Annual Status Report #14

Transcription

1 THE WORLD BANK ASIA SUSTAINABLE AND ALTERNATIVE ENERGY PROGRAM (ASTAE) Annual Status Report #14 July 1, June 30, 2006 (FY 2006) ASTAE February 2007 Washington, D.C.

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3 THE WORLD BANK ASIA SUSTAINABLE AND ALTERNATIVE ENERGY PROGRAM (ASTAE) Annual Status Report #14 July 1, June 30, 2006 (FY 2006) ASTAE February 2007 Washington, D.C.

4 Copyright 2007 The International Bank for Reconstruction and Development / The World Bank Group 1818 H Street, NW Washington, DC 20433, USA All rights reserved First printing: February 2007 Manufactured in the United States of America. This document is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of the Board of Executive Directors of the World Bank Group or the governments they represent.

5 Contents Acronyms and Abbreviations Units of measure Foreword Executive Summary Background Financial Year Highlights Proof of Concept Approval of Projects Supported by ASTAE Funding Mobilization Successful Transition from the to the Business Plan Reaffirmation of the Central Role of East Asia and the Pacific in Achieving the World Bank Group Bonn Commitment Implementation of Business Plan IN FY Projects Approved in FY Follow-Up Project to the First Phase of the China Renewable Energy Scale-Up Program (P096158/P087292) Lao PDR Rural Electrification Phase I of the Rural Electrification APL Program (P075531) Achievements under Projects Closed in FY China Energy Conservation (P / P037859) India Rajasthan Power Sector Restructuring (P038334) Projects Added to the Pipeline in FY Regional, Sustainable Energy Finance Pacific Project (P098423) China, Financing of Two Biomass Projects in Inner Mongolia as Part of the CRESP Project Fiji Electricity Authority Renewable Power Development (RDP) Project (P099308) Indonesia, Energy Efficiency Finance Project (P095746) Mongolia, Renewable Energy and Rural Electricity Access Project (P099321/P084766) China, Energy Efficiency Financing Project (P084874) Selected Ongoing Non-lending and Knowledge Management Activities China, Jade Electricity: Developing a Green Electricity Scheme for Shanghai Philippines, Wind Power Training Program China, Shanghai Energy Resource Center China, Wind Resource Assessment Handbook China, Building a Resource Efficient Society Conference Outreach and Promotion: ASTAE and REDP Exhibitions at Energy Week Progress against ASTAE Business Plan Targets Progress against the Business Plan Targets Target 1: Households That Received Access to Modern Energy Services Target 2: Facilitating Investment in Renewable Energy Capacity Target 3: Avoiding Additional Fossil Fuel Based Electricity Generating Capacity through Energy Savings Target 4: Avoided Greenhouse Gas Emissions Other Targets Contents ASTAE Annual Status Report #14 3

6 Overview of the Business Plan Specific ASTAE Targets for the Business Plan Indicator 1: Households with New and Improved Access to Modern Energy Services Indicator 2: Facilitate Investments and Generation in Renewable Electricity Indicator 3: Facilitate Energy Savings as a Result of Efficiency Improvements Indicator 4: Avoided Greenhouse Gas Emissions Indicator 5: Number of Countries with Projects Supported by ASTAE Utilization of ASTAE Resources in FY World Bank Resources for ASTAE-Supported Projects ASTAE Funding Status Staffing Annexes Annex 1: A Brief History of ASTAE Annex 2: Energy Lending Statistics for FY Annex 3: ASTAE-Supported Investment Projects East Asia and the Pacific Annex 4: ASTAE-Supported Investment Projects South Asia Contents Annex 5: Publications in FY Annex 6: Important ASTAE Funding Events since Boxes Box 1: Adding Energy Efficiency to the Energy Equation in China: ASTAE Bridge Support between Energy Conservation Projects I and II Box 2: Scaling Up Greenhouse Gas Mitigation in Asia: Canada International Development Agency (CIDA) TF Figures Figure 1: WBG Commitments for Renewable Energy and Energy Efficiency in FY Figure 2: Country Allocations Figure 3: Allocations by Type of Activity Tables Table 1: Changes in FY06 and Status at the End of FY Table 2: ASTAE Targets Table 3: ASTAE Indicators Table 4: Activities Supported by ASTAE in FY Table 5: Resource Utilization, World Bank and Donors, FY ASTAE Annual Status Report #14

7 Acronyms and Abbreviations AFR Africa Region ASTAE Asia Sustainable and Alternative Energy Program BMZ Federal Ministry for Economic Cooperation and Development (Germany) (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung) BNPP Bank-Netherlands Partnership Program CIDA Canadian International Development Agency CO 2 Carbon dioxide CRESP China Renewable Energy Scale-Up Program DANIDA Danish International Development Agency DfID Department for International Development (United Kingdom) DGIS Directorate-General for International Cooperation (Netherlands) DSM Demand-side management EAP East Asia and the Pacific Region ECA Europe and Central Asia Region EMC Energy management company ENPOGEN Energy, Poverty, and Gender Project ESCO Energy Services Companies ESMAP Energy Sector Management Assistance Programme FEA Fiji Electricity Authority FINESSE Financing Energy Services for Small-Scale Energy Users (a project) FY Fiscal year FY06 Fiscal year 2006 (July 1, 2005 June 30, 2006) GEF Global Environment Facility GTZ German Corporation for Technical Cooperation (Deutsche Gesellschaft für Technische Zusammenarbeit) IBRD International Bank for Reconstruction and Development IDA International Development Association IDF International Development Forum IFC International Finance Corporation Lao PDR Lao People s Democratic Republic LAC Latin America and the Caribbean Region MIGA Multilateral Investment Guarantee Agency PBL Project-based lending Acronyms and Abbreviations ASTAE Annual Status Report #14 5

8 Units of measure PDF PHRD PLN PV REAP REDP SEK SPRE TA U.K. UNDP US$ USAID USDOE USTDA WB WBG Project Development Facility (GEF) Japan Policy and Human Resources Development Fund Perushaan Listrik Negara (Indonesian State Electricity Corporation) Photovoltaic Renewable Energy Action Plan (Vietnam) Renewable Energy Development Project (China) Swedish krona Southern Provinces Rural Electrification (Lao PDR) Technical Assistance United Kingdom United Nations Development Programme U.S. dollar U.S. Agency for International Development U.S. Department of Energy U.S. Trade and Development Agency World Bank World Bank Group (IBRD, IDA, IFC, MIGA) Units of measure GW GWh kw kwh kwp MW MWh MWh el MWh th MWp t tce te TW Gigawatt (1 billion or 10 9 watts) see also MW Gigawatt-hour Kilowatt (1,000 watts) Kilowatt-hour Kilowatt-peak Megawatt (1 million or 10 6 watts) Megawatt-hour Megawatt-hour electric equivalent Megawatt-hour thermal equivalent Megawatt-peak Ton Tons of coal equivalent Tons equivalent Terawatt (1 trillion or watts); see also MW 6 ASTAE Annual Status Report #14

9 Foreword T he Asia Sustainable and Alternative Energy Program (ASTAE) was established in 1992 to mainstream alternative energy (renewable energy and energy efficiency) in the World Bank s energy sector lending operations in Asia. At its inception, ASTAE s strategic objective was to drive renewable energy and energy efficiency investments to become 10 percent of the World Bank s energy lending in Asia. This initial objective was achieved when alternative energy components and projects reached more than 12 percent of the Bank s power sector lending in Asia during FY , and renewable energy and energy efficiency became an important component of country strategies in the region. At the Bonn International Conference on Renewable Energies in June 2004, the World Bank Group (WBG) committed itself to increasing energy efficiency and renewable energy investments by 20 percent per year over five years (FY05 09). So far, during FY05 and FY06, WBG investment support for alternative energy has exceeded the Bonn commitment. The East Asia and the Pacific Region contributed to this success substantially with an investment of US$232 million in new clean energy in FY06, including US$103 million for new renewable energy, US$72 million for energy efficiency, and US$57 million for hydropower above 10 MW. The successful ramping-up of alternative energy investment projects in Asia would not have been possible without ASTAE. Furthermore, especially during recent years, ASTAE s role has been much more than just facilitating achievement of the growth in renewable energy and energy efficiency investment projects to the point where they comprise a sizable portion of the investment portfolio. ASTAE has enabled project teams to mobilize world-class expertise to contribute on difficult issues of technical design, institution building, financial engineering, regulatory policy, social development policy, sector planning, and local capacity building. Foreword ASTAE Annual Status Report #14 7

