might well be that Sri Lank- to project team members, clients, and market an or regional EE stakeholders could have stakeholders. played a larger, higher impact role in scoping RERED and developing GoSL’s appetite for Project structure matters—align project com- efficiency. ponent design, metrics, and incentives with EA+EE goals. Further, the Japanese government was ev- idently invested in successful reform of Sri DRIVING THE EA+EE NARRATIVE – Despite its Lanka’s energy sector, and its E-Fund pro- many benefits, energy efficiency remains a gram served as something of a competitor tough sell in many policymaking and market to RERED’s EE component. There might have circles. This is particularly true in the energy been an opportunity to collaborate with access community, a field largely dominated E-Fund and its implementing agents such by people motivated by the socioeconomic that both projects benefitted. benefits of extending clean and reliable en- ergy supply to BoP communities, but less ACCESS DRIVING EFFICIENCY – While EE was engaged by the specifics and implications of not at the center of GoSL’s distributed RE end-use. strategy, it does appear that the Sri Lankan off-grid RE market helped support the emer- Many energy access professionals have not gence of an efficient products market (as it been exposed to, or do not yet appreciate, did in Bangladesh). the EA+EE dynamic. Resources and financial 29 products that help the WB’s project team will likely achieve improved access outcomes, members and clients appreciate that a MW and the market as a whole will benefit from avoided is at least as valuable as a MW in- greater energy efficiency infrastructure. stalled – and that energy service, not energy itself, is what is needed and desired by un- Where possible, bring EE stakeholders into der-electrified people – could rapidly push the EA project planning and implementation the EA+EE issue forward, generate cutting process. Where such stakeholders do not yet edge project models, and help the energy ac- exist, strongly consider including the devel- cess community realize faster, more cost-ef- opment of that stakeholder community as a fective human and environmental impacts. core project component. Because of its position, the WB has a remark- able opportunity to drive this agenda. The benefits that EE brings to EA are relatively clear – lower project and consumer costs, mitigated after-market risk, longer run times and more reliable supply, etc. – but the bene- fits of EA+EE to larger EE goals may prove to be even more significant. Markets requiring access are typically energy “green fields,” and work there could very well generate tech- nological innovations and smart business/ project models with global benefits. Position- ing efficiency as essential to access might, in time, show that access was essential to efficiency. Financial product and models, and educa- tional and communications tools, are needed to convince clients and WB EA staff of the value of EA+EE, and to equip them to act. LEVERAGE & DEVELOP EA+EE PARTNERSHIPS The WB often brings a good amount of fi- nancing to its access projects, and market and development stakeholders are generally keen to leverage such funds and/or par- ticipate in the resulting programs. In some project markets it might be possible and fruitful to partner at the project outset with EE programs, industries, or practitioners— where these EE stakeholders do not yet exist, the WB might consider helping develop that community. Doing so, the WB and its clients 30 CASE STUDY Peru Rural Electrification Project PROJECT APPROVAL: 7 March 2006 PROJECT CLOSE: 30 June 2013 CLIENT: Republic of Peru IMPLEMENTING AGENCY: Ministry of Energy Directorate of Competitive Funding (DFC) & General Directorate of Rural Electrification (DGER) Project Background & Overview To achieve these objectives, REP invested Peru has seen sustained economic growth in rural electrification projects using both in recent years, which has aided poverty re- on- and off-grid renewable energy systems, duction and job creation efforts and created implemented a pilot program to increase the increased demand for electricity. However, use of electricity for income generation, and poverty rates in rural Peru remain significant- provided financing for hydropower invest- ly higher than in urban Peru. As recently as ments. 2012, poverty levels in rural Peru were 53% Project Highlights and Lessons but just 14.5% in urban Lima. Adding to this complexity, there is a marked difference REP did not have an explicit energy efficien- between energy access rates in urban and cy component; nevertheless, this project rural areas. The 2007 census found that only illustrates that even if energy efficiency is not 29.5% of rural Peruvian areas had access to explicitly included in a project, it is often in- electricity. corporated to achieve access objectives. For example, Peruvian energy service providers To expand electricity coverage and expedite (ESP) participating in the program provid- poverty alleviation objectives, the Govern- ed training on energy use and costs when ment of Peru (GoP) has invested an average connecting a