Last week with the support of the World Bank Group’s (WBG) Scaling Solar initiative. The auction for 100 MW (2x50 MW) resulted in a price as low as 6 cents/kWh.
This is good news for the country, which much like the rest of Sub-Saharan Africa faces acute electricity shortages.
Zambia’s solar auction result followed a series of headline-making auctions in India, Mexico, Peru, and Dubai. In Dubai’s case, the price was as low as 3 cents/kWh -- the lowest price ever offered for solar power. Solar auctions are effectively a competitive bidding process to build power plants and supply a specific quantity of electricity at a pre-agreed price over a specified period of time.
There are a few reasons why Zambia’s outcome is more significant than Dubai’s.
First, Zambia’s 6 cents/kWh price is fixed and won’t increase for 25 years. This makes the average price in real terms an even more astonishing 4.7 cents/kWh.
Second, there aren’t any implicit or explicit subsidies involved in the deal, neither Zambia has a sophisticated and liquid financial market. The WBG simply helped structure the auction based on the best global practices – taking into account local specifications and providing a guarantee to back-stop the obligations of the national utility to pay for the electricity being supplied.
Third, Zambia has about 2400 MW of mostly hydro-based generation, compared to much larger systems in other countries with successful auctions. It also has a distressed macroeconomic situation coupled with weak institutional capacity in the energy sector. The Bank’s guarantee is critical to address the risks associated with these factors.
Most importantly, these results are dramatically shifting perceptions that low costs for renewable energy are unattainable in poor countries with weak institutions, underdeveloped laws and regulations, and high costs for conducting business. According to the Doing Business report, Zambia is ranked 97, compared to the United Arab Emirates (UAE), which is ranked 31.
While all the legal and financial agreements still need to be signed, . As long as countries put in place a well-structured, transparent bidding process, mitigating country risks using guarantees and other financial insurance instruments, we can expect to see even lower prices in the months and years to come.
Scaling Solar is a World Bank Group solution that makes it easier for governments to quickly procure and develop large-scale solar projects with private financing. It includes a ‘one-stop shop’ package of technical assistance, templated documents, pre-approved financing, insurance products, and guarantees. Scaling Solar is designed to allow governments to get fast, affordable, utility-scale power up and running within two years of engagement. It has financing support of USAID’s Power Africa, the Ministry of Foreign Affairs of the Netherlands, the Ministry of Foreign Affairs of Denmark, and the Infrastructure Development Collaboration Partnership Fund (DevCo).
Last week with the support of the World Bank Group’s (WBG) Scaling Solar initiative. The auction for 100 MW (2x50 MW) resulted in a price as low as 6 cents/kWh.
The “sisters” experience demonstrates how simple innovation can lead to socio-economic transformation and ownership.
This example can inform other areas, such as forestry, where women have always played a significant role in sustainable forest management in basically everything from agroforestry to collecting fuelwood and developing non-wood forest products for food, medicine, and shelter. Forest-related development initiatives, such as reducing emissions from deforestation and forest degradation (also known as REDD+), can learn from the experiences to date to involve women in program design and implementation through methods which are adapted to the needs of the forest community.
A socially inclusive approach—in which vulnerable or traditionally excluded social groups such as women, indigenous peoples, and other forest dwellers are treated as partners in planning the operation of funds and deployment of climate finance—has been a hallmark of the World Bank Group’s Forests and Landscapes Climate Finance Funds. The Forest Carbon Partnership Facility (FCPF), BioCarbon Fund, and Forest Investment Program* (FIP) provides technical and financial assistance to countries working on forest and climate change initiatives, and are also in the unique position to help support gender inclusion in countries around the globe.
These programs engage forest users and producers to foster benefit sharing and participation of women in local forest governance, tenure security, and forest-based livelihoods.
In Panama, taking concrete action to ensure the full and effective participation of women and men at the community level—by hosting a series of workshops and local activities - has helped boost the indigenous Guna community’s understanding of how forest programs can reduce greenhouse gas emissions and benefit the local community. A local organization, Fundación para la Promoción del Conocimiento Indígena (FPCI), implemented this small grant project (in 2013-2014) financed by the FCPF Capacity Building Program for Forest-Dependent Peoples and Southern Civil Society Organizations to strengthen the capacity of indigenous Guna leaders, women, and young people to take part in the emission reductions program.
