BMZ Information Brochure 1/2014e

Sustainable Energy for Development German Development Cooperation in the Energy Sector

Huge challenges lie ahead of us in the next few years. We need to overcome global poverty and hunger, and protect our natural resource base – the whole of creation. The deadline for achiev-ing the Millennium Goals will be up in 2015 and we need a new system of global goals for the period afterwards that meets the needs of both people and the environment. Sustainable energy is a key topic when it comes to addressing these tasks. The promotion of sustainable en-ergy plays a vital role in the protection of global goods, such as biodiversity or the climate, and also when it comes to human development or overcoming global poverty.

Almost everything people do uses energy. Whether at work or at home, in schools or in hospitals, in the manufacturing or in the services sector, for lighting, cooking, cooling or heating, the transport of goods and people, or operating machines. Energy is always needed to make all these processes easier and more efficient. In the food sector, too, energy means crucial progress. Water pumps or irrigation facilities, machines and special agricultural equipment increase the size of the harvest, which is then stored, transported and distrib-uted – using energy.

For almost one sixth of the global population, especially for people in rural areas, energy is inshort supply. At the same time, however, fossil fuels are running out. The carbon dioxide emissions from using fossil fuels are continuing to rise everywhere in the world, adding to the ef-fect of global warming. The outcome is a lack of development opportunities for the poorest people on the one hand and vulnerability to climate change on the other, especially for the least developed countries and their popula-tions. That is why, although people need more energy, particularly in developing and emerg-ing economies, more energy needs to come from low-carbon sources and also – because of the high risks – from non-nuclear options.

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This can only be achieved if more energy is pro-duced using renewables, which means more solar energy, geothermal power, wind and hydro-

power, and sustainable bio-mass. Energy efficiency plays a crucial role, too. The better the efficiency of our energy use, the longer available re-sources will last and the greater the number of people who can use the energy produced, which means less damage to the environment and the climate.

The German government, and specifically the development ministry, supports the goal of UN Secretary-General Ban Ki-moon’s Sustainable Energy for All initiative to bring access to sus-tainable energy to all people by 2030. The initia-tive is working to bring about a global turna-round in energy policy, away from fossil fuels and towards more renewable energy and greater energy efficiency. Together with its global development partners – Brazil, India, In-donesia, Mexico and South Africa – BMZ will continue to work on finding answers to those countries’ energy challenges, creating the nec-essary energy and environmental policies for sustainable development and, at the same time, facilitating access to energy for huge groups of people who do not yet have adequate supplies. The only way we can lay the foundations for a global switch to sustainable energy and thus address the numerous threats to our planet due to global resource shortages is by working to-gether with our partner countries. We can and should bring our skills and know-how into play, making use of experience and success factors from the transformation of the energy system in Germany.

Dr Gerd Müller, Federal Minister for Economic Cooperation and Development

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Sustainable Energy for Development German Development Cooperation in the Energy Sector

01. Introduction ................................................................................................................. 6

02. Overview ........................................................................................................................ 8

03. Action Area: Access ..................................................................................................14

04. Action Area: Renewables ......................................................................................22

05. Action Area: Energy Efficiency ..........................................................................28

06. Germany’s International Commitment ........................................................36

07. The Nexus Perspective ...........................................................................................38

08. Looking Ahead ...........................................................................................................40

01 INTRODUCTION

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“Achieving sustainable energy for all is not only possible, but necessary. It is the golden thread that connects development, social inclusion and environment protection.”

Ban Ki-moon, UN Secretary General

Energy is a key component of development. Even now, however, many millions of people still suffer from energy poverty. They have little or no access to energy for cooking, lighting, heat-ing, cooling or using information and communi-cation technology. This has a detrimental impact on their quality of life, their health and their opportunities to gain an education and earn income, while hampering the country’s economic development.

