The boTTom line Promoting Productive Uses of electricity

The boTTom line

Rural electrification programs can be more effective in stimulating economic growth, social development, and sustainable utility operations when they promote productive uses of electricity, as shown by a decade of experience in Peru. To obtain the desired benefits, rural electrification programs need to encourage and support installation and reliable operation of electrical equipment that makes production more efficient and profitable.

Janina Franco is a senior energy specialist and task team leader in the World Bank’s Energy and Extractives Global Practice.

V. Susan Bogach is a senior energy consultant in the same practice.

Inés Pérez Arroyo is an energy consultant in the same practice.

Maite Lasa is a consultant in the Trade and Competitiveness Global Practice.

Promoting Productive Uses of electricity in Rural electrification Programs: experience from PeruWhy is this issue important?

Rural electrification programs can often multiply their effect by promoting productive uses of grid-based electricity beyond basic household uses

Most countries place a high priority on electrification, recognizing the many benefits it can bring. These benefits include improved lighting; higher educational attainments of children; improved productivity in businesses and agriculture; improved health through reduced use of kerosene lamps; more access to entertainment and information through radio, television and computers; and increased social activity and safety through public lighting (IEG 2008). Today, electrification is often combined with investments in other areas, such as roads, water supply, education, training, technical assistance, and access to credit.

This brief focuses on the important benefits that can result from the use of grid-based electricity for productive uses, over and above basic household uses of electricity.1 It considers how the adoption of electrical equipment can increase the productivity of micro-, small, and medium-sized businesses, including those based in the home. It also shows how promotion of productive uses can increase the financial viability of investments in electricity generation and distribution, especially in rural areas.

“Any use of electricity that generates income for the user is a productive use of electricity.” That definition comes from NRECA International, Ltd. (no date). The German development agency, GIZ,

1 Off-grid electricity from mini-grids and stand-alone systems is not considered here be-cause of limited power. Biomass co-generation is also not considered.

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uses a similar definition: “Productive uses of electricity are those that increase income or productivity (that is, they add value…)” (EUEI PDF and GIZ 2011). The range of production processes is wide, from artisanal activities to large-scale commercial and industrial process-ing of agricultural products (box 1).

Supported by

Box 1. Examples of productive uses of electricity

Agriculture

• Pumps(groundwater,surfacewater)

• Modernirrigation(sprinkler,drip)

• Processingcentersforcoffee,cereals,rootcrops,fruit

• Grainandricemills

• Cropdrying

Animal husbandry

• Centersforprocessingandstoringdairyproductsandmeat

• Heatedshelters,feedmixingandprocessing

Metalworking and carpentry

• Solderingequipment,saws,lathes,andsanders

Tourism, bakery, restaurants, crafts

• Lights,fans,ovens,mixers,cookstoves

• Sewingmachines

Source: Finucane, Bogach, and Garcia (2012).

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2 P R o m o T i n g P R o d u c T i v E u s E s o f E l E c T R i c i T y i n R u R a l E l E c T R i f i c aT i o n P R o g R a m s : E x P E R i E n c E f R o m P E R u

Productive uses of

electricity are those

that increase income or

productivity—that is, they

add value.

The simplest productive use of electricity is the extension of

working hours of restaurants, shops, clinics, schools, and artisanal

businesses thanks to electric lights. Other common uses include the

provision of cooling and refrigeration, heat, and motive power for

agriculture, small industry, or commerce.

In Peru, which is the focus of this brief, common examples

include electric motors to grind grains and to process coffee, as

well as electric pumps to irrigate the land and improve growing

conditions and yields. In Indonesia, a survey of businesses showed

that most productive units were family owned and operated, had

less than 20 employees, were based at home or nearby, and used

electricity mainly for lighting and motive power (Fishbein 2003).

Applying electrical equipment to production increases produc-

tivity and income by (a) extending product life through electrical

equipment for drying, refrigeration, freezing, and packaging; (b)

raising output, standardizing product quality and cutting costs; (c)

replacing less-efficient equipment (e.g., diesel-powered motors); (d)

expanding access to information about markets and technologies;

and (e) creating jobs. These gains translate into higher incomes and

help catalyze economic growth in a community, thus contributing to

both increased household well-being and shared prosperity (figure 1).

Figure 1. main pathways from productive uses of electricity to income generation

Source:GIZ,BMZ,ESMAP,AEI(2013).

Use of electricity

Communication Motive power LightingRefrigeration

Reduction ofinformation costs

Mechanization/automation

Product preservation

Consumer drawnExtension

operating hoursTime and money

savings

Higher pricesIncreased unit quality

Cost reduction

Uniform productionand higher quality

Higher productivity

Higher profitability

Higher wages Higher owner incomeEmployment (+)/(-)

Cost reduction


Productive uses of energy can assist women, in particular, to earn income and improve their quality of life, through the use of lighting to extend opportunities for cottage industries in the home and electrical equipment in activities such as baking and ceramics. Electrical equipment helps women save time and labor and creates opportunities for education, socializing, and communication. Benefits for women such as increased cash incomes, community develop-ment, enhanced lighting for education, improved health services, lower indoor air pollution, and reduced labor burdens have been cited if not always documented. Increased income and fulfillment of social needs in turn allows greater use of modern energy, with further development benefits (White 2002; Cabraal, Barnes, and Agarwaal 2005).