Participating in a project supported by the BioCarbon Fund in Nyanza Province and Western Province of Kenya, women have taken on leadership roles in gathering information from farms and training the community on sustainable agriculture land management practices. Based on local tradition, women don’t typically own land, but they are actively engaged in the project and are known for adopting more diverse land practices and producing higher profits on maize yields. In addition to setting the stage for more gender inclusion in future initiatives in Kenya, the project was the first to issue carbon credits and develop a carbon accounting methodology for agricultural land management.
As well as engaging the women in indigenous communities, forest programs also generate support from the institutions upon which they are built to ensure gender parity is prioritized. Ghana stands out as an example. The country has included a gender road map into its draft REDD+ Strategy in November 2011. According to the roadmap, the benefit-sharing structures, dispute resolution structures, implementation, monitoring and evaluation structures, and monitoring reporting and verification system will include a gender officer responsible for those aspects of program design. Ghana’s Forestry Commission staff at the district and regional levels, along with the REDD+ Secretariat staff, are also to receive gender training as part of their standard work plan.
Likewise, the Forest Investment Program’s Dedicated Grant Mechanism (DGM) program includes specific design features to ensure women are involved in the planning, implementation, monitoring, and evaluation of activities and other gender elements in DGM decision-making. In Peru, the DGM program supports selected indigenous communities in the Peruvian Amazon to improve their sustainable forest management practices, with specific initiatives in native community land titling and community forest management. In recognition of the significant role that indigenous women play in forest management, funds have been set aside for smaller projects proposed or managed by women in such areas as food security, agroforestry, and timber.
With the focus of these emission reductions programs shifting to implementation, there is an excellent opportunity to integrate gender in program activities from day one. Likewise, the recent launch of the World Bank Gender Equality Strategy 2016-2023 and a session on gender at the upcoming Forest Carbon Partnership Facility Participants Committee meeting next week is focusing attention on the inclusion of women in development approaches to help close gender gaps and achieve results. Putting these gender-focused strategies into action on the ground is critical in ensuring country-level, country-led actions.
and forest conservation challenges as household managers, farmers, and consumers. Bringing women into the design, planning, and implementation of forest and land use efforts promotes both gender equality and smart development policy.
*The Forest Investment Program is part of the Climate Investment Funds.
This is Morocco’s Noor 1 concentrated solar power plant, the first phase of what will eventually be the largest concentrated solar power plant in the world. It is an impressive sight—visible even from space–and it holds the promise of supplying over 500 megawatts of power to over a million Moroccans by 2018. It also embodies the power of well-placed concessional financing to stimulate climate action. Low cost, long term financing totaling $435 million provided by the Climate Investment Funds (CIF) has served as a spark to attract the public and private investments needed to build this massive facility, and it is just one example of how the
There are many more CIF stories to tell, and some of our most impactful are captured in our 2015 annual report “Empowering a Greener Future.” It caps off a very busy 12 months for the CIF, indeed, and the entire global community, as world leaders achieved landmark agreements to launch sustainable development goals and intensify climate change action. With $8.3 billion in climate-smart investments expected to attract at least another $58 billion in co-financing for more than 300 projects in 72 developing countries, the CIF holds a wealth of experience, innovation, and unparalleled knowledge. The CIF is showing how countries invest to meet their development aspirations while contributing to the global good.
Half way around the world from Morocco, CIF concessional financing is also helping small enterprises and famers in Tajikistan cope with climate change. CIF $5 million is supporting local banks in piloting new lines of credit that farmers can access to invest in climate-smart solutions to improve water and energy efficiency and combat soil erosion. This climate resilience financing facility is the first of its kind, but certainly not the last!
It is extremely gratifying to see CIF projects come to fruition and empower countries and businesses to learn from our challenges, replicate our successes, and build on our momentum. But the CIF is more than the sum of its investments. It is also a platform and a solid partnership—one that is paying dividends well beyond our involvement.
The CIF’s programmatic approach embodies a country-driven and country-owned process of strategic planning, deliberation, and alignment with policy and investment interventions from relevant development players, particularly the multilateral development banks (MDBs) that implement CIF funding. Through this flexible process conducted at each country’s own pace and reflecting each country’s own needs and goals, recipient countries benefit from the solid technical and operational expertise, as well as financial leverage, provided by our MDB partners. This business model, and its ability to replicate, is unique in the global finance architecture and highly sought after by developing countries and investors.
Zambia, for example, used the CIF programmatic approach process to establish its Interim National Climate Change Secretariat under the Ministry of Finance. It now coordinates all climate change activities in Zambia and credits the CIF for empowering the country to access climate finance from other sources. Brazil used its CIF engagement to bring together the Ministry of Agriculture and Environment at the same table to discuss and agree upon agendas of common interest.