10 Foreword This has fostered the development of a series of new, innovative project approaches, far deeper institutional development than is common for most investment projects, broad awareness building on the potential for further clean energy development, and a vibrant cross-exchange of operational experience on alternative energy. This mobilization of expertise and knowledge to develop new ideas, and the subsequent required hands-on assistance to operationalize and implement them, is the key to long-term results in the new, growing business of alternative energy investment projects and is truly a special contribution of ASTAE. This report focuses on ASTAE s work during the specific period of FY06, and hence provides only a snapshot of ASTAE s overall contribution in recent years. Even so, the diversity and breadth of ASTAE s work is striking. During FY06, ASTAE was not only able to maintain and consolidate strategically important work in China and Vietnam, but it also increased activities in a broader range of countries, including Cambodia, Fiji, Indonesia, Laos, Mongolia, Papua New Guinea, Solomon Islands, and Timor-Leste. Citing only some examples from FY06, work on rural electrification and energy efficiency strategies in Indonesia sought to lay a foundation for possible future operational programs. Further along the project cycle, energy efficiency, institutional development, and renewable energy program components were developed for the Bank s new two-phase rural electrification Adjustable Program Loan in Lao PDR. ASTAE-supported experts designed the more challenging aspects of the new Mongolia Renewable Energy for Rural Access Project, which was subsequently approved by the Bank s Board in late Even further down the project cycle, ASTAE provided essential assistance for addressing thorny implementation issues in the China Renewable Energy Scale- Up Project (CRESP), which is one of the largest and most ambitious renewable energy scale-up projects ever developed by the Bank. ASTAE provided support to encourage Chinese cities to adopt particularly innovative packages of building energy efficiency investments and heating system reform, associated with the China Heat Reform and Building Energy Efficiency Project. Cross-country work also continued as work on energy, poverty, and gender (ENPOGEN) issues progressed further, and Chinese project counterparts helped project counterparts in Papua New Guinea gain access to new solar photovoltaic (PV) packages suitable for low-cost applications in rural schools. ASTAE s work in FY07 promises further new innovations and efforts to scale up results. With China s requests for knowledge, experience, and new ideas to further improve energy efficiency and more aggressively develop low-carbon energy sources, expertise through ASTAE, combined with increasing Bank and Global Environment Facility (GEF) investments, could make truly remarkable new contributions. For example, building on past success in developing a new industry of energy services companies (ESCO), the Bank is developing a new US$200 million Energy Efficiency Financing Project loan, to launch new energy efficiency lending programs in Chinese banks. In Vietnam, preparation of a new multidonor investment operation to foster private sector renewable energy development is just being launched, as is a new long-term program to develop energy efficien- 8 ASTAE Annual Status Report #14

11 cy businesses in the local market. Work in small countries is expanding, too. In Fiji, for example, the Bank, with ASTAE assistance, is supporting the Fiji Electricity Authority to make Fiji the second country in the world (after Norway) to obtain all its electricity from renewable resources on a least-cost basis. With these and other initiatives requested by clients, the importance of ASTAE s work is expected to increase. The year 2006 also signified the completion of the first business plan period for the new structure of ASTAE. The strategic recommendations from the 2002 Management Review have worked well. In measurable results, the ASTAE Business Plan provided targets for new renewable energy generation capacity and avoided energy generation capacity through energy savings, which, once implemented, would result in a reduction of CO 2 emissions of 156 million tons during a 20-year period. The important role played by ASTAE in delivering these results would not have been possible without the generous support received from ASTAE supporters. Junhui Wu Sector Manager East Asia and Pacific Energy and Transport Unit (EASTE) The World Bank Foreword ASTAE Annual Status Report #14 9

12 1Executive Summary 1 Executive Summary Background In 1992, the World Bank and its donor partners established the Asia Sustainable and Alternative Energy Program (ASTAE) to support the transition to environmentally sustainable energy use in developing countries in Asia by increasing World Bank lending for energy efficiency and renewable energy project components and projects. The ASTAE mandate was later extended to encompass energy poverty, and its objective became to scale up the use of sustainable energy options in Asia to reduce energy poverty and protect the environment. Although ASTAE support to World Bank projects can represent only a small part of the total preparation cost, its timeliness to address unforeseen problems is of great importance and in some instances vital. According to many task managers, development of some of the projects supported by ASTAE would not have been possible (such as for the Sri Lanka Energy Service Delivery Project and the China Renewable Energy Development), or they would have taken a much longer time (such as for the China Renewable Energy Scale-Up Program). A history of the ASTAE program is provided for reference in Annex 1. By the end of June 2006, ASTAE had supported the preparation and implementation of 46 World Bank and/or Global Environment Facility (GEF) projects in 17 countries in Asia and the Pacific. Through FY06, 35 of the 46 projects supported by ASTAE were approved by the World Bank Board of 10 ASTAE Annual Status Report #14

13 Executive Directors. These 35 projects will provide access to modern energy sources to about 1.55 million households and improve the electricity services of another 600,000 households, directly avoiding more than 1 GW in electricity generating capacity equivalent as a result of energy efficiency improvements (and indirectly an additional 3.5 GW equivalent). The projects will also directly install 860 MW in renewable electricity generating capacity (and indirectly an additional 4.9 GW) and directly reduce more than 200 million tons of CO 2 in greenhouse gas emissions (and indirectly an additional 1,200 million tons). 1 The total investment of the 35 projects is US$2.64 billion, of which US$989 million is provided by the IBRD and IDA and US$244 million by the GEF. This annual report concentrates on the activities that occurred during the financial year 2006, which started July 1, 2005 and ended June 30, It should be noted that a given financial year may not be representative of the full range of ASTAE-supported activities, which more often than not overlap over several years. 1Executive Summary Financial Year Highlights 1. Data here are approximations for all the ASTAE-funded projects. For example, approximately 752,500 households have been or will be connected through projects approved in the period Another 797,500 households were connected through projects approved by the World Bank Board of Executive Directors during Similarly, estimates are made for the Renewable Energy and Energy Efficiency Indicators, with the indicators for reported in detail in the current report. Proof of Concept The important highlight this year is proof of the ASTAE concept. ASTAE concluded its first three-year business plan subsequent to the Management Review in 2002, which recommended a change both in the structure and the focus of ASTAE activities. From an independent unit, ASTAE became an integral part of the East Asia and Pacific Energy Unit. At the same time, ASTAE s activities started to include a focus on access to modern energy services. This also made it possible for ASTAE to move from general qualitative targets to output-based targets. ASTAE also received funding for its Business Plan from the Government of the Netherlands, which made a commitment to provide US$7.4 million in funding for ASTAE II. Last, but not least, ASTAE was again instrumental in the East Asia and the Pacific Region s achievement of being the second largest contributor to the WBG commitment made in Bonn in 2004 to scale up investments in energy efficiency and renewable energy. Approval of Projects Supported by ASTAE In FY06 the World Bank s Board of Executive Directors approved two projects that had received ASTAE support. The total sustainable energy investment from these projects will be US$168 million, of which US$96 million derives from IBRD ASTAE Annual Status Report #14 11

14 and/or IDA commitments and US$3.7 million derives from GEF commitments. The projects supported by ASTAE constituted 23 percent of World Bank and GEF total energy lending in East Asia and the Pacific Region (see Annex 2 for further details). The expected outcomes of the two projects are summarized as follows: China Follow-Up to CRESP, Phase 1B is expected to provide for the installation of 128 MW of renewable energy and to displace 6.4 million tons of CO 2 over a 20-year period. The second project approved by the Board, Lao PDR Rural Electrification Phase I of the Rural Electrification APL Program, will provide access to new electric connections for 52,000 households, while saving 15.3 GWh of electricity through efficiency improvements and displacing million tons of CO 2 over a 20-year period. 1Executive Summary Funding Mobilization The Swedish Agency for International Development has indicated that it would start to contribute to ASTAE with SEK 15 million for a period of more than three years. The Government of the Netherlands approved ASTAE s Business Plan and provided a commitment of US$7.4 million for FY The first disbursement of US$2,598,540 was received. Successful Transition from the to the Business Plan Building on the achievements and even exceeding most targets of the ASTAE Business Plan, the forthcoming ASTAE Business Plan was drafted, discussed, and approved by its principal donors. This new business plan sets forth updated targets and improves on ASTAE s performance based on the lessons learned during the past three-year plan. In the ASTAE Business Plan, the first four targets provide the core indicators of success for ASTAE s contribution to the scale-up of sustainable energy and access in Asia. One of the lessons learned is that the World Bank s activities, particularly in the area of energy savings, are moving more and more from financing direct investments to facilitating investments by the private sector. Such indirect achievement of the expected impacts was not initially anticipated in the Business Plan. In this report, we report on both the expected direct and indirect effects from investments that benefited from ASTAE support. The Business Plan now also contains specific targets for these indirect outcomes. The targets listed below are indicative figures based on the final project appraisal before the project goes to the World 12 ASTAE Annual Status Report #14

15 Bank Board for approval. The figures listed are, therefore, forward-looking figures that will be confirmed after closing the projects, following the due diligence of the Implementation Completion Report. Households That Received Access to Modern Energy Services The Business Plan target was to provide access for 1 million households. Not only did ASTAE achieve close to 80 percent of this target, but it also contributed to helping more than 600,000 households in Vietnam that previously had limited access (only 2 to 3 hours of electricity per day) obtain more reliable and longer supplies. This means that almost 1.4 million have received or will receive new or improved access a successful, if different, outcome from the original target. For the period , keeping in mind this dual outcome, the targets were set to 500,000 households for new access and 500,000 households for getting improved services. Facilitating Investment in Renewable Energy Capacity In 2003, ASTAE set 1 GW as a target for investments for the period In direct investments, ASTAE facilitated about 25 percent of that target (266 MW). However, through guarantees provided by Bank loans and GEF grants for new renewable investments by the private sector, ASTAE overachieved this target by nearly five times. More than 4.9 GW of investments in renewable energy generation capacity are expected to be generated. For the period , ASTAE not only has a capacity indicator (350 MW directly and 3GW indirectly), but also an actual energy generation indicator with an expected energy generated by the new investments expressed in GWh (1,000 GWh directly and 3,000 GWh indirectly). Avoiding Additional Fossil Fuel Based Electricity Generation through Energy Savings The target for the reporting period started out as 1 GW. From the start of the reporting period, ASTAE had difficulties in recording the amount of avoided capacity in this unit, since most Bank projects focused on the amount of GWh saved. With this in mind, in the period ASTAE facilitated the saving of 250 MW capacity only 25 percent of the target of 1 GW. However, through private sector investments facilitated by Bank and GEF guarantees or other credit-enhancing mechanisms, more than 3.5 GW capacity was avoided 3.5 times the target. In ASTAE targets for , this target is no longer used, but rather is replaced with energy units: direct and indirect amount of GWh saved. The targets set are:1,000 GWh directly and 10,000 GWh indirectly, through private sector investments. 1Executive Summary ASTAE Annual Status Report #14 13

