Promotion of a transformational change for a low-carbon electricenergy in Togo

Banque Ouest Africaine de Développement (BOAD) | Togo

27 February 2018

Please submit the completed form to fundingproposal@gcfund.org, using the following name convention in the subject line and file name: “Togo-BOAD-20180226”

Project/Programme Title: Promotion of a transformational change for a low-carbon electric energy in Togo

Country(ies): Togo

National Designated Authority(ies) (NDA):

Mr. Esso-Sam Abdou Rassidou Agrignan

Accredited Entity(ies) (AE): Banque Ouest Africaine de Développement (BOAD)

Date of first submission/ version number: 2018-02-26

Date of current submission/ version number 2018-02-26

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2

Notes

The maximum number of pages should not exceed 12 pages, excluding annexes. Proposals exceeding the prescribed length will not be assessed within the indicative service standard time of 30 days.

As per the Information Disclosure Policy, the concept note, and additional documents provided to the Secretariat can be disclosed unless marked by the Accredited Entity(ies) (or NDAs) as confidential.

The relevant National Designated Authority(ies) will be informed by the Secretariat of the concept note upon receipt.

NDA can also submit the concept note directly with or without an identified accredited entity at this stage. In this case, they can leave blank the section related to the accredited entity. The Secretariat will inform the accredited entity(ies) nominated by the NDA, if any.

Accredited Entities and/or NDAs are encouraged to submit a Concept Note before making a request for project preparation support from the Project Preparation Facility (PPF).

Further information on GCF concept note preparation can be found on GCF website Funding Projects Fine Print.

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A. Project/Programme Summary (max. 1 page)

A.1. Project or programme ☒ Project ☐ Programme

A.2. Public or private sector

☒ Public sector ☐ Private sector

A.3. Is the CN submitted in response to an RFP?

Yes ☐ No ☐ If yes, specify the RFP: ______________

A.4. Confidentiality1 ☐ Confidential ☐ Not confidential

A.5. Indicate the result areas for the project/programme

Mitigation: Reduced emissions from:

☒ Energy access and power generation

☐ Low emission transport

☐ Buildings, cities and industries and appliances

☐ Forestry and land use Adaptation: Increased resilience of:

☐ Most vulnerable people and communities

☒ Health and well-being, and food and water security

☐ Infrastructure and built environment

☐ Ecosystem and ecosystem services

A.6. Estimated mitigation impact (tCO2eq over lifespan)

2 332 853 tCO2eq

A.7. Estimated adaptation impact (number of direct beneficiaries and % of population)

400 000

A.8. Indicative total project cost (GCF + co-finance)

Amount: USD 46 655 000

A.9. Indicative GCF funding requested Amount: USD 28 210 000

A.10. Mark the type of financial instrument requested for the GCF funding

☒ Grant ☐ Reimbursable grant ☐ Guarantees ☐ Equity ☐ Subordinated loan ☐ Senior Loan ☐ Other: specify___________________

A.11. Estimated duration of project/ programme:

a) disbursement period: 2 years b) repayment period, if applicable:

A.12. Estimated project/ Programme lifespan

This refers to the total period over which the investment is effective. 10 years

A.13. Is funding from the Project Preparation Facility requested?

2

Yes ☒ No ☐ Other support received ☐ If so, by who:

A.14. ESS category3

☐ A or I-1 ☒ B or I-2 ☐ C or I-3

A.15. Is the CN aligned with your accreditation standard?

Yes ☒ No ☐ A.16. Has the CN been shared with the NDA?

Yes ☒ No ☐

A.17. AMA signed (if submitted by AE)

Yes ☒ No ☐ If no, specify the status of AMA negotiations and expected date of signing:

A.18. Is the CN included in the Entity Work Programme?

Yes ☒ No ☐

A.19. Project/Programme rationale, objectives and approach of programme/project (max 100 words)

Brief summary of the problem statement and climate rationale, objective and selected implementation approach, including the executing entity(ies) and other implementing partners. The electricity sub-sector in Togo is characterized by a high dependence on imports (around 80% of requirements), a national production that is essentially thermal and unsustainable with respect to the mitigation of GHG emissions, an inefficient

1 Concept notes (or sections of) not marked as confidential may be published in accordance with the Information Disclosure Policy (Decision B.12/35) and the Review of the Initial Proposal Approval Process (Decision B.17/18). 2 See here for access to project preparation support request template and guidelines 3 Refer to the Fund’s environmental and social safeguards (Decision B.07/02)

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consumption both in terms of public lighting in domestic lighting, a virtual absence of valorization of renewable energy sources. This limits access to energy services, the rate of which is 30% in urban areas and 13% in rural areas. This project aims to promote transformational change in the production and consumption of electric power in Togo. BOAD is the accredited entity and the project will be implemented in collaboration with the ministries in charge of energy, grassroots development and environment.

B. Project/Programme Information (max. 8 pages)

B.1. Context and baseline (max. 2 pages) Describe the climate vulnerabilities and impacts, GHG emissions profile, and mitigation and adaptation needs that the prospective intervention is envisaged to address. Togo electricity sub-sector is characterized by a structurally failing service, both in terms of quantity and quality, due to the dilapidated production base, the disparity of production tools and the high dependence on imported hydrocarbons. In addition, lamps (traditional incandescent) used for public and households’ lighting are energy-consuming and inefficient. Final consumption by energy source was 71% of plant biomass, 26% of petroleum products and 3% of electricity. Only a small proportion of the population has accessed to electricity with 30% in urban areas and 13% in rural areas. Energy demand in urban and rural areas is expected to increase by 60% over the next 12 years (TCN Togo, 2015). In the meantime, energy sector GHG emissions are increasing at a rapid rate (9.38 % in 2005 to 15% in 2010). However, the domestic electricity production is mainly generated from thermal power plants, especially in rural and remote areas. Therefore, the increase in electricity supply will raise the state's invoice for the supply of petroleum products thus; amplify GHG emissions of this sector. In addition, the lamps used for public and domestic lighting are largely energy-consuming and inefficient which increase electricity consumption.

