“If we are to end extreme poverty, we must tackle energy poverty,” said World Bank Senior Director for Energy & Extractives Anita Marangoly George. “With 1.2 billion people still living without electricity across Sub-Saharan Africa and South Asia, it’s clear where our work will be focused for the foreseeable future. Our priority is to find the cleanest energy solutions to meet local needs in the smartest ways possible.”
Ms George said Bank Group energy financing for low-income (or IDA) countries, at $4.62bn in FY14, was (in absolute terms) the highest ever – double the highest level the Bank Group has previously provided for IDA countries. Grants and credits provided through IDA exceeded total energy lending for middle-income countries, at $2.167bn, for the second year running.
The increase in the Bank Group’s renewable energy lending reflected growing demand – particularly from IDA countries. Much of the increase on FY13 renewable energy lending was due to approval of a number of large-scale hydropower projects, but it also represents strong continuing investment in solar, wind and geothermal energy, especially from the IFC, the Bank Group’s private sector arm. IFC renewable and energy efficiency lending went from $1bn in 2013 to over $1.4bn in 2014 – with a record 25 percent of this going to wind energy projects.
A considerable proportion of World Bank Group renewable energy financing also went towards building the policies and institutions countries need to manage a sustainable electricity supply as well as the smart transmission and distribution systems that connect people and industry to energy.
A key aspect of World Bank Group energy lending is that it brings in other financing sources. The World Bank mobilized a record amount of over $1bn of private sector finance through guarantees which help to mitigate the risk for potential investors. IFC and MIGA each mobilized a further US$1 billion from third party sources to complement their own investments.
“This year we saw a tipping point for the competitiveness of renewable energy as a commercially viable part of the energy mix, particularly in places like Chile where we financed the largest solar plant in Latin America and in Jordan where we financed the country’s first large-scale wind project”, said Bernard Sheahan, IFC Global Head of Infrastructure and Natural Resources.
For the fourth year running, there was no lending for “greenfield” coal-fired energy generation. And oil-based generation projects made up a very small fraction of overall lending (at 1.7 percent) – concentrated in Sub-Saharan Africa to meet critical and pressing energy needs where there is no other immediate solution available.