Access to Electricity services
Clemencia Torres de Mästle
The World Bank
Washington, D.C.
February 15, 2006
Outline of the Presentation
1.
2.
3.
4.
5.
Introduction
Why does access matter?
Main challenges
Solutions for expanding access
Bank’s role: some examples
2
1. Introduction

Multiple Dimensions of Electricity
Services
•
•
•
•

Access
Quality of service
Efficient use
Environmental impact
The Presentation will focus on Access
3
Access to electricity is low…
http://antwrp.gsfc.nasa.gov/apod/ap001127.html
4
…especially in rural areas
% Urban
Population
with
Electricity
% Rural
Population
with
Electricity
Population without
Electricity
(million)
% Population
with
Electricity
South Asia
814
40
69
33
Sub-Saharan Africa
531
17
52
8
North Africa & ME
39
87
99
88
Country or region
Characteristics of Pop. Without Electricity [MMInhab]
East Asia
216
88
96
83
Latin America
47
88
98
61
70
85
72
Rural
Developing Countries
1,620
37,4
Urban
5
12,5
Sources: World Bank, 2000, IEA 2002.
2. Why does access to
electricity matter?
Key input for economic development
and improved living standards
• Growth and poverty reduction
• Education
• Gender equality
• Health
• Environmental sustainability
Source: “Energy Poverty Issues and G8 Actions”, The World Bank, Moscow/Washington DC, February 2,
2006
6
Electricity matters
Millennium Development Goals
Source: Barnes, Douglas (2000) World Bank. "Social Infrastructure and Poverty Studies"
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3.Challenges to Expand Access to
Electricity (1/2)
General:
• Lower Income Dwellers
• Low consumption of Energy
• High Cost-Low Return
Rural: (Even more costly)
• Remote Areas
• Low density of population
Urban: (additional issues)
• Illegal Settlements
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The low hanging fruit has been picked 
difficult users remain, costs go up
BAHIA
Grid extension costs per consumer in US$
Columns: Distance from existing grid in km
Posts per
consumer
0-1
>1 – 5 > 5 –
10
> 10
– 20
> 2050
> 50
≤
0.5
105
145
202
322
324
357
373
632
642
646
711
>
0.5 – 1
>
1.1 – 2
>
2.1 – 4
1.179 1.184 1.208 1.325
>
4
4.166 4.343 4.763 6.530 6.818
28.219
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Challenges to Expand Access to Electricity
(2/2)
•
•
•
•
•
Free-Market Reforms initially brought more
investment, but with scant trickle down effect
towards the poorest.
Obligation to serve of Utilities limited to a given
area.
National uniform tariff and badly targeted subsidies
hinder cost-recovery and lead to poor service.
Unrealistic standards of service and equipment
quality in rural areas.
Difficulty to monitor and enforce compliance in
distant and disperse communities.
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4. Solutions for expanding access
(1) in Urban and peri-urban areas
Problems



Solutions
Volatile income of poor
dwellers discourages
connection

Illegal settlements

Financial & regulatory
hurdles to extend
distribution lines beyond
area of mandatory
coverage.

Pre-paid smart meters;
subsidies to connection;
social tariffs
Land titularization; urban
planning with basic
infrastructure
Fine tuning laws and
regulations with respect to
property rights and
financing of the
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distribution lines.
4. Solutions for expanding access
(2) in Rural Areas
High Cost/Low returns: users in remote and disperse areas, more
expensive to serve, particularly with traditional grid expansion…
Better Subsidies: Investment rather than use
Alternative technologies: Solar, Wind, Hydro, Minigrids
Integral solutions to maximize development impact of electricity
Light handed regulation suited to rural characteristics
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5. Bank’s Role in Increasing Access
to Electricity: Some Examples
13
Analytical Work (1): Regulatory Principles
for Electrification (ESMAP, 2006)
Defining more efficient, light handed regulations for RE,
in light of the peculiar characteristics of rural areas:
•
•
Difficulty of enforcement due to the distance and the
dispersion of population.
Diversity of technologies with different regulatory
requirements.
Source: Reiche/Tenenbaum/Torres. “Promoting Electrification:
Regulatory Principles and a Model Law.” ESMAP and EWDEN Washington DC - 2006
14
Analytical Work (2): Subsidy Design
for Electrification
• Electricity subsidies are ubiquitous!
(1), (2)
• Quantity-based subsidies perform poorly!
(1)
 subsidize connections, not tariff
 self selection and geographic targeting
• Pay attention to practical success factors!
(2)
 secure funding
 disburse performance-based
 fit competition type to market stage
 fit risk allocation and financing to provider size
Sources:
(1) Komives/Foster/Halpern/Wodon. “WHO BENEFITS FROM UTILITY SUBSIDIES? WATER, ELECTRICITY, AND
THE POOR.” World Bank - Washington DC – 2005
(2) Reiche/Rysankova/Goldmark. “OBA Subsidies for Electricity Access in Latin America.”
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World Bank - Washington DC – forthcoming
Argentina - PERMER
Renewable Energy for Rural
Markets Project
Project:
• 30,000 rural households + schools
• off-grid concessionaires or coops
• providers chose technology
• users choose service level
• part of subsidy paid against installations
Financing:
$10
$30
$44
$26.5
$10
$120.5 million
GEF
IBRD
Concessionaires
FEDEI (Gov. Fund)
Users
Total
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Argentina - PERMER
Renewable Energy for Rural
Markets Project
Technology neutral supply
for remote rural users…
• Solar Home Systems
• Wind Home Systems
• PV-diesel-battery village grids
• hydro village grids
• wind-diesel village grids
• diesel village grid clusters
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Nicaragua PERZA
A US$ 22 million IDA/GEF/GoN project to
service isolated areas with private providers
over 5 years.
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Nicaragua PERZA
Key Elements
 Integrated provision of services
to rural areas: Electricity, microfinances and BDS.
maximizes development
impact & ensure business
sustainability
 Output-Based Subsidies for
Electricity and for BDS
maximizes efficient use of
scarce resources
 Support to RE policies,
institutional strengthening and
investment in actual projects
support long term impact,
replicability & sustainability
demonstration effects &
learning by doing
 Civil Society Participation:
Politicians, IFIs, communities,
Private Sector and NGOs.
make it possible, efficient &
sustainable in remote areas
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Thank you
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