The current situation in rural areas is characterized by heavy dependence on multifunctional diesel engines for basic energy services including distribution of water and electricity and for income generating activities such as butter manufacturing, grinding cereals and other preservation and processing activities. The multifunctional diesel engines operate 20 hours for about 300 days a year. The result is 7,650,000 liters of fuel per year. In response to this situation, the project included component 2, which aims to hybridize 400 multifunctional diesel engines with solar energy. This component will reduce 3,060,000 liters of fuel per year and save 36 billion in fuel spending. Also, the main income generating activity for these groups is agriculture. In the intervention zone like in many areas in Togo, agriculture is significantly dependent on rainfall production systems. Trends in rainfall decline and variability and rising temperatures result in high evaporation / transpiration, which exacerbate the region's water scarcity and its use in production systems during drought seasons. Reduced access to water could lead to the reduction in crop yield and productivity, increasing the situation of food insecurity in the country.

In urban areas, public street lighting is particularly made up of Sodium discharge lamps. These lamps are highly energy intensive but provide lower quality services. This constitutes a major budgetary concern for the municipalities, responsible for the public lighting network. These municipalities have difficulty in overcoming the electricity bills despite the subsidy of the State and the contribution of the subscribers of the national networks. In rural areas, households lighting is dominated by neon bulbs, as well as fluorescent lamps with mercury compact fluorescent. Notwithstanding the publicity around these bulbs, it is proven that their lifetime is very short (2 to 4000h) against 50 0000 hours for LED bulbs and that they consume more energy than LEDs (with equal power, the luminous flux of the LED bulbs is 2 to 3 times higher and the LEDs make 50 to 90% power saving compared to compact fluorescent bulbs). In addition, the mercury contained therein is harmful to human health and the environment. The Minamata Convention recommended that all countries should phase out the use of mercury in products, such as compact fluorescent lamps, by 2020 at the latest.

Please indicate how the project fits in with the country’s national priorities and its full ownership of the concept. Is the project/programme directly contributing to the country’s INDC/NDC or national climate strategies or other plans such as NAMAs, NAPs or equivalent? If so, please describe which priorities identified in these documents the proposed project is aiming to address and/or improve. The proposed project is in alignment with the following national climate strategy and mitigation/adaptation priorities: (i) National Communications and sectoral strategies, (ii) Nationally Determined Contribution (INDC); (iii) national action plan for renewable energy and energy efficiency (SE4ALL); (iv) National Action Plan for Adaptation to Climate Change (NAPA); (v) Strategy for accelerated growth and employment promotion; etc. National Communications and sectoral strategies: The project will support key issues in the country's second and third national communications. Indeed, the options proposed in Chapter 3 of the second national communication (DCN) are based on three strategic axes including the development of renewable energy technologies, notably solar. As regards

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to the third national communication (TCN), the priority options in the energy sector include, among other things, solar photovoltaic rural electrification (see section 4.1.2 of the TCN). Nationally Determined Contribution (NDC): elaborated in September 2015, it aims to mitigate the country’s greenhouse gas emissions by putting emphasis in the following three sectors: Energy, Agriculture and land use, land-use change and forestry. In the energy sector, priority will be placed on:(i) the introduction of solar equipment in households and on capacity-building for the various actors concerned; (ii) implementation of policies and incentive programs to promote household use of biomass and (iii) mitigation of the consumption of fossil fuel by 20% in road transport. (INDC Togo, 2015). The proposed project through its component 2: Hybridization of thermal groups in rural areas with solar photovoltaic and component 3: Promotion of low-consumption lamps contributes to the objectives of NDC. In total, it will result in reduction of over 2.5 million tonnes of CO2 eq. National action plan for renewable energy and energy efficiency (SE4ALL-2030): approved in 2015, the overall objective of this plan is to: (i) ensure universal access to modern energy services by 2030; (ii) double the overall rate of improvement in energy efficiency; and (iii) double the share of renewable energies in the global energy mix. Specifically, it plans to create an enabling environment for renewable energy by: (i) developing the institutional and regulatory framework, (ii) creating a renewable energy agency; (iii) establishing a fund for the promotion of renewable energies to capture and centralize funding for the subsector as much as possible; (iv) taking into account the solar variant in public procurement of energy; (v) developing clear guidelines for the development of renewable energies; (vi) exempting photovoltaic and thermal solar equipment and materials from customs, tax and value added tax (VAT); and (vii) introducing a tax-related tax law in the field of renewable energy use (Ministry of Mines and Energy, n.d) . National Action Plan for Adaptation to Climate Change (NAPA): Togo has developed its NAPA, which was submitted to the UNFCCC in 2009. The priority areas, which are also the most vulnerable areas to climate change impacts, are: agriculture, water resources management, housing, and health. Strategy for accelerated growth and employment promotion (SCAPE): From 2013 to 2017, the government plans to increase the country's energy production capacity from 161 MW in 2010 to at least 300 MW in 2015 and 500 MW in 2020. With regard to the distribution of electricity, the objective is to improve public access to electricity utilities, from 23% in 2010 to 40% in 2017 and 42% in 2020. In rural areas, the access rate over this period is expected to rise from 5% to 16%, and then to 18%. Rural electrification will be accompanied by the adoption of a rural electrification strategy, the creation of a national rural electrification agency and the establishment of a rural electrification fund. The SCAPE provides for measures such as: the establishment of a legal and regulatory framework encouraging the promotion of renewable energies. Describe the main root causes and barriers (social, gender, fiscal, regulatory, technological, financial, ecological, institutional, etc.) that need to be addressed. The lack of awareness of the benefits of renewable energy: photovoltaic solar demonstration projects in the villages will help educate the public on the benefits of photovoltaic solar energy in rural areas. The Knowledge and capacity development and support to public and private sector to provide better quality of service to the rural areas is necessary. The lack of technical capacity: The technology shift induces a change in the required technical skills of operators and installers. Capacity building, training, promotion of the technology and support allocated to local equipment and service providers is needed in order to obtain private promoters’ buy-in . There is also a low technical capacity in the chain of officials and actors (private promoters of solar systems, public services. These technical barriers will be addressed through training and targeted capacity-building activities. The lack of access to financing: the capacity of the private sector to finance solar photovoltaic projects in the villages is very low due to lack of capital, lack of financial assets, and lack of fund raising capacity. In addition, the risk of non-payment has been so far higher in rural areas because of the larger number of poor people with very limited revenues. The lack of financial incentives: Because of their low population density and scattered settlements, providing electricity services in rural areas is difficult to achieve without any kind of subsidy system. Existing subsidy schemes include subsidy on investments (equipment for generation and infrastructure, customers’ connections, etc.) and subsidy on operating costs (typically subsidy on fuel expenses borne by local operators). In countries where electricity is subsidized, end users do not pay the real cost of power, this implies that shifting from a conventional diesel power plant to a PV / diesel hybrid system induces a displacement of the subsidy from the operating costs to the initial investment. Incentives and subsidized loans may make the financing of solar photovoltaic projects in the villages more attractive. In Togo, the production cost of one KWh of electricity is higher than the retail price to the poor population. Where relevant, and particularly for private sector project/programme, please describe the key characteristics and dynamics of the sector or market in which the project/programme will operate.