Access to energy is therefore also a prerequisite for attainment of the Millennium Development Goals. As a consequence, demand for energy will increase significantly: the International Energy Agency calculates that global energy consump-tion is likely to rise by a further 40 per cent by 2035, with developing and newly industrialising countries accounting for some nine tenths of this increase. In the long term, rising energy demand cannot be met solely with fossil fuels. Experts continue to debate when ‘peak oil’ will be reached, but the finite nature of fossil fuels reserves is beyond doubt.

Only renewable energy, which is available in almost unlimited quantities, can give more people access to energy while keeping damage to the climate and environment to a minimum.

Boosting energy efficiency can make an addi-tional crucial contribution to reducing emis-sions that damage the climate. The potential for saving energy is especially great in devel-oping countries, where the impacts of climate change are felt particularly strongly.

Improvements in energy efficiency and the transition from fossil fuels to renewable energy will not happen overnight, however. Deliberate decisions and consistent policy-making are re quired if climate change is to be kept within bounds and if dwindling supplies of fossil fuels are not to give rise to a global spiral of conflict over resources and their distribution.

The German Federal Ministry for Economic Cooperation and Development (BMZ) supports its partner countries in enabling people to access energy on a sustainable basis and thus to adopt low-carbon pathways. The effect is to promote development while protecting the cli-mate and the environment at the same time.

02 OVERVIEW

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“Energy is the golden thread that connects economic growth, increased social equity, and an environment that allows the world to thrive. Development is not possible without energy, and sustainable development is not possible without sustainable energy”

Kandeh Yumkellah Special Representative to the UN Secretary General, Sustainable Energy for All

The energy sector is one of the priorities of Ger-man development cooperation and has in recent years become an increasingly important aspect of BMZ’s activities. This cooperation now involves more than 50 partner countries worldwide; in 24 of these the energy sector is a priority of bilateral cooperation (see Figure on next page). In 2011 alone, pledges for energy projects (including low-interest loans by KfW Development Bank) amounted to some 1.86 bil-lion euros. Between 2004 and 2011 a sum of around six billion euros was pledged for energy projects and programmes. This makes energy the largest funding area of German development cooperation – and it is set to grow significantly.

BMZ’s main goals in supporting energy projects are to provide poor people with access to energy, improve their economic prospects and enhance social security and stability in the partner countries. It focuses in particular on the areas of renewable energy and energy efficiency because in both there is enormous potential to be unleashed, especially in deve-

loping countries. KfW estimates that in Africa alone 90 per cent of renewable energy capacity is still untapped.

Partner countries receive support in the form of advice on policy and technical issues, in parti-cular from the Deutsche Gesellschaft für Inter-nationale Zusammenarbeit (GIZ) GmbH, and through the financing of energy projects by KfW Development Bank.

German development cooperation involves all the relevant stakeholders in the energy sector, including government institutions, energy com-panies and other representatives of the private sector, associations, scientific groups, civil soci-ety and directly affected citizens. This partici-pation takes place at all levels – local, national and regional. For example, public institutions, such as national electricity authorities and regu-latory agencies, are developed and strengthened through the provision of conceptual and strate-gic policy advice. In other cases, the local acti-vities of companies and non-governmental orga-

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Partner countries of German development cooperation in the energy sector

Countries with energy as a priority area (BMZ):

AfghanistanEgyptAlbaniaBangladeshBosnia & HerzegovinaBrazilIndiaCaribbean programme

Caucasus InitiativeKosovoMoroccoMexicoMongoliaNepalNigeriaPakistan

SenegalSerbiaSouth AfricaTanzaniaTunisiaUgandaUkraineVietnam

Other Countries with energy projects (BMZ):

BoliviaEcuador Ghana JordanKenyaKyrgystanDemocratic Republic of the Congo

NamibiaPeruTajikistanTogo

nisations are supported. In addition, loans and subsidies are offered to governments, public energy undertakings and also indirectly to pri-vate companies via the finance sector. Further-more, campaigns and training schemes educate and inform the population about energy issues. In these varied ways BMZ, with its implementing organisations and other partners of German development cooperation, assists diverse stake-holders with distinct instruments in order to enable them to achieve the goals they have set for themselves.

