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World Bank Group Reiterates Focus on Green Energy

October 7, 2010

  • Financing for renewables and energy efficiency reaches $3.63 billion
  • Low-carbon energy projects account for more than 40% of 2010 lending
  • 1.5 billion people still lack access to electricity, 640 million in Africa

October 7, 2010—The World Bank Group said today its financing commitments to new renewable energy projects increased to $1.5 billion in 2010, more than triple the amount committed in 2008. Energy efficiency lending increased 48 percent during the same period.

The figures confirm the institution is on track to meet its commitment to increase support for new renewable energy and energy efficiency by nearly $8.8 billion over 2008-2012.

“Combined with our large hydropower commitments, this amounts to $3.63 billion for green energy,” said Inger Andersen, the Bank’s Vice President for Sustainable Development. “It’s a record for the World Bank Group, and clear evidence of a shared commitment between the institution and borrowing countries to invest in a sustainable energy future.”

In 2010, the Bank Group commitments on renewable energy, energy efficiency, transmission and distribution, and energy sector reform accounted for more than 60 percent of total energy financing.

The lending covers approvals for 118 renewable energy and energy efficiency projects in 51 countries, raising the total number of projects of this kind to 428, under way in 100 countries.

Lending shifts to meet country demand

Lucio Monari, Manager of the Bank’s Energy Unit, said the composition of energy lending has shifted in response to demand from borrowing countries, whose leaders increasingly ask for assistance promoting renewable energy, energy efficiency policies, and other low carbon measures.

For example, in Mali, the Bank has provided—through the International Development Association—two zero-interest loans in 2003 and 2008 respectively, for a total of $70.6 million, to support a household energy and rural access project, which includes installation of solar photo-voltaic electricity systems in some 40 rural communities.

In Bangladesh, IDA has been active for a decade in the Rural Electrification and Renewable Energy Development Project, helping connect more than 900,000 households through grid extensions and solar home systems. With additional financing approved in 2010, the government of Bangladesh’s original target of just 50,000 new connections through solar home systems has increased 20-fold to a million systems by 2012.

“Like our clients, we are mindful that there can be no poverty reduction without power—but no sustainable development without addressing climate change,” Monari said. “We work with clients to capture synergy between the two to the maximum possible extent.”

Balancing urgent need for power and lower-carbon solutions

The number of people without access to energy in sub-Saharan Africa is projected to rise to 90 to 100 million in 2030. Without access to energy service, the poor will be deprived of the most basic economic opportunities to improve their standard of living.

In the past decade, for the poorest countries—many of them in Africa— World Bank support has helped build - and make more reliable - almost 8 gigawatts (GW) of electricity. World Bank support has also connected 24 million people (in IDA countries) to energy for the first time by building 27,000 miles of transmission and distribution networks.

Improving access to energy for the poor is about more than declarations in a document. Millions of people worldwide have benefited from World Bank Group energy financing. They know that they can now keep their medicines cool in a refrigerator, they can read and study at night, they can keep working at a factory that otherwise would be closed, and that they are on a path out of poverty. That is the true measure of the Bank’s work.

In southern Africa, where countries were facing an energy crisis even before the economic crisis started, the World Bank approved a $3.75 billion loan to the South African power utility, Eskom, in 2010. The loan will help deliver urgently needed electricity to the people of South Africa, which has not built a major new power plant in more than a decade.

“The Bank team carefully reviewed alternatives for South Africa’s energy crisis and the economic and human consequences of not pursuing the project,” said Andersen. “We found that no domestic or regional sources could meet the required base load capacity to fuel the economy. The loan was approved based on South Africa’s clearly stated goals to lower carbon intensity and emissions.”

The Eskom project will use advanced supercritical technology for the coal-fired Medupi power plant and prompt major investments in wind and solar power. The $260 million for wind and solar power projects and the $485 million for energy efficiency are important steps in South Africa’s long-term plan to mainstream renewable energy.

“Our mandate is to work with developing countries to promote economic growth and reduce poverty in environmentally and socially sustainable ways,” Andersen said. “The challenge is to help developing countries deliver electricity to 1.5 billion people who are without it—640 million of whom are in Africa—without aggravating climate change, and without constraining efforts at growth and poverty reduction, and we are doing that.”