new customer, which was im- of US $40-50 million per year for electrifica- portant to the financial stability of these new tion. Yet, these investments were insufficient ESPs. If customers did not manage their us- to meet GoP’s energy access goals expedi- age and were unable to pay their energy bill, ently, and additional funds were needed. the ESPs’ business models would become untenable. To increase access to efficient and sustain- able electricity services in rural Peru, the Peru The project also included a “productive uses Rural Electrification Project (REP) included of electricity” component to encourage in- both grid extension and off-grid compo- come-generating uses of energy, which the nents. By expanding electricity service, the project designers and ESPs hoped would project aimed to improve the quality of life in also increase the customers’ ability to pay for rural areas and to support economic develop- energy services. This component’s goal was ment through the productive use of energy. to encourage the use of 18,000 MWh of pro- 31 ductive electric use, which the project met capacity so that they could run additional and exceeded. appliances like refrigerators. CAPACITY BUILDING THROUGH ENERGY EFFI- Key Takeaways to Inform CIENCY EDUCATION – To build a viable, sus- Future Project Design tainable customer base, ESPs led community CUSTOMER EDUCATION IS ESSENTIAL – When training initiatives on energy use and safety a new electric on- or off-grid connection is for the newly connected. Training was also made, it is important for customers to receive provided to recipients of SHSs, as they need- training on how to use energy safely and ef- ed to understand which appliances could ficiently. Energy use is a potentially difficult safely and effectively be used with their concept for newly connected customers, and system. Per conversations with the project everyone – customers, energy companies, TTL, a significant portion of training time was and projects – benefits when customers spent explaining demand management prin- understand how end-use devices will affect ciples and the importance of using efficient their energy bill or the performance of their end-use devices to keep energy costs low. SHS. REP training materials were not available as of this writing. However, these training pro- Work with ESPs, NGOs, and local govern- grams were a notable success of the project, ments to develop training materials on and there may be an opportunity to leverage energy use that can be presented to newly REP’s experience with new customer training connected customers. for future access projects. SETTING APPROPRIATE METRICS – REP’s DESIGNING SHS MARKETS – The project set a “productive use” component was arguably goal of distributing 20,000 SHSs through ru- its biggest success, driving more than 19,000 ral ESPs but was only able to distribute 7,100. MWh of productively used electricity. How- Per the project TTL, the primary constraint in ever, as the WB moves to incorporate EA+EE meeting the target was that the tariff-setting principles, measuring marginal energy con- process delayed the products’ availability sumption, rather than the service or develop- because ESPs could not buy and install sys- ment goals met through that consumption, tems without a set tariff. However, the project may prove counterproductive. Energy con- succeeded in demonstrating a novel off-grid sumption enables socioeconomic develop- financing model, approved by Peruvian reg- ment goals, but it is also subordinate to those ulators, which included cross-subsidization goals, and a more efficient use of energy to from grid-connected consumer. meet WB and client objectives is desirable for a variety of reasons. All of the SHSs distributed through REP were 60 Wp, and were distributed with a fixed Design access projects to measure success in configuration of appliances: three CFLs and terms of increased energy service rather than a black and white TV. One observation from energy consumption. the WB’s experience in Peru is that many SHS customers were not satisfied with ser- WORKING WITH LOCAL NGOS TO LEVERAGE vice provided by the 60 Wp panels, CFLs, INVESTMENTS – The project TTL noted that and black and white TVs. Many of these cus- working with local NGOs to communicate tomers invested in modular increases to solar the importance of energy efficiency was very 32 effective. The NGOs understood the needs of local communities and were able to effective- ly advocate on customers’ behalf to ESPs and other project stakeholders to enable and en- hance energy access objectives. Identifying and involving the right local partners in train- ing and outreach programs can be more ef- fective than relying solely on ESPs, who may not have the appropriate skills or incentives. Identify the strengths of local partners active in the community to improve project out- comes. STRUCTURING SHS MARKETS FOR SUCCESS – This project did not fulfill its goal of backing the installation of 20,000 SHSs in large part because of the delay in establishing the SHS market’s tariff. The project TTL also saw that energy service demand from at least some SHS purchasers was not met by the 60Wp SHS and its three CFLs and black and white TV. It may be that a more flexible and com- petitive SHS market, such as Bangladesh’s – one with a variety of SHS sizes and super-ef- ficient off-grid appliances and tariffs set and then adjusted as needed by ESPs and/or local NGOs – could have reached more cus- tomers, and achieved REP’s objectives, more quickly. “One size fits all” may not be the best ap- proach for establishing new SHS markets. Packaging differently sized SHSs with a va- riety super-efficient products can provide a more diverse group of customers with more energy service at a lower price point. 