The energy sector is closely linked to climate change mitigation and environmental conser-vation. This means that energy generation must be carbon-neutral wherever possible; in other words, fossil fuels need to be gradually substituted by renewables. At the same time,

adverse environmental effects must be kept to a minimum. Since 2011, German development cooperation has therefore carried out systematic environmental and climate assessments of all its programmes with the aim of preventing or reducing damage to the climate and environ-ment and identifying potential for reducing greenhouse gases. Between 2009 and 2011, BMZ increased its funding for climate change miti-gation from just under 900 million euros to 1.5 billion euros annually, making Germany one of the largest donors in the field.

BMZ’s activities are complemented by climate and energy projects of other German Govern-ment departments, such as the German Federal Ministry for Environment and the German Federal Ministry of Economics. The German Government also supports the energy pro-

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grammes of European institutions such as the European Commission and those of multilateral organisations including the United Nations, the World Bank and regional development banks.

German development cooperation attaches great importance to the achievement of measurable results in its projects and it campaigns also at international level for greater effectiveness. To this end, results are precisely monitored and evaluated. This is essential if ambitious natio-nal and international targets are to be achieved and if Germany is to make a genuine contri-bution to a better, greener and more climate-friendly energy supply for all.

Sustainable Energy for All – SE4All At international level, German development cooperation supports the energy sector policy of the United Nations. In 2011, UN Secretary-General Ban Ki-moon launched the Sustainable Energy for All (SE4All) initiative. Subsequently the UN declared 2012 the International Year of Sustainable Energy for All and 2014-2024 as the Decade of Sustainable Energy for All. 80 developing countries and numerous donors, including the European Commission and Germany, have now joined the SE4All initiative. It has three objectives, which it wants to see achieved by 2030:

Y ensure universal access to modern energy services (especially electricity and cooking energy)

Y double the global rate of improvement in energy efficiency Y double the share of renewable energy in the global energy mix

BMZ intends to make a substantial contribution to the attainment of these objectives; it plans to help its partner countries provide an additional 100 million people with access to electricity or sustainable cooking and heating energy by 2030. To this end, it is seeking to double funding for the energy sector to at least 3.6 billion euros annually by 2030.

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Y Y

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ACTIONAREAS

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ACTION AREA ACCESS

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“More than 1 billion people in poor countries around the world could have access to electricity within 20 years if the international community is prepared to make the effort.”

International Energy Agency

The challenge of energy poverty

People are described as energy-poor if they have little or no access to energy for cooking, ligh-ting, heating, chilling and the use of informa-tion and communication technology. There are 1.3 billion people who have no electricity; about twice this number depend on firewood, charcoal, dung or plant residues for cooking and heating. Yet if energy is unavailable, unaf-fordable or only inefficiently usable, impor-tant needs go unmet. This type of poverty has major consequences for those involved: their quality of life – and often their health – is impaired; their educational and income-gene-rating opportunities are limited. Ensuring that more people have access to energy is therefore not just an issue affecting individu-als but a social concern, especially as it is not only private households that lack energy but often also social institutions such as schools and hospitals. Small businesses, too, may suf-fer from energy poverty, which then greatly limits the scope of their economic activities.

The problem is most acute in sparsely populated rural areas of developing countries. Sometimes fewer than five per cent of the people living in these areas have access to electricity. But in the cities, too, electricity supply companies are often unable to keep pace with the rapid rate of population growth. Many countries have insuf-ficient power plants and those that exist are frequently poorly maintained, outdated and inefficient. This results in power cuts and voltage fluctuations, at considerable cost to the economy. It is therefore important to invest in efficient, green and environmentally friendly generation and use of electricity and in the expansion and modernisation of electricity grids. Where it will not be possible in the foreseeable future to provide electricity via national grids at acceptable cost, distributed solutions need to be promoted. These operate independently of the national grid, for example in the form of mini-grids, stand-alone photovoltaic systems or small biogas units, thereby providing people even in remote regions with access to energy services.

