Directions in Development - Energy and Mining

Unlock energy savings in the public sector through strategic procurement. This resource provides a comprehensive guide to public procurement of energy efficiency services, drawing on international experiences to offer practical lessons and policy recommendations. Discover how to overcome barriers to implementing energy savings programs, leverage innovative financing models, and design effective energy savings performance contracts (ESPCs). Learn from case studies that showcase successful approaches to budgeting, energy audits, and bid evaluation. This is for government officials, policymakers, and energy managers seeking sustainable energy solutions, reduced energy costs, and a greener public sector. By implementing the strategies outlined, you can transform your agency into a model of energy efficiency and environmental responsibility.

Unlock sustainable energy solutions for developing nations. This guide offers a rigorous economic analysis of renewable energy incentives, providing a global taxonomy of financial mechanisms and models for sustainability. It examines policy design, regulatory frameworks, and affordability issues in developing countries. - Discover effective incentive schemes for private investment. - Compare feed-in tariffs, quota systems, and auctions. - Integrate climate finance into regulatory processes. For policymakers, energy economists, and investors seeking to balance economic efficiency with sustainable energy development.

The passage of India's Electricity Act of 2003 was a signature achievement, moving the sector toward amarket-driven approach that forced potential investors to compete aggressively for generation and transmission contracts. India's 2005 National Electricity Policy recognized electricity as one of the key drivers for rapid economic growth and poverty alleviation in the country. Yet the policy's target-electricity for all and 1,000 kilowatt-hours (kWh) available per capita by 2012-was not met. Despite a 20-year reform process and private-sector participation, the rate of resource augmentation and growth in energy supply has been less than the rate of increase in demand. Numerous challenges need to be addressed before India can overcome severe energy shortages and achieve its desired national policy objectives. Private Participation in the Indian Power Sector: Lessons from Two Decades of Experience examines the home-grown Indian experience with private sector participation in power, identifies emerging risks, and proposes specific actions for government consideration, so that the power sector may fulfill its important role in India's growth story. Much has been achieved, and the Indian power sector can rightfully take its placeamong the bold reformers. Yet a large agenda remains, and a more rigorous focus on implementation, particularly on last-mile reforms in the distribution sector, will be required. Close coordination among variousstakeholders and unrelenting attention to efficient execution through decentralized authority to make technical decisions, together with a robust emphasis on monitoring, evaluation, and transparent sharing of data and performance statistics, will help in achieving this objective.

This World Bank review, Governance of Indian State Power Utilities: An Ongoing Journey, is a first attempt to systematically examine the quality of corporate and regulatory governance in the Indian power sector. Considering that much of the poor performance of utilities reflected internal and external shortfalls in governance, India's Electricity Act of 2003 mandated unbundling and corporatizing the vertically integrated state electricity boards, along with establishing independent regulators at the center and in the states. The aim was to create a more accountable and commercial performance culture. A particular motivation was the need to keep the state government at arm's length from utilities and regulators alike. This review assesses aspects of corporate governance that would be expected to increase the internal and external accountability of utilities; the institutional design of state-level regulation; and the extent to which regulators have implemented key elements of their mandate. In addition, it examines the correlation between the adoption of recommended corporate governance practices and utility performance, and between regulatory governance and utility performance. It finds that while unbundling the electricity boards has progressed quite well on paper, actual separation and functional independence of the unbundled entities is considerably less than it appears-and clearly identifying the contributions of individual entities in the service value chain and holding them accountable for their performance remains difficult. Corporatization has been unable to insulate utilities from state interference because boards remain state dominated, lack sufficient decision-making authority, and are rarely evaluated on performance. Also, the regulatory environment has not sufficiently pushed utilities to improve performance. State electricity regulatory commissions have been established in all states, but a lack of accountability and autonomy and limited technical capacity have restricted their ability to create an independent, transparent, and unbiased governance framework for the sector that balances consumer and investor/utility interests.