33 CASE STUDY Mongolia Renewable Energy and Rural Electricity Access Project (REAP) PROJECT APPROVAL: December 19, 2006 PROJECT CLOSE: December 31, 2011 CLIENT: Government of Mongolia IMPLEMENTING AGENCY: Ministry of Mines Resources and Energy Project Background & Overview and WTSs that could serve nomadic herd- Mongolia has a population of 3 million peo- ers and improve the reliability of electricity ple, about 1.2 million of whom live in the services in Soums through increased deploy- urban capital of Ulaanbaatar. The remainder ment of renewable and renewable-diesel of the country’s population is spread over hybrid mini-grids. its vast rural areas, primarily among small Soums (villages or prefectures) and groups The project facilitated the sale of over 67,000 of nomadic herders. At the outset of REAP, SHSs and WTSs, exceeding its target by much of Mongolia was connected to a rel- almost 35% and greatly contributing to the atively reliable grid. Many off-grid Soums, Government of Mongolia’s (GoM) goal of dis- however, relied on diesel-powered mini- tributing 100,000 SHSs to herders by 2012. grids, the reliability of which was subject to As a result, more than half a million people, high-prices, the logistical challenges of diesel including 60-70% of Mongolia’s nomadic transport, and seasonal and global market herders, now have access to modern and reli- fluctuations in fuel availability. Meanwhile, able electricity services. Mongolia’s nomadic herders had negligible access to energy as a market for appropriate In the interest of preserving the herders’ products and services, i.e. SHSs and small unique culture, REAP provided them with wind turbine systems (WTSs), had not yet SHSs and WTSs that were portable and developed because of highly dispersed com- adaptable to the nomadic way of life. The munities and the herders’ limited ability to systems were available for sale in Soums, pay. with a subsidy that covered roughly half of the cost of the system. There were some ini- REAP was designed to break down several tial difficulties in getting the systems to mar- of the barriers blocking the emergence of a ket, as few Mongolian retailers or distributors market for appropriate rural electrification had sufficient capital to purchase thousands services in Mongolia. Its objectives were to of SHSs and WTSs. After a thorough market increase access to electricity and improve assessment of herders’ demand for SHSs and the reliability of electricity service among the WTSs, REAP emulated a parallel GoM pro- herder population and in off-grid Soums. It gram and procured large orders of off-grid achieved this by building markets for SHSs systems, distributing them through Soum administration facilities and private retailers. 34 One of REAP’s most innovative and high-im- within a country’s existing landscape to break pact features was the establishment of 50 down market barriers and encourage EA+EE certified regional sales and service centers market infrastructure. (SSCs) at Soums throughout Mongolia. Rath- er than forcing the herder SHS customers to LEVERAGE EXISTING MARKET DYNAMICS IN travel to Ulaanbaatar for after-sales service EA+EE MARKET DEVELOPMENT – The need for and upkeep, these centers offered afford- after-market service was a major barrier to able maintenance and component sales the expansion of off-grid energy markets to within a reasonable distance of the herders. nomadic herders in rural Mongolia. For herd- This greatly reduced the incidental costs of ers needing to replace or repair SHS or WTS owning SHSs and WTSs and improved their components or appliances, traveling hun- utility. They were also the start of a nascent dreds of kilometers to an urban center like technical industry and a market for replace- Ulaanbaatar would not have been feasible ment parts and off-grid-compatible applianc- and would have caused them to fall back on es. The SSCs are privately operated, but were candles and kerosene for energy service. This selected after receiving training and certifica- aspect of the Mongolian off-grid marketplace tion through REAP to ensure that technicians threatened to greatly reduce the usefulness were qualified and had the skills necessary to of SHSs and WTSs to the herders and their service the off-grid systems. positive development impacts. The combination of the market assessment REAP’s solution to this challenge was to to identify herder demand for off-grid sys- leverage existing technician/retail operations tems and the establishment of SSCs that in Soums throughout Mongolia