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Energy for cooking and heating is also an area of concern, as the traditional and usually ineffici-ent use of fuels such as firewood and charcoal gives rise to serious health problems. Burning these fuels produces large quantities of smoke, which causes respiratory and eye diseases, espe-cially in women and children. The “The Global Burden of Disease Study” estimates that 3.5 mil-lion people annually die prematurely as a result of smoke-related air pollution. In addition, the use of wood destroys forests and harms the natural environment on which people depend for their survival. As fuel becomes increasingly scarce, women and children must cover ever-longer distances to gather what they need for cooking and heating. This deprives them of time for other activities, such as attending school or working in the fields. Often the families invol-ved then incur even more expense because they need to purchase additional fuel as supplies in their immediate vicinity dwindle. This places strain on the family budget and sets in motion a negative cycle that creates major problems for those affected. Thus, it is particularly important to increase the use of improved, energy-saving stoves and alternative fuels and to ensure that forests do not shrink further but are replanted and sustainably managed.

In some countries in colder climate zones, such as Mongolia and the Peruvian highlands, the main problem is the provision of adequate hea-ting energy. Women and children traditionally

spend much of their time indoors; they are therefore particularly exposed to cold and harmful smoke from inefficient stoves and open fires. In such countries, businesses as well as public and social institutions also need a good supply of heat if community life is not to suffer severely in the cold season.

Energy poverty can take different forms in dif-ferent situations, but it always has major conse-quences for people’s lives. Irrespective of whether it is electricity, wood-saving stoves or heating energy that is in short supply, everyday life – and hence the development of entire societies – is adversely affected.

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Germany’s contribution to reducing energy poverty

German development cooperation considers the energy needs of all user groups – households, businesses and social and public institutions. It looks at the electricity supply as well as at clean energy for cooking and heating. Sustainability – in economic, ecological and social terms – is a key aspect of all activities.

The implementing organisations of German development cooperation have extensive expe-rience in this field and are helping to improve access to energy in many countries (Project Example 1). Increasingly, their expertise, inter-national presence and implementation strength is also being called on by other bilateral and multilateral donors. For example, through the global Energising Development (EnDev) part-nership BMZ, with the Netherlands, Norway, Australia, the United Kingdom and Switzer-land, is helping partner countries improve access to energy. This is being achieved through pro-grammes that include promotion of efficient cooking stoves, rural electrification and the provision of electricity to schools and hospitals.

Other projects encourage the productive use of energy in small and medium-sized businesses. GIZ is currently implementing these projects on behalf of BMZ in 24 countries in Africa, Latin America and Asia (see Figure below). Since the formation of the partnership in 2004, EnDev has provided more than ten million people, most of them in rural areas, with access to improved cooking technology or electricity. In addition, more than 35,000 social institutions and small businesses have benefited from the programme. By December 2018, some 14 mil-lion people will have obtained access to sustai-nable energy as a result of EnDev’s work. Access to sustainable energy is supported not only by state implementing organisations but also by companies (Project Example 2) – for example, through the develoPPP.de programme – and non-governmental organisations (Project Example 3).

EnDev is currently active in 24 countries in Africa, Latin America and Asia, where it is encouraging the productive use of energy in small and medium-sized businesses:

BangladeshBeninBolivia Burkina FasoBurundiCambodia

EthiopiaGhanaHondurasIndonesia KenyaLiberia

MadagascarMalawiMaliMozambiqueNepalNicaragua

PeruRwandaSenegalTanzaniaUgandaVietnam

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PROJECT EXAMPLE 1: Access to electricity in northern Uganda The West Nile region is situated in the north-west of Uganda, bordered by the Democratic Republic of Congo and the Republic of South Sudan. This corner of the country lies more than 800 kilometres from the capital, Kampala. Its outlying position has major consequences for the region: it is not connected to the national electricity grid. As a result, the electrification rate is only one per cent – even lower than the national average of 15 per cent, which is itself low.