The electricity sector in the Middle East and North Africa (MENA) is in the grip of an apparent paradox. The region holds the world's largest oil and gas reserves and has been able to universalize access to electricity in most economies, but it may not be able to make the investments required to meet the future power needs of its fast-growing populations. The annual investments to keep pace with the demand for electricity have been estimated at about 3 percent of the region's projected GDP. In most of the region's economies, however, financial constraints limit the ability to make those investments. The power sector needs to find its own financing sources-and quickly. Shedding Light on Electricity Utilities in the Middle East and North Africa provides quantitative evidence on how better utility management; sustainable pricing; and selective, context-specific reforms would free enough resources to make the needed investments and lower the operating costs of the sector. The solution involves cutting costs and raising revenues through well-targeted and well-identified improvements. These improvements would generate more financing than the sector's investment needs. The report provides detailed evidence of the size of the potential gain in each of the 14 MENA economies covered. The analysis is based on the MENA Electricity Database, a new dataset covering 67 electricity utilities, as well as a sample of utilities in comparable economies from other regions. The authors hope that their benchmarking efforts will provide a regional- and utility-level frame of reference for sector performance in the region. The book will be of interest to managers of electricity utilities, regulators, policy makers, and other stakeholders concerned with the performance of utilities in the region.

Government strategies for setting energy prices are not uniform across the Latin America and the Caribbean (LAC) region-or even across fuels. Instead, they cover a full spectrum, ranging from discretionary price-fixing at one end to pure market-based approaches at the other. In between is a wide variety of other schemes such as price stabilization funds, import or export parity pricing, price smoothing through tax levels, and targeted direct price subsidies or vouchers. Governments in the LAC region, however, tend to be small as measured by government revenues as a percentage of GDP. So their limited government resources have to be used wisely and be better targeted to the poor and vulnerable. Although energy subsidies are an inefficient policy tool for protecting the welfare of the poor, energy price increases can have a big impact on these households. Energy Pricing Policies for Inclusive Growth in Latin America and the Caribbean finds that energy subsidies are highly regressive in an absolute sense-that is, the lion's share of every dollar spent on keeping energy prices low benefits wealthier households. However, subsidies for fuels that are widely used for cooking and heating-liquefied petroleum gas (LPG), natural gas, and kerosene-as well as for electricity, can be relatively neutral or progressive, implying that lower-income households capture benefits that are proportionate to their expenditures. In other words, although poorer households receive very little from every dollar spent on energy subsidies, that small amount may represent an important share of their expenditures. It is important, then, that governments expand the coverage and depth of their social safety nets to provide relief for poor households if energy prices rise. This report also finds that aggregate price impacts and the competitiveness effects of energy price increases are moderate to small and can be smoothed out through macropolicy responses.

Most Sub-Saharan African countries try to promote rural electrification through both centralized and decentralized approaches. This guide focuses on the decentralized approach, providing practical guidance on how small power producers and mini-grid operators can deliver both electrification and renewable energy in rural areas. It describes four basic types of on- and off-grid small power producers, as well as several hybrid combinations that are emerging in Africa and elsewhere. The guide highlights the ground-level regulatory and policy questions that must be answered by electricity regulators, rural energy agencies, and ministries to promote commercially sustainable investments by private operators and community organizations. Among the practical questions addressed is how to design and implement retail tariffs, quality of service standards, feed-in tariffs, and backup tariffs. The guide also analyzes the regulatory implementation issues triggered by donor grants and so-called top-up payments. It provides a primer for nonengineers on interconnection and operating standards for small power producers connected to main grids and isolated mini-grids. It analyzes whether the option of small power distributors, used widely in Asia, could be employed in Sub-Saharan Africa, and addresses two often ignored questions: what to do "when the big grid connects to the little grid" and how to practice light-handed regulation. Finally, the guide considers the threshold question of when to regulate and when to deregulate tariffs. All these implementation issues are presented with specific ground-level options and recommendations rather than just general pronouncements. In addition, to make the discussion more useful to practitioners, the guide provides numerous real-world examples of successful and unsuccessful regulatory and policy actions taken in Kenya, South Africa, and Tanzania, as well as Nepal, Sri Lanka, and Thailand. Many of the decisions are inherently controversial because they directly affect the economic interests of investors and consumers. The guide highlights rather than hides these real-world controversies by drawing upon candid comments of key stakeholders-national utility managers, mini-grid operators, government officials, and and consumers.