16 1Executive Summary Avoided Greenhouse Gas Emissions The Business Plan did not have an explicit reduction of CO 2 emissions as a target. However, ASTAE translated the renewable energy and energy efficiency targets into a CO 2 emission reduction target of 156 million tons over a 20-year period. Again, through direct Bank-financed investments, ASTAE achieved a little more than a third of the 156 million ton target (58 million tons CO 2 equivalent). However, if the actually facilitated emission reductions are taken into account, ASTAE will have overachieved its target by nearly 8 times with a projected reduction of 1,240 million tons of CO 2 emissions. The target for the period is set for a reduction of 78 millions ton of CO 2 through direct investments and 10 times this amount 780 million tons of CO 2 emissions through indirect Bank support. Other Targets The Business Plan had a number of other targets, including expansion of the number of countries in which ASTAE would provide support and process focused targets. All those targets were achieved and are shown in chapter 2. Now that the new structure of ASTAE is well established, these process-focused targets have not been incorporated in the Business Plan. Reaffirmation of the Central Role of East Asia and the Pacific in Achieving the World Bank Group Bonn Commitment The WBG committed itself to scaling up its support for renewable energy and energy efficiency in developing countries at the 2004 International Conference on Renewable Energies in Bonn, Germany. In addition to supporting specific programs and policies, the WBG adopted a target of 20 percent average annual growth in energy efficiency and new renewable energy commitments between FY05 and FY09 (the Bonn target ). For the second year in a row, the WBG has outperformed its Bonn target. In FY06, the WBG s financial support for renewable energy and energy efficiency was US$860 million. Commitments were shared between US$221 million for new renewable energy, US$447 million for energy efficiency, and US$192 million for hydropower above 10 MW (see Figure 1). East Asia and the Pacific contributed largely to this success and provided US$103 million for new renewable energy, US$72 million for energy efficiency, and US$57 million for hydropower above 10 MW. This placed it as the second-highest contributing Region this financial year. The Region alone provided 46 percent of the total new renewable energy com- 14 ASTAE Annual Status Report #14

17 1Executive Summary Figure 1: WBG Commitments for Renewable Energy and Energy Efficiency in FY06 ASTAE Annual Status Report #14 15

18 1Executive Summary mitments. This was achieved by the simultaneous engagement of three of the four branches of the WBG, as well as the GEF. Taken alone, with US$175 million committed for new renewable energy and energy efficiency in FY06, the East Asia and Pacific Region has exceeded by 153 percent the theoretical Bonn target of US$70 million, based on a 20 percent growth annually from the US$48 million commitments of FY04. Since FY04, the East Asia and Pacific Region achieved an average annual growth in lending commitment of 90 percent for the Bonn-related targets. 16 ASTAE Annual Status Report #14

19 Implementation of Business Plan in FY06 Table 1: Changes in FY06 and Status at the End of FY06 Changes in FY06 South Asia East Asia and the Pacific Total Closed Approved Added to pipeline Dropped from pipeline Status at end-fy06 South Asia East Asia and the Pacific Total Total closed Under implementation Pipeline Total Table 1 summarizes the changes in ASTAE s portfolio mix during FY06, as well as the situation at year s end. For a description of all projects, see the ASTAE website at The financial details for projects in East Asia are provided in Annex 3 and those for South Asia in Annex 4. This chapter describes the FY06 progress by presenting: (a) the two projects approved in FY06; (b) the progress achieved under the two projects closed during FY06; and (c) the five projects added to the ASTAE pipeline. Each project overview will include information on the project, its sustainable energy component, and the ASTAE support provided or envisioned, or both. 2Implementation of Business Plan in FY06 2 Projects Approved in FY06 In FY06 the World Bank s Board of Executive Directors approved the following two projects: Follow-Up Project to the First Phase of the China Renewable Energy Scale-Up Program (CRESP; P / P087292); and Lao PDR Rural Electrification Phase I Project in support of the Rural Electrification APL Program (P075531). ASTAE Annual Status Report #14 17

20 2Implementation of Business Plan in FY06 Follow-Up Project to the First Phase of the China Renewable Energy Scale-Up Program (P096158/P087292) The World Bank s Board of Executive Directors approved the Follow-Up Project to the First Phase of the China Renewable Energy Scale-Up Program on January 5, This project was also known in the FY05 pipeline as CRESP Phase 1, Part B. As indicated by its name, this project provides the funding to support a subcomponent of the CRESP project already approved in June The objective of this project is to demonstrate early success in the development of large-scale, renewable energy investments while enabling the participation of local developers in two pilot provinces. Such lending is necessary, in addition to the existing CRESP, to fast-track implementation of projects while the investment funds from local sources are still in the process of materializing. To do so, the project supports the establishment of: (a) a 100 MW wind farm at Huitengxile in Inner Mongolia; and (b) 18 small hydropower plants in Zhejiang Province, through the rehabilitation of 11 small hydropower plants that will increase their capacity from 40 to 52 MW, and the construction of 7 new small hydropower plants for a total capacity of 16 MW. The Huitengxile wind farm will generate 4,900 GWh during the lifetime of the project (20 years), avoiding CO 2 emissions of 4.4 million tons equivalent to 1.2 million tons of carbon. The small hydro projects are expected to generate an additional 2,500 GWh during the lifetime of the project, avoiding 2 million tons of CO 2 emissions equivalent to 0.56 million tons of carbon. The total project cost is US$ million, of which the IBRD is providing US$86.33 million, local financial intermediaries US$16.01 million, and the government US$30.08 million. The bulk of the funding goes to component 1, the Huitengxile wind farm, with a total of US$ million, including US$67 million from IBRD. The expected closing date of the project is September 30, ASTAE supported the preparation of this project by providing the wind farm developer, North Long Yuan Wind Power Company in Inner Mongolia, with access to international experience and expertise throughout the early stages of project implementation. It supported the validation of wind data, the confirmation of the site selection, as well as technical specifications, financial evaluations, and the establishment of bid documents. This confirms and complements the critical support already provided by ASTAE at all stages of development of the CRESP. 18 ASTAE Annual Status Report #14

21 Lao PDR Rural Electrification Phase I of the Rural Electrification APL Program (P075531) The World Bank Board of Executive Directors approved this project, previously called Southern Provinces Rural Electrification II (SPRE II), on March 27, The project is to be implemented in two phases, with the global objectives of: (a) increasing rural households access to electricity in villages in seven southern provinces; and (b) achieving a global sustainability for the development of the power sector. A total of 106,000 rural households are expected to be electrified within the program s life. The project has two subcomponents, implemented by two agencies according to their respective strengths and areas of responsibility. With component 1, Electricité du Laos will concentrate on grid extension, loss reduction, demand-side management (DSM), and energy efficiency, and will electrify rural households within reach of the national grid. With component 2, the Ministry of Industry and Handicraft will direct the off-grid investment program and the development of innovative offgrid electrification models to electrify rural households and will develop the energy sector master plan and strategy. An extensive capacity building element is also included in each component. The design of the project has been largely underpinned by the successes of the previous SPRE project, which was closed in FY05 (see Annual Report 13) and which also benefited from ASTAE support. The total proposed project cost is US$72 million under a two-phase Adaptable Program Loan (APL), for which IDA is expected to provide US$25 million, GEF is expected to provide US$10 million, the Norwegian Agency for Development Cooperation (NORAD) US$10 million, and the remainder, US$27 million, to be provided by the government, Electricité du Laos, and the households. The total committed funding for the ongoing Phase I is US$36.27 million, including an IDA grant of US$10 million and a GEF grant of US$3.7 5 million. Triggers to move to Phase II are multiple, and include reaching at least 70 percent of the electrification targets of Phase I totaling 42,000 households for Electricité du Laos and 10,000 households for the Ministry of Industry and Handicraft. Throughout the project life, energy savings resulting from the DSM and energy efficiency elements are estimated to be 76.5 GWh or 40,250 te CO 2. The off-grid electrification is also expected to displace 4,050 te CO 2, which brings the combined savings to 44,300 te CO 2. If Phase II is triggered, the expected closing date of the project will be March 31, ASTAE provided substantial support during the preparation of this project. In previous years, in addition to providing 2Implementation of Business Plan in FY06 ASTAE Annual Status Report #14 19

22 direct technical assistance through its program-based consultants, it provided funding to prepare the DSM component of the project, the analysis of the social impact of rural electrification, a review of the tariff structure, and subsidy policies and a renewable resource assessment and compilation into a database. In FY06, ASTAE funded further just-in-time technical assistance to help finalize the innovative design of the rural electrification components through: (a) employment of a management contractor in charge of supporting the Ministry of Industry and Handicraft in the design of its components activities; (b) preparation of an off-grid rural electrification master plan and Geographic Information System (GIS) database; (c) preparation of a micro-hydro resource assessment; and (d) development of legal, regulatory, and institutional arrangements for the alternative rural electrification models. 2Implementation of Business Plan in FY06 Achievements under Projects Closed in FY06 In FY06, the following two projects that received ASTAE support were closed: China Energy Conservation (P / P037859); and India Rajasthan Power Sector Restructuring (P038334). China Energy Conservation (P / P037859) This project was approved on March 26, 1998, and closed on June 30, 2006, although the GEF component was extended for one year. The project comprises three components: (a) demonstration of operation of three energy management companies (EMCs); (b) dissemination of information on the concept of EMCs; and (c) program management and monitoring of the development of EMCs. The indicators of success included: (a) the quantity of energy savings and CO 2 reduction; (b) the number of energy performance contracts and the variety of companies engaged in these contracts; and (c) the diffusion of information on energy efficiency measures. More precisely, during the eight years of the project period, direct energy savings of 13 million tce and a direct reduction of 9.2 million t CO 2 were expected from the investments of the three EMCs. In addition, direct savings of 32 million tce and direct reduction of 24.7 million t CO 2 were expected from the investment lifetime, which will exceed the project duration, and indirect savings of 24 million tce and indirect reduction of 18.7 million t CO 2 were expected from projects implemented following the energy information programs. By June 2006, the direct targets were achieved with energy savings of 12.8 million tce (98 percent of target) and a reduction of million t CO 2 (120 percent of target) according to the annual report of the project management office. In all, the 20 ASTAE Annual Status Report #14

