What is the role of multilaterals and governments to facilitate WEF?

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Agenda

Background: Launched in 2002 as a World Bank initiative; spun-out as an NGO in 2006. Current headcount of 90.

Locations: HQ in London (UK); field offices in East Africa (Kenya, Tanzania, Uganda, Rwanda) and Senegal.

Mission: Providing support to businesses working to accelerate access to energy in developing countries.

Value Proposition: Sustainable businesses are longer lasting than the effects of direct donations.

Impact: Supported 3,000 businesses that have raised $90m of capital, created 8,800 jobs, avoided 9m tonnes of CO2 and provided 12m people with improved access to energy.

Energy for Impact overview

The energy Access Challenge and impact on other sectors

Connection between energy and other sectors

The role of Multilaterals and government at national and supra national scale

The role of the private sector

List of concrete opportunities & interventions to operationalise the WEF

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Energy 4 Impact overviewBackground: Launched in 2002 as a World Bank initiative; spun-out as an NGO in 2006. Current headcount of 90.

Locations: HQ in London (UK); field offices in East Africa (Kenya, Tanzania, Uganda, Rwanda) and Senegal.

Mission: Providing support to businesses working to accelerate access to energy in developing countries.

Value Proposition: Sustainable businesses are longer lasting than the effects of direct donations.

Impact: Supported 3,000 businesses that have raised $90m of capital, created 8,800 jobs, avoided 9m tonnes of CO2 and provided 12m people with improved access to energy.

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Energy access: a massive global problem with sectorial cross cutting consequences

• 1.3 billion people without access to electricity; 83% are in rural areas

• Almost 2.7 Billion people rely on traditional biomass for cooking, leading to 4.3 million premature deaths /yr

• Poor access to electricity and clean cooking affects:

• Quality of life

• Educational potential

• Healthcare opportunities

• Economic productivity

• Food security

• Significant implications for all the Sustainable Development Goals

“Access to electricity is fundamental to opportunity.”

Barack Obama, 30 June 2013

Energy Access: a high pervasive issue• Increasing energy services in rural areas has the potential to spur agricultural development by

increasing productivity, for example through irrigation, and improving crop processing and storage.

• It could also strengthen the development of non-farm commercial activities, including micro-

enterprises, and create opportunities for other livelihood activities beyond daylight hours

• Energy development, especially renewable energy, also has the potential to create green jobs in rural communities, in areas such as fuel crop cultivation and the provision and maintenance of energy services.

• Renewable energy use natural resources such as water and can help improving access to water and using water more efficiently;

• Energy can improve irrigation : According to FAO irrigated lands produce higher yields than rained systems and allow for double and triple cropping. In Africa only 4% of the land is irrigated

• Aquaculture enterprises (fish farming and mariculture) are expanding. Some of these enterprises, such as shrimp farming, rely on direct energy for pumping and aerating water, as well as on indirect energy for producing and delivering feed.

Energy

FoodWater

Energy sector:-Focus on supply -Mainly modern energy

1-Large ruralelectrification(governments/major firms)

2- Standalone,off-grid energysystems (e.g.solar irrigation,multi-functionalplatforms)

Agri-Food-Sector:-Improving livelihoods/productivity- Energy as one component1. Mechanisation: increaseProductivity with appropriate technology including energy.2. Sustainableagriculture integrated food–energySystems/conservation agriculture

Bio-energyRenewable energy

(Hydro-Power)Irrigation

Productive Uses

Water sector: sustainable management and supply of Water,

storage, irrigation, careful withdrawal

Stakeholders dialogue

The Need for a more coordinated stakeholder approach

The role of Multilaterals and Government at national and supra national level

• Bring together actors at different sectors and level of governance, create platform for discussion and knowledge sharing & ensure that interventions are aligned with national needs and priorities

• Inter-ministerial co-ordination/inter-sectorial response (Senegal: CIMES ?)

• Incentives are needed to understand the challenges associated with the nexus at the local and regional levels and help identify mutually beneficial responses

• Integrate the nexus into national strategies , policy and programmes, development plans and policy frameworks

• Effective governance and a proper enabling environment

• build capacity/knowledge of staff within each ministry. Establish a focal point for each sector in each interrelated ministry? Can only work if empowered to make decisions

• Move from assessment , policy and dialogue to action by implementing integrated interventions/initiatives less complex approach, more pragmatic approaches

The role of Multilaterals and Government at national and supra national level (continue)• Map out likely energy needs of farmers/small holder/food processors

better understanding of issues and understanding priorities

• Understand impact on smallholders, productivity, livelihood, private sector challenges in delivering an economically viable model build evidence to guide policy makers and funders.

• Design intervention that support farmers to articulate their needs in term of energy needs, water resources and value chain linkages

• Intervention that address all barriers to development and scale of more integrated energy , food and water intervention with a fully integrated approach to natural resources.