This World Bank review of India's power sector assesses state-wise progress in implementing the government's reform agenda two decades after the liberalization of India's economy and a decade after the passage of the forward-looking Electricity Act of 2003 (EA). It examines the performance of the sector along the following dimensions, drawing on in-depth background papers-achievements in access, the financial and operational performance of utilities, governance, private participation, and the coverage and targeting of domestic user subsidies. Despite considerable progress in implementing the EA mandates and associated policies over the past decade, the report shows that sector finances remain weak. After-tax losses in 2011 were equivalent to nearly 17 percent of India's gross fiscal deficit and around 0.7 percent of GDP; they were concentrated in the distribution segment. Twenty years after the initiation of reforms, an inefficient, loss-making power sector and inadequate and unreliable power supply are major constraints to India's growth, inclusion, job creation, and aspirations for middle-income country status. This report shows that achieving sector outcomes is linked closely to the degree to which each state has implemented the EA. Key reforms mandated by the EA have still not been implemented in full, with progress in promoting competition lagging furthest behind. Further, multiple institutions with diffuse accountability have undermined the sector's commercial orientation: state governments are a major presence with a generally detrimental impact on utility operations; the regulatory environment has not sufficiently pushed utilities to improve performance; and, the flow of liquidity from lenders has limited the pressure on discoms to improve performance and on state governments to allow tariff increases. An important contribution of this report is its forthright recognition that poor power sector performance in India is rooted in distribution inefficiencies and limited accountability. This leads the authors to conclude with recommendations directed at these specific aspects in order to improve service delivery and other metrics of sector performance, put the sector on a financially sustainable path, and help ensure that power is no longer a bottleneck for growth.

Economic development relies critically on infrastructure development. Yet, without careful planning, the services provided by hydropower facilities and dams are at risk. Ensuring the long-term resilience of these critical infrastructure facilities requires early and consistent attention to the processes of reservoir sedimentation, which reduce the storage capacity of reservoirs and damages hydromechanical equipment, posing a threat to the sustainability of hydropower, water supply, and irrigation services. Written by two of the world's leading experts on sediment management, Extending the Life of Reservoirs: Sustainable Sediment Management for Dams and Run-of-River Hydropower provides guidance on adopting sediment management practices for hydropower and dam projects. It stresses the importance of incorporating sediment management into projects in order to safeguard the many important services of these projects, including water supply, irrigation, and renewable electricity. In particular, the book stresses the importance of integrating sediment management into the early planning phases of projects. Importantly, this book provides a new perspective on the importance of sediment management that is not found in earlier work. The authors stress the value of sediment management as a robust adaptation strategy to support sustainable hydropower and supply of water for domestic use, agriculture, and industry. The techniques focus on addressing uncertainties related to future climate changes, and how uncertainty over future hydrological patterns may be addressed. While the primary audience for the book includes policy makers, lending agencies, and general practitioners evaluating dam and hydropower proposals, the level of detail provided in the book should appeal to a wide array of stakeholder groups. The content is neither overly technical nor overly simplistic, and aims to provide practical and useful information.

The large-scale transformation of Kazakhstan's power sector following independence in 1991 was reflected by the country's move toward liberalizing the market and implementing sector regulation. As an early adopter of a liberalized multimarket model consisting of bilateral, spot, balancing, ancillary, and capacity submarkets Kazakhstan's power sector was regarded a market reform leader among countries of the former Soviet Union, having achieved a much improved supply and demand balance and service quality. However, despite the noteworthy headway, sector reforms remain predominantly as unfinished business. The excess generation capacity that was inherited from the former Soviet Union at a time when the "energy-only" market prices were too low to attract serious investors has masked the need to reflect on the long-term outlook of the country's power production. As the investment crunch unfolded in the mid-2000s, a diverging concern almost immediately arose; that is, the capacity additions of existing and planned generations may not be sufficient to keep pace with the perpetuating and significant increase in the demand for power. Instead of applying market mechanisms to allow prices to rise and reflect the underlying supply and demand gap, the GoK addressed the issue by implementing administrative, command-and-control measures. This study draws on the World Bank's long-standing engagement in Kazakhstan's energy sector and a number of recent technical assistance and advisory support activities. The study aims to (i) objectively identify the principal challenges faced by the Kazakhstan power sector in its ongoing transition and outlining potential policy options; and (ii) draw lessons from Kazakhstan's experience in sector reforms for the broader international audience. The study covers broader sector issues including long-term least-cost power system planning, supply and demand balancing, tariff setting, market structure, and integration of renewable energy.

