2% energy finance spent on off grid
THE WORLD’S MULTILATERAL development banks (MDBs) spent two percent of their energy finance from 2014 to 2017 toward off-grid and mini-grid energy solutions, which are regarded as the most impactful ways to close the electricity access gap, a leading research firm, Oil Change International has said.
THE WORLD’S MULTILATERAL development banks (MDBs) spent two percent of their energy finance from 2014 to 2017 toward off-grid and mini-grid energy solutions, which are regarded as the most impactful ways to close the electricity access gap, a leading research firm, Oil Change International has said.
The multilateral development banks, which include the African Development Bank (AfDB), the Asian Development Bank (ADB), the Inter-American Develop- ment Bank (IDB), and the World Bank Group (WBG), have all pledged support to achieving the incredible feat of delivering universal energy access by 2030, but there seems to be a yawning gap between the said ambition and the difficult reality of delivering energy access to all.
According to the International Energy Agency, to achieve universal electricity access by 2030, off-grid and mini-grid solutions would need to account for more than two-thirds of additional electricity supply investment, and a $36 billion total annual investment would be needed to achieve universal electricity access by 2030– the vast majority of which would be in the form of renewable energy technologies.
However, MDBs have spent $378 million per year on off-grid and distributed energy for access as financuncomfortable,” ing for off-grid and mini-grid energy solutions declined significantly from 2016 to 2017, the report said.
“We need multilateral development banks to finance those energy solutions that can reach the poorest fastest. They shouldn’t continue to pour money into fossil fuel projects, few of which have a clear link to energy access. Off-grid and mini-grid solutions should be a central part of these institutions’ plans, especially in regions with the lowest rates of energy access, including Africa,” said Thuli Makama, Africa senior advisor at Oil Change International.
The report also revealed that the MDBs do not apply a harmonized framework to track finance for energy access or its outcomes, despite energy access being a key principle of each institution assessed, with the exception of AfDB.
This is despite some MDBs saying that they are doing more to advance energy access goals than the numbers actually suggest. However, the report found out that these institutions do not track finance for energy access or progress toward energy access goals in a consistent, harmonised way, making it difficult to assess claims about their energy access finance.
“Of the institutions assessed, the AfDB is the only one that has set quantitative targets for energy access, and the only one that tracks new connections from offgrid energy and household access to clean cooking,” the report revealed.
The support for clean cooking fared even worse: only 1.6 percent of MDB energy finance supported clean cooking solutions, the newly released report said.
“Good intentions won’t deliver energy access and clean cooking solutions to the billions of people who suffer without them today,” said Alex Doukas, programme director, Oil Change International.
“If multilateral development banks keep directing only 2 percent of their energy finance toward the most-needed energy access solutions, there is little hope of meeting the global goal of universal energy access by 2030.”
Yet, the analysis found some bright spots: nearly two-thirds went to countries with the largest number of people without access despite the limited MDB finance; with nearly half of this finance targeting subSaharan Africa, the region with the greatest share of the global population without energy access.
The report then recommended that the MDBs direct at least half of their energy finance to projects focused on advancing energy access for the poor and/ or rural areas; support distributed renewable energy and clean cooking solutions so that these solutions receive at least one-third of total MDB energy finance; and set clear targets for energy access and collectively track energy access finance and its outcomes.
Good intentions won’t deliver energy access and clean cooking solutions to the billions of people who suffer without them today