Africa Renewable Energy Access ( AFREA ) Program

1. Africa Renewable Energy Access (AFREA) Program Tjaarda P. Storm van Leeuwen, Adviser, World Bank ESMAP-SIDAEnergy Conference Stockholm, Sweden February 23, 2010

2. The Context: Africa’s chronic power problems • SSA generation capacity inadequate and has been stagnant for 20 years • Low generation accompanied by low electrification • Less than 40 percent of countries will have universal access by 2050 (current trends) • Consumption relatively small and falling • Power shortages high: • expensive (emergency power cost) • negatively affect growth (loss of output)

3. The Context: A huge power investment backlog • US$40.8 bln-power sector annual spending needs • US$11.3bln - power sector annual spending • US$29.5 billion-power sector annual financing gap • Global financial crisis could reduce power spending needs by 20%, with minor effect on GDP shares • Most of private sector finance relates to Independent Power Producers • Potential efficiency gains large in absolute terms, but not sufficient to reduce financing gap

4. Africa Energy Unit Strategic Response • A: Regional scale-up of generation capacity • Develop a new generation of large-scale, transformative generation projects • Concerted effort behind key projects – Development banks as enablers • Strengthen power sector planning taking into account potential climate change effects • Blend private sector capital and donor support • Less risk averse approach to hydro • Develop regional power pools • Get key inter-connectors in place • Complete institutional frameworks (regulations, system operating agreements) • Surmount political concerns on security of supply (including via complementary national investments) • Promote environmentally sustainable solution

5. Africa Energy Unit Strategic Response • B: Improve functioning of utilities, in hybrid markets • Strengthen critical planning capabilities • From firefighting to foresight • Sector structure: ‘hybrid market’ of incumbent utilities and private sector participation • Adapt regulatory oversight mechanisms and institutions • Recommit to SOEReform • Utility efficiency and operational improvement programs • Loss reduction programs (non-technical + revenue collection) • Load management / DSM • Low-cost technology standards • Invest to reduce cost and adjust tariffs to improve financial viability and creditworthiness • Better governance & oversight critical • Major efforts on capacity building, improving efficiency and reducing carbon footprint

6. Africa Energy Unit Strategic Response • C: Access rollout through sector-wide engagement • Increase political and financial commitment • Access to modern energy expansion imperative: redirect capital subsidies towards rollout • Target public institutions including efficient lighting for maximum development impact • Develop institutional models for rural areas, including innovative rural energy finance mechanisms to engage private sector • Review strategy towards biomass and biofuels • Harness technology advancesincluding promotion of sustainable renewable energy resources • Adapt solutions to expected climate change effects • Reduce carbon footprint of energy sector

7. AFTEG Current Portfolio • A portfolio in SSA of about of about 42 projects valued at about US$4 billion • Regional operations, in particular regional transmission, and renewable projects impacting several countries of growing importance • IDA supports rural energy access projects in about 15 countries through various rural finance mechanisms (rural energy access programs represent about 30% of AFTEG portfolio) • AFTEG manages several trust funds which complement its lending activities (AFREA (US$28m from Netherlands), ESME (US$30 million from Russia) in addition to core ESMAP and PPIAF

8. How Trust Funds are managed in AFTEG ESMAP Program Manager AFTEG SectorManager • AFTEG Adviser/Program Coordinator • Program Officer • Support Staff (RM, Publications Asst, • ACS) ESMAP Core Activities Dutch AFREA Program Russian SME Program • Bank- Executed AAA • Recipient- Executed TA & Grants • Bank-Executed AAA • Recipient- Executed Grants • GVEPI TA

9. Africa Renewable Energy Access (AFREA) Program • The Africa Renewable Energy Access Program (AFREA) is supported by the Netherlands’ $28.75 million contribution to the ESMAP Clean Energy Investment Framework Multi-Donor Trust Fund • AFREA objective: Meet energy needs and widen access to energy services in an environmentally responsible way (Pillar 1 of CEIF) • AFREA provides essential support to AFTEG strategic agenda to promote increased access to modern energy in Sub Saharan Africa and is fully aligned with the overall strategic agenda

10. What does AFREA Fund ?Bank-executed activities SWAP-Investment & Policy prospectus Lighting Africa Biomass Energy Initiative for Africa Africa Electrification Initiative Solar PV Toolkit Gender & Energy Catalyzing New Renewable Energy in Rural Liberia Africa Energy Access Scale-Up Plan consultations Energy & Climate Change SWAP-Investment & Policy prospectus

11. What does AFREA Fund?Recipient-executed activities Rwanda GEF Sustainable Energy Development Program Modernizing Biomass Energy Services in Benin Mali Energy Access for Productive Uses Catalyzing New Renewable Energy in Rural Liberia Lighting Rural Tanzania Biomass Energy Initiative for Africa- 12 pilots Lighting Africa Renewable Energy Education Project

12. Emerging areas which require additional support • Impact evaluation of Rural Energy initiatives in the Sub Saharan African region • Increased support to Rural Energy Agencies to support acceleration of energy access agenda • Develop hybrid solutions • Support to RE educational institutions in sub-region • Support to local energy entrepreneurs to manufacture, assemble, maintain and distribute appropriate technological solutions (solar, biomass and other renewables) • Implementing sustainable biomass and bio-fuel solutions in rural • Adaptation of renewable energy solutions to climate change

13. Thank you Tjaarda P. Storm van Leeuwen Email: tstormvanleeuwen@worldbank.org Tel: +1-202-458-1464