Increased use of electricity for productive purposes can also improve the efficiency and financial sustainability of rural electric systems and utility operations. When demand for electricity for productive uses is added to demand for household applications, not only do revenues increase but also the load curve changes, enabling electricity systems to operate at more efficient levels. The demand profiles in electrified communities with a low level of productive activities often follow a classic pattern of morning and evening peaks of demand, mainly for lighting, with low demand during the day. Daytime use of electricity in businesses can maximize the use of the power infrastructure at times when it is otherwise underused. Figure 2 provides a dramatic example from an Indian village.

When demand for

electricity for productive

uses is added to demand

for household applications,

not only do electricity

system revenues increase

but also the load curve

changes, enabling more

efficient operation.

Morning Afternoon Evening Night

5 am

–6 a

m

6 am

–7 a

m

7 am

–8 a

m

8 am

–9 a

m

9 am

–10

am

10 a

m–1

1 am

11 a

m–1

2 pm

12 p

m–1

pm

1 pm

–2 p

m

2 pm

–3 p

m

3 pm

–4 p

m

4 p

m–5

pm

5 pm

–6 p

m

6 pm

–7 p

m

7 pm

–8 p

m

8 pm

–9 p

m

9 pm

–10

pm

10 p

m–1

1 pm

11 p

m–1

2 am

12 a

m–1

am

1 am

–2 a

m

2 am

–3 a

m

3 am

–4 a

m

4 am

–5 a

m

Productive user load profile

Household load profile

Average daily energy demand:

Household 11 kWh, productive use 54 kWh

Ho

url

y lo

ad (

kW)

10

9

8

7

6

5

4

3

2

1

0

Source: Rammelt (2015).

Figure 2. daily load curve in the village of naurangabad, india, with and without productive uses


Promotional efforts are

often needed to encourage

the adoption of electrical

equipment for production

and to overcome demand

constraints, supply

constraints, and policy

constraints.

Why doesn’t the adoption of electrical equipment for production occur spontaneously?

Demand, supply, and policy constraints must often be overcome before electrical equipment is integrated into production

In spite of the potential benefits identified above, international experi-ence shows that promotional efforts are often needed to encourage the adoption of electrical equipment for production (Finucane, Bogach, and Garcia 2012). A major evaluation of World Bank-assisted rural electrification projects concluded that simply providing an electricity connection did not lead to adoption of electrical equipment inbusinessesorsignificantdevelopmentimpacts(IEG2008).TheU.S.National Rural Electric Cooperative, with many years of experience worldwide, recognizes that increasing the productive uses of electric-ity is a long-standing challenge (NRECA International, Ltd. ND).

The reasons why adoption of electrical equipment requires promotion relate to (a) the nature of rural producers and the markets for their products (demand constraints); (b) the characteristics of rural electricity supply (supply constraints); and (c) tariff and regula-tory issues (public policy constraints).

Demand constraints include:• Limited market opportunities. The local market may not be

able to absorb the expected increase in production from use of electrical equipment.

• Limited access to information. Producers may lack knowledge about business opportunities or technology options (electrical equipment types, sizes, brands, local availability), or how to connect to the grid. In a survey on productive uses in Indonesia, this was the main barrier identified.

• Lack of technical and management skills. Adopting a new technology may require know-how that rural producers lack. They may not have the skills to present a business plan to financing institutions. In rural areas, qualified technicians may not be available to maintain equipment.

• High investment costs and limited financing. Producers may face high upfront costs for grid connection and new equipment. Credit to finance those costs may be scarce in some rural areas.

Supplyconstraintsinclude:• Unreliable electricity service. An unreliable grid poses threats

to equipment from voltage fluctuations and interruptions and can prevent realizing a return on investment in electrical equipment. Forexample,icecreamfactoriesinsemi-ruralareasinSriLankaand Bangladesh grew quickly but continued using small-scale generators due to the unreliability of the grid (IEG 2008).

• Physical limitations of rural grids. Most rural distribution systems use single-phase circuits (two-wire configurations with aneutralconductororsingle-wireearthreturn).Suchlinescanaccommodate small-scale applications such as sewing machines andrefrigerators.However,themotorsneededformanyproduc-tive uses can create problems on such systems. Motors have high starting currents (often six to ten times their running currents) that can cause a voltage depression on start-up. As a result, many utilities limit the size of the motors that can be run on rural circuits.

• Minimal service by rural utilities. Utilities serving rural areas often provide minimal service, focusing on connections, billing, and collection. Many have no staff to help rural producers select electrical equipment or design connections and facilities.

• Low distribution company revenues and viability in rural areas. Utilities often incur high costs but earn low revenues in rural areas owing to a combination of low levels of demand, the lack of cost-reflective tariffs and the absence of compensating subsidies. The result is poor quality and minimal service.

Public policy constraints include:• Tariff issues. Rural tariffs may not fully cover costs, discour-

aging utilities from promoting demand. Tariff structures may discourage productive uses of electricity. In Peru, for example, users with demand of less than 100 kWh per month are entitled to a graduated cross-subsidy. If they increase consumption, they may lose all or part of that subsidy.