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B.2. Project/Programme description (max. 3 pages) Describe the expected set of components/outputs and subcomponents/activities to address the above barriers identified that will lead to the expected outcomes. The present project “Promotion of a transformational change for a low-carbon electric energy” overall objective is to promote a sustainable production and consumption of low-carbon energies and to promote energy efficiency development. On one hand, the project plans to enhance agriculture resilience through solar energy in rural areas by hybridizing multifunctional diesel platforms with solar systems and promoting solar pumps for agriculture and small agro-industries. In total, the project will hybridize 250 diesel engines of 10kVA and 150 diesel engines of 15kVA. On the other hand, it aims to replace the public lighting system equipped with sodium bulbs by a high-pressure sodium lighting system. A total of 20 000 inefficient sodium bulbs currently in use for public street lighting will be replaced by LED lamps. In addition, the project will replace 600 000 compact fluorescent lamps in rural household by LED lamps. The proposed project will focus on the following three components: (i) strengthening the technical and organizational capacities of stakeholders; (ii) enhancing agriculture resilience through solar energy development in rural areas and (iii) replacing street lamps and compact fluorescent bulbs with LED lamps. The project components and corresponding activities are summarized below: Component 1 : Strengthening the technical and organizational capacities of stakeholders and dissemination of

lessons learned

- Output 1.1. : Training of young technicians in the rural zones in the construction and maintenance of small solar units and PTMF equipment;

- Output 1.2. : Organization of local banks and financial institutions to support young energy engineer groups for solar energy development in urban and rural zones;

- Output: 1.3. : Knowledge sharing and dissemination of lessons learned.

Component 2: Enhancing agriculture resilience through solar energy development in rural areas

- Output 2.1. : enhancing water mobilization for gardeners and households with 3000 irrigation units with solar pumps;

- Output 2.2. : Support for small agro-industries for young entrepreneurs through the hybridization of 400 diesel generators with Solar PV and agricultural products market development.

Component 3: Promotion of fossil fuel low-consumption

- Output 3.1. : Replacement of 30,000 unit of 150 W public street lamps by LED in urban area; - Output 3.2. : Replacement of 600 000 compact fluorescent lamps in urban and rural household; - Output 3.3. : Support for small and medium entrepreneurs for development of LED lamps and solar equipment

manufacturing held by young men and women; - Output 3.4. : Support for young entrepreneurs for promotion of low-carbon small industries in rural, urban and

peri-urban areas. In terms of rationale, please describe the theory of change and provide information on how it serves to shift the development pathway toward a more low-emissions and/or climate resilient direction, in line with the Fund’s goals and objectives. The project is part of a sustainability dynamic in the sense that it aims to promote a transformational change in the production and consumption of electrical energy in Togo. Project activities have been planned to achieve this goal. The implementation of energy efficient lamps and multifunctional platforms with solar energy will create a cascading-effect, which will raise awareness electricity consumption and solar PV, elevate the benefits of solar energy and create a sustainable framework for energy-efficiency and low carbon rural electrification. The project will contribute to improving access to energy services and mitigating greenhouse gas emissions, thereby achieving the objectives of the GCF. Describe how activities in the proposal are consistent with national regulatory and legal framework, if applicable. The project is in compliance with the national regulatory framework. In accordance with the Law N ° 2008-005 Bearing framework law on the environment in Togo, the project will be subjected to an environmental and social impact study in order to mitigate possible negative impacts and to improve the positive impacts of the project. This study will be carried

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out according to the environmental and social impact assessment procedures in force (Decree No. 2017-040 / PR establishing the procedure of environmental and social impact studies). The project will comply with current technical standards governing electrical installations. Where appropriate, international standards will be applied. Describe in what way the Accredited Entity(ies) is well placed to undertake the planned activities and what will be the implementation arrangements with the executing entity(ies) and implementing partners. The accredited entity for this project is the West African Development Bank (BOAD). The activities developed in the project are in line with BOAD's key areas of intervention: climate change and renewable energies. The project will be implemented in collaboration with the national Company of electricity, the Ministry departments in charge of energy, grassroots development and the environment. Please provide a brief overview of the key financial and operational risks and any mitigation measures identified at this stage. The potential risks associated with the preparation of the project and their mitigation measures are defined in the table below.

