More than 1.2 billion people—about 17 percent of the world’s population—are without access to electricity, most of them concentrated in about a dozen countries in Africa and Asia. Another 2.8 billion rely on wood, charcoal, dung and coal for cooking and heating, which results in over four million premature deaths a year due to indoor air pollution. Shortages in power supplies, and their unreliable and poor quality, due to underinvestment, are also major challenges facing developing countries.
Electricity access must be reliable as well as environmentally and socially sustainable. Ensuring these depends on business models robust enough to mobilize financing, as well as policy and institutional frameworks that ensure that electricity access projects are both economically viable and sustainable from a climate perspective.
The Bank Group supports development of energy systems based on least-cost options with an emphasis on renewable sources, such as hydropower, wind, solar and geothermal, while also promoting energy efficiency. Projects support achievement of universal access to electricity and modern household fuels, as well as improved utility performance and sector governance. The Bank Group also provides financing and advice to countries on oil and natural gas extraction, production, processing, transmission and distribution.
Representative projects include support for grid expansion in India, rural electrification in Ethiopia, hydropower projects in Senegal and Cameroon, increased geothermal capacity in Kenya and Indonesia, off-grid solar home systems in Bangladesh and Mongolia, and support for off-grid lighting solutions in Africa through the Bank-International Finance Corporation (IFC) partnership, Lighting Africa.
During 2002-11, the Bank supported projects for the construction and rehabilitation of about 115,000 kilometers of transmission and distribution lines and about 19,000 megawatts of generation capacity to improve access to reliable energy.
Some examples of results achieved with IBRD-financed projects include:
India: To extend power to India’s nearly 400 million people currently without electricity requires a massive expansion of transmission capacity. World Bank financing has helped India expand transmission across the country’s regions by 52 billion kilowatt-hours. It has also supported a five-year program from 2008-12, led by India’s Power Grid Corporation to increase its circuit by 40,000 km to reach 100,000 km, raising inter-regional electric power transfer capacity from 21 to 37 gigawatts. A $1.0 billion IBRD-financed project has supported expansion of five regional transmission systems, to enable transfer of power from energy-surplus regions to towns and villages in under-served regions. This expansion has helped to integrate the national grid, resulting in a more reliable system and reduced transmission losses.
Mexico: Mexico has achieved an energy efficiency milestone by distributing almost 23 million energy-saving light bulbs for free. The national program, partially financed by $185 million from the Global Environment Fund, established over 1,100 exchange points in 2011-12 at which customers replaced their incandescent bulbs with compact fluorescent lamps (CFLs). In total, more than 5.5 million Mexican families now use energy-saving lamps that consume only 20 percent of the energy and last 10 times longer than a traditional light bulb. The first stage of the program, partially financed by the World Bank, resulted in savings of 1,400 gigawatt hours (Gwh). The program also enables families to save up to 18 percent of their electric bill. When the second stage ends in 2014, it is estimated that the saving will be of 2,800 Gwh per year, preventing about 1.4 million tons of CO2 emissions.
The government of Bangladesh envisions a country with electricity for all. The World Bank has supported this vision of Bangladesh for 40 years.
Some highlights of results achieved in IDA-supported projects include:
Bangladesh: In 2002, only 7,000 Bangladeshi households were using solar panels. Today, more than 1.4 million low-income rural households in Bangladesh have electricity—delivered by solar photovoltaic (PV) panels. Installations of the panels under the IDA-supported Rural Electrification and Renewable Energy Development Project have doubled since 2010 to 40,000 a month. A $130 million IDA credit in 2009 and another for $172 million in 2011 followed earlier IDA financing that launched the project in 2002.
Competitively priced solar PV panels and a well-designed financing scheme have combined to deliver life-changing—and zero-carbon—electricity to bottom-of-the-pyramid families on a scale that was inconceivable only a few years ago. Under the program, non-governmental (NGO) partner organizations install the systems in households following standards, with the households paying 10-15 percent down with the rest financed by a microcredit loan. Funds from IDA, among others, re-finance part of the microcredit extended to the households. In addition to IDA support, the solar home systems program in Bangladesh has received financing from the World Bank-managed Carbon Finance Unit, the Global Partnership on Output-Based Aid, and several other donors including the Asian Development Bank, and the German agencies KfW and GIZ.
The program aims to deliver off-grid solar power to 2.5 million households by 2014, while also promoting mini-grids for rural consumers. In addition to delivering power to un-served communities, it is helping to reduce carbon emissions from avoided use of kerosene and diesel for lighting. The solar electrification industry and its supply chain in Bangladesh has also helped create, directly and indirectly, about 50,000 jobs.