to foster a could keep the systems functional and useful network of regional SSCs, to which SHS and was extraordinarily effective. A survey of WTS owners could more easily travel for any herders who had purchased off-grid systems after-market sales or service needs. through the REAP program found that 41.7% were “extremely satisfied,” 51.7% were “very This solution presents, in many ways, a “win- satisfied,” and that 99.6% would recommend win” situation: far-flung Mongolian herders the systems to others. From a socioeconomic have an accessible resource for services relat- development standpoint, it is significant that ed to off-grid systems and compatible appli- 70.5% of the herders cited “increased pro- ances, the owners of the SSCs received train- ductivity for work” as the key benefit linked ing and additional customers, and the econ- with the installation of the off-grid system.19 omies of the villages where the SSCs were established have received a slight boost. GoM Project Highlights and Lessons and project team members can be reason- REAP did not feature an explicit energy ably well-assured that the off-grid systems efficiency component, but it does present distributed through REAP and other efforts a good illustration of the value of establish- will have lasting usefulness and impacts. ing EA+EE market infrastructure. As seen in the Bangladeshi and Sri Lankan projects, Though fairly obvious in hindsight, this the needs of the off-grid market will often solution required a fair amount of flexible, drive demand for, and the development of, strategic thinking from the REAP team and an efficient products market. REAP provides GoM. It required a thorough understanding of a good example of project leaders working the dynamics of the Mongolian marketplace 35 and recognition of its barriers, and significant dedication to working with market actors to develop capacity and raise awareness. Ideas for Future Project Design ASSESS AND WORK WITHIN THE DYNAMICS OF LOCAL MARKETS – Many WB access projects take place in rural areas with limited mar- ket infrastructure, and TTLs managing such projects have shared that it is often difficult to deliver consumers and businesses ade- quate energy service, training and support. REAP’s response to these challenges (e.g. appropriate demand assessment, flexible procurement and sales model, establishment of SSCs) was essential to its success and the sustainability of its impacts. It provides a conceptual model for success in developing EA+EE markets in other contexts. Like Bangladesh RERED, Mongolia REAP is a unique project with a unique context—but the lesson it provides in patiently assessing a market’s barriers and flexibly responding to them is highly transferable. 36 CASE STUDY Bolivia Decentralized Electricity for Universal Access Project PHASE I: PROJECT APPROVAL: July 2, 2007 PROJECT CLOSE: June 30, 2013 PHASE II: PROJECTED IMPLEMENTATION START DATE: June 22, 2015 EXPECTED CLOSING DATE: Dec 1, 2021 CLIENT: Government of Bolivia Project Background & Overview these products in rural, mountainous com- Bolivia has one of the highest poverty rates munities. The selection of lamps and other and lowest rural electrification rates in Lat- appliances available for purchase is very in America. Its low population density and limited, and it is difficult to educate dispersed mountainous terrain has made it difficult for communities about the benefits of purchas- the country to achieve its goal of universal ing energy efficient products. grid connectivity. The two-phase Decentral- ized Electricity for Universal Access project Energy efficiency was not mentioned in the aims to increase affordable access to electric- PAD for the second phase of the project, but ity in remote, rural areas of Bolivia and meet the project’s TTL said that outreach activities the national goal of universal access by 2025. are being planned to educate those who are newly connected to the grid about the im- The first phase of the project was completed portance of energy efficiency. in 2013 and focused on extending off-grid Project Highlights and Lessons access by installing over 7,000 SHSs and over 5,000 Pico PV systems in rural households, The barriers to EA+EE in Bolivia reflect those schools, clinics, and SMEs. The second phase faced by many other countries with rural of the project includes both grid extension electrification goals: highly dispersed pop- and off-grid components. Both SHSs and ulations, relatively few market centers, and Pico PV systems will be utilized to provide limited market infrastructure such as product energy to off-grid customers. The SHSs will availability and policy support. come with lamps and a cell phone charger; any other appliances will be purchased by The project’s TTL recognizes the benefits the customer. Implementation of the second of EA+EE, but lacks the tools and resources phase of the project will begin in June 2015. to robustly incorporate EE into this project. The suggestions made below are in line with The TTL for this project acknowledged that feedback received from the project’s TTL and Bolivians would benefit from installing sys- consider lessons