23 three EMCs entered into 475 energy performance contracts with 405 enterprises. Indirect savings, undertaken by entities other than the three project EMCs following the energy information programs, were not yet available. Total project cost is within the initial budget of US$150.8 million, including a US$63 million IBRD loan and a GEF grant of US$22 million. It is noteworthy that, with US$54.3 million, the private and commercial bank portion represented 36 percent of the project total. The outcome of this project is not yet final, since the GEF part is still open, but it is expected to be at least rated satisfactory. ASTAE provided general support to this project, but was more specifically involved in providing a bridge between this project and the start of Phase II, which was approved in June This contribution is detailed further in Box 1. Box 1: Adding Energy Efficiency to the Energy Equation in China: ASTAE Bridge Support between Energy Conservation Projects I and II In the early 1990s, the concept of energy efficiency was foreign to China. The low cost to energy users and the relative lack of awareness of the economic, environmental, and health costs meant that the notion of energy conservation and efficiency was absent from the mind-set of energy planners and project developers. The Energy Conservation Project I successfully demonstrated through three pilot EMCs in Beijing, Shandong, and Liaoning that energy performance contracting was feasible in China. It also addressed early implementation issues, in particular the novelty of the approach, and incorporated lessons learned into subsequent EMC activities. In short, the EMCs made money, saved energy, and reduced carbon emissions on commercial terms, and thus the concept was ready for scale-up through the Energy Conservation Project II. As is frequently the case with the adoption of new concepts and the development of best practices around them, it took time to design and develop an appropriate financial model. In particular, attention had to be paid to the challenge for entrepreneurs to mobilize funds in an area unfamiliar to bankers. Attention also had to be paid to the replicability of the model and to the model s robustness in being scaled up when the concept was applied on a broader scale. This is where ASTAE, using funding from the U.K. Department for International Development (DfID), provided a critical bridge between the two Bank phases. The timely ASTAE activities enabled the experience, lessons learned, and expertise gained by the three Phase I pilot EMCs to be documented in training and technical assistance materials, and transferred to a new generation of EMCs. These activities led to the development of scores of new EMCs, many of which successfully obtained financing and developed projects prior to the availability of Phase II loan guarantee financing. In this process, the ASTAE funding contributed to the creation of the EMC Association, an institution with the single objective of developing and sustaining EMCs. The EMC Association is considered an outstanding success. It has assisted 50 EMCs in their development through training and technical assistance. It acted as a portal between the government and the EMC industry, and has been instrumental in the development of government policies that are beneficial to the EMC industry. It counted 85 members in 2005 which, in one year, invested US$170.5 million and saved 13.6 million tce and 9.2 million tons CO 2. The EMC industry requires domestic financing to be sustainable. To this end, the major element of Phase II of the China Energy Conservation Project is a loan guarantee mechanism administered by the Chinese National Investment and Guaranty Company, I&G. I&G, however, had limited experience with various project-financing packages. Therefore, technical assistance in customized financial engineering was provided to I&G, local guarantee companies, and commercial banks. International and domestic teams worked with I&G to develop project-based lending (PBL) packages, which would act as alternatives to the traditional approach, which involves Chinese working capital loans that are secured by assets and counter-guarantees from EMCs. After lengthy work, I&G acknowledged that the use of PBL would improve risk mitigation while increasing business volume, and it started developing a pipeline of EMC projects for the I&G loan guarantee. In 2005 I&G guaranteed projects for US$26.8 million, which saved 1.2 million tce and 800,000 tons CO 2. Finally, the considerable amount of material generated may also be valuable to the development of EMCs, EMC associations, energy performance contracting, and/or project-based lending in other developing countries. 2Implementation of Business Plan in FY06 ASTAE Annual Status Report #14 21

24 2Implementation of Business Plan in FY06 India Rajasthan Power Sector Restructuring (P038334) This project, which was approved on January 18, 2001, and closed on June 30, 2006, provided support to an ongoing power sector reform process in Rajasthan. It led to higher sector efficiency and financial recovery, and improved the power supply by removing critical bottlenecks from the power transmission and distribution system. Key performance indicators were: (a) the establishment of a fully functioning electricity regulatory commission; (b) the satisfactory implementation of the Financial Restructuring Plan, resulting in a financial turnaround of the five successor companies by FY2005; (c) private participation in distribution by having strategic investors in place by end-2002; and (d) investments in the transmission and distribution system, resulting in improved voltage levels, reduced outages and technical losses, and increased energy availability in the service areas affected by investments. Among the indicators relevant to ASTAE, the loan provided financing for 300,000 improved meters for customers and reduced distribution losses by saving TWh el. Financing included US$180 million from IBRD and a US$2 million grant from the U.S. Agency for International Development (USAID) to co-finance a DSM technical assistance component, for which ASTAE provided assistance. The outcome of the project is rated moderately satisfactory. Projects Added to the Pipeline in FY06 Six projects were added to the pipeline in FY06, bringing the total to ten projects: The Regional Sustainable Energy Finance Pacific Project (P098423); Financing of Two Biomass Projects in Inner Mongolia as part of the CRESP project; Fiji Electricity Authority (FEA) Renewable Energy Power Project (P099308); Energy Efficiency Finance Project, Indonesia (P095746); Renewable Energy and Rural Electricity Access Project, Mongolia (P099321/P084766); and Energy Efficiency Financing Project, China (P084874). Regional, Sustainable Energy Finance Pacific Project (P098423) In the Pacific Islands, particularly in rural areas, renewable energy (and energy efficiency interventions) offers cheaper options and increased access to modern energy services for households and micro and small enterprises. For households 22 ASTAE Annual Status Report #14

25 and small and micro enterprises to switch from traditional fuel options (kerosene and dry cell batteries) to renewable energy options (solar PV, pico-hydro, and coconut oil), three important barriers exist. The relatively high initial investment is a big obstacle. Second, financial institutions in the region have mixed experiences lending to this target group, and they have no experience lending for energy services. Third, the relatively simple technical knowledge required to operate and maintain renewable energy solutions is not readily available. The proposed regional project will remove the above-mentioned three barriers by creating a Trust Fund that would provide for a menu of sustainable financial intermediation solutions, tailor-made for target groups in each of the Pacific countries in which the project will operate. The project will also provide technical assistance and training for financial institutions participating in the project. The renewable energy options to be supported under this project are solar PV, pico-hydro, and locally produced bio fuels (coconut oil) to be used in generator systems. In exceptional circumstances, based on market demand, other solutions might be financed. The project consists of four components: (a) sustainable energy finance; (b) creation of a sustainable energy finance fund; (c) local knowledge development and mastering of renewable energy and energy efficiency technologies; and (d) incentive- or outputbased participant monitoring. The total project cost, based on project activities starting in Fiji, Papua New Guinea, and the Solomon Islands, is estimated to be about US$30 million. GEF is expected to finance US$10 million, with the rest of the funds coming from a variety of sources, including private equity, commercial funds, and other donors, such as the European Union Energy Facility. 2Implementation of Business Plan in FY06 China, Financing of Two Biomass Projects in Inner Mongolia as Part of the CRESP Project The authorities of the Xin an Meng, Inner Mongolia, are planning to develop, with the support of the Inner Mongolian government, a biomass-based power generation program to replace small-fired and heavily polluting power plants and sell electricity to the grid. Initial plans call for 10 MW of biomassfired power generation and cogeneration units of 100 MW to replace all small coal power plants in the short term, and more in the future. This project, financed two of the potential biomass plants, follows on an ASTAE-funded activity that provided a scoping study report, including: (a) resource assessment; (b) regional potential for biomass power; (c) regional market evaluation; and (d) project identification, a pre-feasibility study, and other preparation activities. ASTAE Annual Status Report #14 23

26 Fiji Electricity Authority Renewable Power Development (RDP) Project (P099308) The development objective of this project is to assist the Government of Fiji in meeting the current and future demand for electricity with a continuous and reliable power supply at the lowest possible cost. In particular, the Bank will assist the FEA in diversifying its energy portfolio to reduce its dependency on diesel oil. Key indicators include: (a) the energy capacity added to the grid; (b) the amount of actual generation added to the grid (GWh); (c) the resulting reduction in the cost of generating electricity (U.S. dollars per kwh), against a 2006 base price and confirmation by a recent power sector analysis that renewable energy is indeed the least-cost solution; and (d) the reduction in greenhouse gas emissions. 2Implementation of Business Plan in FY06 Indonesia, Energy Efficiency Finance Project (P095746) Under the Integrated Resource Planning Program, the Indonesian State Electricity Corporation (PLN) started to implement a DSM Program. The DSM program includes the introduction of energy-efficient lamps, energy labeling for household appliances, and some financial incentive schemes for consumers to shift peak demand and/or to improve efficiency, as well as energy audit services. It has three subprograms, namely, DSM Peduli (DSM for awareness of energy efficiency to household consumers at capacity below 900 VA), DSM PJU (DSM for Public Street Lighting), and DSM Terang (DSM for poor household consumers at capacity up to 450 VA). The implementation of the program went well. A preliminary survey, done in 2002, shows that about 78 percent of targeted residential customers under the program have shifted to energy-efficient lamps. PLN has now requested Bank support to focus on improving its energy efficiency in the industrial and commercial sector. Mongolia, Renewable Energy and Rural Electricity Access Project (P099321/P084766) This activity stems from an earlier and broader Mongolia project: Delivery of Infrastructure Services. The development objective of the proposed project is to increase the access to and the reliability of electricity in rural Mongolia, so as to enhance the living standards of rural communities in off-grid soums (villages) and individual herders. This objective will be achieved by: (a) assisting the development of institutions and delivery mechanisms based on a partnership between the public and private sectors for rural electrification; (b) facilitat- 24 ASTAE Annual Status Report #14

