The Challenge of Low-Carbon Development - World Bank Internet ...

Figure 5.1CommercialdemoSpectrum of Technology SupportScale-upCSP Fuel cells Photovoltaic BoilersSource: IEG.Note: CSP = concentrated solar power.Diffusioneffectiveness; and diffusion and scale-up, to reduce localcosts toward the global minimum and to help stimulatesupply and demand.WBG support for technology transfercan help reduce local costs towards globallevels.To bring concrete experience to these sometimes abstractdebates, we review here some of the largest and most prominentexamples of WBG support for energy technology promotionand transfer, across the spectrum from upstreamto downstream. These are roughly depicted along an upstream-downstreamspectrum in figure 5.1.However, this evaluation uses the term “technology” to referany kind of know-how or innovation that can advancedevelopment and GHG mitigation. For instance, ESCOs,chain-of-custody tracing of beef, and BRTSs all qualify astechnologies.The concentrating solar power experienceIn 1997, the GEF approved the first of four World Bankexecutedprojects designed to accelerate the diffusion ofconcentrated solar power (CSP). CSP, which uses focusedsunlight to drive a steam turbine or heat engine, is attractiveto the developing world. It can take advantage ofhigh levels of insolation in arid and semi-arid areas suchas northern Africa, the Middle East, western India, southernAfrica, and northeastern Brazil. It is steadier than windpower, providing power throughout the day and even intothe night, using molten salt to store heat. And it is basedon relatively low-tech components—mirrors and pipes—potentially within the manufacturing capabilities of manydeveloping countries.An effort to accelerate concentrated solarpower technology bogged down.Yet this effort to accelerate technology bogged down. After13 years, 2 of the projects are finally under construction,1 is out for bid, and the last was cancelled. What are thelessons of that 13-year experience for WBG technologypolicy?In 1996, the GEF’s Scientific and Technical AdvisoryPanel identified CSP as a promising target for technologypromotion under the GEF’s new Operational Program 7(OP7). At the time, although a subsidized CSP plant hadbeen operating in the United States since the 1980s, nonew plant had been constructed anywhere since 1991; thetechnology’s high cost was unsupportable, especially aselectricity deregulation progressed. Support for CSP wasin line with the goal of OP7, that “through learning andeconomies of scale, the levelized energy costs (of renewabletechnologies) will decline to commercially competitivelevels” (GEF 2003).In April 1997, the GEF approved a grant of $47 million toIndia for a CSP project and subsequently approved requestsfor projects in Egypt, Mexico, and Morocco. The projectswent to the Bank for development and execution. The Indiaproject was dropped; the others proceeded slowly.A fundamental source of project delay was a mismatchbetween project goals and design. The projects’ intent wasto drive the technology down the learning curve. However,the total planned capacity of 120 MW was only afraction of the amount needed to yield real cost reductions.Moreover, a learning goal would have been moreefficiently served by clustering the plants in the samecountry or region. This would have allowed manufacturersand developers to more easily assemble the necessaryskills and build manufacturing for components in largequantity locally—activities that can help drive costs downmore quickly.Project delays were in part due to mismatchbetween project goals and design.From the host countries’ viewpoint, these plants were anunproven and potentially unreliable source of power. Toaddress host countries’ concerns about power reliability,the plants were designed as hybrids, incorporating muchlarger gas-fired generators. This greatly complicated projectdesign and procurement. In India, it proved economicallyinfeasible to build a gas pipeline to the project, which wasdropped.Bidding the hybrids was problematic. An integrated approachto project contracting carried the risk that therewould be little competition or that contractors would be unwillingto guarantee performance of the novel system. Thealternative approach—separate contracts for gas, solar, andfor systems integration—is complex to manage and couldlead to disputes in the case of poor performance. Both approacheshave now been employed. A retrospective on thisexperience, when complete, could provide useful guidancefor future WBG work on integrated systems—for instance,in potential work on carbon capture and storage.66 | Climate Change and the World Bank Group