learned from other WB proj- tems that use LEDs and efficient appliances, ects that could be applied in Bolivia. but it is challenging to build markets for 37 Ideas for Project Design standards, prices, product durability and oth- CONDUCT RESEARCH TO INFORM PROGRAM er information would provide purchasers with DESIGN – The second phase of this program more information about the market and help has a component that will connect new them avoid problems such as early product consumers to the grid and educate them on failure. A labeling or certification scheme energy use. Data on the energy use patterns system for off-grid products could also be for customers newly connected to the grid considered; however, this presents additional would be extremely useful in tailoring and challenges given that the standardization targeting the program. Ideally, this research process moves slowly while the technology is would demonstrate which tactics and pro- evolving very quickly. Additionally, the econ- grams are effective at teaching consumers to omy may not be large enough to support use energy efficiently and ensure that they labs to test products in small countries like are able to pay their energy bill. Bolivia. DEVELOP A EA+EE MARKET INFRASTRUCTURE – Mongolia’s REAP faced similar challenges to Bolivia in terms of providing energy to a large number of people who reside in sparse- ly populated rural areas. Under REAP, region- al sales and service centers were established that were privately operated but trained and certified under the program to ensure they had adequate qualifications and knowledge to service the SHS industry in Mongolia. Ser- vice centers can fix problems with batteries and other parts of the SHSs, and also sell en- ergy efficient off-grid compatible appliances. In Mongolia, this created business opportu- nities and commercial markets that did not previously exist and it may have the same ef- fect in Bolivia—coupling the establishment of these sales and service centers with a con- sumer awareness effort built around energy efficiency could be particularly beneficial. PROCUREMENT TOOLS ARE NEEDED TO IDENTIFY HIGH QUALITY PRODUCTS – In the absence of a global standard for SHSs, or standards and labeling programs for the ap- pliances that can be used with these systems, more data and information is needed to help both institutional purchasers like the WB and local consumers make informed decisions. A database of off-grid products with informa- tion on product testing, system compatibility, 38 REFERENCES 1. International Energy Agency. Universal access to energy would herald enormous economic and social benefits. (2012, June 14). Retrieved December 15, 2014, from http://www.iea.org/newsroomandevents/news/2012/june/ name,27722,en.html 2. Our Vision - Sustainable Energy for All. Retrieved December 15, 2014, from http://www.se4all.org/our-vision/ 3. International Energy Agency. Universal access to energy would herald enormous economic and social benefits. (2012, June 14). Retrieved December 15, 2014, from http://www.iea.org/newsroomandevents/news/2012/june/ name,27722,en.html 4. Pachauri, S., Ürge-Vorsatz, D., & Labelle, M. (2012). Synergies between Energy Efficiency and Energy Access Policies and Strategies. Global Policy, 3(2), 187-197. 5. Interview with project TTL. July 15, 2014. 6. Implementation Completion and Results Report. (2012). In Sri Lanka Renewable Energy for Rural Economic De- velopment Project (ICR00002296) (p. 10). World Bank. 7. Interview with project TTL. September 2, 2014. 8. Project Appraisal Document. (2009). In Rwanda Electricity Access Scale-Up and Sector-Wide Approach (SWAP) Development Project (p. 5). Washington, D.C.: World Bank. 9. Ibid. (p. 54). 10. Ibid. (p. 53). 11. Institute for Energy Research. Developing Countries Subsidize Fossil Fuel Use, Artificially Lower Prices. (2013, December 23). Retrieved December 15, 2014, from http://bit.ly/1GMmCXr 12. More information is available at www.superefficient.org/leera 13. Interview with project TTL. July 30 2014. 14. Nepal Environmental & Scientific Services. Grid Solar and Energy Efficiency Project: Resettlement Policy Frame- work. (2015, June 1). Retrieved December 15, 2014, from http://bit.ly/139nY19 15. Implementation Completion Results Report. (2013). In Bangladesh Renewable Energy for Rural Economic Devel- opment (RERED) Project (p.12). World Bank 16. For background, we recommend: Sadeque, Z., Rysankova, D., Elahi, R., & Soni, R. (2014, June 19). Scaling Up Ac- cess to Electricity: The Case of Bangladesh. Retrieved December 15, 2014, from http://bit.ly/1qWXfjE 17. Hoque, S., & Das, B. (2013). Analysis of Cost, Energy and CO2 Emission of Solar Home Systems in Bangladesh. International Journal of Renewable Energy Research, 3(2). Retrieved December 15, 2014, from http://www.ijrer. com/index.php/ijrer/article/viewFile/597/pdf 18. Implementation Completion and Results Report. (2012). In Sri Lanka Renewable Energy for Rural Economic De- velopment Project (ICR00002296) (p. 3). World Bank. 19. Implementation Completion and Results Report. (2012). In Mongolia Renewable Energy and Rural Electricity Access Project (p.15). World Bank. 39