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Introduction
from Sustainable Electricity for All: Recommendations to the Global Sustainable Electricity Partnership
by KTD Creative
Broad Goals Under SE4ALL and Work to Date
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Building on the UN Secretary General’s Year of Sustainable Energy for All, GSEP has taken as its 2012-2013 theme “Universal Access to Electricity”, with the goal of defining how our organization, its members, and the utility industry broadly might best contribute to meeting this critical global challenge.
The development of standardized PPAs has been highlighted by stakeholders in the electricity access community as a potentially gamechanging tool
launched in 2012, the uN Secretary-General’s Sustainable Energy For All (SE4All) initiative mobilizes action from all sectors of society in support of meeting three objectives by 2030: providing universal access to modern energy services; doubling the global rate of improvement in energy efficiency; and doubling the share of renewable energy in the global energy mix. The initiative focuses on catalyzing major new investments to speed the transformation of the world’s energy systems, recognizing that energy is essential for economic growth and increased social equity. Over the past six months, a series of discussions have been held and in-depth research has been conducted to identify the most suitable role for GSEP in helping to expand electricity access. These discussions have included: • A survey of GSEP members on past projects and ideas for building on the strengths and special features of the organization • Interviews with a group of Education for Sustainable
Energy Development (ESED) scholars on their experiences with electricity access projects in their home countries, and the challenges and role for GSEP • A Design lab co-hosted at the Clinton Global
Initiative with the uN on strategies and approaches to providing access to energy worldwide • A workshop co-hosted at The World Economic
Forum on cross-sector partnerships and business models for expanding energy access • A roundtable discussion in Washington, DC with senior business leaders and investors on ways for GSEP to leverage private sector capital and expertise Objective and Structure of Report
based on these discussions and the research into the work being done by other organizations in support of SE4All, it is clear that there is an opportunity for GSEP to leverage its unique attributes to make a potentially groundbreaking contribution to the efforts to expand electricity access. This report provides an overview of that opportunity. It is organized into three sections: the first offers a review of GSEP’s contributions to date – past activities, the recent work on public private partnerships (PPPs), and the Berlin Commitments – and examines how that work ties into this year’s effort to help expand electricity access. The second section looks at the electricity access landscape, and lays out the opportunity for GSEP to make a unique contribution to help fill critical gaps. The third section lays out a path forward, exploring two specific potential roles for GSEP: • Global Sustainable Electricity Access Fund (GSEAF) – Electricity access projects in developing and emerging economies face the critical challenge of a lack of access to lower-cost capital, which investors are reluctant to provide because of the higher risks of these projects. GSEAF would address this issue by leveraging GSEP’s leadership to combine three components that are critical to the success of electricity access projects – capital, technology, and know-how. A fund management firm – to be determined by GSEP – would oversee the fund and GSEP and its members could play an integral role in the fund by offering technical advisory services to the projects as well as potentially investing directly in the fund. • Develop a Range of Standardized Power Purchase Agreements (PPAs) for Given Regulatory Environments, Recognizing There
Are Project-Specifics – The development of standardized
PPAs has been highlighted by stakeholders in the electricity access community as a potentially game-changing tool that would help reduce transaction costs and uncertainty associated with the project development process, and unlock access to lower-cost capital – and it is an area that GSEP is uniquely qualified to address. With a membership of the world’s leading electricity companies, GSEP has unrivaled technical expertise and experience with drafting, negotiating, and implementing PPAs, and could play a number of roles in helping to expedite the development of standardized contracts, including convening working groups among member companies to help facilitate template design. These roles offer GSEP the clearest opportunity to utilize the unique skill set of the organization and its member companies to fill critical gaps and make a significant impact to the SE4All initiative while helping to define GSEP’s actions over the next several years. Solar lamps have the potential to transform off- grid communities in developing countries.
Duke CEO James Rogers and Kandeh Yumkella, directorgeneral of the United Nations Industrial Development Organization (UNIDO), showcase a solar lamp at the Clinton Global Initiative Annual Meeting in September 2012.
1. Overview:
GSEP’s Commitment to Electricity Access and Recent Progress
Since its inception in 1992, GSEP has been an important player in the effort to address the challenge of electricity access in developing countries. Through its renewable energy projects and capacity building activities for off-grid communities, its scholarship program for students from developing countries addressing sustainable energy development, and its most recent efforts to promote PPPs and support UN’s SE4ALL initiative, GSEP has shown a commitment to leveraging the unique skills of its members to help solve the issue of electricity access. GSEP’s efforts this year represent a continuation of that commitment, and offer an opportunity to build on recent progress to meet the twin goals of a low-carbon future and universal access to energy.
