Off-Grid Solar Lighting Up Ethiopia

For the millions of people living in remote rural areas of Ethiopia who lack access to the power grid or cannot afford electricity, solar energy represents an important first step on the energy access ladder. Instead of relying on kerosene, candles, dry cell batteries and other fossil fuel-based sources of power, they can now turn to off-grid solar to light up their homes, watch television and charge mobile phones, thanks to an initiative of the Government of Ethiopia supported by the World Bank.

“For households at the base of the economic pyramid, off-grid solar can dramatically boost the quality of life,” says Yemenzwork Girefe, Director of the Export Credit Guarantee & Special Fund Administration at the Development Bank of Ethiopia (DBE). ”Energy access has a large impact on the well-being of society in general, women and children in particular, in countries like Ethiopia where access to electricity is low for the vast majority of the population.”

The Development Bank of Ethiopia (DBE) in partnership with the International Development Association (IDA), the World Bank’s fund for the poorest countries, is providing working capital loans to private sector household solar providers, as well as micro-finance to households for the purchase of solar lanterns and Solar Home Systems (SHS) through a $20 million credit line under the Electricity Network Reinforcement and Expansion Project (ENREP). Another $20 million line of credit was approved by the World Bank Board of Directors in May 2016 as part of $200 million in additional financing to ENREP.

This line of credit leverages the market-based approach of the Lighting Africa program and supports Lighting Global’s list of quality-verified lanterns and SHSs to ensure Ethiopians have access to the best off-grid renewable lighting and energy products available. So far, 800,000 off-grid products meeting Lighting Global’s Quality Standards have been imported and distributed by eight approved retailers, providing clean, safe lighting and modern energy services to more than three million Ethiopians.

But while demand for these new off-grid solar technologies is taking off, barriers to consumer confidence must still be overcome before the market can be expanded to make a real impact on energy access in the poorest communities. Here is where the Carbon Initiative for Development (Ci-Dev), a $125 million fund with a pipeline of 12 pilot projects in Africa, is stepping in.


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Off-grid solar providers showing off their products at a market in rural Ethiopia

Credits: Lighting Global / Rahim Kanani


Ci-Dev has just signed an Emissions Reduction Purchase Agreement (ERPA) with DBE to deliver additional funding to the project through the purchase of greenhouse gas emission reductions. The funding will address concerns over insufficient warranties and battery replacement for SHS, thus helping to ensure the sustainability of off-grid solutions and to protect the market from counterfeit products.

“This Ci-Dev initiative in Ethiopia is an excellent example of leveraging carbon credits and concessional finance to enable off-grid solar,” says Program Manager Venkata Ramana Putti, who leads the World Bank Group’s Climate and Carbon Finance unit which oversees Ci-Dev and 18 other carbon pricing and results-based finance initiatives.

The carbon revenues generated from the Ci-Dev project will support the demonstration of a tracking and enforcement system to ensure SHS warranties are honored completely and consistently by the private solar suppliers. The pilot warranty program will also be used to collect data for carbon monitoring through 2024 that will ultimately enable the demonstration of carbon emission reductions achieved under the project.

In addition, the Ci-Dev project will include a system so battery replacement and other maintenance costs of SHSs are supported through carbon revenues, thus incentivizing suppliers to offer more robust maintenance programs. This part of the program design serves as a form of subsidy, which helps Ethiopians afford to replace their SHS batteries, with revenues covering a portion of the cost of replacing batteries, that break down or reach the end of their four-year life span.

ENREP team leader Issa Diaw says ensuring post-sale assistance to poor households is the key to scaling up off-grid solar in rural communities.

“This will incentivize them to adopt quality products further sustain the market,” Issa Diaw says. “Moreover, the warranty tracking system will give to the government a powerful monitoring tool not only to track the number of disseminated products versus their Growth and Transformation Plan goals but also their geographical distribution and quality of service provided,” he explains.