• Electrification targets and system designs that focus on access and ignore motorized uses. When programs focus only on numbers of connections, system designs often use least-cost single-phase or single-wire earth return distribution lines. As noted above, such lines often limit the use of motors that are essential for common applications such as grinding, milling, pumping, and sawing.


Target areas and

communities were

selected based on

criteria that included

a surplus of electricity

supply, 24-hour electricity

service, adequate physical

infrastructure, availability

of complementary support

services and programs,

and, most importantly,

the presence of small

enterprises with potential

to increase electricity

consumption.

• Lack of evidence linking productive uses of electricity to socioeconomic development. Data on the results of promot-ing productive uses of electrical power has focused on increases in demand for electricity and producers’ output. There is a lack of data and evidence-based conclusions on the broader effects—on income generation, health, and education—of expanding the productive use of electricity.

• Electrification seen as an end in itself. Rural electrification must be seen not as an end, but as a means of promoting rural development and the well-being of rural populations.

• Lack of coordination with other development efforts. Too often, electrification is not coordinated with efforts in other sectors, such as health, education, agricultural extension, or small-industry development programs.

Can those constraints be overcome?

Peru has achieved good results by promoting productive uses of electricity

Over the last decade, Peru has made a concerted effort to increase rural electricity coverage, introducing the Rural Electrification Law of 2006 and establishing, in 2007, the General Directorate of Rural Electrification (DGER) within the Ministry of Energy and Mines. From 2007 to 2015, electricity coverage increased from 29 to 78 percent in rural areas and from 74 to 93 percent nationally (Ministry of Energy and Mines 2016).

The DGER’s National Plan for Rural Electrification 2016–25 recognizes that the promotion of productive uses of power fosters economic and social development. The plan aims to exploit that potential through capacity building and education of rural producers in coordination with other government agencies in value chains such as coffee, cocoa and grain processing, bakeries, livestock and dairy production.

Peru’s rural electrification efforts have included two World Bank-assisted Rural Electrification Projects implemented by the DGER (known as FONER I and II) that have led the way in establishing the importance of productive uses of electricity. FONER I was carried out between 2006 and 2013; FONER II closed in August 2017. Together, the two projects provided electricity access to more than 597,100 rural residents, increasing national rural electrification coverage by

8.2 percent. Through the FONER projects, distribution companies received capital cost subsidies to establish 124,300 new connections through grid extension, while an additional 18,900 households, small businesses, and public buildings obtained regulated electricity service from individual household solar photovoltaic systems owned and maintained by distribution companies. The two projects also helped more than 25,000 family businesses adopt electrical equipment that increased their productivity. The Bank’s Energy SectorManagementAssistanceProgram(ESMAP)providedtechnicalassistance to support the projects. DGER’s productive uses activities were designed using previous experience in Indonesia (box 2).

Promotion of productive uses under Peru’s FONER I and II projects was carried out through a series of activities in specific geographical areas selected for the presence of productive activities and the willingness of the distribution company to participate (Finucane, Bogach, and Garcia 2012). For each activity, the DGER first signed a memorandum of understanding with the distribution company. It then signed a contract with a competitively selected local NGO to assess the market for productive uses of electricity and carry out promotional activities to increase them, in collaboration with the distribution company and other local development efforts. Key elements of the approach are described below.

Selection of the communities. Target areas and communities were selected based on criteria that included a surplus of electricity supply, 24-hour electricity service, adequate physical infrastructure, availability of complementary support services and programs, and,

Box 2. Promotion of productive uses of electricity in indonesia

Two World Bank–assisted rural electrification projects in Indonesia (RE I & II) pioneered the application of business development services for productive uses of electricity. Implemented by the national utility, PLN, the projects reached out to small businesses through nongovernmental organizations that addressed lack of information, tariff barriers, and service quality. Impact studies showed that 66,000 enterprises adopted electrical equipment under the RE 1 project, and more than 20,000 jobs were created. “Outsourcing” to NGOs was an effective way to reach individual producers, although the program did not take hold as hoped within PLN.Source: Fishbein (2003).


most importantly, the presence of small enterprises with potential to increase electricity consumption.

Memorandum of understanding with distribution compa-nies. Distribution companies were selected based on their interest in promoting productive uses. The DGER signed an agreement with each company, establishing its role and responsibilities.

Time-limited contracts with NGOs. The project team in the DGER competitively procured the services of an NGO for promotional activitiesineacharea.TheNGOSwerekeyactorsandchangemakers, given their links with the communities, field experience, and

motivation for social development. They tailored their approaches to the communities and their own skill sets, using innovative methods like live theater performances to attract attention. The contracts had two phases. Phase 1 consisted of about three months for surveys, assessments, coordination with other programs and sectors, and identification of opportunities. The program then negotiated with the NGO performance targets for Phase 2 based on the analysis of Phase 1. Phase 2 consisted of about nine months of capacity building of individual producers and cooperatives and implementation of business plans.

The activities targeted

were chiefly small-scale

operations in agriculture

(e.g., coffee, cacao, grains,

cereals, fruits, livestock,

dairy); and off-farm

activities (e.g., artisanal

mining, textiles, carpentry,

metal working, bakeries,

ceramics, transportation,

and distribution).