Risk categories Risk Level Mitigation measures

Policy The political and security conditions in the study area are deteriorating

Low The project will not target areas prone to political insecurity

Institutional and Organizational

Low participation and involvement of decentralized public services

Low Representatives of the decentralized public services will be mobilized by the Focal Point to facilitate consultants' fieldwork and access to local information.

Lack of support from local administrative authorities (councils and regional councils)

Low Local administrative authorities have worked on projects related to resilience to the adverse effects of climate change. The authorities have shown their interest and have been heavily involved in the preparation of projects. The present project has been identified with these authorities and the grassroots communities. They await with their populations the formulation and execution of the project with their effective involvement.

B.3. Expected project results aligned with the GCF investment criteria (max. 3 pages) The GCF is directed to make a significant and ambitious contribution to the global efforts towards attaining the goals set by the international community to combat climate change, and promoting the paradigm shift towards low-emission and climate-resilient development pathways by limiting or reducing greenhouse gas emissions and adapting to the impacts of climate change. The project falls under different GCF focal areas, in terms of: (i) adaptation (livelihoods of people and communities, health, food and water security) and, (ii) mitigation (production and access to energy). The project, if implemented, will: (i) improve access to clean energy services in rural areas, (ii) increase livelihoods, improve education, health and drinking water for rural population, agriculture and livestock, and (iii) reduce more than 2.3 million TCO2e- over 20 years, i.e. a contribution of (20.76%) to the conditional reductions target provided by the NDC until 2030.Given that water supply systems in some areas of the project are extremely dry during the drought season and considering that agriculture and livestock is the main income generating activity in the intervention areas, the implementation of the project will enhance the resilience of farmers and breeders during, counter-seasons and lean periods by providing 3000 solar pumps for irrigation and livestock and hybridizing 400 PTMF (Component 2 of project). The beneficiaries of the project are villages with approximately 600 and 2000 inhabitants. Considering 1000 inhabitants per village on average, the beneficiaries of the 400 PTMF hybridization will be at least 400 000 inhabitants or 205 600 women (women represent 51.4% of the Togolese population according to the Accelerated Growth Strategy and the

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Promotion of Employment 2013-2017) The table below provides a summary of project alignment with GCF investments criteria.

Project GCF core indicators

Expected tons of carbon dioxide equivalent (t CO2 eq.) to be reduced or avoided (Mitigation only)

Annual : 116 643 Lifetime: 2 332 853

Expected total number of direct and indirect beneficiaries (reduced vulnerability or increased resilience); number of beneficiaries relative to total population (adaptation only)

Total

400 000 direct beneficiaries of which 51.4% are women 800 000 indirect beneficiaries of which 51.4% are women

Other relevant indicators

Expected increase in the number of households with access to low-emission energy

Total 80 000

Expected increase in generation and use of climate information in decision-making

90%

Provide an estimate of the expected impacts aligned with the GCF investment criteria: impact potential, paradigm shift, sustainable development, needs of recipients, country ownership, and efficiency and effectiveness. 1. Climate impact potential The project is in line with the climate mitigation impact of the GCF. Component 2:" Enhancing agriculture resilience through solar energy development in rural areas » will support the development of small agro-industries and hybridize 400 PTMFs with solar systems. This will make it possible to avoid, over the 20 years lifetime of the solar panels, emissions of 859 248 tonnes of CO2-eq. Component 3: “Promotion of low-consumption lamps” will reduce about 1.4 million tonnes of CO2 over 20 years. In total, the project will mitigate approximately 2.3 million tonnes of CO2-eq. over 20 years. The beneficiaries of the project are villages with about 600 to 2000 inhabitants. Considering 1000 inhabitants per village on average, the potential beneficiaries of the hybridization of PTMF will be at least 400 000 inhabitants of which 205 600 are women. The number of indirect beneficiaries will be determined during project preparation. 2. Paradigm shift potential This project is designed to promote a sustainable development of renewable energies in rural areas affected by poverty and deprived of essential infrastructures. It also aims to strengthen the resilience of the beneficiaries (gardeners and breeders) during counter-seasons and drought by providing access to water for irrigation, livestock and households. Innovation is a major feature of the project because the emphasis is on the combination and sequencing of different technologies and the project approach will allow synergistic effects to be applied to various fields of intervention. Component 2 “Enhancing agriculture resilience through solar energy development in rural areas” and Component 3 “promotion of low-consumption lamps” will provide viable and proven technologies. Capacity building actions through training on techniques and technologies promoted within the framework of the project will enable rapid adoption and appropriation of the techniques and technologies. The introduction of solar energy in rural households has enormous potential for replication. Once the financial mechanism is in place, it can either be used by other private investors, international and national financial institutions to catalyse the deployment of solar energy in other rural villages in Togo. This project can also be replicated with other renewable energy technologies.

