World Bank (Renewable Energy)

Access to environmentally and socially sustainable energy is essential to reduce poverty. Globally, over 1.3 billion people are still without access to electricity. About 3 billion use solid fuels — wood, charcoal, coal, and dung for cooking and heating. To make the leap to universal access to modern energy services by 2030, new capital investment of about $35-40 billion will be needed every year. This is in addition to annual investments of about $450 billion just to sustain energy services at current levels.

World Bank Group focuses on Sustainable Energy for All

Our challenge is to build a sustainable energy future by acting on three fronts. First, expand access to energy that is affordable to low-income consumers. Second, promote energy efficiency practices to moderate consumption patterns in energy-intensive economies. Third, facilitate a shift to cleaner energy sources where feasible. The Bank Group is contributing to this worldwide effort, through lending, analytical support, technical assistance and capacity-building.

The WBG has formally engaged in active support for the Sustainable Energy for All (SEFA) initiative, with Bank Group President Jim Yong Kim assuming co-chairmanship of the initiative’s multi-stakeholder advisory board. The initiative, launched by the UN Secretary General Ban Ki-moon in September 2011, calls on governments, businesses and civil society to achieve three objectives by 2030: universal access to energy, including electricity and modern cooking and heating fuels; double the renewable share of power produced and consumed from 15% to 30%; and double the energy efficiency improvement rate.

The Sustainable Energy for All objectives will be achieved through collective action. There is a need for leadership in all countries. Countries with low access must expand that access. High-intensity consumers of energy need to scale-up efforts on energy efficiency. Countries with renewable energy potential need to find ways to tap that potential.

Disseminating knowledge through communities of practice

The Bank Group has launched Communities of Practice for Hydro-Power and Energy Efficiency, which bring together practitioners for knowledge exchange and dissemination of best practices. We will also launch communities of practice on Energy Access and Renewable Energy in 2013. These communities provide fertile ground for North-South and South-South exchange activities.

Tracking progress towards the goals

The Sustainable Energy for All initiative needs data tracking and analytical support. The Bank Group and ESMAP are leading a knowledge consortium in partnership with the International Energy Agency, and other international organizations to produce regular tracking reports on progress towards the goals. This will start with a Baseline Report in January 2013.

Reaching the poor

Millions of people worldwide have benefited from Bank Group energy financing. Women can earn an income by keeping a corner store or village eatery open at night. Mothers in childbirth after dusk and their newborns have a better chance at survival. Medicines and perishable food can be kept cool in a refrigerator. Children can read and study at night. Factories that otherwise would be closed, can stay open, providing jobs and a path out of poverty.

The WBG is providing more than $1 billion a year to over 60 countries that is directly focused on expanding access, both by extending the grid and through off-grid solutions for remote areas. The Bank Group’s financial instruments, such as partial risk guarantees, reduce risk associated with energy projects to leverage private investment for access, while its policy and strategic guidance help governments create conditions that attract companies who bring new business models, innovative finance or new energy and energy efficiency technologies.

Since the Rio+20 Summit, 61 countries have opted in to the Sustainable Energy for All initiative, while businesses, investors and donors have committed $50 billion to it. The 61 countries, 25 of them in Africa, account for about 80% of global population without access to electricity. The Energy Sector Management Assistance Program (ESMAP), administered by the World Bank, has completed six of a total of 40 “rapid assessment” country studies undertaken by all SEFA partners (others supporting these assessments are the African Development Bank, Asian Development Bank, InterAmerican Development Bank, European Commission and the United Nations Development Programme). Each of these reviews a specific country’s electricity and household fuels’ access gaps, as well as status on renewable energy development and energy efficiency practice. ESMAP will deliver a technical assistance program for energy access in five developing countries.

Moving towards clean energy

The Bank Group supports development of energy systems based on least-cost options with an emphasis on renewable sources such as hydropower, wind, solar and geothermal, while also promoting energy efficiency. Projects support achievement of universal access to electricity and modern household fuels, as well as improved utility performance and sector governance. The Bank Group also provides financing and advice to countries on oil and natural gas extraction, production, processing, transmission and distribution.

The Bank Group committed $8.2 billion to support energy finance in 2012; of which $3 billion from IBRD, $1.9 billion from IDA, $2 billion from IFC, and $489 million from MIGA. The Bank Group approved a total of $3.6 billion in financing for renewable energy projects in fiscal year 2012, a record 44% share of its annual energy lending in 2012. Looking only at power generation projects approved in 2012, renewables accounted for an even larger share — 84%.

Since 2007, the Bank Group has provided $12.5 billion for renewable energy projects and programs, just over one-quarter of all energy financing over the same period, which totaled $49.2 billion. “The renewable energy lending figure for 2012 is a remarkable spike, but also part of a consistent trend of increases over several years,” said Rachel Kyte, Vice President of Sustainable Development at the World Bank. “It shows the determination of many countries to seek lower-carbon energy solutions.

Finance for energy access was close to 20% of 2012 commitments, while coal projects accounted for $690 million, less than 10% of energy project approvals for the year. The Climate Investment Funds have committed over $5 billion to date into clean energy projects.

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