Access to energy is essential to reduce poverty. Globally, over 1.2 billion people still do not have access to electricity. About 2.8 billion use solid fuels — wood, charcoal, coal, and dung — for cooking and heating.
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ObjectivesThe objective of the Scaling up Renewable Energy Program (SREP) Armenia Investment Plan (IP) is to catalyze private investment in renewable energy technologies which, for lack of experience,... Show More + high capital costs and a variety of other reasons, have not previously been considered as options in the country.SREP support can help to gradually introduce geothermal energy and utility-scale solar PV by:Absorbing some of the project development risk on geothermal power, through subsidization of exploratory wells at Karkar geothermal site;Helping to finance the country’s first 40-50 MW of utility-scale solar PV projects through private investors, while minimizing the tariff-impact by using SREP funds;Promoting wider penetration of geothermal heat pumps and solar water heaters for residential, industrial, and other commercial use. The US$ 40 million of SREP funding is expected to catalyze roughly 4.5 times as much investment, most of it from the private sector (as equity or debt), and the commercial lending windows of the Multilateral Development Banks (MDBs) including ADB, EBRD, and WBG.Key Expected ResultsThe above projects will foster larger-scale development of the above technologies. The main outcomes expected from the SREP Armenia IP are as follows:Improvement energy security by increasing the proportion of domestic renewable energy in the energy mix, including 40-50 MW of new utility-scale solar power capacity, heat pumps and solar water heaters, and paving the way for 28 MW potential geothermal power plant at Karkar site if exploratory drilling confirms availability of the resource.Promotion and scale-up of utility-scale solar and geothermal power through private investments. This will also facilitate R&D which has traditionally been a focus of researchers and academicians in Armenia.Contribution to reduction of 400 MW of impending supply capacity gap to meet forecast demand.Creation of jobs related to the construction/installation, operation and maintenance of renewable technologies. Education of the workforce in the deployment of these technologies.Reduction of greenhouse gas (GHG) emissions as compared to the business-as-usual scenario.About SREPThe Scaling up Renewable Energy Program (SREP) in Low Income Countries is a targeted program of the Strategic Climate Fund (SCF), which is one of two funds within the framework of the Climate Investment Funds (CIF). The SREP was established to scale up the deployment of renewable energy solutions and expand renewables markets in the world’s poorest countries.The SREP aims to pilot and demonstrate the economic, social, and environmental viability of low carbon development pathways. SREP financing supports technologies such as solar, wind, bio-energy, geothermal, and small hydro technologies. It stimulates economic growth by working with governments to build renewable energy markets, engage the private sector and explore productive energy use. Show Less -
WASHINGTON, September 16, 2014—The World Bank’s Board of Executive Directors today approved a US$15 million International Development Association (IDA*) credit and a US$45 million International Bank f... Show More +or Reconstruction and Development (IBRD) loan to the Republic of Congo to help increase access to electricity and improve the efficiency and reliability of the distribution system. This new financing provides additional funds for new activities to enhance the electricity utility’s managerial, technical and commercial performances that complement the electricity portion of the ongoing Water, Electricity and Urban Development Project (PEEDU). The project will help increase access to basic infrastructure services, safe drinking water and electricity for the urban poor living in Brazzaville and Pointe Noire. Approved by the Board in 2010, the project has strong support from the government and has already benefitted over 260,000 people.The studies conducted under the first phase of the PEEDU revealed that the power sector was in need of reforms and of essential investments in order to restore the reliability and viability of the sector.“The electricity demand in these cities is expected to double in the next few years and the major transmission lines essential to supply power is not up to the standard to meet these needs,” said Sylvie Dossou, the World Bank Country Manager for the Republic of Congo. “This project will support investments to retrofit or upgrade the infrastructure to improve operation and management of the power system.”The additional financing will provide the country’s National Electricity Utility (SNE) with tools to improve the quality of services provided to its customers, and to enhance overall efficiency, transparency and accountability of its performance in all business areas. It will also help improve the performance and the governance of the SNE to implement sound operations and maintenance conditions of the goods, works and services financed under the project.“Through investments targeted to improve the efficiency of electricity supply, the additional financing will help improve the financial viability of the sector, which in turn will reduce the power sector’s fiscal burden on the economy and create opportunities for social investments,” said Mahine Diop, the World Bank Task Team Leader for the project. Show Less -
Limiting the average global temperature rise to under 2°C is a prerequisite to avoiding dangerous climate change. Urgent action is needed to not only reduce greenhouse gas emissions, but to help count... Show More +ries build resilience and prepare for a world of dramatic climate and weather extremes.Mobilizing finance for climate action is a priority, but public resources are not sufficient. In the energy sector alone, the additional investment required consistent with a 2°C scenario is estimated to be $910 billion per year during 2010-2050.With limited public resources there is a need to ensure they achieve maximum impact and leverage private investments. But the collapse of carbon prices has removed the important incentive which encouraged the private sector to invest in clean technology projects, and consequently many projects that reduce greenhouse gas emissions are at risk of being decommissioned.Targeting methane emission reductions. Methane, a by-product of a range of industrial