Food Energy and Water are high on the development agenda: - Sustainable Energy for All (SE4ALL) High Impact Opportunity on the Water-Energy-Food

Nexus fostering synergies between the different sectors, platform to disseminate and share knowledge

- USAID ‘Powering Agriculture’ awards, which provides grants to clean energy enterprises addressing agricultural needs in low-income countries.

- Ashden Awards include an agriculture focused award within the renewable energy awards scheme.

- FAO’s Energy-Smart Food for People and Climate (ESF) Programme which focus on the role of energy in food security and climate , and food security through integrated food - energy production.

- Endev Climate Innovation Centre: incubators for businesses in the Water, agriculture and energy sector (in Kenya: led by a consortia including E4I in Kenya

- IDEAs to Impact (DFID): innovation prizes to address the issues of water, energy and climate change. (led by IMC in collaboration with E4I) however prizes are segregated by sector

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The role of the private sector

• Only 40% of the new generation capacity required for universal access by 2030 is by grid extension – the rest is the natural domain of SMEs

Africa

Asia Off-grid

On-grid

Mini-grid

Off-grid

On-grid

Mini-grid

Africa Asia

Mini-grid

Smaller, decentralised solutions can play an important role to meet the need of smallholder farmers /food producers and have a significant impact on food security

There needs to be much more emphasis on the question of how to support the development of markets, by mobilising private capital, stimulating demand, and strengthening supplier capabilities

For energy-off grid interventions to be effective , they need to:• A bottom-up approach: focus on the need of rural communities

• Be targeted at productive uses

• Be more markets developments focussed, by mobilising private capital, stimulating demand, and strengthening supplier capabilities

• Design appropriate access to finance mechanism for both end users and suppliers

• Provide technical and business capacity building

• Ensure Gender aspect is addressed women represent 43% of agri-workforce (FAO 2011)

• Facilitate access to market/ route to marker, connection through the value chain

• Build on existing complementary initiatives

• A more pragmatic approach

Opportunities and interventions to operationalise the WEF

• Energy and productive uses: opportunities and examples

• Energy & farming: our experience in Rwanda

• Enterprise development for productive uses: our experience in Senegal

• Energy and Water: the example of Pico-hydro

• Bio-energy: our support to the National Biogas Programme in Senegal

Enterprise development for productive use: Our approachWhat?• Productive use of electricity are those that increase income or productivity• They include:

• Agro-processing (grain milling, rice milling, oil expeller)• Manufacturing (welding, carpentry, tailoring, air compressors)• Lighting for businesses (television in bars, music systems, radios,

refrigerators)• Irrigation

Why?• Enhances the viability of the mini-grid – increased utilization and revenues• Enhances economic impact of energy access• Increases quality of life• Achieves broader social and economic objectives: food security, health ,

education, better resource mgt

Productive use of energyOutline of Services Provided

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Business Advisory

› Preliminary activities: Map-out mini-grid developers, identify synergies with the developer on productive use, Geography

› Identification of productive use opportunities: Mapping out business opportunities, existing businesses, identifying gaps

› Recruiting businesses: Identifying potential businesses, soft contract, baseline information

› Technical assistance: Assess needs of the business, detailed analysis, define strategy, business mentoring

› Access to finance: Financing needs, asset financing, local MFIs, Banks, measures to improve access, Guarantees and monitoring loans through guarantees

› Monitoring & Evaluation: Setting indicators, means of monitoring, ease of data collection, assess impacts

Analysis

› Market/gap Analysis:

Mapping of economic activities/livelihood opportunities

Identify existing enterprises with a scope to upgrade

Generate new business ideas requiring power

Key bottlenecks

Financing environment

Mapping other key stakeholders/programs

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Example of private sector led mini-grid project supported by E4I: JUMEME

• A solar-powered mini-grid on Ukara island in Tz.• Capacity to provide reliable and affordable

electricity to 2,000 households & 200 businesses.

• Energy 4 Impact is playing a key role by advising local entrepreneurs, helping them to make informed decisions on how to use the electricity to increase productivity and profitability

Micro-enterprises supported:• Maize mills• Refrigeration for shops• Carpentry• Chicken incubators• ICT center

Micro-enterprises planned:• Horiculture• Water supply• Fish storage and processing• Animal Feed Production

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One of these entrepreneurs is Samweli Nyakalege, who uses the mini-grid power for rice and maize milling. He can now serve more customers more quickly and

efficiently and, thanks to the increased volume of sales, he is able to employ more staff. He now plans to raise more funding to further expand his business.

