IMPACT Issue 18 | November 2019 Source: Addis Ababa sunrise by Benedek. ETHIOPIA’S ENERGY SECTOR TRANSFORMATION By assisting the Government of Ethiopia in incorporating gender-focused solutions, bolstering markets for off-grid products, and scaling up private sector participation in the country’s vast renewable energy resources, ESMAP has facilitated new investments, strategies, and approaches to help reach the goal of universal elec- tricity access. A FOCUS ON HOUSEHOLD The NEP and NEP 2.0 adopt an integrated, ELECTRIFICATION sectorwide approach to achieve the Over the past decade, the Government of Ethiopia has ambitious goals it sets for the electrification launched one of the most successful electrification pro- of the country. This approach encompasses grams in Sub-Saharan Africa, expanding the electricity a number of development partners in order grid to nearly 60 percent of the country—from only to achieve these goals, including the World 667 towns and villages to approximately 6,000. Bank, the European Union (EU), the United Kingdom’s Department for International However, the household electrification rate remained Development (DFID), the United States stubbornly low, at only 20 percent in 2015. With more Agency for International Development than 60 million people without access to electricity, (USAID), the African Development Bank Ethiopia still had the second largest energy access defi- cit in Africa. Understanding that affordable and reliable (AfDB), the French Agency for Development access to electricity was essential to reducing poverty (AFD), the United Nations Development and shifting toward higher rates of productivity and Programme (UNDP), the German Agency for industrialization, the Government of Ethiopia committed Co-operation (GIZ), the Swedish International to reaching universal energy access by 2025. Development Co-operation Agency (Sida), and the European Investment Bank (EIB). FROM VISION TO STRATEGY Source: National Electrification Program 2.0: Integrated New investments and strategies would be necessary Planning for Universal Access, Federal Democratic Republic to reach the goal of universal access, including private of Ethiopia, 2019 Source: Street in Machew, Northern Ethiopia, by Raimond. 35 percent of the population with pre-electrification and long-term off-grid solutions, individual solar home systems, and mini grids. Access targets were based on the ESMAP Multi-Tier Framework, which looks at the multiple dimensions of access to capture detailed and accurate information about the quantity and quality of energy services. The rollout of new connections under NEP 2.0 were also based on geospatial analysis that identified the least-cost technology based on location and avail- able demand estimates, generated from the ESMAP supported geographic information system (GIS). The state-of-the-art GIS optimized planning for both on-grid and off-grid infrastructure and continues to act as a monitoring and evaluation platform for the program. OPTIMIZING ELECTRIFICATION EFFORTS Source: Street scene women in Harar by Emad Aljumah. An investment prospectus set forth guidance for future investments in the sector and the syndication of financing requirements for service delivery under sector participation, off-grid solutions, and scaling up the NEP. The World Bank’s US$375 million Ethiopia the country’s vast renewable energy resources. Electrification Project (ELEAP), which is supporting the In 2015, the World Bank’s Energy Sector Management NEP’s three pillars: grid electrification, off-grid services, Assistance Program (ESMAP) funded a four-year World and sector capacity and institutional reform, used this Bank engagement to provide the Government with solid guidance to determine the best grid and off-grid invest- sector diagnostics and identify key sector reforms, with ments. The holistic, sectorwide approach optimized a focus on electricity access. The engagement was electrification efforts to maximize the development instrumental in helping the Government to develop a impact of electricity services. strategic approach—the National Electrification Strat- Launched in 2018, the project directly finances new egy (NES)—and eventually on-the-ground tactics and electricity connections for over one million ­households— actions—the National Electrification Program (NEP). nearly doubling the rate of electrification to reach The first NEP was launched in 2017 to strategically over 50 percent of the population. Already, more than shift focus from infrastructure development to delivery 100,000 new connections have been established of adequate, reliable, and affordable electricity ser- and 500,000 people in connected areas are receiving vices, in line with the recommendations identified in the enhanced services. The project will also provide over NES. The NEP included a fast-paced grid connection 250,000 people with off-grid electricity services through a program to increase connectivity nearly five-fold, to combination of standalone solar home systems and mini achieve 65 percent of access through grid connectivity grids—of which the first 12 were tendered in May 2019. by 2025. GENDER IN ENERGY The NEP was then updated—the first electrification program in Sub-Saharan Africa to take this important As part of the NEP and NEP 2.0, the Government com- step—and re-launched as NEP 2.0 in March 2019. mitted not only to ensuring that women and girls benefit NEP 2.0 considers changes on the ground and taps from modern electricity services, but that they would into updated analytics. An integrated and complemen- also have more opportunities within equitable energy tary off-grid access program targeted the remaining institutions. Based on the idea that empowering women 2 ESMAP Impact | Issue 18 is smart economic policy, a coordinated approach between the World Bank and the Government, resulted in the Closing Gender Gaps Across Ethiopia’s Energy Sector initiative. The unique initiative incorporated an ESMAP supported gender analysis, high-level policy advice, and the mobilization of significant financial resources to transform gender equality across the entire US$1.8 billion World Bank energy portfolio in Ethiopia. Energy experts, gender experts, and outside stake- holders all worked to identify the fundamental drivers of gender inequality in