and agricultural processes – mainly waste and fossil-fuel extraction – is a highly potent greenhouse gas with a global warming potential 25 times that of carbon dioxide. Methane actions alone are responsible for approximately half of the potential of 0.4-0.5°C in avoided global warming by 2050. Implementation of technically feasible and cost-effective methane reduction measures would not only slow the rate of climate change over the next decades but also contribute to improvements in local air quality and food security. Additionally, captured methane can be burned for cooking or electricity generation, contributing to increased access to clean energy.Commercial technologies are available. Technologies that reduce methane emissions are relatively inexpensive and had been used more widely as the carbon market developed. But with the dramatic plunge in carbon prices since 2011, carbon revenues are not sufficient to make those projects viable. As a result, about 1,200 methane-reduction projects have been identified in 2012 as dormant or incomplete. Most of the projects are located in Brazil, China, India, Indonesia, Malaysia, Mexico and Thailand. The additional revenue required to unlock these investments is often small. The methane sectors studied could deliver as much as emission reductions of 8,200 million tons of carbon dioxide in developing countries by 2020 at less than $10 per ton in incremental cost financing. Moving forwardWith the PAF, the World Bank Group has developed an innovative, pay-for-performance mechanism which uses auctions to allocate scarce public funds and attract private sector investment to projects that reduce methane emissions, taking advantage of the Clean Development Mechanism (CDM) infrastructure already in place for implementation.The key objective of the PAF is to demonstrate a new, cost-effective climate finance mechanism that incentivizes private sector investment and action in climate change in developing countries by providing a guaranteed floor price on carbon reduction credits. The guaranteed floor price would be delivered through the auctioning of put options supported by donor funding.The nature of the put option means that the facility’s resources will only be disbursed after the emission reductions have been independently verified, making the PAF a “pay for performance” facility. The put options will be embedded into puttable bonds issued by the World Bank. The World Bank’s obligation under the bonds will be backed by the PAF. Under the terms of the bond, the bondholders will have the right, but not the obligation, to sell the emission reductions achieved by the underlying projects to the PAF at a pre-agreed price, the put option “strike” price.The optionality allows put option owners to benefit if carbon prices in international markets rise above the strike price. In this case, the PAF will have achieved its objective (to stimulate private sector investment in mitigation) at no cost to it. If prices fall, the put option owner has the right to sell the carbon credits to PAF at the strike price. Either way, the price guarantee has provided the private investors the financial incentive to fund projects.The competitive nature of the auction used to allocate the put options reveals the minimum price required by the private sector to make such investments, therefore maximizing the impact of public funds and achieving the highest volume of climate benefits per dollar.Additionally, the PAF will disburse its resources only against independently verified emission reductions, using existing carbon auditing standards such as the CDM or voluntary standards such as the Verified Carbon Standard or Climate Action Reserve. This pay-for-performance feature is attractive for governments facing expanding funding needs and scrutiny on achievements. The combination of an auction process and payments based on performance maximizes value for public money.In its first phase, the PAF will support projects that cut methane emissions at landfill, animal waste, and wastewater sites. The facility will deliver quick impact by initially targeting the 1,200 methane reducing projects which are at risk of decommissioning due to the low price of carbon credits. The facility has a strong potential for replication and quick scaling up, in methane or other sectors.Examples of leadershipThe World Bank Group is taking the leadership on piloting innovative climate finance solutions that maximize the impact of public funds and leverage private sector financing by putting a price on carbon at a time when carbon markets have collapsed. Due to low price on carbon, green investments by the private sector in developing countries have slowed down. The PAF aims to stimulate such investments by revealing a price on carbon through auctions, and providing a “floor” price on carbon which is guaranteed by the facility.Download the brief as a pdfDownload the brochure Show Less -
World Bank Regional Vice President for the Middle East and North Africa, Inger Andersen, affirmed support to the people of Egypt and the country's development priorities and underscored the Bank’s com... Show More +mitment to exploring new projects and scaling up existing ones. “Egypt has the potential to become a powerful emerging economy,” said Andersen. “The World Bank Group is committed to supporting the country’s priorities to reduce poverty and achieve shared prosperity.”Andersen’s three-day visit to Egypt included meetings in Cairo with Prime Minister Ibrahim Mahleb, Minister of International Cooperation Dr. Naglaa El-Ahwany and senior government officials including Minister of Planning Dr. Ashraf El-Araby; Minister of Investment Mr. Ashraf Salman; Minister of Social Solidarity Mrs. Ghada Wali; Minister of Finance Mr. Hani Qadri Demian; Minister of Industry, Trade and Small and Medium Enterprises Mr. Mounir Fakhry Abdul Nour; and, Minister of Petroleum and Mineral Resources Eng. Sherif Ismail.In her meetings, Andersen highlighted the importance of rolling out a well-targeted, efficient and effective social safety net program to meet the urgent needs of the poor and protect them from short-term impact of fuel price increases. In Upper Egypt, Andersen visited two projects focusing on employment creation and service delivery. Moreover, she met with civil society representatives and young leaders to discuss how the Bank can support job creation and improve service delivery especially in lagging regions. “I had an opportunity to engage with a variety of stakeholders in Aswan, including women micro-entrepreneurs and young people, on their opinions