Throughout the country, a

total of 600 interventions

increased electricity

demand by 22.3 GWh per

year, exceeding the target

of 19.5 GWh.

Figure 4. Power-assisted brick making


Business development services. The NGOs helped small enterprises address constraints using business development tech-niques that included: (a) deployment of strong field-based teams; (b) analysis of market opportunities for electricity based on productive chains; (c) assistance in preparing business plans and obtaining credit from financial institutions; (d) targeting of low-risk agricul-ture-based businesses; (e) integration with other projects, sectors, and government programs; and (f) coordination with distribution companies on how to provide adequate connections.

Collaboration with other actors and programs. The success of the small NGO teams depended on active collaboration with other actors such as other government programs and agencies, municipal-ities and local associations, and finance organizations that provided

credit for equipment and electricity infrastructure.2 An institutional platform was created for the project.

Activities targeted. While the activities targeted varied by region, they were chiefly small-scale operations in agriculture (e.g., coffee, cacao, grains, cereals, fruits, livestock, dairy); and off-farm activities (e.g., artisanal mining, textiles, carpentry, metal working, bakeries, ceramics, transportation, and distribution) (figures 3 and 4). In Cuzco, the main productive activities included grain milling, coffee processing, agricultural processing, and milk products. In Junin, the focus was on coffee production and grain milling, working mainly with cooperatives. In Lima provinces, the focus was on pumping for the production of prickly pear, ceramics, and dairy products.

Leadership within the project team. Essential to the success of the entire effort was an effective productive-uses coordinator on the FONER team who maintained close contact among the parties and supervised the activities of the NGOs and distribution companies.

What does the work in Peru show us?

Promotion of productive uses of electricity in rural areas worked and benefited producers

Under FONER I and II, the DGER carried out seventeen contracts with ten NGOs working together with eleven distribution companies in eighteen Peruvian provinces, benefiting more than 25,000 family productive units. The productive uses program was active in all three major geographical regions in Peru—the dry, flat, coastal desert plains, the highland areas of the Andes, and the Amazonian rainforest. The NGOs developed a business plan for each value chain identified. Throughout the country, a total of 600 interventions under both projects increased electricity demand by 22.3 GWh per year, exceeding the projects’ combined targets of 19.5 GWh.

An impact evaluation of the productive uses component of the FONER I Project estimated that its promotional activities increased the average electricity consumption of the participating producers from 56 to 240 kWh per month, an increase of more than 300

2 PartnersincludeINAI(InstitutoNacionaldeInnovaciónAgraria),SENATI(ServicioNacionaldeAprendizajeyTrabajoIndustrial),ALIADOS(ProgramadeApoyoalasAlianzasProductivasdelaSierra),AGRORURAL(ProgramadeDesarrolloProductivoAgrarioRural),CIED(CentrodeInvestigación y Educación), Ministry of Agriculture, and local universities and technical institutes.

About a third of the

producers that benefited

from the productive uses

promotion were women.

This came about naturally,

as women entrepreneurs

are active in bakeries,

dairy production, ceramics,

and textiles and are

represented in most

other types of productive

activities in Peru.

Figure 3. coffee processing with the aid of electricity


percent. Participating producers reported a number of benefits: more productive hours during the day (56 percent); higher levels of production (39 percent); better product quality (40 percent); and higher market prices (39 percent). A comparison between producers that benefited from the productive uses interventions and those that did not estimated that the producers under the project had higher netgainsofaboutS/.130permonth,aproject-relatedincreaseof18percent (Prisma, Macroconsult, and Instituto Cuanto 2016).

About a third of the producers that benefited from the productive uses promotion were women. This came about naturally, as women entrepreneurs are active in bakeries, dairy production, ceramics, and textiles and are represented in most other types of productive activities in Peru. For example, FONER I assisted an association of women in adapting its electrical installations to the requirements of idle productive machinery to increase production of bakery products, especially cookies, made from kiwicha (amaranth seed), a high-nu-trition traditional crop native to Peru, and to more effectively brand, label, and market the goods.

The incorporation of productive uses into the National Rural Electrification Plan and the availability of funds for capacity building from Peru’s Rural Electrification Fund provide a foundation for the DGER and the electricity distribution companies to continue promo-tion of productive uses after FONER II closes.

DGER held an international forum on Peru’s productive uses promotion experience in Lima in November 2016. The 200 attendees included participants from Argentina, Bolivia, Colombia, Germany (GIZ),Haiti,andtheUnitedStates(NRECA).Conclusionsfromtheforum are reflected in this brief.

Could Peru’s experience be replicated?

Yes, where supportive conditions exist

FONER’s success could be replicated where similar conditions exist. These conditions include: (a) broad-based economic growth that reaches into rural areas; (b) strong NGOs that are active in rural development efforts; (c) adequate infrastructure and availability of financing for rural productive investments; and, (d) willingness of distribution companies to make productive connections. Lessons from Peru are summarized below.

Peru’s success could be

replicated where similar

conditions exist. These

conditions include: (a)

broad-based economic

growth that reaches into

rural areas; (b) strong NGOs

that are active in rural

development efforts; (c)

adequate infrastructure

and availability of financing

for rural productive

investments; and, (d)

willingness of distribution

companies to make

productive connections.