Ethiopia’s energy sector. Coun- try data, combined with findings from consultations, workshops and discussions with the government, utilities, universities, businesses, women’s associations, Source: https://www.seforall.org/stories-of-success/ethiopia- microfinance institutions, and civil society organizations electricity-access-through-innovative-partnerships helped to identify existing gender gaps. These gaps centered on employment and leadership in technical fields, access to finance in the adoption of clean tech- nologies, and exposure to gender-based violence in the workplace. The financing facility complements electricity grid Based on the findings, ELEAP includes provisions to connection programs, providing retailers credit to import address occupational sex segregation across the sec- and assemble renewable energy products—like solar tor’s 14,000 employees, establish child-care facilities lanterns and solar home systems, biogas digesters, and in utility offices across all 11 regions in Ethiopia, makes small wind turbines—and microfinance institutions with career development, management, and leadership funding to disperse loans to families to purchase and training available for female staff, creates prevention install these products. and response programs for gender-based violence, and ESMAP’s Lighting Africa provided a technical assess- provides access to finance and promotion of female ment of the credit line’s performance for scale-up under entrepreneurship in the off-grid market. NEP 2.0, including an off-grid market assessment, private sector consultations, and expert technical and DEDICATED FUNDING financial advice for design and scale-up. FOR OFF-GRID RENEWABLE Twenty-six private sector businesses are currently ENERGY using the credit line, importing and selling solar prod- ucts that meet Lighting Global Quality Standards, and ESMAP’s Lighting Africa program designed the Market fourteen microfinance institutions are currently provid- Development for Renewable Energy and Energy ing energy-financing options to households using funds Efficient Product Credit Line, which is a revolving accessed through the credit line. The credit facility has fund providing loans to private sector enterprises and a remarkable zero percent rate of default. The first of its microfinance institutions to expand the local renewable kind, the credit facility is now being replicated in almost energy market and increase affordability of renewable 20 countries across Africa. energy products for households. In collaboration with the Development Bank of Ethiopia, the World Bank To date, the credit line has successfully supported the Electricity Network Rehabilitation and Enhancement replacement of kerosene lamps with 1.2 million solar Project (ENREP) established the financing facility in products, installed more than 8,600 biogas digesters 2013 with US$20 million and has since doubled the for cooking and agriculture purposes, and provided credit line to US$40 million. loans through microfinance institutions to more than ESMAP Impact | Issue 18 3 resources, like solar, wind, and geothermal. With the US$200 million Renewable Energy Guarantees Program (REGREP), for the first time in the country’s history, the World Bank will support the Government’s ongoing power sector reforms and leverage private sector financing for renewable energy generation. REGREP will support the development of over 1,000 MW of solar and wind energy. The Government utilized ESMAP’s Global Wind Atlas to identify areas with high potential. In collaboration with the government of Denmark, ESMAP is financing wind measurements in 17 sites for validation, including 6 priority sites for a future wind Independent Power Project. In line with the integrated, sectorwide approach adopted in the NEP, the project will ensure adequate supply for the electrification targets, increase climate resilience by diversifying the electricity supply, boost industrialization Source: Addis Ababa at night by Jakob Polacsek. through clean energy growth, and promote regional integration through the Eastern Africa Power Pool. 170,000 rural households, 60 percent of which are A STRONGER ENERGY female-headed. SECTOR Linked to ENREP, the World Bank’s Carbon Initiative Ethiopia is emerging as a role model for energy devel- for Development has agreed to purchase the emissions opment in Sub-Saharan Africa and around the world. reductions resulting from the distribution of 2.8 million By addressing the challenge of access from many solar lanterns and more than 200,000 solar home angles, Ethiopia has made and continues to make great systems, providing US$11.1 million in revenue from strides toward reaching universal access. By partnering carbon finance. These funds will be used to support a with ESMAP and the World Bank, the Government of warranty tracking and enforcement system, and battery Ethiopia has successfully implemented comprehen- replacement and maintenance incentive scheme that sive programs and investments. Working together, will further bolster the market for renewable energy these instruments have helped to achieve an overall products. program for providing electricity to the whole country, created markets for off-grid solar products, developed WAY FORWARD gender-based solutions within the energy sector, and ­ incorporated private sector financing for untapped While Ethiopia benefits from vast amounts of renewable renewable resources—ultimately transforming the hydropower, the country also has largely untapped entire energy sector. ESMAP MISSION The Energy Sector Management Assistance Program (ESMAP) is a global knowledge and technical assistance program administered by The World Bank. It provides analytical and advisory services to low- and middle-income countries to increase their know-how and institutional capacity to achieve environmentally sustainable energy solutions for poverty reduction and economic growth. ESMAP is funded by Australia, Austria, Canada, ClimateWorks Foundation, Denmark, the European Commission, Finland, France, Germany, Iceland, Italy, Japan, Lithuania, Luxembourg, the Netherlands, Norway, the Rockefeller Foundation, Sweden, Switzerland, the United Kingdom, and the World Bank. 1818 H Street, NW Washington DC 20433 www.esmap.org esmap@worldbank.org 4 ESMAP Impact | Issue 18 Nove mb e r 20 19