Renewable EnergyThis evaluation devotes special attention to energy because it is by far the largestpart <strong>of</strong> the mitigation-relevant WBG portfolio, is the focus <strong>of</strong> most existing mitigationorientedprojects and funds, and will play the dominant role in long-term mitigationefforts. As an introduction to both chapters on energy, this section begins by reviewingthe outcomes <strong>of</strong> evaluated renewable energy and energy efficiency projects and thencomprehensively describes the recent pattern <strong>of</strong> low-carbon energy investments.<strong>The</strong> chapter goes on to discuss the impact <strong>of</strong> interventions to overcome barriersto on-grid renewable energy investment. It then discusses the experience withhydropower and with solar photovoltaics, the on-grid and <strong>of</strong>f-grid renewable energytechnologies, respectively, with the longest evaluable record at the WBG.<strong>Low</strong>-<strong>Carbon</strong> Energy Projects and <strong>The</strong>irPerformanceAs a backdrop it is useful to consider the International EnergyAgency’s projections <strong>of</strong> how future power needs willbe met over the coming two decades, in two scenarios:reference and ambitious mitigation (450 parts per million;table 2.1). While some energy efficiency is includedin the reference scenario, additional efficiency is the mainway to satisfy demand while reducing emissions. In bothscenarios, increases in hydropower far outpace growth inother types <strong>of</strong> renewable energy outside the Organisationfor Economic Co-operation and <strong>Development</strong> (OECD).Performance <strong>of</strong> closed <strong>World</strong> <strong>Bank</strong> projectsInvestments in low-carbon energy have increased considerablyover the past five years, so most are still ongoing andunevaluated. 1 Of <strong>World</strong> <strong>Bank</strong> renewable energy and energyefficiency projects 2 initiated between 1990 and 2007, 91 hadclosed and been evaluated by 2009. Table 2.2 shows the outcome<strong>of</strong> these projects as rated by IEG.Two-thirds <strong>of</strong> evaluated renewable energyand energy efficiency projects since1990 had outcome ratings <strong>of</strong> moderatelysatisfactory or better.Table 2.1 International Energy Agency Projections <strong>of</strong> Power Production, 2007–30Increase in electricity generation 2007–30: baseline versus 450 ppm CO2 scenarios (terawatt hours per year)2007–30 increase under baseline 2007–30 increase under 450 ppmPower source OECD+ Rest <strong>of</strong> world OECD+ Rest <strong>of</strong> worldHydro 164 1,437 384 2,196Wind 918 443 1,425 1,180Solar 215 182 376 554Other renewable energy 330 414 536 957Fossil and nuclear power 790 9,644 –1,175 3,751Total electricity generation 2,417 12,120 1,546 8,638Incremental energy efficiency 871 3,482Source: OECD/IEA 2009.Note: Energy efficiency includes price-induced demand reduction. OECD+ = Organisation for EconomicCo-operation and <strong>Development</strong> + non-OECD European Union members; ppm = parts per million.12 | Climate Change and the <strong>World</strong> <strong>Bank</strong> Group
Table 2.2Evaluated <strong>World</strong> <strong>Bank</strong> Renewable Energy and Energy Efficiency Projects by Rating, ProjectsInitiated 1990–2007Rating Energy efficiency New renewable energy Large hydro (>10 MW)Highly satisfactory 2 1 2Satisfactory 21 14 3Moderately satisfactory 10 4 2Marginally satisfactory 0 1 1Marginally unsatisfactory 1 0 0Moderately unsatisfactory 7 2 3Unsatisfactory 5 8 2Highly unsatisfactory 1 1 0Total number 47 31 13Percent moderately satisfactory or better 70 65 62Source: IEG based on ICR reviews.Note: MW = megawatts.Two-thirds <strong>of</strong> these projects were rated moderately satisfactoryor better, versus 72 percent <strong>of</strong> all energy projects.Energy efficiency projects fared slightly better thanrenewable energy projects. Just over half <strong>of</strong> such projectsin low-income countries 3 were marginally satisfactory orbetter, compared to 70 percent in higher-income countries.China had 13 projects, the largest number <strong>of</strong> any country,and all were rated marginally satisfactory or better. Aboutone-third <strong>of</strong> this portfolio was in energy efficiency projectsin transition countries, with a 64 percent success rate.Performance <strong>of</strong> evaluated IFC investment projectsDuring the period <strong>of</strong> fiscal 1990–2008, IFC made commitmentsto 102 investment projects in support <strong>of</strong> renewableenergy or energy efficiency, <strong>of</strong> which 81 were committedduring fiscal 2005–08. Because IFC projects are evaluatedon a sample basis after five years <strong>of</strong> operation, onlyeight projects have been evaluated, all committed betweenfiscal 1992 and 1999. Five received satisfactory ratings.Twenty-six ongoing projects, committed during fiscal1992–2008, have internal monitoring data available. 