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sustainable energy delivery models

that target the poorest


Seminar for the UCL Energy Institute
Ben Garside
International Institute for Environment & Development
23 October 2012
www.iied.org

What Im going to cover

Energy as a hot topic Rio+20 & beyond


SE4ALL and pro-poor energy delivery
Private sector as deliverer of SE4ALL
The broader picture energy equity principles
Key aspects of building pro-poor energy
delivery models
Energy delivery models a framework
Delivery model design process
Next steps

Sustainable Energy for All (SE4ALL)


What?
When?
Where?
Who?

( with thanks to Practical Action for inputs on SE4ALL slides )

What:
UN Sustainable Energy for
All Initiative (SE4ALL)
The SE4ALL Initiative is focused on working with
stakeholders to deliver three key objectives by 2030:

Ensuring Universal Access to modern energy


services

Doubling the share of renewables in the global


energy mix

Doubling the global rate of improvement in


energy efficiency

Key outputs of SE4ALL


Vision Statement
Framework for Action
Action Agenda (identifies 11 Action Areas)

sectoral areas: (1) modern cooking appliances and fuels; (2)


distributed electricity solutions; (3) grid infrastructure and supply
efficiency; (4) large-scale renewable power; (5) industrial and
agricultural processes; (6) transportation; and (7) buildings and
appliances.
enabling areas: (1) energy planning and policies; (2) business model
and technology innovation; (3) finance and risk management; and (4)
capacity building and knowledge sharing.

When:
Timeline of action

September 2011 - SE4ALL Initiative launched

November 2011 - EC announce Agenda for Change energy priority


for Development Assistance

April 2012 SE4ALL Action Agenda launched

June 2012 - Rio +20 52 countries endorse SE4ALL, $50b committed


from private sector to Initiative

September 2012 launch of operational phase of the Initiative


(country-focused)

December 2012 baseline report released (WB-led)

Where:
Priority countries
62 countries have actively opted in to the SE4ALL Initiative
(almost half of which are in sub Saharan Africa)
12 countries have been prioritised as first-movers largely
SSA:

Kenya
Mozambique
Tanzania
Ghana
Uganda
Burkina Faso
Sierra Leone

Who:
Key International Players
UN:
- UNDP
- UNEP
- UNIDO

European Commission
Energy+
GIZ
World Bank

Who:
European Commission Energising
Development
Demonstrating leadership on energy access through:

1) New Development strategy Agenda for change


prioritising energy access in Sub Saharan Africa
(2014 2020)

2) Launch of a 50m Technical Assistance Facility


(by 2014)

3) Announcement of 500m commitment to


concrete energy access projects (by 2014)

Who:
Energy+ and World Bank
Energy+
Norwegian government initiative to promote energy access
and low carbon development country government
agreements already signed with Kenya, Liberia and
Ethiopia (c. 150m Euros)
World Bank
Leading the development of an SE4ALL baseline report
a snapshot of the global picture of each of the goals in
2012 - and establishing a tracking framework to define and
monitor progress to 2030

Who:
Private sector is seen as key deliverer of SE4ALL

Many large PS financial commitments e.g. Bank of


America USD 35 billion of financing toward energy
initiatives

Civil society - All three SE4ALL documents highlight


the role of Civil Society as crucial and
complementary. The Secretary General identifies civil
society as the third pillar to deliver SE4ALL,
alongside business and government

Who: SE4ALL and the private sector some perspectives

The overriding rule should be to make


markets not destroy them, while clearly lots
of aid programmes have been very
ineffective in giving things away. Grant
money needs to be used to reduce the risk of
standard commercial business.

Unfortunately, most energy access


investment opportunities among the
worlds poorest offer high risk and low
returns, which is the wrong
combination.

The primary role of NGOs should


be to innovate and demonstrate the
viability of systems and technology,
reducing the risk for subsequent
investment by the private sector.
In fact many do not do that
because they are not brave enough
to subject their work to critical
evaluation.

If there is a simpler market ready to be


exploited there is little incentive for the
private sector to set up cumbersome
financial mechanisms and delivery models
to serve the poorest.

I think [SE4ALL is] a great initiative but there


have been so many initiatives in the past with
dubious results so Im not getting too excited.

I think we need to be honest


and recognise that at present
we are not able to target the
poorest of the poor.

A successful business model is


not necessarily defined by the fact
that people have to pay at the
point of end use.

An IIED survey: What can SE4ALL do to stimulate private sector


involvement in sustainable energy access, especially for the poorest?