27 ing herders investments in solar home systems and small wind turbine systems; and (c) rehabilitating isolated soum center minigrids by improving their operations and management practices, followed by introducing renewable-diesel hybrid generation systems. The project also will help strengthen the institutional and regulatory capacity at the national level to develop grid-connected and off-grid renewable energy supplies. The key development indicators include: (a) the percentage of the herder population with access to reliable electricity services provided by solar home systems and small wind turbine systems; and (b) the number of off-grid soum centers (and corresponding population) with improved reliability and affordability of electricity services supported by renewable-diesel hybrid systems. ASTAE provided project identification and implementation support to increase access to electricity and improve reliability of electricity service among the herder population and in off-grid soum centers. The project was approved in December China, Energy Efficiency Financing Project (P084874) This project s objective is to improve energy efficiency in medium- and large-scale Chinese industries by developing lending programs for sustainable, energy efficiency projects in selected banks to support energy-efficiency investments in these industries. The key performance indicators of the project will be energy savings achieved in medium- and large-scale industries, and associated emission reductions of greenhouse gases and other pollutants. Increases in the level of energy-efficiency project lending in participating banks will also be a key output indicator. Five commercial banks and two policy banks have shown strong interest in participating in the project and in becoming financial intermediaries, four of which (two commercial banks and two policy banks) have already formally submitted project applications to the government of China. The proposed outcome of the project is to finance a line of credit to the selected domestic banks with an IBRD loan of US$200 million. Under the project, the selected banks will establish their energy-efficiency lending business with the support of the proposed technical assistance (up to US$15 million, including proposed GEF financing), and will utilize their own financial resources in addition to the Bank loan proceeds to increase the impact of the project. A proposed technical assistance may also support additional domestic commercial banks that are committed to energy-efficiency financing, but that are not participating in the IBRD on-lending support to further amplify the impact of the proposed project. 2Implementation of Business Plan in FY06 ASTAE Annual Status Report #14 25

28 2Implementation of Business Plan in FY06 Selected Ongoing Non-lending and Knowledge Management Activities In addition to the support to project and program identification, development, and implementation, ASTAE provides support to non-lending and knowledge management activities that it believes to be beneficial to meeting its objectives. A description of the most notable activities that took place this year is provided below. China, Jade Electricity: Developing a Green Electricity Scheme for Shanghai The Green Electricity Scheme for Shanghai was started during FY04 as an ASTAE flagship project and was declared best practice. Its report describing the project became available in Green electricity is a product that consumers pay on a voluntary basis, usually at a premium, if part or all of the electricity is produced from renewable resources, such as wind and solar. The program will initially support wind and photovoltaic electricity only. Green electricity will be available to households, industries, and commercial customers, although initially the focus will be on large non-household consumers. The approach adopted by Shanghai was to start small and to let the scheme develop and grow with increasing demand and increasing availability of renewable electricity. This means that the scheme will remain small for some time to come, but that it can become very substantial over time. To qualify as a green electricity user, consumers must buy yearly blocks of green electricity delivery. The size and number of blocks is set depending on each customer s total electricity consumption. For example, households must buy blocks of 12 kwh per year with a minimum of 10 blocks, and larger customers must buy blocks of 6 MWh with a number of blocks depending on their relative sizes. The incremental cost of green electricity has initially been set at Y >0.53/kWh (about 6.5 U.S. cents/kwh in 2005). Shanghai s annual electricity consumption will soon surpass 100 TWh per year, which can be compared with the current green electricity consumption of 6.54 GWh per year (less than 0.01 percent). This nonetheless covers the entire electricity generated by the existing 3.4 MW Feng Xian wind farm and its 10 kwp grid-connected photovoltaic system which, until 2005, were the only renewable electricity resources available to the Shanghai municipality. ASTAE took the lead to provide World Bank support, together with the Energy Sector Management Assistance Programme (ESMAP) and later joined by the World Wildlife Fund and the Energy Foundation. Resources were used to provide access to international expertise and experience. International experts 26 ASTAE Annual Status Report #14

29 provided advice, both hands-on and in the form of project reports on specific issues. A policy study tour to Finland, Germany, and Sweden for senior Shanghai officials provided information on issues and options for designing and introducing a green electricity scheme, and helped them make an informed decision on whether to adopt this approach in Shanghai. Implementation Training in Canada, Finland, and the Netherlands helped with the actual design of the scheme. ASTAE resources were also used to organize the marketing campaign, prepare promotion materials, and establish and operate the Shanghai Green Electricity website. In addition, ASTAE provided overall support through the ASTAE program-based consultant and a national renewable energy policy expert. Philippines, Wind Power Training Program This program provided local technical, financial, and economic analysis training for stakeholders in the field of wind power development in the Philippines. The principal recipient was the Philippine National Oil Company Energy Development Corporation (PNOC-EDC) which has applied for carbon financing from the World Bank for a 40 MW wind farm planned to be established in Burgos, Ilocos Norte, a project that also receives separate support from ASTAE. A group of 15 participants from PNOC-EDC and from other organizations followed a training program designed and delivered by international consultant specialists in the field. The first part of the training of the program provided the fundamental tools and information for stakeholders who lack basic knowledge in wind power development related to wind turbine techniques, environment assessments, financial analysis, procurement and construction issues, and contracting and operation basics. The second part of the training focused on a smaller group of eight players, already involved in wind projects in the Philippines, to improve their capabilities through advanced training modules on technical and financial analysis. 2Implementation of Business Plan in FY06 China, Shanghai Energy Resource Center The Shanghai Energy Conservation Supervision Center, which also participated in the design of the green electricity scheme described above, will renovate three floors in their building to create a living exhibition on energy improvements that local citizens can make in their houses and offices. ASTAE supported the design and plans for the renovation, including an evaluation of the actual energy savings the proposed modifications will generate. In order to make these energy improvements attractive to the general public, the Shanghai Energy ASTAE Annual Status Report #14 27

30 Conservation Supervision Center was advised on both energy efficiency measures and on the most efficient communication methods. The center was opened in June 2006 and is attracting a large number of visitors everyday. 2Implementation of Business Plan in FY06 China, Wind Resource Assessment Handbook At the International Conference for Renewable Energy in Bonn, the Chinese government announced a target of 20 GW of wind installed capacity by 2020, and its plan to conduct 30 wind concessions (each of 100 MW), in addition to the two pilot wind concessions that have been done. Wind resource measurement and assessment are important steps for wind concession schemes and for scaling up wind power. Existing Chinese practices for wind measurement and assessment are not yet up to international standards. This ASTAE project provided a translation of the Wind Resource Assessment Handbook written by the U.S. National Renewable Energy Laboratory into Chinese to provide guidelines for international standards on wind resource measurement and assessment in China. Three cases studies were also developed as an illustration using the handbook. This package is now an important sourcebook used by local developers of wind farms in China. China, Building a Resource Efficient Society Conference If the current modes of production and trends in consumption continue, China will face a severe shortage of natural resources, making sustainable development of the economy and society an impossible mission. The government has realized this and is determined to transfer the current modality of economic growth and build a resource-efficient society. To achieve this goal, the government has shown strong interest in learning from the successful experiences of both developed and developing countries, and working with international organizations and multinational companies to create the right institutional, regulatory, and policy environment for building a resource-efficient society. The objective of the ASTAE activity was to conduct a high-level international conference to facilitate in-depth discussion of the international experiences and practices, and to discuss the policy recommendations for China and the action plans the Chinese government needs to take in order to move toward a resource-efficient society. The main output was the delivery of the conference, with the following outcomes: (a) increased awareness of the Chinese decision makers and general public about the importance and urgency of resource conservation; (b) broadened knowledge on the part of the Chinese decision makers of successful international experiences and practices; 28 ASTAE Annual Status Report #14

31 2Implementation of Business Plan in FY06 (c) a roadmap consisting of principles; (d) the policies and modalities to be applied to build a resource-efficient society in China; and (e) follow-up actions by the government, international organizations, and business community. Presentations were posted on websites and are available in Chinese language. Outreach and Promotion: ASTAE and REDP Exhibitions at Energy Week 2006 ASTAE and the Renewable Energy Development Project (REDP) had exhibitions at the 2006 edition of Energy Week. The exhibit stands were seen by numerous visitors, including the World Bank President, Paul Wolfowitz, and the Dutch Minister of Development Cooperation, Agnes van Aardenne. The ASTAE stand was organized on the theme of the ASTAE atlas, Sustainable Energy: Less Poverty, More Profits, and offered copies of the atlas, its accompanying video, and a series of ASTAEfunded reports and publications printed for the occasion. The ASTAE stand remains available for future exhibitions. ASTAE Annual Status Report #14 29