4 Ofthese ongoing projects, 22 were reported as progressingsuccessfully.<strong>The</strong> 2003–08 portfolio <strong>of</strong> WBG investment projectsTo assess the portfolio <strong>of</strong> recently initiated (2003–08) projects,IEG reviewed and validated a database <strong>of</strong> low- carbonproject components assembled by the <strong>Bank</strong>’s energyanchor (appendix G). In some cases, IEG revised the classificationor funding amount <strong>of</strong> a component designatedas “low carbon.”<strong>The</strong> WBG has three arms with different products. Two <strong>of</strong>those arms (the <strong>World</strong> <strong>Bank</strong> and IFC) can use both traditionalfinance and new, environmentally oriented finance:GEF grants and carbon payments.Table 2.3 breaks down commitments by technology and bywhether financed traditionally or together with environmentalfinance. Off-grid investments are about 11 percent<strong>of</strong> this $8 billion low-carbon portfolio and roughly one-fifth<strong>of</strong> all rural energy access commitments. Grid-connectedrenewable energy accounts for $3.3 billion, compared with$2.9 billion for energy efficiency. Projects that use financialor other intermediaries account for about 20 percent <strong>of</strong> thisportfolio.Projects with exclusively traditional financing (International<strong>Bank</strong> for Reconstruction and <strong>Development</strong> [IBRD],International <strong>Development</strong> Association [IDA], and IFC)—that is, without even small amounts <strong>of</strong> GEF or carbonc<strong>of</strong>inancing—comprise 70 percent <strong>of</strong> the 2003–08 portfolioand more than three-quarters <strong>of</strong> the grid-connectedrenewable energy portion. Nontraditional finance is mostimportant in financial intermediation for energy efficiency,reflecting a perception that risk aversion is deterring pr<strong>of</strong>itableefficiency loans.Renewable Energy | 13
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Consequently, the efficiency with w
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technologies could accelerate diffu
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A second issue, inherent to any adv
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goal of promoting wind turbine impr
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ConclusionsThe WBG’s efforts to p
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Table 5.1Carbon Funds at the World
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demonstration initiative. The Commu
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Impacts on technology transferThe 2
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Chapter 6Photo by Martin Wright/Ash
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Figure 6.1800Economic and Carbon Re
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Specifically, the WBG could:• Pla
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Table 6.1Summary of Sectoral Findin
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Table 6.1Sector Intervention Direct
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Appendix ARenewable Energy Tables a
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Table A.4Grid-Based Biomass/Biogass
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Table A.5 (continued)Negative examp
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Figure A.4A. Hydro/biomass capacity
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Appendix bWorld Bank Experience wit
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Table C.2Completed Low-Carbon Energ
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TAble C.4Reviewed energy efficiency
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the new capacity. Transmission syst
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Table E.2Climate obligationsCoal Pl
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Table F.2GHG objectiveModeNumber of
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IEG eliminated a few cases of doubl
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Table H.1Project andlocationBioener
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Appendix ICarbon and Economic Retur
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Appendix JRecent WBG Developments i
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y providing value to standing fores
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never had an explicit corporate str
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overnight. The Bank can provide ass
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Chapter 51. From the chief economis
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Hartshorn, G., P. Ferraro, and B. S
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______. 2007. World Development Ind
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IEG PublicationsAnalyzing the Effec