Rural electrification authorities must lead the effort to promote productive uses of electrical power by integrating productive uses into efforts to extend the rural grid. They must organize business development services to actual and potential producers; ensure that distribution companies address the demands and constraints of productive users; modify rural distribution systems to foster productive uses; and adapt regulatory practices to cover rural marketing costs and the costs of infrastructure.

Distribution companies must support the promotion of productive uses by providing quality service in rural areas, responding to requests for connections for productive uses, and sharing in the cost of those connections, based on regulations.

Change agents are needed. Rural electrification programs need to contract NGOs or similar agents of change to interact with individual producers as distribution companies cannot be expected to lead the work of promoting productive uses with individual rural producers. The structure of the NGO contracts was one key to success in Peru, especially their results-based and phased approach. Also key was the flexibility given to NGOs to apply their particular strengths.

While opportunities may be easy to identify, constraints need to be addressed. In the FONER projects, finding opportuni-ties for adoption of electrical equipment by existing producers was relatively easy. Peer-replication worked well, once first adopters set a strong example. Financing was accessible after solid business plans were prepared. The degree to which markets would absorb increased production was not known ahead of time, but this poten-tial constraint proved less serious than expected.

The potential of monitoring and reporting needs to be fully exploited. Monitoring beneficiaries for 1–2 years after adoption of electrical equipment would increase knowledge of impacts. To assess broader impacts, it would be useful to introduce additional indicators such as increased production and income and employment generation.


Change agents are needed.

Distribution companies

cannot be expected to

lead the work of promoting

productive uses with

individual rural producers.

The structure of the NGO

contracts was one key to

success in Peru.

What can we conclude?

Promoting productive uses of electricity can enhance producers’ results while simultaneously improving the viability of electricity distribution

The promotion of productive uses of electricity can signifi-cantly improve productivity in rural areas. Experiences in World Bank-assisted projects in Peru and Indonesia have shown that such promotion can have a significant effect on: (a) adoption of electrical equipment in rural areas (66,000 enterprises adopted equipment through Indonesia’s RE I and 25,000 through Peru’s FONER I and II); (b) electricity use (an estimated 300 percent increase annually per participating producer in Peru’s FONER I); (c) income and employment in rural enterprises (an increase in monthly income of 18 percent by participating producers through RE I in Peru and an additional 20,000 jobs through RE I in Indonesia).

Rural electrification programs need to actively promote productive uses of electricity. Between 2000 and 2014, however, only 16 of 278 World Bank electricity-sector projects (about 6 percent) included indicators in their results frameworks for tracking productive uses and increased income associated with electricity access (IEG 2015). Fewer projects included active promotion of productive uses.

Standards and regulations for rural electrification need to be adapted to support productive uses. Designs of rural electrification systems must support productive uses of electricity (such as three-phase electric motors), not just lights and a few appliances. The costs of providing adequate levels of service in rural areas need to be reflected in rural tariffs. Rural tariffs also need to encourage productive uses, including lower tariffs for larger-scale demand or off-peak electricity consumption.

NGOs have proven to be successful agents of change in programs to promote productive uses of electricity. They can work directly with producers and coordinate among stakeholders, including other government programs, as a natural extension of their development activities. Other change agents could be small business development centers, microfinance institutions, programs that provide credit to small and medium-sized enterprises, small business accelerators, and chambers of commerce.

Collaboration with other actors and availability of com-plementary infrastructure increase probability of success and impact. Promotion of productive uses depends on collabora-tion with actors outside the electricity sector such as agricultural and rural development programs, municipalities, and local associations andfinanceorganizations.Successismorelikelyinplacesthathaveachieved a certain level of development and where complementary infrastructure (transport, water supply, and ICT services) and services (e.g., availability of credit) already exist (Fishbein 2003). Credit and concessional loans programs allowed local entrepreneurs to explore possibilitiesforelectrificationinIndiaandSriLanka;whileknowl-edge and training on how to use new-found electrical and motive powerincreasedprofitabilityforhouseholdsundertheNepalHomeEmployment and Lighting Package (IEG 2008).

Assessment of the broad impacts of promoting produc-tive uses needs to be strengthened. More evidence is needed that links adoption of electrical equipment to increased economic activity and well-being. Monitoring of electrification programs has focused on sector outputs (connections, kWh sales) rather than outcomes (income creation, employment). Impact evaluations and other research could investigate and measure the channels through which electricity increases economic activity, raises incomes, and improves livelihoods at levels beyond the firm and the household level(GIZ,BMZ,ESMAP,andAEI2013).Researchcouldtestwhetheragiven intervention created desirable effects such as provision of new higher-value goods, more-efficient processing of local raw materials, and transfer of production from urban to rural areas—or whether it simply reallocated incomes among different producers (EIUI PDF and GIZ 2011).

The demonstrated benefits to rural producers and elec-trical utilities already justify the inclusion of strong efforts to promote productive uses in electrification programs. If rural people are to be fully integrated into modern economies, rural electricity systems must facilitate a broad range of productive uses beyond providing power for lighting and basic household appliances.