Coordinating
Link entrepreneurs and investors; NGOs

and business; private and public sectors


Co-ordinate (and educate) donors
Gather country-focused information for
setting up business/finding local partners
Coordinate market analysis, resource
mapping, data collection/info sharing

Stimulating

Guiding
Influence governments to generate

supportive policy/economic frameworks,


e.g. guidelines for policy directives
Promote incentives, e.g. fossil fuel
subsidy reform; eliminating import taxes;
tax benefits for local manufacturing; feedin tariffs

Demonstrating

Stimulate investment funds aimed at

difficult market (low returns, high risk,


longer term)

Provide guarantees for private investment


Encourage public sector adoption of new
technologies and public/private support
for research and education

Showcase and validate demonstrably


profitable business models for replication
Build capacity in financial institutions to
understand viability of such businesses
Develop standardised methods for
measuring impact beyond profit

Who: Civil Society


The current profile of energy access is unprecedented
but commitments to clean, secure and affordable energy do
not automatically translate into delivery for poor communities
Civil society has a role to play in establishing a new energy
narrative; one which recognises the full range of services
which poor people want, and need AND ensuring that this
message is reflected in the definition and delivery of
energy access at country level
September 2012 marks the start of the operational (i.e
national-focused) phase of the Initiative

Civil Society Roadmap

Civil society engagement with SE4ALL has not been


strategic or systematic
Civil society groups, including IIED, have formed a
coalition and made a high level joint statement at Rio+20
The SE4ALL initiative has tasked a group of NGOs, led by
Practical Action, to create a Civil Society Roadmap
This represents a tangible opportunity to help shape how
civil society can engage at the international and national
levels
IIED and others currently working on a joint-plan to run
civil society strategic engagement at national level

Key national opportunities


Each of the 62 countries opting in to SE4ALL have to
deliver two outputs in the next 12 months:

1) Gaps Analysis
2) National SE4ALL Implementation Plan
These will shape the delivery and definition of energy
access in country for the coming decade

Energy equity some principles

Energy equity some principles

Prioritise improving the lives of the poorest

Tailoring energy services to the needs of the poor


Decentralised is often more appropriate and more
affordable
Danger of low-carbon agenda driving pro-poor
energy access

Measure success in terms of development


benefits

Health, education, and livelihoods; more focus on


M&E
Joined up planning

Energy equity some principles (II)

Promote effective civil society participation in


planning and decision making

A sense of ownership/involvement is often key


Local socio-cultural context including preferences
for products and practices; assessing &
stimulating local willingness to pay

Support sustainable use of local resources


Using locally available energy resources e.g.
solar, gas
Creating jobs in supply chains

What is an energy delivery model?

The combination of technology, finance and

management required to supply energy to users. This


includes sourcing energy resources, conversion and
processing, distribution (of products or power) and
relations with end users. The design of this process
needs to consider governance, management and
ownership structures, and the chosen financing
options and payment systems (product pricing or
tariffs).
Pro-poor energy models would target the needs of
the poorest, following the equity principles

A few key aspects of pro-poor energy


delivery models

Success needs to be viewed from different perspectives

Wants vs needs
Partnerships and stakeholder relations/incentives

Socio-cultural context is often key

Local preferences & expectations


Community cohesion and capacities
Strength & perceptions of institutions

Enabling environment

Institutional structures, policy, regulation, and government support


Environmental conditions

Financial sustainability and scaling

Designing payment systems


The role of subsidies
The challenges of connecting to larger finance

Pro-poor energy delivery model framework

Osterwalders Business Model Canvas

Delivery Model Design Process

1. Demand Phase

Identify the context - this is usually dictated by the initiating


agencys priorities

Perform a broad stakeholder mapping

group types, livelihood types, actors that engage with these groups (local,
national)

Carry out energy needs and wants assessment across a range of


actors

e.g. particular geographical area; a group of people with similar activities or


lifestyles such as farmers in semi-arid regions. The productive uses of energy
services for subsistence agriculture

perceptions of end-user needs plus own needs/incentives. Is there a space for an


energy service as part of a broader need?

Nail down the challenge - matching stakeholders priorities

fits within local and national programs, feasibility in terms of natural and human
resources, opportunities, barriers

Identify potential solutions and definitions of success from all


stakeholder perspectives.

What are the expected outcomes and impacts from delivering certain outputs?
How are the outputs linked to outcomes and impacts

2. Market and context analysis phase

The process so far has led to the broad formulation of an intervention


idea or value proposition.

This phase uses a Delivery Building Tool to understand what market


and context information is needed to create the delivery model.

Analysis adapted from Osterwalder canvas and market mapping tools


Answering the questions the analysis raises involves using a number of different
tools/approaches e.g. better understanding willingness to pay

3. Design Phase

Using the gathered information, map out potential


delivery model options

Keeping in mind risk/opportunities that have emerged


from the market analysis and ensuring best alignment of
incentives for different stakeholders

Identify opportunities to mitigate risks and

improve the models value through creating


support services
Action plan define activities, monitoring and
evaluation strategy

Next Steps

Continue engagement with and constructive


analysis of SE4ALL process
Deepen analysis of delivery models
framework, working with others to refine and
field test it
Work on better measuring links between
energy service delivery and livelihood
impacts

Publications

Energy equity: will the UN Sustainable Energy for All

initiative make a difference


http://pubs.iied.org/17127IIED.html
Powering change in low-income energy markets
http://pubs.iied.org/17093IIED.html
Sustainable Energy for All and the private sector
http://pubs.iied.org/G03383.html
Sustainable energy for all? Linking poor communities
to modern energy services (forthcoming)

Thank you