“By tackling these important consumer concerns, Ci-Dev’s results-based finance is playing a key role in supporting DBE and IDA to scale up off-grid solar in Ethiopia, ensuring that more than 1.5 million rural homes would have access to clean electricity through off-grid solutions. It is fully in line with the World Bank Group’s strategic engagement and support to the Government of Ethiopia to increase and improve delivery of infrastructure and services,” adds World Bank’s Country Director for Ethiopia, Sudan and South Sudan, Carolyn Turk.

The ultimate goal: to enable off-grid solar to have a truly transformative impact on energy access and climate change mitigation in the country.

Source : www.worldbank.org

Lighting Africa Featured in International Innovation’s Energy Focus Week

Courtesy of International Innovation – a leading scientific dissemination service

Since 2007, the World Bank Group’s Lighting Africa programme has enabled over 35 million people across the continent to access clean, safe and affordable lighting and energy. Communications Lead Jennifer Lynch describes how these renewable energy options are increasing savings and drastically improving living standards
SmilingChildwithLight

What circumstances are sub-Saharan populations currently facing with regard to lighting and energy? What solutions are available?

Close to 600 million people in sub-Saharan Africa – about two-thirds of the population – live without grid electricity. And despite ongoing efforts to expand the grid to reach more people, the reality is that this expansion is slow and expensive and, in some places, simply not technically or financially feasible. Due to these difficulties, the number of people living without access to the grid in sub-Saharan Africa is actually rising as population growth outpaces expansion.

Without the option of simply flipping a switch to turn on the lights, they largely turn to kerosene lamps, candles and torches, all of which, unfortunately, come with serious drawbacks. These lighting sources carry recurring fuel costs, necessitating repeated financial expenditure and time to fetch kerosene, new candles or disposable batteries. These expenditures can make up a significant portion of a household budget amongst those living in ‘energy poverty’.

Additionally, kerosene lamps (the most commonly used alternative) carry serious health risks in the form of respiratory diseases and accidental poisoning, as well as the risk of fires – a risk they share with candles. All of these products also carry a notable environmental toll, with disposable batteries ending up in landfills. Moreover, kerosene lamps contribute to global warming through black carbon and CO2 emissions. A typical kerosene-burning household in Africa emits 100 kg of CO2 per year – a significant amount, especially when you consider how many households are using these lamps.

LIGHTSTo top it all off, these conventional lighting options offer just that – lighting. And poor quality lighting at that. Quality-verified solar lighting and energy products, in contrast, provide people with safe, affordable, reliable, better-quality light – and often the ability to charge mobile phones or even power smaller household appliances.

In short, these solar products have the power to transform lives. Instead of fruitlessly waiting for a grid expansion that may take years or may possibly never reach some rural areas where so many of these energy-poor live, modern, high-quality off-grid products can sustainably meet the lighting and – increasingly – the energy needs of people who aren’t connected to the grid.

Can you explain the role Lighting Africa plays in the development and implementation of these products?

Lighting Africa catalyses the development of markets for affordable, modern, reliable off-grid lighting and energy products in sub-Saharan Africa. Manufacturers, companies, and investors can benefit from Lighting Africa’s publicly available market research that details information on market size, the demands of end users and their ability to pay, as well as analysing distribution channels to ensure products reach even the ‘last mile’ consumers.

Another important contribution to product development is our quality assurance work. The purchase of an off-grid lighting product or solar home system can represent a significant investment for a family in sub-Saharan Africa, and consumers simply can’t afford to purchase something that doesn’t work well or won’t last.

In order to protect consumers and prevent the eroding of consumer confidence in off-grid products in the process, Lighting Africa developed a series of Quality Standards and testing methods. As our programme has been replicated in other continents, the coordination and testing of these Quality Standards has been moved to our affiliated programme, Lighting Global. Lighting Africa works exclusively with products that meet the Lighting Global Quality Standards.