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Finucane,J.,S.V.Bogach,andL.E.Garcia.2012.Promoting Productive Uses of Electricity in Rural Areas of Peru: Experience and Lessons Learned.EnergySectorManagementAssistanceProgram, World Bank, Washington, DC.

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———.2013. Productive Use of Energy—PRODUSE: Measuring Impacts of Electrification on Small and Micro-Enterprises in Sub-Saharan Africa. Eschborn, Germany.

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———. 2008. The Welfare Impact of Rural Electrification: a Reassessment of the Costs and Benefits. Washington, DC: World Bank Group.

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Prisma,Macroconsult,andInstitutoCuanto.2016.“Serviciodeconsultoría para la evaluación de resultados e impacto del Componente 3: Promoción de usos productivos de la electrici-dad,” Lima, Peru: Ministry of Energy and Mines.

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White, R. D. 2002. GEF-FAO Workshop on Productive Uses of Renewable Energy: Experience, Strategies, and Project Development,June18–20,WorkshopSynthesis.Rome.Italy.

This note is based on the experience of two World Bank–assisted rural electrification projects in Peru (FONER I and FONER II), with support from the Energy Sector Management Assistance Program. The authors are grateful to the Ministry of Energy and Mines in Peru, especially the Directorate General of Rural Electrification (DGER) and the project teams of FONER I and II, for their efforts to promote the productive uses of electricity and the high quality of the documentation provided on the program, including impact evaluations, that enabled the preparation of this note. The authors thank the peer reviewers of the note, Karen Bazex (senior energy specialist in the World Bank’s Africa region) and Koffi Ekouevi (senior economist in the World Bank’s Latin America and Caribbean region).

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live Wires 2014/30. “Tracking Progress Toward Providing sustainable Energy for all in latin america and the caribbean,” by Elisa Portale and Joeri de Wit. (Related briefs are available for other regions of the world.)

live Wire 2014/35. “Planning for Electricity access,” by debabrata chattopadhyay, Rahul Kitchlu, and Rhonda l. Jordan.

live Wire 2017/76. “increasing the Potential of concessions to Expand Rural Electrification in sub-saharan africa,” by Richard Hosier, morgan Bazilian, and Tatia lemondzhava.

live Wire 2017/79. “Rural Electrification using shield Wire schemes,” by franklin K. gbedey, david vilar ferrenbach, and Tatia lemondzhava.

http://hdl.handle.net/10986/17370

























The Live Wire series of online knowledge notes is an initiative of the World Bank Group’s Energy and Extractives Global Practice, reflecting the emphasis on knowledge management and solu-tions-oriented knowledge that is emerging from the ongoing change process within the Bank Group.

Each Live Wire delivers, in 3–6 attractive, highly readable pages, knowledge that is immediately relevant to front-line practitioners.

Live Wires take a variety of forms:• Topic briefs offer technical knowledge on key issues in energy and extractives

• Case studies highlight lessons from experiences in implementation

• Global trends provide analytical overviews of key energy and extractives data

• Bank views portray the Bank Group’s activities in the energy and extractives sectors

• Private eyes present a private sector perspective on topical issues in the field

Each Live Wire will be peer-reviewed by seasoned practitioners in the Bank. Once a year, the Energy and Extractives Global Practice takes stock of all notes that appeared, reviewing their quality and identifying priority areas to be covered in the following year’s pipeline.

Please visit our live Wire web page for updates: http://www.worldbank.org/energy/livewire

Live Wires are designed for easy reading on the screen and for downloading and self-printing in color or black and white.

for World Bank employees: Professional printing can also be undertaken on a customized basis for specific events or occasions by contacting gsdPm customer service center at (202) 458-7479, or sending a written request to [email protected].

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1 T r a c k i n g P r o g r e s s T o w a r d P r o v i d i n g s u s T a i n a b l e e n e r g y f o r a l l i n e a s T a s i a a n d T h e Pa c i f i c

THE BOTTOM LINE

where does the region stand

on the quest for sustainable

energy for all? in 2010, eaP

had an electrification rate of

95 percent, and 52 percent

of the population had access

to nonsolid fuel for cooking.

consumption of renewable

energy decreased overall

between 1990 and 2010, though

modern forms grew rapidly.

energy intensity levels are high

but declining rapidly. overall

trends are positive, but bold

policy measures will be required

to sustain progress.

2014/28

Elisa Portale is an

energy economist in

the Energy Sector

Management Assistance

Program (ESMAP) of the

World Bank’s Energy and Extractives

Global Practice.

Joeri de Wit is an

energy economist in

the Bank’s Energy and

Extractives Global

Practice.

A K N O W L E D G E N O T E S E R I E S F O R T H E E N E R G Y & E X T R A C T I V E S G L O B A L P R A C T I C E

Tracking Progress Toward Providing Sustainable Energy

for All in East Asia and the Pacific

Why is this important?

Tracking regional trends is critical to monitoring

the progress of the Sustainable Energy for All

(SE4ALL) initiative

In declaring 2012 the “International Year of Sustainable Energy for

All,” the UN General Assembly established three objectives to be

accomplished by 2030: to ensure universal access to modern energy

services,1 to double the 2010 share of renewable energy in the global

energy mix, and to double the global rate of improvement in energy

efficiency relative to the period 1990–2010 (SE4ALL 2012).