For potential for knowledge and learning, component 1 of the project focuses on renewable energy (solar) awareness raising, organizational and technical capacity-building activities and the dissemination of lessons learned. Capacity building activities concern all the actors involved in the project (government departments, private operators, farmers' organizations, producers, etc.). These activities enable the players to assimilate the techniques promoted within the framework of the project. Knowledge sharing and learning will be based on a project knowledge management strategy, with targeted communication activities. Communication media such as community, radio broadcasts, and project website will be promoted. Documents on lessons learned will be produced and annual meetings will be organized to share experiences. It is to note that Component 2 of the present project has synergy with the GEF project “Hybridization of multifunctional diesel platforms with solar systems." It pursues common goal of reducing greenhouse gas emissions and promoting renewable energy. The activities take place in different localities and the scale of the present project is larger. As a result, the complementary information and lessons learned on the project localities will be disseminated through private and public media, radio broadcasts, and awareness-raising meetings. The project will contribute to the creation of an enabling environment for renewable energy by enhancing the organizational and technical capacities of stakeholders through trainings and workshops.

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3. Sustainable development potential Economic co-benefits: The project activity will: (i) enhance the resilience of small farmers and breeders; (ii) Create new job and income opportunity. New income opportunities, such as construction of the PTMF Solar Units, repair and maintenance PTMF, mobile phone-charging services and renting time on mobile phones; and jobs opportunities related to operation, repair and maintenance of the system will also be generated; (iii) increase revenues and standard of living, through availability of water for agriculture irrigation during counter-seasons; (iv) improve technology transfer from developed countries; (v) reduce vulnerability to fossil fuel price fluctuations; (vi) allow the government of Togo avoids additional debt and therefore alleviate budget deficit by reducing government spending on emergency programs thus, providing resources to finance other programs; given that the energy sector is a major consumer of fuel, the proposed project will bring about a considerable reduction in fossil fuel over the lifetime of the LED lamps and solar PV; (vii) promote the development of micro- enterprises.

Social co-benefits: The project activity will: (i) promote solar energy through capacity building, awareness-raising and dissemination of lessons learned; (ii) accelerate rural electrification in Togo; (iii) improve the living condition of the population in the target areas through access to drinking water for households; (iv) improve access to education by increasing productive time for work and study; (v) improve school attendance and education outcomes; (vi) provide access to clean water for households’ needs, irrigation and livestock; (vi) improve population health by reducing incidence of respiratory diseases and eye ailments. Since access to electricity is quite low in the project areas, households without diesel engines for electricity rely on kerosene lamp and/or wood-burning for lighting; (vii) improve family ties by reducing rural exodus and transhumance; (viii) reduce poverty and stimulate development.

Environmental co-benefits : The project activity will: (i) improved air quality by decreasing the emission of nitrogen oxides, non-methane volatile organic compounds and Sulphur dioxide from power plants in inverse to the proportion of clean energy generated; (ii) increase the resilience of the population to climate change through greater locally- generated renewable energy; (iii) avoid the GHG emissions that would otherwise be generated by diesel to meet the energy needs of households and small industries in the intervention areas; (iv) reduce energy consumption through installation of LED lamps; (v) promote energy efficiency and reduction in electricity bill; (vi) contribute to both local and global climate change mitigation effort by addressing the electricity needs with clean energy.

Gender-sensitive development impact: The project will be particularly beneficial to women and youth, offering them a privileged opportunity to: (i) participate in income-generating activities with men. Intended activities for women include: processing and preservation (solar drying of fruits and vegetables, production of jams and fruit juice), water conservation, agricultural extension, mentoring groups, beekeeping, and forest produce exploitation; (ii) increase time dedicated to wealth-enhancing activities; (iii) facilitate the processing and preservation of agricultural products ; (iv) improve education for girls; (v) strengthen the capacity of young people and women in the creation of renewable energy and renewable energy firms, particularly solar; (vi) enhance capacities of women by promoting and training sustainable self-help groups; (vii) improve security for women and girls, enabling greater mobility to engage in productive activities under safe conditions through providing interior and exterior lighting in rural areas. Gender aspect of the project will be considered. The application of women in job positions and their involvement in the management committees will be highly encouraged. In choosing stakeholders capacity building, the gender criterion will be included to give women, young people and adults the opportunity to fully participate in the project. Jobs will be created for women from the preparation and implementation of the project. At least 50% of direct and indirect beneficiaries will be women. Gender-disaggregated data will be used for monitoring outputs, outcomes and impacts during project implementation to ensure women’s participation in capacity building and employment opportunities.

4. Needs of recipient In Togo, climate change threatens key sectors of the economy: Energy; Agriculture; Human settlements and health; Water resources; Coastal erosion; and land use, land-use change and forestry. Without an organized intervention and the anticipated level of governance of these sectors in order to meet these challenges, climate change could be very threatening on the development of Togo. The NDC also recognizes that actions and initiatives at the sectoral level to anticipate and integrate risks and opportunities related to climate change are limited and deserve more attention and human and financial resources of a higher dimension. This applies both to adaptation to climate change and mitigation of emissions and to the use of clean and sustainable development projects. The National Initial Communication (CNI) considers the energy sector as a key source of greenhouse gas (GHG) emissions. Its emissions accounted for 5.17% of total GHG emissions in Togo in 1995 behind the Agriculture sector (13%). It should also be noted that greenhouse gas emissions from the energy sector are rising very rapidly; energy sector emissions increased by 130% over the period 1992 to 1998. More than 95% of the GHG emissions linked to the energy sector come from the combustion of fossil fuels and biomass energy.

