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5th Annual Donor Consultation Meeting: Financing Partnership Facilities and Cooperation Funds 12-14 March 2012, ADB

Headquarters, Manila

ADBs Energy for All: Rising to the Challenge of Energy Poverty in Asia and Pacific Introduction/Background This note was prepared for the participants at the 5th Annual Donor Consultation Meeting and reviews the activities and future plans of ADBs Energy for All program, which embodies ADBs pillar of policy to maximize access to energy for all, especially the rural poor. Launched in 2008, ADBs Energy for All Initiative develops and mainstreams approaches for scaling up access to affordable, modern and clean energy among the regions poor. This includes household access to electricity from renewable energy technologies such as micro-hydro, solar, biomass, and small wind power, as well as access to clean cooking fuel, such as LPG or biogas from livestock waste. Access to energy as a critical development issue has gained much more traction recently due to the recognition that the achievement of the MDGs hinges on increased access to modern energy. Energy for All is ADBs response to its commitment to maximize access to energy for all, especially the rural poor who are unserved by national energy infrastructure. Since 2008, Energy for All has expanded ADB investment in access to energy to a cumulative total of $2.8 billion from 2008 to 2011, which is expected to bring new connections to modern energy to nearly 10 million households. This investment support will continue, even as Energy for All broadens its activities. In view of the global call to action to achieve universal energy access by 2030, Energy for All is looking to expand its efforts with development partners at a larger scale, and is already working with the UNs International Year of Sustainable Energy for All initiative, Norways Energy+ program and the Global Alliance for Clean Cookstoves etc. Energy for All has strong bilateral partnerships, and is currently supported by the Government of Japan and the Government of Austria. It was founded through support from the Government of the Netherlands and has also drawn support from the Governments of Denmark and Switzerland. It is currently in discussion with new partners including the Governments of Australia, Germany, Norway and Sweden.

Ways Forward: 4 Priorities 1. Continuing efforts to increase ADBs investment in energy access Energy for All will increase interaction with ADBs operations departments especially the private sector to create sustainable business models, and look to new projects in nonenergy sectors such as agriculture, finance, urban development where energy access solutions are also needed Assist in identifying, developing, implementing and monitoring access to energy projects Work with governments and consult with the private sector to establish relevant and effective policies and regulations that promote energy access 2. Facilitate access to energy projects development High barriers to entry have prevented businesses from providing services to the energy poor, despite tremendous market potential among the base of the pyramid. However,

the few successful business models are profitable, but still constrained, and unable to expand and broaden their benefits. ADB aims to mobilizing private sector capital using scare public sector funding to scaleup energy access in developing Asia and the Pacific through organized project development through the following activities: o Programmatic support for the development of bankable projects: including support incubation programs to allow replication of successful business models through knowledge-sharing and hands on training. o Programmatic support for mobilizing financing of the projects: encouraging investors by lowering perceived risk through capacity building, relevant information for investors and investment aggregation. o Establishing synergies between multinational corporations and energy access enterprises: multinationals serve the bottom of the pyramid through innovative design. Synergies allow smaller social enterprises to tap into the assets and distribution network of the multinationals. Among the long term goals for this facility would be to institutionalize energy access on a national scale through a critical mass of enterprises and projects, influencing how policy and regulations are crafted to benefit access to energy entrepreneurship.

3. Mobilizing and channeling resources (e.g. Results or Output-Based Financing for Access to Energy) One of the biggest challenges facing poor households is their limited ability to pay high upfront connection fees. A results-based financing approach, in which subsidy payments are linked to predefined outputs such as installation of a working household connection offer a potential solution. ADB is proposing a new financing window in its existing CEFPF which will be a dedicated facility for channeling donor contributions to energy access projects. The initial contribution from donors will also be used leverage funding from other bilateral organizations as well as from ADB itself. These funds will be managed under the already existing framework for applications and approvals of the CEFPF but overseen by experts working with Energy for All. 4. Work with partners to institutionalize rapid response mechanism for energy access in Asia and Pacific ADB established the Energy for All Partnership in 2009 and leads it to provide a platform for key stakeholders in the region to address energy poverty. Currently, the Partnership comprises 200 members from public and private sectors with the objective of providing modern energy access to 100 million people by 2015. This regional level approach would be best addressed by an organization that exhibits the characteristics of: o Able to quickly respond to opportunities that arise to address critical energy poverty issues. o Provide full service for energy access: build capacity, develop projects, and implement and deploy them in developing countries. o Work closely with donors to direct financing and support to priority areas, while serving as a bridge between them and national governments, multilaterals, NGOs and other stakeholders. There is precedent for major ADB initiatives being spun off to address development issues at a larger scale. Notable examples include the Clean Air Initiative and the Cities Development Initiative for Asia.
For more information, contact Jiwan Acharya