The SE4ALL objectives are global, with individual countries setting

their own national targets in a way that is consistent with the overall

spirit of the initiative. Because countries differ greatly in their ability

to pursue the three objectives, some will make more rapid progress

in one area while others will excel elsewhere, depending on their

respective starting points and comparative advantages as well as on

the resources and support that they are able to marshal.

To sustain momentum for the achievement of the SE4ALL

objectives, a means of charting global progress to 2030 is needed.

The World Bank and the International Energy Agency led a consor-

tium of 15 international agencies to establish the SE4ALL Global

Tracking Framework (GTF), which provides a system for regular

global reporting, based on rigorous—yet practical, given available

1 The universal access goal will be achieved when every person on the planet has access

to modern energy services provided through electricity, clean cooking fuels, clean heating fuels,

and energy for productive use and community services. The term “modern cooking solutions”

refers to solutions that involve electricity or gaseous fuels (including liquefied petroleum gas),

or solid/liquid fuels paired with stoves exhibiting overall emissions rates at or near those of

liquefied petroleum gas (www.sustainableenergyforall.org).

databases—technical measures. This note is based on that frame-

work (World Bank 2014). SE4ALL will publish an updated version of

the GTF in 2015.

The primary indicators and data sources that the GTF uses to

track progress toward the three SE4ALL goals are summarized below.

• Energy access. Access to modern energy services is measured

by the percentage of the population with an electricity

connection and the percentage of the population with access

to nonsolid fuels.2 These data are collected using household

surveys and reported in the World Bank’s Global Electrification

Database and the World Health Organization’s Household Energy

Database.

• Renewable energy. The share of renewable energy in the

energy mix is measured by the percentage of total final energy

consumption that is derived from renewable energy resources.

Data used to calculate this indicator are obtained from energy

balances published by the International Energy Agency and the

United Nations.

• Energy efficiency. The rate of improvement of energy efficiency

is approximated by the compound annual growth rate (CAGR)

of energy intensity, where energy intensity is the ratio of total

primary energy consumption to gross domestic product (GDP)

measured in purchasing power parity (PPP) terms. Data used to

calculate energy intensity are obtained from energy balances

published by the International Energy Agency and the United

Nations.

2 Solid fuels are defined to include both traditional biomass (wood, charcoal, agricultural

and forest residues, dung, and so on), processed biomass (such as pellets and briquettes), and

other solid fuels (such as coal and lignite).

1 T r a c k i n g P r o g r e s s To wa r d P r o v i d i n g s u s Ta i n a b l e e n e r g y f o r a l l i n e a s T e r n e u r o P e a n d c e n T r a l a s i a

THE BOTTOM LINE



energy for all? The region

has near-universal access to

electricity, and 93 percent of

the population has access


despite relatively abundant

hydropower, the share

of renewables in energy

consumption has remained

relatively low. very high energy

intensity levels have come

down rapidly. The big questions

are how renewables will evolve

when energy demand picks up

again and whether recent rates

of decline in energy intensity

will continue.

2014/29

Elisa Portale is an

energy economist in

the Energy Sector




Global Practice.

Joeri de Wit is an

energy economist in


Extractives Global

Practice.



for All in Eastern Europe and Central Asia




(SE4ALL) initiative


All,” the UN General Assembly established three global objectives

to be accomplished by 2030: to ensure universal access to modern

energy services,1 to double the 2010 share of renewable energy in

the global energy mix, and to double the global rate of improvement

in energy efficiency relative to the period 1990–2010 (SE4ALL 2012).






















the GTF in 2015.



Energy access. Access to modern energy services is measured

by the percentage of the population with an electricity connection

and the percentage of the population with access to nonsolid fuels.2

These data are collected using household surveys and reported

in the World Bank’s Global Electrification Database and the World

Health Organization’s Household Energy Database.

Renewable energy. The share of renewable energy in the energy

mix is measured by the percentage of total final energy consumption

that is derived from renewable energy resources. Data used to

calculate this indicator are obtained from energy balances published

by the International Energy Agency and the United Nations.

Energy efficiency. The rate of improvement of energy efficiency is

approximated by the compound annual growth rate (CAGR) of energy

intensity, where energy intensity is the ratio of total primary energy

consumption to gross domestic product (GDP) measured in purchas-

ing power parity (PPP) terms. Data used to calculate energy intensity

are obtained from energy balances published by the International

Energy Agency and the United Nations.

This note uses data from the GTF to provide a regional and

country perspective on the three pillars of SE4ALL for Eastern




“Live Wire is designed

for practitioners inside

and outside the Bank.

It is a resource to

share with clients and

counterparts.”

1 U n d e r s t a n d i n g C O 2 e m i s s i O n s f r O m t h e g l O b a l e n e r g y s e C t O r

Understanding CO2 Emissions from the Global Energy Sector

Why is this issue important?