The proposed GCF project will focus on the most vulnerable regions exposed to climate change. It targets less affluent Togolese however; the entire population will benefit from the project activities especially component 3 which involves

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the lightening of streetlights with low consuming lamps. Component 2 which involves the hybridization of diesel engines with solar will reduce the reliance of the rural population on imported fossil fuels and reduce the economic shocks from price fluctuation. Project activities involving the promotion of income generating activities will help develop a local market for food processing and preservation, agricultural/dairy products, which will reduce the economic vulnerability of the rural population. The project are included activities such as distribution of 3000 solar pumps for irrigation, livestock and household, aim at reinforcing the resilience of the beneficiaries during counter-seasons and lean periods. For the inefficient consumption of electricity in public and domestic lighting, the project through its component 3 aims at improving energy efficiency via installation of low consumption lamp and the reducing of electricity bills. The implementation of this project will save 50 316 MWh per year, a total of 1 006 320 MWh over 20 years. In addition, it allows the target municipalities to save about 1.9 billion a year, over 36 billion CFA in the 20 years. In response of the fuel high consumption of fuel, the project included component 2, which aims to hybridize 400 multifunctional diesel engines with solar energy. This component will reduce 3,060,000 liters of fuel per year and save 36 billion in fuel spending. 5. Country ownership

The proposed project is in alignment with the following national climate strategy and mitigation/adaptation priorities: (i) National Communications and sectoral strategies, (ii) Nationally Determined Contribution (INDC); (iii) national action plan for renewable energy and energy efficiency (SE4ALL); (iv)National Action Plan for Adaptation to Climate Change (NAPA); (v) Strategy for accelerated growth and employment promotion. The Energy policy of Togo promotes the development of solar energies whose potential is estimated at 4.5 to 5.5 kWh / m² / day. Through this policy, the government has initiated solar pre-electrification programs for rural communities remote from the electricity grid. The objectives are to increase the country's electrification rate to 21% in 2009 to 42% by 2022. The strategic thrusts of the policy are: (i) to promote the thermal conversion of solar energy to satisfy certain domestic and industrial needs for the purpose of saving other forms of commercial energy; (ii) encourage the use of renewable energies at isolated sites, outside the power grid and in environments where environmental problems arise; Iii) to study the promotion of electrical energy from renewable energies. This policy suggests: (i) encouraging the private sector to engage in trade in solar equipment and related services, but by guaranteeing the quality of products; (ii) to regularly inform, as far as possible, on developments in technology or on equipment using renewable energies; (iii) seek funding for pilot or national projects; (iv) to join regional or international networks to exchange and share experiences and data, to find expertise and opportunities for cooperation and funding; (V) conduct a feasibility study on options that are considered important for the future of the country; And (vi) to study, in the medium and long term, the plan for the development of renewable energies. Through the actions of capacity building of actors, involvement of beneficiaries and micro-finance institutions, ownership of project activities will be rapid. 6. Efficiency and effectiveness: Through its component 3, the project will (i) reduce energy needs by 1.06 million MWh over the next 20 years, (ii) allow municipalities and households to save a total of XOF 105 billion in electricity bill over the next 20 years and (ii) reduce 1.3 million TCO2. In addition, Component 2:” hybridization of 400 multifunctional diesel engines with solar” will impact over 400 000 beneficiaries. It will allow these beneficiaries to save XOF 36 billion in fuel spending and simultaneously reduce 859 242 TCO2 over 20 years. Meanwhile, the project will strengthen the vulnerability of these beneficiaries, who are mainly (farmers, gardeners, breeders), during counter-seasons” by providing water for irrigation, livestock and households. In total, Components 2 and 3 are expected to generate 2.3 million tCO2e of direct and indirect emission reductions over the useful life of the technologies at a cost to the GCF of around US$ 12 /tCO2e. The table below provides a summary of the economic and financial viability of the project in two scenarios “with GCF Assistance” and “without GCF support.

Economic and Financial Analysis Without GCF support With GCF support

Component 2 Hybridization of thermal groups in rural areas with solar photovoltaic

Baseline Energy consumed: Annual : 82 620 MWh Over 20 years: 1.6 million MWh

Avoided energy consumption: Annual : 33 048 MWh Lifetime : 660 960 MWh

Baseline Fuel Consumption spending: Annual :4.5 billion XOF Over 20 years: 54 billion

Monetary savings on Fuel spending Annual:1.8 billion XOF Over 20 years : 36 billion XOF

Baseline TCO2 emissions Avoided TCO2 emissions

Annual:107 406 Annual: 42 962 Over 20 years : 2.1 million Over 20 years: 859 248

Component 3 Promotion of

Baseline Energy consumption:

Avoided energy consumption:

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low-consumption lamps

Annual : 100 632MWh Over 20 years : 2.01 million MWh

Annual : 50 316 MWh Lifetime : 1.06 million MWh

Baseline Electricity bills : Annual : 7.04 billion XOF Over 20 years : 140 billion XOF

Avoided Electricity bills Annual : 3.5 billion XOF Over 20 years : 105 billion XOF

Baseline TCO2 emission Avoided TCO2

Annual: 130 821 Annual: 65 411 Over 20 years: 2.6 million Over 20 years: 1.3 million

B.4. Engagement among the NDA, AE, and/or other relevant stakeholders in the country (max ½ page)

Please describe how engagement among the NDA, AE and/or other relevant stakeholders in the country has taken place and what further engagement will be undertaken as the concept is developed into a funding proposal. The project has been identified and structured with a strong involvement of the NDA of the Green Fund in Togo, the BOAD and Governmental institutions. The project is a strong request of Togo Electric Power Company (CEET), the Ministry in charge of communities’ development and youth employment and the Ministry of the Environment. Exchange meetings were held between these different institutions during the preparation of this Concept Note.

