Energy access and fuel poverty

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Paris alignmentReasoning
Some progressAlthough energy access is a focus area with monitored metrics there is no quantitative target associated with this segment. According to AFD, given that there are only a limited number of off-grid electrification projects, the multi-tier framework(MTF) for energy access is not systematically applied. Nonetheless, AFD internally applies some approaches -which are inspired by the MTF- both upstream and downstream of the projects, for example statistical analysis and demand assessment for the former and monitoring of results for the latter. It is recommended that this adapted MTF methodology is made available for transparency purposes.
Alignment and reasoning
Energy Access TargetAFD aims to contribute to SDG7 and energy access is one of the axes of its energy strategy. However, there is no quantitative target.
Minimum Definition of AccessThere is no systematic implementation of a minimum definition of access. According to documentation shared with E3G, the multi-tier framework is sometimes used in some projects, but it is not systematically applied.
% of Energy Financing Dedicated to Energy AccessThe budget for this segment has been fluctuating. In 2020, it was only 1% of total energy-related finance, in 2019, this was almost half (42%) of the total.
Is Progress MonitoredYes, progress is monitored with report as recent as 2021. The data is broken down by region, year, and financial tool.
Progress against MetricsN/A – since they do not have a specific target on energy access.

Explanation

  • AFD Group defines ‘Access to energy services for all’ as one of the focus areas on energy transition – with particular focus in Africa and Southeast Asia.
  • According to its website, it addresses this issue globally, aiming to improve access to electricity, and deploying low-carbon energy at every level. However, there is no systematic use of the multi-tier framework as the minimum definition of access available.
  • Furthermore, although AFD reports the availability of EUR 2.2 billion allocated to the energy sector annually, funding has been fluctuating.
  • It is also worth noting that its financing strategies also seem to still cover “the broadest possible range of technological options” and hybrid energies, which include fossil fuels. The latter is an exception for mini-grid projects powered by hybrid plants (combining renewable energy and fossil fuels) under the following conditions:
  1. A minimum of one third renewable to two thirds diesel
  2. Specific emissions are less than 500 kg CO2/MWh
  3. Projects are in rural areas off the national grid or in small island states or to meet the needs of industrial facilities on remote sites.

The AFD taxonomy considers that greenfield electricity transmission or distribution projects that increases the share of “very-low carbon electricity” have climate co-benefits. It defines access projects by network extension/densification (i.e. excluding mini-grids), as those distribution projects with connections for households that do not have access to electricity.

Source: STRATEGY 2019-2022 ENERGY TRANSITION; OCI Public Finance Database

Recommendation:

  • For off-grid projects AFD should make public the methodology –inspired in the Multi-Tier Framework – it applies to categorize energy access projects.
  • It should aim to increase the ratio of renewable energy to fossil fuels in a hybrid generation, with the aim to achieve 100%. The usage of energy efficiency measures and storage must be put first before considering fossil fuels.
Last Update: November 2022