32 3Progress against ASTAE Business Plan Targets 3 Progress against ASTAE Business Plan Targets Progress against the Business Plan Targets In the ASTAE Business Plan of January 2004, which was revised in March 2005, ASTAE promised its donors to achieve the targets given in Table 2 by December 31, As was reported in the FY05 annual report, the achievement of the first four targets rests largely on the approval of the three following projects: Vietnam Rural Energy II, the First Phase of the CRESP, and China Heat Reform and Building Energy Table 2: ASTAE Targets Indicator End-2006 target Progress as of end-fy06 1 Provide additional households 1 million New access: 797,500 households with improved energy services Improved services: 600,000 households 2 Install additional renewable 1 GW equivalent Direct: GW electricity generating capacity Indirect: 4.9 GW 3 Avoid additional conventional electricity generating 1 GW equivalent Direct: 250 MW equivalent capacity through efficiency improvements Indirect: 3.5 GW equivalent 4 Mitigate CO 2 emissions over a 20-year period 156 million tons CO 2 Direct: million tons CO 2 Indirect: 1,240 million tons CO 2 5 Successfully complete sustainable energy projects 8 projects 8 projects completed, of which 6 rated satisfactory under implementation and 2 unsatisfactory 6 Approve sustainable energy projects or 10 projects 9 projects approved during the period project components 7 Put in place a strong pipeline of sustainable Not quantified Pipeline end-fy04: 8 projects energy projects Pipeline end-fy05: 7 projects Pipeline end-fy06: 9 projects 8 Develop sustainable energy programs China and Vietnam Sustainable energy programs in China and Vietnam and implement their first phases developed and implementation started 9 Make good progress for developing sustainable 2 countries Programs opening in Fiji, Solomon Islands and in Philippines energy programs in other countries 10 Implement flagship projects 2 projects Green Electricity for Shanghai successfully implemented; secondflagship project started and ongoing: Sustainable Finance for Small-Scale Energy Solutions 11 Implement projects in nonenergy sectors 2 projects One project in the water sector in India and one technical assistance project in the water sector in China 30 ASTAE Annual Status Report #14

33 Efficiency. Counting the indirect benefits in addition to direct benefits is justified by the nature of these programs in that they establish favorable policies and legal and institutional infrastructures to enable other players, such as the private sector, financial institutions or other agencies, and the private sector to develop their own projects that contribute to the targets. These would not take place without such an enabling environment or without the enhanced risk coverage provided by GEF grants or Bank loans. With these caveats, if we take the indirect benefits into account, and for households the improved services, the targets for the Business Plan have been well achieved. It should be noted that the targets listed below, as well as earlier business plan targets, are indicative figures based on evaluations calculated at the time of appraisal and included in the official Project Appraisal Documents presented to and approved by the Board. The figures listed are therefore forward-looking figures that can only be confirmed after closing of the projects following the due diligence of the Implementation Completion Report. 3Progress against ASTAE Business Plan Targets Target 1: Households That Received Access to Modern Energy Services The Business Plan target was to provide access for 1 million households. ASTAE achieved 80 percent of this figure, the actual number was 797,500. In addition, more than 600,000 households in Vietnam that had limited access (only 2 to 3 hours of electricity per day) will now be getting more reliable and longer supplies. This means that almost 1.4 million households received new or improved access a successful, if different, outcome from the original target. Target 2: Facilitating Investment in Renewable Energy Capacity In 2003, ASTAE set 1 GW as a target for investments for the period In direct investments, ASTAE facilitated about 25 percent of that target (266 MW). However, through guarantees provided by Bank loans and GEF grants for new renewable investments by the private sector, ASTAE overachieved this target by nearly five times. More than 4.9 GW of investments in renewable energy generation capacity are expected to be generated. Target 3: Avoiding Additional Fossil Fuel Based Electricity Generating Capacity through Energy Savings The target for the reporting period started out as 1 GW. From the start of the reporting period, ASTAE had difficulties in recording the amount of avoided capacity in this unit, since ASTAE Annual Status Report #14 31

34 most Bank projects focused on the amount of GWh saved. Dividing the amount of GWh by 365days times 24 hours will not always be reliable, because it is not always known what the capacity factor or the operating hours of the electricity-generating units are. Although for consistency reasons, the amount of avoided capacity is reported, this figure needs to be treated with caution. With this in mind, in the period ASTAE facilitated the saving of 250 MW capacity only 25 percent of the target of 1 GW. However, through private sector investments facilitated by Bank and GEF guarantees or other credit-enhancing mechanisms, more than 3.5 GW capacity was avoided 3.5 times the target. 3Progress against ASTAE Business Plan Targets Target 4: Avoided Greenhouse Gas Emissions The original Business Plan did not have an explicit reduction of CO 2 emissions as a target. However, ASTAE received a significant contribution through the Canadian International Development Agency (CIDA) from the Canada Climate Change Development Fund. In recognition of the funds objectives and in dialogue with CIDA officials, ASTAE translated the renewable energy and energy efficiency targets into a CO 2 emission reduction targets. Like all other agencies, ASTAE also struggled and is still struggling with a uniform methodology for translating the energy units into CO 2 emission savings. The combination of the renewable energy and energy efficiency targets explained above translated into projected CO 2 emissions savings of 156 million tons over a 20-year period. This is based on the assumption that the renewable energy will replace energy derived at 40 percent from coal and 60 percent from diesel oil. The data on actual emission savings facilitated is based on the projections, since they are made by Bank staff in their Project Appraisal Documents. Again, through direct Bank-financed investments, ASTAE achieved a little more than a third of the target of 156 million ton (58 million tons CO 2 equivalent). However, if the actually facilitated emission reductions are taken into account, ASTAE will have overachieved its target by nearly eight times with a projected reduction of 1,240 million tons of CO 2 emissions. Other Targets Following are some of the other targets that have been achieved: Target 5: Successful completion of eight sustainable energy projects was achieved in volume; Targets 6: Nine sustainable energy projects were approved by the end of FY06 and, with another in the summer of 2006, the target of 10 was achieved; 32 ASTAE Annual Status Report #14

35 Target 7: A strong pipeline is on track with five more projects entering the pipeline in FY06. The beginning of FY07 has also seen strong growth; Target 8: Development of sustainable energy programs, and implementation of their first phase in two countries, was achieved; Target 9: The potential for this target, building programs in two other countries, was achieved with programs opening in Fiji and the Solomon Islands; Target 10: The target of two flagship projects is well advanced with the Shanghai green electricity scheme finalized, and good progress has been made in the sustainable finance for small-scale energy solutions; and Target 11: This target proved difficult to undertake, but some synergies were found with the water sector. Overview of the Business Plan In 2006, a new business plan was produced and approved for the period. The goal and objectives of scaling up the use of sustainable energy options in Asia to reduce energy poverty and protect the environment remain unchanged, but the strategy has been modified to refocus on operations and implementation support that have been the source of ASTAE prior successes and the set of indicators have been refined (see Table 3). The current five priority areas (detailed in Table 4, next chapter) have been restructured to three areas of support: Development and Implementation Support for Sustainable Energy Projects and Programs in ASTAE Priority Countries in Asia. Development and Implementation Support for Sustainable Energy Projects and Programs in Other Countries in Asia. Development and Implementation Support for ASTAE Flagship Activities (such as green electricity and small and medium-size energy service companies). China, India, Indonesia, and Vietnam remain the priority countries, since these are the countries with large sustainable energy potential and populations. In these countries, projects and program identification will be allocated 20 percent of the resources, project/program development 60 percent, and the remaining 20 percent will go to implementation. In non-priority countries, the focus will be on those countries that did not have ASTAE activity in the past. To this end, the approach will continue to include the following: Early program and project identification work; 3Progress against ASTAE Business Plan Targets ASTAE Annual Status Report #14 33

36 3Progress against ASTAE Business Plan Targets Quick response to support the urgent needs of task team leaders for project development (identification and preparation assistance) and supervision (troubleshooting); Project-related capacity building in client countries beyond what can reasonably be expected to be part of normal project preparation; and Assistance to task team leaders for the mobilization of additional funds. As always, ASTAE funds will not be used to replace the Bank budget for project identification and supervision, but rather will be used only for activities beyond normal project preparation and supervision (incremental costs of investing in renewable energy and energy efficiency). The standard proposal format for requesting ASTAE assistance is being maintained, which will help evaluate task team leaders requests based on the expected contribution in achieving ASTAE targets and program objectives. Specific ASTAE Targets for the Business Plan The indicators and targets for the period have been refined from the previous business plan, as shown in Table 3. In particular, the following have been modified: Energy savings are Table 3: ASTAE Indicators addressed with actual energy savings in GWh rather Indicator Qualification Value 1 Households with new and improved Direct New access 500,000 access to modern energy services Improved services 500,000 than avoided capacity as was (number of households) Indirect New access 50,000 previously done; Improved services 250,000 2 Facilitate investments and generation Direct Investments 350 The distinction between in renewable electricity Generation 1,000 direct impact (as result of (capacity in MW and generation in Indirect Investments 3,000 the project) and indirect annual GWh el ) Generation 10,000 3 Facilitate energy savings as a result of Direct Electric 1,000 impact (induced by the efficiency improvements Thermal 3,000 project) is generalized, as (annual thermal savings in GWh th and Indirect Electric 10,000 well as the one between new connections (first-time service) and improved services with respect to rural electrification; and Since achieving the targets will only be possible by implementing projects and programs in the larger countries, indicator 5 has been added to assure that other countries are not left out. Finally, since ASTAE s impact now extends beyond the World Bank, restricting the indicators to projects and programs approved by the World Bank s Board no longer covers ASTAE s full range of activities. Therefore, both projects approved by the World Bank s Board of Executive Directors and verifi- annual electricity savings in GWh el ) Thermal 30,000 4 Avoid CO 2 emissions Direct 78 (million tons over 20-year period) Indirect Number of countries with projects Total 10 supported by ASTAE 34 ASTAE Annual Status Report #14