In 2011, the existing mini-grid served only a few places in the region and was liable to break down. It was powered by heavy oil and provided electricity to just 3,100 customers. Another 2,000 prospective customers were waiting in vain to be connected, because the local private utility, the West Nile Rural Electrification Company, had insufficient capacity to supply them.

The region is fertile and could provide opportunities for income generation and even for export if the farmers had electricity with which they could irrigate the fields or dry the harvest. As it is, more than 60 per cent of people in the West Nile region live below the poverty line.

Through an electrification programme financed by KfW Development Bank on behalf of BMZ, which is contributing around 28 million euros, and the EU, which is providing more than three million euros, and in cooperation with various local executing agencies, the elec-tricity supply is now gradually being improved. This is being achieved by expanding two small hydropower plants and enlarging the electricity distribution grid. The construction of almost 300 kilometres of transmission lines will enable many villages to be supplied with electricity. The first power plant commenced operation in 2012 and has already rendered the heavy oil generator superfluous. The second power plant is due to follow in a couple of years. Prepayment meters are also being introduced; this encourages careful use and gives customers complete control over costs.

GIZ is amplifying the impact of the investment through various complementary measures. For example, it is raising awareness of efficient and productive energy use and training technicians who can install new electricity connections. The aim is to provide 60,000 people in six cities and 40 trading centres with access to electricity. The West Nile will then still be far from the capital, but it will be much nearer to keeping pace with the times.

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PROJECT EXAMPLE 2: An electricity supply for villages in Senegal Sine Moussa Abdou is a village in Senegal. It is situated in the Thiès region, beyond the reach of the national electricity grid. Until 2010, its population at night had to rely on candles and kero-sene lamps. But these “dark” times are a thing of the past: the 900 inhabitants of the village now draw their electricity from a mini-grid fed mainly by wind and solar power. They have electric light and can charge mobile phones, listen to the radio, watch television or use other electrical and electronic devices. This not only improves their quality of life but also opens up new income-earning opportunities. For example, the tailor M’baye Djeune has bought an electric sewing machine, which has increased his output sixfold; he can now sell the clothes he makes not just in his village but also in the nearest town.

The electricity system was installed by the German company INENSUS, based in Goslar/ Germany, and its Senegalese partner MATFORCE. The venture was based on cooperation between INENSUS, the Senegalese partner-company and GIZ, which set out to test both the technology and the multi-award-winning “Micro Power Economy” business model

under local conditions. To finance the project, an agreement on electricity prices and the quantity of power to be supplied was concluded with village leaders. INENSUS installed smart meters for mini-grids that were specially developed for the project and enable the electricity to be billed fairly. This has created planning certainty for suppliers and customers. A second vil-lage in Senegal is now following the example of Sine Moussa Abdou; there too, the electric lights will soon be on in the evenings.

INENSUS is striving to expand its activities in Senegal. It plans to electrify another 50 villages. The Senegalese subsidiary ENERSA S.A., a joint enterprise with the local company MATFORCE, has won the tender of the rural electrification agency ASER to electrify 20 villages. In another 30 villages, island grids to supply the population with electricity are being set up with the help of funding from the Dutch development bank FMO and a grant from the Daey Ouwens Fund.

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PROJECT EXAMPLE 3: Energy-saving stoves in the Democratic Republic of Congo The high plateau of Minembwe in the province of South Kivu is a remote, inaccessible and war-torn area of the Democratic Republic of Congo. All cooking is done with wood, since no other fuel is available. Food is usually cooked over open fires: this causes health problems, and much of the energy is wasted. As a result of the high consumption of wood the region is heavily deforested and women and girls must range ever further afield to gather their daily supplies of firewood.