Others actors: (i) the Private solar system installation companies will provide information on solar technologies, sales, after-sales services, warranties, equipment maintenance and will benefit from incentives to promote solar energy; (ii) the rural population, local / rural organizations and NGOs will participate in the design and implementation of the project, in awareness campaigns, share rural and traditional knowledge; (iii) the International Financial Institutions and the International Partners will ensure synergy with current or recent projects and will serve as a support for experience exchanges.

C. Indicative Financing/Cost Information (max. 3 pages)

C.1. Financing by components (max ½ page)

Please provide an estimate of the total cost per component/output and disaggregate by source of financing. Togo is soliciting a grant through this project due to the country’s budget deficit and low debt capacity. The opportunity provided by the GCF to poor States parties to the United Nations Framework Convention on Climate Change (UNFCCC) to take advantage of a Grant to curb the adverse effects of climate change by strengthening the resilience of affected populations and reducing Greenhouse gas emissions is a real asset that Togo wants to seize. Therefore the GCF is solicited to support Togo with USD 28.21 million in the form of Grant to finance the proposed project.

Component/Output Indicative cost

(USD)

GCF financing Co-financing

Amount

(USD)

Financial Instrument

Amount

(USD)

Financial Instrument

Name of Institutions

Component 1 : Strengthening the technical and organizational capacities of stakeholders and dissemination of lessons learned

3 000 000 2 000 000 Grant 1 000 000 Loan Banque Ouest Africaine de Développement (BOAD)

Component 2: Enhancing agriculture resilience through solar energy development in rural areas

25 000 000 15 000 000 Grant 10 000 000 Loan BOAD

Component 3: Promotion of fossil fuel low-consumption

15 000 000 9 000 000 Grant 6 000 000 Loan BOAD

Project activities cost 43 000 000 26 000 000 17 000 000 Project management (8,5%)

3 655 000 2 210 000 Grant 1 445 000 Loan BOAD

Indicative total cost (USD)

46 655 000

28 210 000

18 445 000

For private sector proposal, provide an overview (diagram) of the proposed financing structure.

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C.2. Justification of GCF funding request (max. 1 page)

Explain why the Project/ Programme requires GCF funding, i.e. explaining why this is not financed by the public and/ or private sector(s) of the country. Due to the impact of climate change, the Government of Togo will face heavy spending on climate change adaptation and mitigation. However, Togo is a least developed country with high budget deficit—and public debt is estimated at over XOF 717 billion4. Despite this situation, the country has taken some initiatives to raise awareness on climate change and contribute to global mitigation and adaptation objectives by ratifying to a number of international conventions on climate change and developing its NAPA, NAMA and NDCs. In its NDC, Togo aims to adopt an approach based on contributions that provides any opportunities for co-benefits in terms of reducing GHG emissions that might potentially be derived from synergies between adaptation and mitigation. For this reason, it specifies the following priority sectors, by order of importance: Energy; Agriculture; Human settlements and health; Water resources; Coastal erosion; and Land use, land-use change and forestry. However, despite the above initiatives and political reforms aims at encouraging mitigation and adaptation actions, responses to environmental and climate challenges are still very limited for various reasons such as financial constraints. In the energy sector, the high cost of acquiring green technologies such as LED and solar equipment represents one of the hurdles that often limit renewable energy initiatives. In the agriculture and water resources sector, the cost of building climate resilient infrastructures, putting into place irrigation systems that maximize crop yield and improving water management represent a hindrance.

Without external mobilization of financial resources, a key priority in the government’s effort to promote adaptation and mitigation actions would not be achieved in the targeted areas. Unsustainable coping strategies would continue and GHG emissions will continue to rise. Public and domestic lighting will continue to be provided by energy-consuming and inefficient lamps. Municipalities and households will continue to bear the burden of electricity bills remaining in the vicious circle of poverty, crop productivity will continue to decrease and access to water for irrigation, livestock and household will remain a problem during drought seasons. Without the project, fuel consumption for component 2 alone in a baseline scenario is estimated at 61.2 million litters over the next 20 years and public and households electricity bill at158.6 billion FCFA. Without funding from the Green Climate Fund, Togo will not be able to finance the project and achieve the expected results in terms of mitigation and adaptation to the adverse effects of climate change. The gap in Togo’s balance of payment partly justifies the need for GCF financial assistance. In 2014, Togo exported $2B and imported $12.6B, resulting in a negative trade balance of $10.6B.Yet, public debt continues to increase amounting to XOF 717 billion at end-2014 from XOF 473 billion at end-2010 (IMF, 2015). After declining in 2011 by about 1.5% to 28.5% of GDP, the level of domestic debt has gradually increased to 31.5 % in 2014 (IMF, 2015). The overall fiscal deficit balance remains high (-6.4% in 2014).Thus, in 2014, the IMF reported that Togo has a heightened risk of overall public debt distress and suggested prudent debt management and solid fiscal performance (IMF, 2015).The proposed project will contribute US$ 29 000 000 GCF grant and indirectly avoid public spending of the corresponding amount. The proposed project will deliver benefits that are fully aligned with the country’s strategic plan. The project is also clearly aligned with Togo’s NDC and the accompanying Action Plan which requires investments of the order of US$ 3.54 billion, of which the proposed GCF project is a small contribution. In addition, the project falls under different GCF focal areas, in terms of mitigation and adaptation. The project, if implemented, will: (i) improve production and access to clean energy services in rural areas; (ii) energy-efficient in rural buildings and cities; (iii) increase livelihoods, improve education, health and drinking water for rural population, agriculture and livestock. The project aims to reduce more than 2.3 million TCO2e- over 20 years, i.e. a contribution of (20.76%) to the conditional reductions target provided by the NDC until 2030.Given that water supply in the area of the project is extremely difficult during the drought season and considering that agriculture and livestock is the main income generating activity in the intervention areas, the implementation of the project will enhance the resilience of farmers and breeders during, counter-seasons and lean periods by providing 3000 solar pumps for agriculture and livestock and promoting small agro-industries. Describe alternative funding options for the same activities being proposed in the Concept Note, including an analysis of the barriers for the potential beneficiaries to access to finance and the constraints of public and private sources of funding. Funds requested for the financing of activities planned under the project could be requested from the State or national banks. However, the Togolese Government does not have adequate financial resources and the local capital market in Togo lacks depth. Bond and stock markets are inexistent while the domestic market is dominated by institutional investors (such as banks, insurance companies, pension funds) and local private investors. Meanwhile, climate change mitigation and adaptation projects are relatively first-hand, the institutional investors lack understanding of this type of projects and demand complex requirements and procedures and interest rate of the order of 12% which limit access to loans. T