about challenges facing Upper Egypt and the kind of interventions needed to create voice, participation and jobs,” said Andersen.During Andersen’s visit, Egypt and the World Bank signed the US$500million Egypt Household Natural Gas Connection Project which was approved recently. The Project will expand access to a safe, more reliable and lower cost energy source for cooking by shifting 1.5 million households from the highly subsidized largely imported LPG cylinders to grid connected natural gas. It will also ensure access to areas where cooking gas is currently in short supply and where households have to pay high prices, including three governorates in Upper Egypt with poverty rates among the highest in the country. “The World Bank is a steadfast and continuous partner of Egypt,” said Hartwig Schafer, World Bank Country Director for Egypt, Yemen and Djibouti. “I am pleased that this visit comes as we are preparing our new Country Partnership Framework and listening to the development priorities of Egyptians and how the Bank can best support Egypt.” Last June, the World Bank Group launched nation-wide consultations for Country Partnership Framework (CPF) in Cairo, Alexandria and in Aswan and reached out to civil society, youth, academia, and the private sector. The World Bank portfolio in Egypt includes 26 projects for a total commitment of US$5 billion. The World Bank finances projects for faster delivery of benefits to the people of Egypt in key sectors including energy, transport, water and sanitation, agriculture and irrigation as well as health and education. Show Less -
In June, Kenya set a new African record. At $ 2 billion, the country’s sovereign bond debut was four times oversubscribed. Only one month later, Senegal broke this high. Zambia and Cote d’Ivoire... Show More + have been similarly successful in what some call an African bond bonanza.Interest rates in traditional markets are so low that investors are going after sub-Saharan debt for its high return rates averaging between 5.5 and 7.5 percent. But they are also attracted by the continent’s promising growth rates, its economic stability, rising exports, and growing private investment.This is a good thing.To sustain growth and fight poverty, Africa needs to ramp up investment, particularly to generate more electricity given that 600 million Africans have no access to power. The infrastructure investment gap, estimated to be around $75 billion per year, can be narrowed by, among other measures, raising debt.This is why bond markets, but also bilateral lending, have become so popular. To be clear, raising debt on the international markets and increasing spending are standard tools for any finance minister. But this should not be a race for issuing more and bigger bonds and shouldn’t result in out-of-control spending.Not long ago, over 30 African countries benefited from a major international debt relief program. Now a handful of countries are building up debt again, at a fast pace, often at risky terms and to unsustainable levels. Their debt could reach pre-relief times within a decade.It matters a lot how these resources are being used. Some countries have started increasing their borrowing and spending with an eye on long-term gains by addressing their infrastructure gap and deploying a mix of economic incentives and investments into Africa’s vast human potential. But in others spending remains short-sighted and too few dividends are used to fight poverty.There are three things for leaders to keep in mind if they want their borrowing and fiscal management to pay off:First, be patient. It is rarely the quick fix that goes the farthest. So don’t get tempted by political cycles and the lure of electoral wins. Development is an endurance exercise with incremental improvements. When done well, they are more likely to stay, benefiting today’s and tomorrow’s generation. But populist measures like bumping up civil service salaries or subsidizing fuel can quickly become unsustainable. Fuel subsidies help the rich more than the poor, and some African countries spend up to 5% of their GDP on them, leaving little for smarter investments. Related to this is a second moral of spending. Do what is best for most people, , not just a few. Prevent your elites and growing middle class, those who often benefit most from growth and development, from turning into a special interests group that blocks reforms. . They will always be eager to protect their privileges, and you will have to spend time and effort to build a climate that promotes broad buy-in for difficult reforms. If you wait too long, resistance to more competitiveness, open markets, and revenue collection will grow while opportunities go untapped.Third, act multi-dimensionally. Investing in new power generation without reforming your ineffective power company will bring little change. Similarly, building schools without improving the quality of teaching can be wasteful. In other words, go for the development “package,” the broad approach. Infrastructure alone won’t end poverty. The World Bank had to learn this lesson too. While we believed too much in bricks and mortar in our early days, we now understand that bringing together funding, technical expertise, and tested knowledge, go much further.Together with our clients, we now focus on finding investment solutions that benefit multiple countries in multiple sectors. Just a few months ago, we pooled our own and private funding sources, for which we provided an investment guarantee, to support Mauritania to develop its off-shore gas deposits. The gas will be converted into electricity and then in part be sold to Senegal and Mali, providing both cheaper and cleaner sources of electricity for those countries. Millions of people will benefit.The outlook is good. Africa has better institutions today than ever, is more resilient to shocks, and in many places guided by prudent macroeconomic and fiscal policies. Twenty-five years ago 60 percent of Africans were extremely poor. Now it’s 48 percent. But the decline has been slower than in other regions and inequality is rising in many countries.This is why leaders need to finance the next stage of their countries’ development. And they can do so without endangering hard-won development gains. But fiscal discipline remains critical to secure long-term growth and finance successful pro-poor policies. It is the virtue that can help protecting today’s successes for the next generation. If Africa spends smartly and designs the right development package it can continue the continent’s path of success. Show Less -