Projets Energétiques Multi-Sectorial (Senegal)

• An initiative led by ASER.• Support Small Projects/ Enterprises in various

sector (health, agriculture, water, food production, education ) to improve productivity by meeting their energy need

• E4I support to 12 PREMS in Rural Areas in• Identification, energy & financial need

assessments, Business and technical support,• Seed funding by the WB with equity contribution

and debt• Sector include dairies, a range of agriculture

businesses and food processing and tourist camp

3 grid-connected and 9 standalone solutions $1.3m in grant support providedJob creation, income generating activities, economic & social development

Energy and Farming• By definition, large numbers of people living in rural areas without mains electricity are also

involved in agriculture.

• Furthermore, there are multiple intersections of energy- and farming-related issues. Better access to energy can increase the well-being of farmers, for example, in relation to crop-processing or refrigeration, powering irrigation, light for working after dark, charging phones to allow access to market information.

• Also, farming is a source of energy which, whether by combustion, gasification or anaerobic digestion of crops, residues or animal waste, can be a sustainable alternative to the traditional, or fossil fuel based alternatives currently used for cooking and industrial applications.

• Several recent commercial entrants to the market; technology-driven reductions in unit costs and potential for pay-as-you-go solutions have increased growth prospects

• But market development still held back by:• Limited / high cost route-to-market options for the companies• Working capital constraints

• Programme designed to address both these issues then work with equipment suppliers selected by competitive process to increase significantly uptake by smallholders-

Energy and FarmingSolar Irrigation for farmers in Rwanda

• 3 years programme.• Design phase 6 month: mapping of energy needs

of small holders, partnership with agri-initiatives/organisation and framers cooperative

• Supplier surveys and assessment• Design of distribution model analysis• Appropriate financial mechanism for both

suppliers and end-users• Risk: The potential for poorly managed or designed

irrigation systems to result in wasted water or energy, to deplete or pollute water resources, to fail to produce good crops, or to cause soli degradation and salinization Environment and climate change impact Analysis

• Gender mainstreaming• Awareness raising• Working with 3 ministries: Ministry of Energy,

Ministry of environment, Agriculture board

Energy and Water: The example of Pico-hydro

• Most micro hydropower schemes are run-of-river or integrated within an already existing water infrastructure, the effect on the local environment is minimal.

• Run-of-river systems return water to streams, thus minimizing the impact on stream ecosystems, while systems integrated into existing infrastructure merely make use of existing water flows.

• Small/Pico hydropower schemes take up little space and so there is minimal impact on nearby communities or land issues

Main Challenges and pitfalls are :• water availability : During the dry season, the flow rate gets too low which affect the power

produced. • The capital investment for these projects is high compared to future demand projections, and

therefore in nearly all cases projects need a capital subsidy in order to be economic. • The availability of bank finance is rather limited due to banks’ perceptions of high risks, and,

when it is available, is accompanied by large equity and collateral requirements. • The financial capacity of most developers is quite small, so they often struggle to come up with

sufficient equity/collateral on their own. • Developers lack technical but also business skills to manage the utility as a viable business

Energy and Water Pico-Hydro facility in RwandaObjectives:

- 30 pico-hydro micro utilities established and supported with technical, financial and business mentoring,

- 450KW of electricity installed - 4500 HHs in rural areas to get connected to

electricity- Productive use support to local businesses

(Agro-processing, irrigation)- Access to finance mechanism: RBF, Partial

risk Guarantee, Subsidy - Environment Management plan for each

site- Stakeholders involved: target Communities,

Ministry of Natural resources (water, energy , forestry) , Energy and Water national Utility (EDCL)

Bio-energy: National Biogas programme in Senegal• Objective: deploy 10,000 Biogas units in Senegal via 46 biogas enterprises• Build capacity of enterprises to deliver the units• Access to finance mechanism (though a subsidy) for both end-users and enterprises• Mainly government finance project with co-funding from the EU energy facility• A first phase with some degree of failure from 2010-2013-> main focus was biogas as

energy source for clean cooking only, a total of 580 digesters installed a third of the initial target

• New phase: 2015-2020- integrate lessons learnt: a more integrated water, food energy approach: with a strong focus on production of organic fertilizer/compost, water resource management & fish farming , energy for cooking improved income and food security

• Model: private sector engagement, capacity building, access to finance and strong partnership with the ministry of agriculture.

• Challenge: design an economically viable business model • There are barriers to the implementation and wide-scale dissemination of these types of

integrated food-energy approaches, including the complexities and increased workload faced by the farmer, access to technical support, and the long-term nature of the benefits to be reaped

In the off-grid market, there is a unique opportunity, not to only ask how can development cooperation or government themselves facilitate the WEF nexus, but instead to observe that the private sector is already making progress, and then ask how can development cooperation and government help them go faster and built evidence and lessons to inform policy makers.

The result may be more lives improved per $ of development expenditure. And also more lives improved in a shorter space of time

Conclusion: The off-Grid market perspective to WEF