Mitigating climate change requires knowledge of the

sources of CO2 emissions

Identifying opportunities to cut emissions of greenhouse gases

requires a clear understanding of the main sources of those emis-

sions. Carbon dioxide (CO2) accounts for more than 80 percent of

total greenhouse gas emissions globally,1 primarily from the burning

of fossil fuels (IFCC 2007). The energy sector—defined to include

fuels consumed for electricity and heat generation—contributed 41

percent of global CO2 emissions in 2010 (figure 1). Energy-related

CO2 emissions at the point of combustion make up the bulk of such

emissions and are generated by the burning of fossil fuels, industrial

waste, and nonrenewable municipal waste to generate electricity

and heat. Black carbon and methane venting and leakage emissions

are not included in the analysis presented in this note.

Where do emissions come from?

Emissions are concentrated in a handful of countries

and come primarily from burning coal

The geographical pattern of energy-related CO2 emissions closely

mirrors the distribution of energy consumption (figure 2). In 2010,

almost half of all such emissions were associated with the two

largest global energy consumers, and more than three-quarters

were associated with the top six emitting countries. Of the remaining

energy-related CO2 emissions, about 8 percent were contributed

by other high-income countries, another 15 percent by other

1 United Nations Framework Convention on Climate Change, Greenhouse Gas Inventory

Data—Comparisons By Gas (database). http://unfccc.int/ghg_data/items/3800.php

middle-income countries, and only 0.5 percent by all low-income

countries put together.

Coal is, by far, the largest source of energy-related CO2 emissions

globally, accounting for more than 70 percent of the total (figure 3).

This reflects both the widespread use of coal to generate electrical

power, as well as the exceptionally high CO2 intensity of coal-fired

power (figure 4). Per unit of energy produced, coal emits significantly

more CO2 emissions than oil and more than twice as much as natural

gas.

2014/5

THE BOTTOM LINE

the energy sector contributes

about 40 percent of global

emissions of CO2. three-

quarters of those emissions

come from six major

economies. although coal-fired

plants account for just

40 percent of world energy

production, they were

responsible for more than

70 percent of energy-sector

emissions in 2010. despite

improvements in some

countries, the global CO2

emission factor for energy

generation has hardly changed

over the last 20 years.

Vivien Foster is sector

manager for the Sus-

tainable Energy Depart-

ment at the World Bank

([email protected]).

Daron Bedrosyan

works for London

Economics in Toronto.

Previously, he was an

energy analyst with the

World Bank’s Energy Practice.

A K N O W L E D G E N O T E S E R I E S F O R T H E E N E R G Y P R A C T I C E

Figure 1. CO2 emissions

by sector

Figure 2. energy-related CO2

emissions by country

Energy41%

Roadtransport

16%

Othertransport

6%

Industry20%

Residential6%

Othersectors

10%China30%

USA19%

EU11%

India7%

Russia7%

Japan 4%

Other HICs8%

Other MICs15%

LICs0.5%

Notes: Energy-related CO2 emissions are CO2 emissions from the energy sector at the point

of combustion. Other Transport includes international marine and aviation bunkers, domestic

aviation and navigation, rail and pipeline transport; Other Sectors include commercial/public

services, agriculture/forestry, fishing, energy industries other than electricity and heat genera-

tion, and other emissions not specified elsewhere; Energy = fuels consumed for electricity and

heat generation, as defined in the opening paragraph. HIC, MIC, and LIC refer to high-, middle-,

and low-income countries.

Source: IEA 2012a.

1 T r a c k i n g P r o g r e s s To wa r d P r o v i d i n g s u s Ta i n a b l e e n e r g y f o r a l l i n e a s T e r n e u r o P e a n d c e n T r a l a s i a

THE BOTTOM LINE



energy for all? The region

has near-universal access to

electricity, and 93 percent of

the population has access


despite relatively abundant

hydropower, the share

of renewables in energy

consumption has remained

relatively low. very high energy

intensity levels have come

down rapidly. The big questions

are how renewables will evolve

when energy demand picks up

again and whether recent rates

of decline in energy intensity

will continue.

2014/29

Elisa Portale is an

energy economist in

the Energy Sector




Global Practice.

Joeri de Wit is an

energy economist in


Extractives Global

Practice.



for All in Eastern Europe and Central Asia




(SE4ALL) initiative


All,” the UN General Assembly established three global objectives

to be accomplished by 2030: to ensure universal access to modern

energy services,1 to double the 2010 share of renewable energy in

the global energy mix, and to double the global rate of improvement

in energy efficiency relative to the period 1990–2010 (SE4ALL 2012).






















the GTF in 2015.



Energy access. Access to modern energy services is measured

by the percentage of the population with an electricity connection

and the percentage of the population with access to nonsolid fuels.2

These data are collected using household surveys and reported

in the World Bank’s Global Electrification Database and the World

Health Organization’s Household Energy Database.

Renewable energy. The share of renewable energy in the energy

mix is measured by the percentage of total final energy consumption

that is derived from renewable energy resources. Data used to

calculate this indicator are obtained from energy balances published

by the International Energy Agency and the United Nations.

Energy efficiency. The rate of improvement of energy efficiency is

approximated by the compound annual growth rate (CAGR) of energy

intensity, where energy intensity is the ratio of total primary energy

consumption to gross domestic product (GDP) measured in purchas-

ing power parity (PPP) terms. Data used to calculate energy intensity

are obtained from energy balances published by the International

Energy Agency and the United Nations.

This note uses data from the GTF to provide a regional and

country perspective on the three pillars of SE4ALL for Eastern




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