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he absence of financial instruments makes it difficult for individuals to mobilize financial resources at the domestic level. Although solar is clean energy, electricity generators in Togo not only find the cost of installing solar units exorbitant and out of their reach but also lack the technical and organizational framework for their promotion. They still prefer thermal installations that they master better, despite the GHG emissions generated. Indeed, the analysis of the renewable energy sector in Togo reveals that the sector is facing financial difficulties. However, energy needs are increasingly higher due to increasing population growth. Moreover, the fragility of the production and distribution systems and the high cost of renovation constitute obstacles for the total coverage of electrical energy needs. The lack of financial support and the absence of an incentive framework prevent this sector from fully playing its role. Consumers do not really know the benefits of solar energy and they are sceptical about using solar systems because of the acquisition costs they consider important. Establishing stronger organizational and capacity building in the energy sector would also facilitate the planning of rural electrification through the public-private partnership, providing access to solar electrification. Without external financial mobilization, the private sector, as well as all the players involved in the energy sector, development of the renewable energy sector will be limited and moving towards efficient and environmentally friendly rural electrification will take generations. Justify the rationale and level of concessionality of the GCF financial instrument(s) as well as how this will be passed on to the end-users and beneficiaries. Justify why this is the minimum required to make the investment viable and most efficient considering the incremental cost or risk premium of the Project/ Programme (refer to Decisions B.12/17; B.10/03; and B.09/04 for more details). The justification for grants and reimbursable grants is mandatory.

Togo is one of the Low Developed Countries (LDCs). The country is heavily indebted. These debts represent 77% of GDP5 in 2018. These debts have been restructured with the HIPC Initiative. This requires the country to receive authorizations from the International Monetary Fund (IMF) to incur new debts. But the IMF does not allow the country to take high-rate loans even if they are concessional. The IMF prefers grants for the country. This limits Togo in its development and particularly in its initiatives to fight against climate change. With regard to climate-related projects, and given the urgency of the needs on the ground, traditional donors in Togo are trying to find donations to finance these projects or, at least, to improve the loans they give to the country. The request for a grant to the GCF to finance this project is a must necessity if the country wants to carry out the project. In the case of private sector proposal, concessional terms should be minimized and justified as per the Guiding principles applicable to the private sector operations (Decision B.05/07). C.3. Sustainability and replicability of the project (exit strategy) (max. 1 page)

Please explain how the project/programme sustainability will be ensured in the long run and how this will be monitored, after the project/programme is implemented with support from the GCF and other sources. The project activities have been planned to promote a transformational change in the production and consumption of electrical energy in Togo. The implementation of energy efficient lamps and multifunctional platforms with solar energy will create a cascading-effect, which will raise awareness electricity consumption and solar PV, elevate the benefits of solar energy and create a sustainable framework for energy-efficiency and low carbon rural electrification. This project has significant replication potential. As villages are usually far apart with dispersed habitat, electrification from the interconnected electricity grid is very difficult and financially unbearable. Hybridizations with solar appear as an alternative to provide rural electrical services for socio-economic development. In addition, public and domestic lighting is still dominated by energy lamps, containing Mercury, a pollutant that should be phased out under the Minamata Convention. The services in charge of electrical energy being strongly involved in the preparation and implementation of the project, will take ownership of the project's actions and ensure their continuity at the end of the project. These different activities being part of their attribution. For non-grant instruments, explain how the capital invested will be repaid and over what duration of time.

D. Supporting documents submitted (OPTIONAL)

☐ Map indicating the location of the project/programme ☐ Diagram of the theory of change ☐ Economic and financial model with key assumptions and potential stressed scenarios ☐ Pre-feasibility study

☐ Evaluation report of previous project

5 FMI - World Economic Outlook Database - http://www.expert-comptable-international.info/fr/pays/

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☐ Results of environmental and social risk screening

Self-awareness check boxes

Are you aware that the full Funding Proposal and Annexes will require these documents? Yes ☐ No ☐ • Feasibility Study • Environmental and social impact assessment or environmental and social management framework • Stakeholder consultations at national and project level implementation including with indigenous

people if relevant • Gender assessment and action plan • Operations and maintenance plan if relevant • Loan or grant operation manual as appropriate • Co-financing commitment letters Are you aware that a funding proposal from an accredited entity without a signed AMA will be reviewed but not sent to the Board for consideration? Yes ☒ No ☐