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Uniting against Poverty
Roadmap to Universal Energy Access: The OFID View Fuad M. F. Siala (On behalf of Mr. Suleiman Jasir Al-Herbish, OFID Director General) Nigeria Energy Forum 2018 Lagos, Nigeria April 17-18, 2018
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Uniting against Poverty Uniting against Poverty
Established in 1976 by OPEC Member Countries
The Vision: To aspire to a world where sustainable development centered on human capacity-building is a reality for all.
The Mission: To foster South-South partnership with fellow developing countries worldwide with the aim of eradicating poverty.
134 developing country partners
Committed more than US$21 billion for around 3600 projects in all fields
OFID….. “Uniting Against Poverty”
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Uniting against Poverty Uniting against Poverty
Alleviation of energy poverty is a central theme in OFID’s work.
November 2007: Declaration of the 3rd
OPEC Summit
June 2008 Workshop in Abuja
June 2012: Ministerial Declaration on Energy Poverty
Since 2008, total energy approvals reached $US 3.6 billion (including rollover)
This represents 26% of all operations for the period
Pioneer in Fighting Energy Poverty
3 enter footnote
Cumulative Approvals
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
58
372
697
928
1,358
1,857
2,306
2,519
2,964
3,428
3,564
Cumulative Investments $US, million
Energy
Other
Source: OFID Database
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Energy is a prerequisite to prosperity
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Energy poverty footprint
2.00
2.50
3.00
3.50
4.00
4.50
3.00 3.50 4.00 4.50 5.00Lo
g (E
ner
gy u
se, k
g o
il eq
. per
cap
ita)
Log (GNI per capita (const. 2010 US$))
Energy consumption directly proportional to income
Sub-Saharan Africa
Nigeria World
-
17
17 588
239
200
780
783
57
11
561
307
Source: IEA 2017 Database Source: World Bank Open Data
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Uniting against Poverty Uniting against Poverty
In Sept. 2015, the 2030 Agenda with its SDGs became the global development framework
OFID and others efforts were successful and central in including energy as SDG7
Universal Access to affordable, reliable and modern energy services first target under SDG 7
Recognition that human development and energy use go hand in hand
2030 Agenda
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Understanding Energy Poverty
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Vast demand for electricity in both urban and rural areas.
But lack of access to electricity is primarily a rural problem.
In sub-Saharan Africa the rural electrification rate is only 22% vs. 71% in urban areas.
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80% 100%
Pop
ula
tio
n w
ith
no
ele
ctri
city
(% o
f to
tal
po
pu
lati
on
)
Rural population (% of total population)
Source: IEA 2017 Database
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Uniting against Poverty Uniting against Poverty
Energy is linked to all sectors of the economy, and access to energy across all sectors for productive uses is necessary.
Improving energy access should go beyond “basic access”, focusing only on providing the minimum energy.
Beyond basic access
7
0
3,000
6,000
9,000
12,000
15,000
18,000
0% 20% 40% 60% 80% 100%
Elec
tric
ity
con
sum
pti
on
, kW
hr/
cap
.
Electrification rate
Source: World Bank Open Data/IIEA 2017 Data
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Electricity consumption
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Vast differences between developed and developing countries.
60% of world population at less than world average.
Full electrification does not mean necessarily adequate electrification
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10,000
20,000
30,000
40,000
50,000
60,000
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00
Elec
tric
ity
con
sum
pti
on
, kW
h p
er c
apit
a
Commulative population, billion
Iceland
USA
China Nigeria
World average:
3,125 kWh/cap.
Mauritius: Electrification
rate: 100% Consumption:
2,183 kWh/cap.
Source: World Bank Open Data
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Distributed systems will need to play major role in alleviating energy poverty in rural settings and locations.
Use mini-grids whenever costs are lower than grid extension and stand-alone systems
Potential to provide more than 40% of new capacity required to achieve universal electricity access, by 2030
Much work needs to be done Structural barriers in governance, finance and
business models are constricting a large scale mini-grid market
Tailoring the Solution
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Guiding Principles
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Access to affordable and reliable modern energy services is a prerequisite to sustainable development.
The aim is to alleviate energy poverty – universal energy access.
The approach should be pragmatic, based on the technology-neutral principle.
Projects should target productive uses of energy and be income generating.
Projects should target inclusive development and promote local ownership.
Universal energy access requires all sources of funding, and private sector must play a significant role.
Respects choices of beneficiary countries and respond to their wishes based on their own priorities.
Sustainable development
Universal Access
Technology Neutral
Productive Use
Local Ownership
Private Sector
Country Choices
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Uniting against Poverty
Very little investment in clean cooking solutions
Very low investment in distributed generation
Despite improvement over the years, still a large gap to close
Investment flows
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9
19.4
0
5
10
15
20
25
30
35
40
45
50
2012 Average 2013, 2014B
illio
n d
olla
rs/y
ear Required
investment
Actualinvestment
45 45
10.1
4
3.6
1.6 0.2 0.1 0.1
0
4
8
12
16
20
Average 2013, 2014
Bill
ion
do
llars
/yea
r
Nuclear
Mini-grids
Off-grid
Market support
Transmission & distribution
Grid-connected fossil fuels
Grid-connected renewables
Clean cooking
0.1 0
1
2
3
4
5
2012
Bill
ion
do
llars
/yea
r
Required
Actual investment
4.4
Electricity access
By type of assets
Grid extension is the dominant model. considered a precondition for development
Requests to finance large centralized power plants and grid extension schemes dominate; requests, either from governments or from private sector for distributed solutions projects rare.