Ethiopia: In Ethiopia three IDA credits totaling $440 million helped expand electricity to community services in about 4,300 towns and villages, benefiting over 30 million people by powering streetlights, local flour mills, water pumping and irrigation installations, telecommunications, businesses, schools and clinics in five years. The Electricity Network Reinforcement and Expansion Project, approved by the World Bank in May 2012, extends this work by upgrading and extending the grid in order to improve the overall service delivery of the Ethiopian electricity network. The last project is expected to benefit 385,000 people.
Mongolia: About 500,000 people in Mongolia have gained access to solar power through a program launched in 2006 by the Mongolian government with support from the World Bank and the Government of the Netherlands. Thanks to the National 100,000 Solar Ger (Yurt) Electrification Program, 70 percent of Mongolia’s herders now have access to modern electricity.
In most of the vast landscape of Mongolia, nomadic herders used to have no access to electricity. Take a look at how a project helped bring changes.
Bank Group Contribution
Since 2008, the Bank Group has provided $45.3 billion for energy projects, with $21.9 billion from IBRD, and $8.5 billion from IDA. Of the total Bank Group financing, $11.6 billion—25.7 percent—was for renewable energy projects and programs, reflecting the determination of many countries to seek lower-carbon energy solutions. Energy efficiency, and transmission and distribution accounted for nearly one-third of energy financing. About 25 percent of the portfolio since 2008 is devoted to fossil fuel projects.
The Energy Sector Management Assistance Program (ESMAP) is a global knowledge and technical assistance program administered by the World Bank. ESMAP provides analytical and advisory services to low- and middle-income countries to increase their know-how and institutional capacity to achieve environmentally sustainable energy solutions for poverty reduction and economic growth. ESMAP is funded by Australia, Austria, Denmark, Finland, France, Germany, Iceland, Lithuania, the Netherlands, Norway, Sweden, and the United Kingdom, as well as the World Bank.
The World Bank-led Global Gas Flaring Reduction (GGFR) initiative is a public-private partnership that brings together representatives from major oil-producing countries and companies. The GGFR aims to minimize the flaring of natural gas associated with oil production by fostering critical collaboration between governments and industry so together they can address policy challenges and specific project implementation. These efforts are starting to pay off. Since 2005, flaring of gas has dropped worldwide by almost 20 percent, preventing over 270 million tons of CO2 emissions, equivalent roughly to taking some 52 million cars off the road.
Lighting Africa is a joint IFC and World Bank program that works towards improving access to better lighting in areas not yet connected to the electricity grid. Lighting Africa catalyzes and accelerates the development of sustainable markets for affordable, modern off-grid lighting solutions for low-income households and micro-enterprises across the continent.
The Bank Group’s strategic priorities in the energy sector are anchored around the goal of improving electricity access in an environmentally and socially sustainable manner. As energy security is essential for sustainable growth, the Bank will continue to work with other development partners to assist countries in achieving it, including through regional energy integration.
The Bank pursues a portfolio approach, including support for investments in power generation that are least cost and sustainable; strengthening and expanding transmission and distribution power networks; improving efficiency through technical assistance, and advisory services. The latter helps countries improve the performance of their electricity utilities, brings greater rigor to their governance, and offers guidance on policy and regulatory frameworks to attract and increase the impact of public and private sector investments. Some developing countries, especially those emerging from conflict, have weaknesses in capacity to implement projects. The Bank provides support to strengthen their capacity.
The World Bank is also sharing leadership with the UN of the Sustainable Energy for All initiative, which has three global energy objectives to be achieved by 2030: universal access to electricity and clean cooking fuels doubling the share of the world’s energy supplied by renewable sources from 18 to 36 percent; and doubling the rate of improvement in energy efficiency from 1.2 to 2.4 percent annually.
To date, about 70 countries have opted in to Sustainable Energy for All, while many public, private and nongovernmental actors have made commitments to support its implementation. The Bank committed to doubling the leverage of its energy financing, providing technical assistance to several opt-in countries and supporting initiatives in partnership with the Energy Sector Management Assistance Program (ESMAP). These initiatives include the Global Geothermal Development Plan, Lighting Africa and Lighting Asia, the Global Alliance for Clean Cook Stoves, the Global Gas Flaring Reduction Partnership (Phase Four) and mapping of renewable energy resources.
One beneficiary of the Bangladesh rural electrification project is Mussarat Begum, who runs a small teahouse in Garjon Bunia Bazaar, a rural community. She bought a solar home system for $457, initially paying $57, and borrowing the rest. She repays the loan in weekly installments with money she earns by keeping her now-lighted chai-shop open after dark. At the same time, her children are able to study at night.
“My business is booming and my family lives much more comfortably with our increased income,” she said. “But most importantly, I now have electricity at home and my children can study at night. They are doing much better at school.”
Source: World Bank