World Bank

Energy access and fuel poverty

This page is part of the E3G Public Banks Climate Tracker Matrix, our tool to help you assess the Paris alignment of public banks, MDBs and DFIs.

 

 

 

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Paris alignmentReasoning
Some progressAccess to basic and modern energy is integrated into energy policy, but the Bank has no specific access target, does not specifically adhere to Multi-Tier Framework’s definition of access and progress monitoring is lacking.
 Alignment and reasoning
Energy access targetCommitment to support universal energy access. Focus on countries with low levels of energy access prioritised in their World Bank Group energy strategy.
Minimum definition of accessMulti-Tier Framework is used as an assessment tool for the World Bank. WBG states that ‘the Multi-Tier Measurement of energy access allows governments to set their own targets by choosing any tier above Tier 0. Such targets will depend on the situation in a country, its development status, the needs of its population, and the budget available’.
% of energy financing dedicated to energy access16% of total energy financing in 2017, up from 10.2% in 2014.
Is progress MonitoredTwo reports (2014 and 2016) by the World Bank Independent Evaluation Group have assessed the banks performance on energy access in detail. The Tier 2 Scorecard assesses the results of operations supported by the World Bank Group. The metric is ‘people provided with new or improved electricity service (millions)’. Combining improved with new electricity sources is not granular enough to make judgements on progress.
Progress against metricsThe Independent Evaluation Group noted energy access is only a small part of the energy portfolio and support for off grid electrification is relatively low. Another Independent Evaluation Group report found over 2000-2016 only 2.5% of electricity spend had an off-grid component. Also 13% of energy lending in 2016 went towards improving energy access; so concrete targets need to be set to ensure enough financing flows towards sustainable energy access for decentralised renewable energy.

Explanation

The World Bank Group Energy Directions paper states that energy access is included in their focus on energy equity, which primarily means secure energy access via traditional grid, mini-grid and off-grid solutions depending on context, but also includes “engagement” in clean cooking and heating solutions. The paper also states the importance of ensuring equity in modern energy access, specifically referencing the lack of modern access in slums and shantytowns.

The World Bank Group’s Energy Hub monitors, analyses and makes public a significant amount of data regarding levels and types of energy access, for the purpose of monitoring progress toward SDG7. The most recent report summarises the work done over the past decade, but that more needs to be done to meet SDG7. In fact, the Bank’s Energy Sector Management Assistance Program (ESMAP) 2021-2024 Business Plan estimates that an additional 120 households will need to be electrifed each year to meet the goal. To work toward this, ESMAP has dedicated energy access plans including integrated electrification planning, the Global Facility on Mini-Grids, and Lighting Global.

The Bank’s Global Electrification Database serves as a useful platform for monitoring progress across Sustainable Energy for All metrics in a wide range of countries, but only includes data through 2018.  It is recommended that the World Bank update this database at least annually for the sake of transparency and progress monitoring.

Up to date information on energy access progress is not easily available. A 2016 report by Sierra Club and Oil Change International on assessing the MDBs on their financing towards energy access between 2012-2014, gave every MDB an ‘F’ rating for their progress on helping to achieve universal energy access. Further reporting by Oil Change International and The Big Shift assessing MDB action from 2014-2017 finds that the Bank, amongst others, is still not on track to meet its energy access commitments. Only 16% of the Bank’s 42.7billion USD in energy finance went to energy access in 2018, and of this very little was spent on off-grid and distributed systems or cooking and heating access. 

Recommendation: The Bank should make available progress on above data since 2017 due to the absence of a similar report, and all MDBs should consider commissioning a joint report on their progress across Sustainable Energy for All metrics.

Recommendation: On energy access, the Bank should consider setting a target to improve overall progress on sustainable energy access, as well as supporting the Climate Vulnerable Forum countries to meet their goal of 100% renewable energy by 2050.

Box: Bangladesh – Solar Home Systems Launched in 2003, the state-owned Infrastructure Development Company Ltd (IDCOL), and the World Bank joined forces to support the first Rural Electrification and Renewable Energy Development Project (RERED). The aim was to bring electricity to the country’s poorest regions. The project was set up with selected local partner organisations who extend loans, install the solar home systems, and provide after-sales support, while IDCOL provides grants, soft loans and technical assistance. Partner Organisations are microfinance institutions which are active in rural areas and involve local private vendors in importing and installing solar home systems; allowing firms to offer families low down-payments of up to 3 years in exchange for solar home systems.
Outcomes: The target to install 50,000 SHS by 2008 was achieved 3 years ahead of schedule and for $2m below the estimated cost. By May 2017, 4.12 million solar home systems systems had been installed, with a focus on areas where electrification and grid expansion were particularly challenging. RERED II is building on this success, piloting renewable energy based mini grids, and supporting solar irrigation pumps to reduce costs of irrigation to the farmers which saves on foreign exchange from importing diesel.
Transformational aspect: The programme is effectively deploying subsidies with concessional loans to make small scale solar installations affordable. The subsidy cost is small compared to grid extension and gradually decreasing, falling from 25% of the average unit price in 2004 to 10% in 2012. The project also has positive impacts on the local manufacturing industry. Initially, batteries were the only component produced in Bangladesh and sold as part of an solar home systems. However, gradually all components (including solar panels) began to be produced locally. This contributed to the growth of the renewable energy market in Bangladesh as a whole, which employed 114,000 people in 2013 alone. The estimated nationwide reduction in carbon emissions due to switching from kerosene lamps to solar home systems is 160,000 metric tons a year, reducing air pollution.

Last Update: November 2020

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