Bangladesh has the world's fastest growing, off-grid solar home system (SHS) coverage. The number of SHS installations has risen phenomenally-from a five-year target of 50,000 in 2003 to 50,000 a month a decade later. By early 2014, installations totaled more than 3 million. Even so, this figure represents just 10 percent of the country's off-grid households, suggesting ample room for continued program expansion. Surge in Solar-Powered Homes: Experience in Off-Grid Rural Bangladesh assesses the country's remarkable growth in SHS, its support schemes, and welfare impacts for rural households. Drawing on both large-scale household survey and institutional data, the book's authors examine the effectiveness of SHS technology in improving rural people's quality of life and the program delivery and financing mechanisms, including partial subsidies, currently in place, administered by the Infrastructure Development Company Limited (IDCOL). The book's findings clearly demonstrate that the welfare benefits of SHS adoption far outweigh the social cost of the subsidy. The benefits of lighting alone-replacing polluting kerosene lamps with solar-powered electric lighting-result in significant cost savings and income gains for adopter households. The findings confirm that SHS increases children's study time, households' sense of security, and women's empowerment. Within the current market incentive structure, there is tremendous scope for broadening the rural market reach. But the high upfront cost of purchasing a SHS at current market prices is a barrier to future sales, suggesting the continued need for IDCOL's well-targeted subsidized operation. Bangladesh's highly successful SHS program leveraged a unique combination of geographical, institutional, and socioeconomic factors; however, certain elements could be easily replicated elsewhere. This book will be of interest to policy makers struggling with the task of increasing rural people's access to electricity, particularly in poor or remote areas where national grid extension is uneconomical. Development practitioners can also benefit from learning about the welfare impacts of SHS on rural households and market-based implementation models designed to meet rural households' basic electricity needs.

Africa needs power - to grow its economies and enhance the welfare of its people. Power for all is still a long distance away - two thirds of the population remains without electricity and enterprises rank electricity as a top constraint to doing business. This sub-optimal situation coexists while vast energy resources remain untapped. One solution to harness these resources could be to tap into the concept of anchor load. Mining industry lends itself to the concept of anchor load as it needs power in large quantity and reliable quality to run its processes. Underpinned by a comprehensive database of mining projects between 2000 and 2020, this report explores the potential and challenges of using mining demand for power as anchor load for national power system development and expansion of electrification. This report finds that mining demand can indeed be a game-changer - an opportunity where policymakers and international community can make a difference in tapping the enormous mineral wealth of Africa for the benefit of so many people. The utilities would benefit from having mining companies as creditworthy consumers that facilitate generation and transmission investments producing economies of scale needed for large infrastructure projects, benefiting all consumers in the system. The mines would benefit from grid supply - typically priced much lower than self-supply - which allows them to focus on their core business, greatly enhancing their competitiveness. The country would benefit from more exports and tax revenues from mines, more job opportunities in local firms selling goods and services to the mines, and a higher GDP. The report estimates that mining demand for power can triple since 2000 going upto 23 GW in 2030. While South Africa will continue to be the dominant presence in mining landscape, its importance will reduce and other countries, primarily in Southern African region, will emerge as important contributers of mining demand for power. Simulations in countries with minimal power-mining interface suggests that bringing this demand explicitly into the power planning process can ensure more investments in both grid and off-grid power systems and potentially superior service delivery outcomes for mines as well as communities. These opportunities can also be attractive investment destinations for private sector. However, there are also risks and institutional roadblocks in power-mining integration - addressing many of them and employing risk mitigation mechanism are within the control of policymakers.