PoorLightHomeworkThe test methods used to assess the Quality Standards have been adopted by the International Electrotechnical Commission (IEC) as a reference point for quality assurance of off-grid lighting products (IEC Technical Specification 62257-9-5). Additionally, the UN Framework Convention on Climate Change (UNFCCC) requires that solar lighting products meet this specification in order to qualify for carbon financing (CDM). African governments, including Kenya, Tanzania and Ethiopia, have adopted or are adopting national standards for off-grid solar products that are harmonised with the Lighting Global Quality Standards. Nigeria and other countries in the Economic Community of West GoodLightHomeworkAfrican States are poised to adopt similar standards by the end of the year.

The evolution of these off-grid lighting – and now energy – products over the past few years has been remarkable. The costs have dropped significantly even as the level of services and the range of products offered have expanded exponentially. Just a few years ago, off-grid solar products could offer a single light point at a (now) relatively high cost. Today, the most affordable quality-verified products retail for as little as US $5. At the same time, the majority of the lanterns now have the capability to charge a mobile phone or other small item, such as a radio, through a USB port. At the other end of the spectrum, solar home systems can charge a mobile phone, power several lights and even, in some cases, a fan or a TV.

Taking into consideration the desire of consumers to move up the energy ladder to the extent possible, the Quality Standards and test methods have recently been expanded to also cover plug-and-play solar home system kits up to 100 W.

What are the main benefits of using off-grid lighting and energy products to support societal development?

The developmental benefits derived from people gaining access to quality-verified off-grid lighting and energy products are numerous, including improved health and healthcare provision, as well as increased savings and economic opportunities.

“The Lighting Africa programme has done an exceptional job in building the foundation of the off-grid market space and will help propel the African continent to achieve universal access for all.” CHARLES FEINSTEIN, Director of Energy and Extractives Global Practice, The World Bank

The negative health impacts of kerosene lamp usage are severe. Several studies have reported that accidental ingestion of kerosene is the primary cause of child poisoning in the developing world, while the use of kerosene lamps contributes to the indoor air pollution that causes about 400,000 deaths in sub-Saharan Africa annually. Furthermore, inadequate lighting in healthcare clinics poses barriers to the delivery of healthcare, which can be improved with proper lighting.

Secondly, quality-verified off-grid lighting and energy products increase savings. While the up-front purchasing cost of these products is a challenge for many of the end users, their life-cycle costs as compared to kerosene lamps and other commonly used alternatives are actually lower, as recurring purchases of fuel are eliminated.

A recent Bloomberg New Energy Finance/World Bank Group study found that consumers in sub-Saharan Africa save $3.15 for every $1 they invest in a solar product.

Additionally, economic opportunities improve when using off-grid solar lighting and energy by enabling longer or more efficient working hours, as well as creating new business opportunities, such as charging the mobile phones of others for a fee – or even by becoming a retailer of off-grid products.

Of course, solar home systems provide even more benefits as they offer better lighting, can charge multiple phones (perhaps as part of a business), or power an electric shaver for a barbershop. They can also improve a consumer’s knowledge of the outside world through TV and radio. And while these solar home systems are far more expensive than a simple lantern, they are put within reach of low-income consumers through pay-as-you-go (PAYG) technology, through which they can pay for their energy use in daily increments, usually through their mobile phones.

Quality-verified solar lighting and energy products provide people with safe, affordable, reliable, better-quality light

Finally, the non-quantifiable benefits to quality of life that these off-grid products provide should not be discounted. They allow children to study in the evenings – so that they can play during the day, and enable families and friends to spend time together – in the light, after dark, perhaps even by the cooling breeze of a fan.

How does Lighting Africa work with governments to provide lighting and energy?

Lighting Africa works all along the supply chain to catalyse the markets to help those living without access to grid electricity to gain access to quality-verified off-grid lighting and energy products. Activities include: market intelligence, quality assurance, access to finance, consumer education, business development support and work with governments.