37 able contributions by ASTAE to multilateral, bilateral, and indigenous organizations will count toward achieving these indicators. Indicator 1: Households with New and Improved Access to Modern Energy Services For the period , expectations were set to provide 500,000 households with new access and 500,000 households with improved services. During the first half of FY07, discussions with task team leaders suggested that ASTAE should also add an indicator for indirect achievements. This would be for private sector investments in access to energy services, which are made possible through guarantees or other credit enhancements provided through GEF grants, IDA grants or credits, or IBRD loans. Indirect numbers for households with access is set at 50,000 for new access and 250,000 for improved services. Indicator 2: Facilitate Investments and Generation in Renewable Electricity Although the installed capacity shows a direct relationship with the actual investments made, it is not representative of the amount of energy generated from renewable resources. Small run-of-river hydro installations might only have 30 percent capacity factor, while wind turbines often have a capacity factor ranging between 19 and 25 percent. For the period , ASTAE not only has a capacity indicator in MW, but also an actual energy generation indicator with the expected energy generated by the new investments expressed in GWh. Based on expected trends, ASTAE has lowered the indicator for direct investments to 350 MW installed with 1,000 GWh production capacity. However, through credit-enhancing support mechanisms, the Bank is expected to facilitate investments in new generating capacity of more than 3 GW installed with 10,000 GWh production capacity. 3Progress against ASTAE Business Plan Targets Indicator 3: Facilitate Energy Savings as a Result of Efficiency Improvements For the period, the capacity target has been eliminated and replaced with the an energy generation unit: GWh saved either thermal or electric. The targets set are, respectively, 1,000 GWh directly and 10,000 GWh indirectly (through private sector investments) for electric GWh; and 1,000 GWh directly and 10,000 GWh indirectly for thermal GWh. Indicator 4: Avoided Greenhouse Gas Emissions As mentioned earlier, the CO 2 emissions target was added late in the prior business plan and was calculated as a combination ASTAE Annual Status Report #14 35

38 of the renewable energy and energy efficiency targets over a 20-year period. The data on actual emission savings facilitated is now based on the projections made by Bank staff in their Project Appraisal Documents. The target for the period is set for a reduction of 78 millions ton of CO 2 through direct investments and 10 times this amount: 780 million tons of CO 2 emissions through indirect Bank support. 3Progress against ASTAE Business Plan Targets Indicator 5: Number of Countries with Projects Supported by ASTAE Meeting the scale-up indicators is only possible by supporting renewable energy, energy efficiency, and rural electrification programs in the larger countries. The indicators can be most effectively met by focusing on only the larger countries. However, this would leave the smaller countries out, which is not desirable from an equity point of view. To avoid this conflict, an indicator for equitable support to all countries has also been added, requiring that 10 countries receive ASTAE project support. 36 ASTAE Annual Status Report #14

39 Utilization of ASTAE Resources in FY06 In FY06, ASTAE funded its activities from two ASTAE Trust Funds, listed below: Canadian Trust Fund for ASTAE (TF ); and The Netherlands third phase support for ASTAE (Bank- Netherlands Partnership Program (BNPP) TF054670). Total disbursements in FY06 from these Trust Funds were nearly US$2 million (US$1,959,983). Table 4 provides details on the use of resources by activities, and is categorized by the five strategic areas defined in the Business Plan: Development of sustainable energy programs in ASTAE priority countries; Development of sustainable energy projects in other countries; Development of sustainable energy components in nonenergy sector projects; Development of flagship projects; and Outreach and knowledge sharing. In FY06, 59 percent of the ASTAE disbursement went to three of the four priority countries (China, Indonesia, and Vietnam; no activity this fiscal year in India), 24 percent to non-priority countries, and 17 percent to administration, ASTAE staff salaries, the Technical Advisory Group, and similar overhead costs, including publication and outreach (see Annex 5 for a list of papers and reports generated this financial year). 4Utilization of ASTAE Resources in FY06 4 ASTAE Annual Status Report #14 37

40 4Utilization of ASTAE Resources in FY06 Laos 1% Cambodia 1% Bangladesh 1% Vietnam 3% Timor Leste 9% Philippines 7% Mongolia 7% Global 2% Indonesia 17% Figure 2: Country Allocations Technical Assistance 49% China 52% Carbon Finance 5% Economic Work 13% GEF Grant 12% Knowledge Products 16% Figure 3: Allocations by Type of Activity IDA/IBRD Credits 5% Excluding the administrative costs, the FY06 disbursements can be viewed in terms of recipient country (Figure 2) and of type of activities undertaken (Figure 3). With regard to disaggregating by country, with 52 percent of disbursement of ASTAE funds (see Figure 2), China remains the main recipient of activities. This is in large part because of the China orientation of the Canadian Trust Fund, which provided two-thirds of the resource for this financial year (see Box 2 for more details). This strong support to China is not surprising as three of the eight projects supported by ASTAE and approved in FY04, FY05 and FY06 were in China. These projects also had, by far, the greatest contribution towards achieving the renewable energy and energy efficiency indicators. It is expected that in FY07 strong demand from Indonesia, Vietnam, and the new Pacific program will provide a good balance. Activity in South Asia was minimal limited to follow-up on a small genderrelated project in Bangladesh. The dis-aggregation by type of activity in Figure 3 shows the focus on operational activities while also recognizing support to knowledge products or think pieces. Table 4: Activities Supported by ASTAE in FY06 ASTAE project Type and details of activity FY06 use of funds (US$) I. Develop sustainable energy programs in ASTAE priority countries in Asia (China, India, Indonesia, and Vietnam) China: total disbursed US$832,870 (including activity 20 listed under flagship project) 1 Heat Reform and Building Energy TA: Technical Assistance 175,428 Efficiency Program Development of a methodology for evaluating the cost and benefits of energy efficiency measures; Preparation of recommendations for energy efficiency designs for demonstration in Tianjin; Review of national testing, certification and labeling system for energy efficient building materials and products, and dissemination of the study results. 2 Implementation support to the TA: Technical Assistance 161,100 China Renewable Energy Scale-Up Support North Long Yuan wind power company in the early stages of implementation of Program (CRESP-I) the 100MW wind farm Validation of wind data and choice of site; Support to establishment of bid document and assistance in bidding. 3 Biomass resource study in Inner Mongolia TA: Technical Assistance 135,176 Assess potential for developing a World Bank/GEF project; Assess availability of biomass resource either as crop residue or energy crop ands technical and feasibility of biomass-fired plants; Identify project sites, project sponsors and carbon financing. 38 ASTAE Annual Status Report #14

41 Table 4 (cont.): Activities Supported by ASTAE in FY06 ASTAE project Type and details of activity FY06 use of funds (US$) 4 Building a resource efficient society KP: Knowledge Product 101,954 High level international conference held in China, targeting government officials and decision makers; Provided best international practices and experiences; Established a road map of principles, policies and modalities to build a more efficient development path for China. 5 Shanghai Energy Conservation TA: Technical Assistance 95,046 Supervision Center Supported the design and plans for the renovation to create a living exhibition on energy improvements. 6 Renewable Scale-Up Program (CRESP) PE: IDA / IBRD Credits 31,565 Support to the CRESP team. 7 Compiling Wind Resource Assessments KP: Knowledge Product Compilation and publication of wind assessments in China 31,370 8 Implementation support to Renewable PE: IDA / IBRD Credits 25,974 Energy Development Project (REDP) Support of the establishment of market competition in the PV market. Setting product standards, for labeling and services. 9 Building Energy Efficiency TA: Technical Assistance 25,689 Support of the building material markets, regulation, testing and certification. India: No activity Indonesia: total disbursed US$280, Indonesia Electricity Access and Rural EW: Economic Sector Work 170,560 Transformation project Analysis of RE situation and recommendations for electrification strategies. Report Electricity for All widely distributed; Study Tour for PNL and Ministry of Energy to view Rural Electrification best practices. 11 PNL Demand Side Management KP: Knowledge Product 110,153 Assessment of current ongoing DSM programs; DSM training courses for PNL staff and industrial customers; Industrial energy audit program and monitoring system. Vietnam: total disbursed US$42, Support for the supervision of GE: GEF Grant 42,927 the Vietnam Rural Energy II Assistance to the World Bank team to supervise the GEF project. Total for Priority Countries: US$ 1,156,509 II. Develop sustainable energy projects in other countries in Asia 13 Cambodia, implementation support to PE: IDA / IBRD Credits 8,588 Rural Electrification and Transmission Regulatory capacity building for renewables. 14 Lao PDR, Southern Provinces Rural PE: IDA / IBRD Credits 21,134 Electrification II General preparation support to World Bank team. 15 Mongolia, support for the preparation of GE: GEF Grant 121,020 Renewable Energy for Rural Access Project Project identification support to increase access to electricity and improve reliability of electricity service among the herder population and in off-grid soum centers 16 Philippines, support for the supervision of TA: Technical Assistance and GE: GEF Grant 33,576 the Power System Loss Reduction project Screening of proposed investments by the cooperatives in order to help attract private sector participation, Provide cooperatives and local authorities capacity building 17 Philippines, PNOC Burgos Wind farm CN: Carbon Finance 81,656 Support to project preparation, due diligence for carbon finance; Capacity building of local agencies 18 Timor-Leste, Energy Service Delivery project TA: Technical Assistance 148,991 Preparation of the Rural Electrification master plan. Preinvestment study for project preparation Total for other Countries (including activity 19, 21 and 22): US$ 459,765 III. Develop sustainable energy components in nonenergy sector projects in Asia 19 Bangladesh, ENPOGEN II KP: Knowledge Product 10,661 Poverty and Gender project addressing women s access to modern energy services Survey to analyze the structure of demand for energy in women owned enterprise, analyze it and pilot test interventions designed to enhance such access IV. Develop ASTAE flagship projects 20 Voluntary Green Electricity Scheme for UE-KP: Knowledge Product 49,207 Shanghai Support design and implementation green electricity scheme Support to website, logo creation, and media campaign. V. Outreach and knowledge sharing 21 ASTAE publications KP: Knowledge Product 7,580 ASTAE Atlas 22 Global Village Energy Program (GVEP) KP: Knowledge Product 26,560 East Asia Follow-up activities after the 2005 launch. 23 ASTAE Management/administration ASTAE international-hire and local staff; 343,709 Technical Advisory Group support; Editing services; and Administrative support. Grand total US$ 1,959,983 4Utilization of ASTAE Resources in FY06 ASTAE Annual Status Report #14 39