Source: SEforALL Source: SEforALL Source: SEforALL
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Uniting against Poverty
Respond to the demand from beneficiary countries
However, achieving universal access to modern energy services needs to be higher on the development agendas of countries
Structural barriers constrain more investment in energy access, including:
enhancing local and regional capital markets,
developing appropriate policy frameworks and
strengthening human capacity to develop project pipeline
Finance is necessary…but not sufficient
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Energy, water & food are linked
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They are interdependent and entwined.
By 2030 we will need 30% more water, 40% more energy and 50% more food
The entwining will become even more manifest
Water
Food Energy
Energy needed to produce Food
Food can be used to produce Energy
In “silo approach”, risks and uncertainties arise if policies and interventions made without cross-sectoral coordination.
Nexus planning focuses on interdependence and potential consequences of one sector on another.
An EWF nexus approach can identify potential policy trade-offs that will need consideration to satisfy future demand in ways that are technologically appropriate, economically responsible, environmentally justifiable, politically acceptable, and socio-culturally defendable.
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OFID 2016-2025 Corporate Plan
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Theme: Food-Energy-Water Nexus
70% of activities dedicated to the 3 critical
sectors: Energy, Water and Agriculture; transportation enabling sector.
Adopting a nexus perspective in development intervention lies with development planners in our partner countries.
17 %
20 %
14 %
49 %
xxx
xxx
Energy
Agriculture
Transport
Water
xxx
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enter footnote 15
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Annex – OFID Examples
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Promoting Access to Modern Energy through Mini-Grids in Africa and Asia
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Supporting Mini-grids:
In 2015, OFID signed an agreement with the Alliance for Rural Electrification (ARE).
To supporting accelerated deployment of mini-grids in Bangladesh, India, Mali and Mozambique.
Links to Guiding Principles:
promoting the productive use of mini-grids.
encouraging the private sector involvement in the mini-grids market.
hybrid mini-grids to minimize LCoE
Country Location Project owner
Project technical characteristics
Bangladesh
Muradpur Island
Rahimafrooz Renewable Energy Ltd
hybrid mini-grid; 80 KWp PV and 40 KW diesel
India Bankai, Sikoh, Larba, Jikirma and Dumardih
Association Mlinda
5 hybrid mini-grids; each 10 KWp PV and 7.5 KW diesel
Mali Blendio ACCESS S.A.R.L.
hybrid mini-grid; 32 KWp PV and 68 KW diesel
Mozambique
Titimane Energias de Portugal, S.A.
hybrid mini-grid; 100 KWp PV and 60 KW biomass
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Support to investments in energy technologies in agrifood
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The OFID-REEEP Revolving Pool
Returnable grant to bring solar irrigation to smallholder farmers in Kenya
Deploy 825 solar irrigation pumps on small farms and test three alternate microfinance products
Private sector investment to unlock scale, potentially reaching 20,000 smallholder farmers
Returnable grant to install two pilot “pay-as-you-go” solar farms for renting to the agro-food sector in Tanzania
Develop a fully operational food processing-focused marketing and sales channel and
Demonstrating use of food-processing plants as mini-grid anchor
Attract sufficient private sector investment to finance the scale-up of the service, potentially to 5.2 megawatt peak
Biogas-based Nexus Projects
Provide 500 small-scale farmers in Tanzania and Kenya— each with 5–20 dairy cows—with an affordable and durable milk chilling solution; by-product solid waste is as fertilizer
Sanitation and Sewage Treatment for Boarding Schools: To demonstrate an affordable biogas system
OFID subsidized installation n 28 schools to benefit 14,000 school children and staff. Biogas is collected and used for cooking in the school kitchens. By-product solid waste is sold as fertilizer to generate income streams A proven concept for upscaling to a further 1,000 schools in Kenya and 500 in Tanzania
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Uniting against Poverty
Distributed solutions must go beyond relying on grant money for finance.
Governments do not prioritize distributed solutions and it is often difficult to prove the business case for the private sector participation.
Clarity and stability of political priorities – Example:
A PV/biomass hybrid mini-grid had to be cancelled in Mozambique when Government denied license to SPV
Assurance that distributed energy systems schemes will not be superseded by grid extension – Example:
5 mini-grids had to be cancelled in India
Involvement of the end-user, development of local technical capacities and ability to pay
Tariffs must be accepted by all parties
Subsidies can be effective, but need to be smart
A good understanding of demand and demand analysis is a pre-requisite for designing sustainable systems that are financially/economically viable and helps reduce dependence on subsidies
Lessons learned
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