Regulatory and policy options to encourage development of ...

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SUSTAINABLE ENERGY REGULATION AND POLICYMAKING TRAINING MANUALpage 9.122The AREED initiative has begun operations in Botswana, Ghana, Senegal and Zambia. Itis working in-country with a number of local partners, including ENDA in Senegal, KITE inGhana, CEEEZ in Lusaka and the Mali Folkecenter.Increased Access to Energy Services Project (IAES)The Government, through the Ministry of Energy and Water Development (MEWD), recognizesthe need for increasing rural and peri-urban access to electricity and informationcommunication technology (ICT) as a strategy to reduce poverty in these areas. As part ofthe implementation strategy, the government embarked on the Increased Access to EnergyServices Project (IAES) financed by World Bank, Global Environmental facility, otherdonors, and the Prototype Carbon Fund.IAES project objectives and design strategyThe objective of the project is to provide for investment and technical assistance/capa -city building activities to enable the scaling-up of access to electricity and ICT services inrural and peri-urban areas to maximize development impact: (a) income generation by SMEsthrough productive uses (farm and non-farm), and (b) improved quality of life emphasizingthe effectiveness of social services (such as health, education) and administrative service.The underlying approach of the IAES project is to expand access via public-private partner -ships in a commercially oriented manner, i.e. with focus on cost recovery. It is recognizedthat there is a need for “smart” subsidies that address the up-front capital cost investmentrequirements and the initial transaction costs to encourage entrepreneurial activitywhile maintaining efficiency of operations and promoting output. The level and terms ofthe capital subsidy may differ according to project characteristics—including underlyingprospects for economic growth and investment risks. GEF provided financial support willbe available for developing local hydro and other renewable energy generation for sale tothe grid and to independent grids.The scale-up strategy for designing delivery mechanisms and targeting the limitedresources (credit and grants) is driven by the consideration of maximizing the developmentimpact on growth and poverty within the prevailing sectoral context and taking intoaccount emerging changes that can be characterized as a “break from the past” inGovernment policies for the sector.This means (see schematic below) geographically targeted introduction of electricity andICT services at established centers of economic and/or social activities for the benefit oflarge numbers of people drawn to those centers from the respective catchment areas.Such concentrations of activity and centers of day-to-day life for most rural people aremissions, farm blocks, trading and administrative centers (including postal centers) andperi-urban townships. As appropriate, they would also include community centers andzonal resource centers.
MODULE 9: RENEWABLE ENERGY: REGULATORY AND POLICY OPTIONSpage 9.123MissionsTrading andadministrativecentresCommercialfarmsPeri-urbantownshipsHigh-impact users Productive use enterprises(including agriculture) Health facilities Secondary and vocationaltraining Water pumping Administrative facilities Households with affordabilityZESCOGrid extensionIsolated gridsSolar PVPublic-PrivatePartnership(PPP)Finally, another key aspect of project design is consistent with the Government’s emergingpolicy thrusts and initiatives that aim to engineer a “break from the past”, by openingup key infrastructure sectors of the economy to new entrants while at the same timestrengthening the existing parastatal players. In keeping with this, the IAES project aimsto target a third of the IDA credit for rural electrification investments and the bulk of GEFgrant resources for enabling rural electrification and renewable energy investments viapublic-private partnerships (PPP). Specifically, the project would develop and strengthentwo parallel and complementary service delivery modalities and sector players: ZESCO andnew entrants that are non-ZESCO sponsors. The latter potentially include sponsors of subprojectsand investments such as mission groups, other private sponsors, and creditworthyNGOs as well as community-based organizations with bankable business plans.A key preparation activity is to prepare and offer on a competitive basis, the opportunityto undertake pre-defined rural and peri-urban electrification schemes, or “subprojects”,designated as Priority Rural Electrification Projects (PREPs).
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