Our work with governments is conducted through World Bank energy-access projects. When a national government reaches out to the World Bank seeking assistance to increase energy service provisions to their citizens, an assessment as to how this can best be achieved is conducted. Traditionally, the focus has been on grid expansion but, increasingly, off-grid products and mini grids are being recognised as viable components of energy access expansion.

COOKINGLIGHTSIn the case that an off-grid component is found to be a viable option for a country, Lighting Africa will form part of the team working on the wider energy-access project. The Lighting Africa team member(s) will then help to identify the best strategy for expanding the availability and use of these off-grid products, and provide technical assistance to the relevant government agency in implementing these strategies. Along with technical assistance, they can take many forms, and are always customised to the specific country. Some of the more common approaches include consumer education campaigns, increasing access to finance both along the supply chain, and to end users, and reducing barriers to importation. In the end, the governments themselves choose their approach and implement the activities, with Lighting Africa serving an advisory role and providing assistance as needed.

In the case of consumer education campaigns, Lighting Africa will share experiences and lessons learned on how to best conduct a consumer education campaign to raise awareness of, and trust in, off-grid products. Consumer education materials developed by Lighting Africa are also shared for adaptation and use.

For access to finance, Lighting Africa may share market research with financial institutions to demonstrate the financial viability of these markets, or facilitate business connections, or connections between financial institutions and NGOs, women’s groups and the like. In the case of import barriers, Lighting Africa may work with governments to identify duties and tariffs that are driving the end price too high for consumers and work to address these with the end-goal of improving access to only quality-verified products to avoid flooding the market with unreliable products that are prone to breaking or have poor-quality function.

Launch of 2016 World Bank Group / Bloomberg Off-Grid Solar Market Trends Report

Off-Grid Energy Solutions Present A Three Billion-Dollar Market Opportunity For Investors, New Report Finds

WASHINGTON, March 3, 2016— By 2020, the sales of off-grid solar products in emerging markets are expected to reach $3.1 billion, providing access to improved energy to 99 million households with no access to the grid, according to a new report released today by the World Bank Group (WBG) and Bloomberg New Energy Finance (BNEF), in collaboration with the Global Off-Grid Lighting Association (GOGLA).

The report, titled Off-Grid Solar Market Trends, tracks the ground breaking technological advances and innovative business models which have emerged to transform the lives of millions through affordable modern solar energy services. It shows that the off-grid solar industry is booming and a growing wave of development partners and investors are committing significant funds, with a primary focus on pay-as-you-go business models. The report finds that annual investments into the industry have risen to $276 million in 2015, a fifteen-fold increase since 2012. It also shows that 89 million people in Africa and Asia already enjoy improved access to energy by using off-grid solar products.

Solar-powered portable lights and home kits offer a safer, cheaper and environmentally friendlier service to the 1.2 billion people who live without access to the power grid and currently spend about $27 billion annually on fuel-based lighting and mobile-phone charging technologies.

“The pay-as-you-go business model combines rapid innovation in solar, batteries and LED lights with the transformative power of mobile communication technology,” said Itamar Orlandi, BNEF’s Head of Applied Research. “This allows new companies to build services, sales and a deep understanding of their customers at an accelerating pace, which in turn is attracting new sources of growth capital into the industry.”

Koen Peters, GOGLA Executive Director, added: “This report marks the success of cooperation between GOGLA, Lighting Global and BNEF in collecting valuable market intelligence. The data and insights this report provides are critical for informing policy makers, investors and other stakeholders to help grow and strengthen our industry, and provide essential information to solar businesses.”

The WBG, through its Lighting Global platform, supports the growth of a sustainable off-grid solar market as a means of increasing access to energy to people for whom the power grid is not a viable option.

Contacts:

In Washington: Emmanouela (Emmy) Markoglou, (202) 473 9526, emarkoglou@ifc.org;

For Broadcast Requests: Huma Imtiaz, (202) 473-2409, himtiaz@worldbankgroup.org