In 2015, we welcomed 25 new countries—out of a pool of 70 applicants—to begin developing investment plans for climate resilience and sustainable forest management. The CIF now reaches 72 developing countries, and the ambition level is high as new countries strive to emulate and go beyond the success of early participants.
Milestones like these fill me with pride, and with hope. As countries and business leaders take a more aggressive stance against climate change, they can look to the CIF as an experienced and trusted partner in achieving transformational change and setting in motion a greener future for us all.
In 2007, Mongolia’s economy grew at a double digit pace with modest inflation. The slump of the 1990s must have seemed a distant memory in the last full year before the elections in 2008.
The previous year saw several iconic projects approved, and 2007, the next year in our 25 years in 25 days reflection, did likewise. The Renewable Energy for Rural Access Project (REAP) became effective in 2007 and was ultimately expanded. The project brought a modern solution to a century old problem: how can the benefits of electricity be harnessed to benefit the quarter of Mongolia’s people who are nomadic herders living in gers? Connecting them to the grid was not a solution both because distances are vast and because nomadic people move around. The modern solution was to give the herders access to solar power through a program launched by the Mongolian Government supported by the World Bank and the Government of the Netherlands. “Thanks to the National 100,000 Solar Ger Electrification Program, over half a million men, women and children, covering half the rural population of Mongolia and 70 percent of herders, now have access to modern electricity.” For these 100,000 herder families, the off-grid solar home systems generate enough power for lights, televisions, radios, mobile phone charging and small appliances. (Video here.)
The Second Sustainable Livelihoods Project, the second of a three part program, was approved in 2007 and took effect the following year. The project, financed by an IDA credit, and IDA grant, and a grant from the European Union, supported a wide range of activities aimed at enhancing livelihood security and sustainability by scaling-up institutional mechanisms that reduce the vulnerability of rural communities throughout Mongolia. (Video here.) The project supported improved pastoral risk management and helped establish, on a nationwide basis, the Community Initiative, an effective, transparent and socially inclusive mechanism that empowers communities to identify and implement small public facility improvement projects. (Video here.) SLP-2 also supported microfinance, deepening and widening access to sustainable financial services to rural citizens. More than 32,000 micro-finance loans were dispersed in rural Mongolia benefiting 150,000 people. (Video here.)
The Education for All Fast Track Initiative (EFA-FTI) provided a $29.4 million grant, approved in 2007, that upgraded classrooms, dormitories, and facilities, helped pre-school children in rural areas gain access to pre-primary education through mobile ger kindergartens, and provided training for teachers.
A 2007 report examined the Enabling Environment for Social Accountability in Mongolia, seeking “to analyze conditions that influence the ability of citizens and their organizations to promote accountability of public institutions in Mongolia; to identify priority areas for policy, legal, regulatory, and institutional reforms to improve these conditions; and to identify areas in which the capacity building of civil society organizations and the Government of Mongolia may be promoted to enhance social accountability for improved governance, social and economic development, and poverty reduction.”
The study, which helped lay the groundwork for more recent initiatives on social accountability, recommended actions to increase CSO financial resources and capacity, and noted “the need to improve the quality of the media to ensure freedom of expression and citizens’ right to reliable information and enhance public interest broadcasting. Among the proposals for institutional reforms is capacity building of public radio and television, which is currently threatened by funding cuts and politicization of its governing board.” The study further wrote “as access to information is crucial to social accountability, the study recommends not only the adoption of an Access to Information Law, which is currently on the parliament’s agenda, but also the amendment of the Law on State Secrets as it reinforces a culture of secrecy.”
A 2007 report titled Building Skills for the New Economy examined the labor market in Mongolia and identified three major interrelated challenges—joblessness, informality and skills mismatch. The report argued that “a key constraint for future growth from the perspective of human resources is the failure to provide adequate learning opportunities, school curricula and teaching for producing the skills that are in high demand. But even if the supply of skills and labor were to be appropriate to market needs, access to productive employment would still be limited by a poor investment climate for firm growth and a social insurance system that generates work disincentives.”
And in 2007, the World Bank Mongolia Office initiated the Mongolia Development Marketplace Program. Based on the model of competitive grants, 37 innovative projects out of 190 finalists were declared as winners and awarded grants amounting to US$326,000.
Next we look at 2008 and a new forum for deliberation about economic policy.
Prepared in collaboration with Dulguun Byambatsoo.
(Please follow our 25 years in 25 days journey here and on twitter with the hashtag #WBG_Mongolia25th)