42 5World Bank Resources for ASTAE-Supported Projects 5 World Bank Resources for ASTAE-Supported Projects Table 5: Resource Utilization, World Bank and Donors, FY92 06 ASTAE supports alternative energy initiatives at all stages of the project cycle: identification, preparation, implementation, and evaluation. At the identification stage, support can be provided for identification studies or missions, or by supporting energy sector work to assess issues and options with respect to alternative energy. At the Donors a World Bank b Total US$ % US$ % US$ % FY92 108, , , FY93 827, , ,246, FY94 1,399, , ,087, FY95 1,309, ,046, ,355, FY96 2,057, ,618, ,675, FY97 1,705, ,197, ,902, FY98 1,617, ,126, ,744, FY99 1,782, ,156, ,938, FY00 2,627, ,524, ,151, FY01 955, ,106, ,061, FY02 2,108, ,106, ,214, FY03 2,205, ,239, ,444, FY04 1,014, ,013, ,028, FY05 2,704, ,450, ,155, FY06 1,959, ,169, ,129, Total 24,382, ,088, ,470, a. Includes the Netherlands, Canada International Development Agency (CIDA), U.S. agencies, the New Zealand Ministry of Foreign Trade, the German Federal Ministry for Economic Cooperation and Development (BMZ) and the German Corporation for Technical Cooperation (GTZ), the European Community, the International Energy Agency, the Danish International Development Agency (DANIDA), the Swedish International Development Cooperation Agency (SIDA), the Government of the Swiss Confederation, and in-kind contributions. b. Includes World Bank/GEF Annual Discretionary Budget, Office Occupancy, Consultant Trust Funds, Japan Policy and Human Resources Development Fund (PHRD), International Development Forum (IDF), and Project Development Facility (PDF) grants. project implementation stage, ASTAE can support troubleshooting of alternative energy components. ASTAE has also supported project evaluation to draw out lessons learned and best practices from completed alternative energy projects or project components. The major part of ASTAE support, however, is devoted to project preparation through capacity building and supporting studies. The use of donor funds by ASTAE totaled US$1.959 million in FY06 (see Tables 4 and 5). The use of World Bank resources for ASTAEsupported projects, includ- 40 ASTAE Annual Status Report #14

43 Box 2: Scaling Up Greenhouse Gas Mitigation in Asia: Canada International Development Agency (CIDA) TF The Canadian Trust Fund was created to support analytical and advisory services, capacity building, and training to support the development of national alternative energy policies and programs, including development of mechanisms to promote investments, particularly in China. Specifically, the Trust Fund was aimed at funding the following: Country diagnostic work. Technical assistance on policy, regulatory, technical, economic, and financial issues related to scaling up alternative energies. Stakeholder consultations, workshops, and capacity building of client country stakeholders and Bank staff on alternative energy (that is, nonlending technical assistance). Technical studies related to project identification, such as, but not limited to, resource assessment and reconnaissance studies. Other activities needed to scale up alternative energy development in client countries. The Trust Fund has funded 23 activities in 9 countries for a total disbursement of US$2,857,225. It has achieved a high level of outputs, both in quantity and quality, and has supported or enabled sizable World Bank lending related to renewable and energy efficiency investments leading to mitigation of up to 1,292 million tons of greenhouse gas once these projects are implemented. It successfully combined this effort with achievement of a major Millennium Development Goal by facilitating access for over 750,000 households to modern energy sources at the completion of these projects. The level of achievement of the Trust Fund was rated Highly Satisfactory in the Implementation Completion Memorandum. The key projects supported by the Trust Fund were described in the previous annual report, but the following ones can be highlighted: China Building Efficiency, which set the stage for the Heat Reform and Building Energy Efficiency Project. The ASTAE video and atlas, which highlighted ASTAE s achievements in renewable energy and energy efficiency. More than 5,000 paper and CD copies of the atlas was distributed, and it is estimated that the video, shown by BBC and China CCTV, was viewed by more than 240 million people. Green Electricity for Shanghai was an ASTAE flagship activity that provided reports, analysis, study tours, and training to the Shanghai Municipality to establish a voluntary green electricity scheme. Support to the CRESP, which happened both at the preparation and the implementation stage and was aimed at enabling commercial renewable electricity suppliers to provide energy to the power market efficiently, cost-effectively, and on a large scale. ing GEF Bank Budget, totaled US$3.169 million in FY06 (see Table 5). Total donor funds utilized by ASTAE since FY92 amount to US$ million, an amount which is now close to being matched by the World Bank with a total of to US$ million over the same period. Table 5 shows the continuation in FY06 of the high levels of spending from the Bank s own budget with an average of US$3.2 million in the last three financial years. This is triple the yearly average amount in the FY92 03 period. The repartition of funding between the Bank and ASTAE donors also confirms the break in trend since FY03, where the World Bank provided in average close to two-thirds of the funding (62 percent in FY06). The total budget for alternative energy remains the second highest in FY06 and double the yearly average of the FY92 03 period, thus confirming the strong commitment of the region to the development and scale-up of alternative energies. One of the resource utilization highlights this year was the closure of the Canadian Trust Fund, TF050558, on March 31, Both the Canadian officials and the World Bank task managers were extremely satisfied with the use of the CIDA Trust Fund, which enabled 23 activities in 9 countries. Box 2 provides further information from the Implementation Completion Memorandum relative to this Trust Fund. 5EWorld Bank Resources for ASTAE-Supported Projects ASTAE Annual Status Report #14 41

44 6 6 ASTAE Funding Status ASTAE Funding Status In FY06, two Trust Funds provided resources for ASTAE: Canadian Trust Fund for ASTAE (TF ); and The Netherlands third-phase support for ASTAE (BNPP TF054670). The Canadian Trust Fund for ASTAE was closed on March 31, All resources from this Trust Fund have been disbursed for a total of US$2,857,225, as described in Box 2. While no new formal commitment was made this financial year, the Netherlands commitment for ASTAE II in the amount of US$7.424 millions, funding years , was signed into agreement in May The first tranche of this ASTAE II funding was received in FY07, in July 22, 2006, for an amount of US$2.598 million, thus opening a second Trust Fund available in FY07, TF Securing this latest support from the Netherlands closes the gap of resources for ASTAE from 2006 to 2008 as identified in the Business Plan. Further resources are still required for 2009, and advanced discussions toward a funding commitment have been held with many potential donors throughout the year. These funding negotiations will be continued in FY07, with specific attention to paid to three countries that have shown interest in such future support. The Swedish Agency for International Development has indicated that they would start to contribute to ASTAE with SEK 15 million for a period of three years. For reference, a list of the important ASTAE funding events that have happened since January 2000 is provided in Annex ASTAE Annual Status Report #14

45 Staffing Ms. Junhui Wu, Sector Manager, East Asia and Pacific Energy and Transport Unit, is the ASTAE Program Manager, and Antonie de Wilde is the ASTAE Coordinator. There were three coterminous field staff members in FY06. Mr. Ximing Peng is located in the World Bank office in Beijing and supports sustainable energy activities in China and Mongolia. Mr. Ky Hong Tran is located in the World Bank office in Vietnam, and covers Vietnam, Lao PDR, and Cambodia. Sustainable energy activities in Indonesia and Timor-Leste are covered by Mr. Eka Zarmen Putra, located in the World Bank office in Indonesia. 7Staffing 7 ASTAE Annual Status Report #14 43

46 A Annexes Annex 1: A Brief History of ASTAE Annexes ASTAE grew out of the Financing Energy Services for Small- Scale Energy Users (FINESSE) project, initiated by ESMAP and bilateral donors in Following a joint request from Asian borrowers and donor partners, the Bank acted to implement the FINESSE recommendations by creating the Asia Alternative Energy Unit (ASTAE) as part of the Asia Technical Department in January ASTAE was originally set up as a three-year pilot program with the objective of mainstreaming alternative energy in Asia, which was defined to include energy efficiency and renewable energy. Its original target was to increase the share of alternative energy in Bank power sector lending in Asia to 10 percent of the total. In the initial years, the ASTAE strategy to achieve its objective was opportunistic. ASTAE actively had to market the idea of alternative energy to government agencies in client countries, as well as to Bank task team leaders, country directors, and management. Initially, ASTAE supported those task team leaders with a positive attitude toward alternative energy by carrying out small activities to support projects under preparation wherever there was demand. Activities slowly increased in size and importance, leading to alternative energy components and eventually to stand-alone projects. The energy efficiency activities supported by ASTAE were in general related to DSM and the establishment of EMCs. The renewable energy tasks were performed mainly on electricity projects for connection or reinforcement of grids and rural electrification mostly using PV. 44 ASTAE Annual Status Report #14