Past GSEP Projects and Activities
GSEP’s projects, activities and network of scholars provide the organization with unique insights into the hurdles to electricity access projects as well as viable models of sustainable energy development: • Renewable Energy Projects - GSEP has worked to implement innovative renewable energy projects in developing countries across four continents, including a number of projects that provided electricity to off-grid communities. GSEP’s role from the planning phase – negotiating agreements and determining legal and financial structures – to the design and deployment phase – technical assessments and energy systems installation – to the operations and maintenance phase – training and technical capacity – provides the organization with extensive knowledge of the operational and technical challenges of these projects as well as the requirements for their success. • Capacity Building Activities - GSEP has also conducted workshops, seminars and technical training sessions to promote sustainable energy development. These activities have taken place in developing countries across five continents, and have covered issues such as financing and project assessment strategies, institutional and management strengthening, and regulatory issues in electricity markets. A number have focused exclusively on the challenges associated with off-grid electricity and rural electrification. These exercises enable GSEP members to apply their extensive knowledge to assist project developers and key stakeholders in expanding electricity access. • ESED Scholar Network - GSEP’s ESED scholars are active in the effort to advance the field of sustainable energy development in developing countries, and the scholar network is a powerful tool to share information and knowledge on the challenges associated with electricity access projects and opportunities for GSEP. One recent scholar, Niraj
Subedi, used the work from his Masters thesis to propose a project that provides electricity to two remote off-grid schools in Nepal – a project that was completed in May 2013 by GSEP1. These scholars provide important on-the ground insights and lessons that GSEP can incorporate into its programs and activities. Recent GSEP Reports on Clean Technology Deployment
In 2011, GSEP, in partnership with uN-Energy, released the report Strengthening Public-Private Partnerships to Accelerate Global Electricity Technology Deployment that outlined nine recommendations, based on a survey of partnership promoters, practitioners and beneficiaries, for successful public-private partnerships in the deployment of low- and zero-emitting electricity technologies. In 2012, the second edition of the report was released, which offered the latest international research on what elements are necessary to strengthen public-private partnerships and ensure their success. With both reports, more than 100 major public and private actors, as well as development banks and agencies, were surveyed over the course of two years, giving insights into the role these partnerships have in advancing the global deployment of low-carbon electricity and helping increase access to cleaner electricity. This year’s work builds on the findings from these reports - specifically the importance of private sector capital and expertise, as well as power purchase agreements (PPAs), in promoting electricity technology deployment and infrastructure expansion: • Importance of Private Sector Capital and Expertise - Survey respondents identified access to private sector capital, improved project design and implementation, and managerial experience among the most vital roles that the private sector can play in contributing to “the strongest partnerships for electricity technology deployment”
2012
% of respondents that agree/strongly agree instrument is important Access to Private Sector Capital* Managerial Experience† Improved Project Design and Implementation‡
0 10 20 30 40 50 60 70 80 90 100%
Source: 2012 Report on Strengthening Public-Private Partnerships to Accelerate Global Electricity Technology Deployment, GSEP/UN-Energy * private sector respondents †development bank and agency respondents‡public sector respondents
2011
% of respondents that agree instrument is extremely effective/very effective Access to Private Sector Capital Managerial Experience Improved Project Design and Implementation
0 10 20 30 40 50 60 70 80 90 100%
Source: 2011 Report on Strengthening Public-Private Partnerships to Accelerate Global Electricity Technology Deployment, GSEP/UN-Energy
• The Critical Role of PPAs - Survey respondents identified PPAs as one of the most effective instruments for promoting low-carbon technologies, infrastructure expansion and the deployment of efficiency technologies.
2012
% of respondents that agree power purchase agreements are extremely effective/very effective Development Banks and Agencies Private Sector Public Sector
0 10 20 30 40 50 60 70 80 90 100%
Source: 2012 Report on Strengthening Public-Private Partnerships to Accelerate Global Electricity Technology Deployment, GSEP/UN-Energy
2011
% of respondents that agree instrument is extremely effective/very effective (3 highest choices) Power Purchase Agreement Local/National Investment Return on Investment
0 10 20 30 40 50 60 70 80 90 100%
Source: 2011 Report on Strengthening Public-Private Partnerships to Accelerate Global Electricity Technology Deployment, GSEP/UN-Energy
Niraj Subedi
2008-2009 recipient of the ESED Scholarship
Niraj Subedi, a 2008-2009 recipient of the ESED Scholarship, utilized the work from his masters thesis on Nepalese energy policy to propose a sustainable energy project to GSEP that would bring power and lighting to an off-grid village development committee (VDC) in western Nepal. Initiated in December 2012, The Energy for Education project, led by Duke Energy, consists of a solar PV system at two local schools and the distribution of small solar home systems (SSHS) to residents in the surrounding Matela VDC. The solar PV systems provide lighting and access to modern education services, while the SSHS provide lighting at home, enabling students to complete homework at night. The project was inaugurated on April 16, 2013, and the Nepalese government’s Alternative Energy Promotion Center (AEPC), an invaluable partner in the effort, hopes that the project will serve as a model for using solar energy to improve the educational services in other regions of Nepal.
GSEP 2012 Summit and Berlin Commitments
This year’s work also builds on progress made on the issue of energy access at the 2012 berlin Summit and the three commitments GSEP made in support of the UN’s SE4ALL initiative, referred to as the Berlin Commitments: to provide 50,000 solar lanterns, expand current capacity-building workshops, and fund the development of Electrification Roadmaps in southern Africa.