In 2011, Oxfam Deutschland e.V. and its Congolese partner organisation Union des Groupes d´Etudes et d´Actions pour le Développement de Fizi-Itombwe (UGEAFI) therefore launched an integrated rural resource conservation programme. Oxfam and UGEAFI focused on the use of improved stoves, such as the highly efficient “Rocket Lorena” stoves that are already widely used in neighbouring Uganda. These stoves are inexpensive because they are made from local materials, and by comparison with traditional stoves they use significantly less wood and produce only a fraction of the harmful smoke. People in the region are being

trained to make the stoves and market them commercially. Each family that acquires one of these stoves must also plant trees to ensure a sustainable supply of firewood. Two thousand families are due to be cooking on energy-efficient stoves by the end of 2014. By then, 200,000 trees will also have been planted to halt deforestation and create supplies of firewood.

The improved stoves reduce the use of firewood to one sixth of the amount previously con-sumed. In addition, shorter cooking times save up to five litres of water per day. An evaluation showed that women now have more than 27 hours of additional time each week. This is time that they no longer need for gathering wood and cooking but can use instead for other work or for social life in the village. Also, more girls are going to school; they are less often absent from lessons and are more likely to obtain a vocational qualification. The number of violent assaults on women and girls has also fallen because they spend less time roaming the forests in the conflict zone. There has been a noticeable reduction in health problems caused by smoke such as irritations of the eye and mucous membranes, respiratory tract disorders, headaches, back pain and burns from open fires. And families now eat together, because women no longer need to tend the food over an open fire. All in all, then, there are many benefits at comparatively little cost.

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04 ACTION AREARENEWABLES

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“Renewable energy provides a prospect for development and growth in a sustainable manner. Around the world, it creates jobs, expands access to energy, improves energy security and provides a stable vehicle to realise a broad range of social, environmental and economic goals.”

Adnan Z. Amin, Director General (IRENA)

An inexhaustible resource

It is estimated that two per cent of the area of the Sahara would suffice to generate electricity for the entire world: the solar insolation that falls daily on the North African deserts is suf-ficiently intense to provide everyone on the planet with energy. At present, however, that is only a theoretical figure, because the plants and even more so the transmission lines needed to convey the electricity to consumers in other regions do not exist. Yet the sun is not the only source of energy that constantly renews itself and whose availability is virtually unlimited – there is also energy from wind and water power, from geothermal heat and biomass. In total the different forms of renewable energy have enor-mous potential; they could supply many times the amount needed to meet worldwide electri-city demand.

Renewable energy has an important part to play not only in electricity generation but also in water heating, chilling processes, heating and cooking and in industry. Only a small proportion of this potential is being used – in Africa just ten per cent. The reasons for this underutilisa-tion include the often unaffordable costs of the initial investment, underdeveloped electricity

markets and an inappropriate legal framework for renewables.

The IEA calculates that global primary energy consumption will increase by more than 40 per cent between 2010 and 2035. Much of this increase will take place in developing and newly industrialising countries – China alone will account for a third of it. Comprehensive transformation of the energy sector is needed if international climate goals are to be achieved. Greater use must be made of alternatives to the traditional fuels of oil, gas and coal, and effici-ency potentials must be fully tapped. Nuclear energy is not a viable option and Germany does not promote it. What is needed therefore is robust support, not confined to a particular country, for making better use of the potential of renewables. Increased use of renewable energy protects the environment, resources and the climate. It also enables energy imports to be cut back, reduces dependency on fluctuating oil and gas prices, and contributes to local crisis resilience and global conflict prevention. A further advantage is that in many countries the expansion of renewables can create jobs and contribute to creating value.

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Germany’s contribution to the promotion of renewables More than 130 countries, over half of them in developing and newly industrialising countries,have now set targets for renewables or adopted a policy of promoting them. BMZ helps its partner countries define such targets, create the neces-sary enabling environment and develop marketsfor the further expansion of renewables. The projects cover a wide spectrum ranging from policy advice to the financing of the investment and risk costs of renewable energy projects.

For example, German development cooperation advises its partners on promoting an appropriate legal, technical and economic framework for the effective and efficient promotion of rene-wables (Project Example 4). It also develops strate-gies for removing the barriers to entry to the market and for the expansion of renewables, and it campaigns at international level for the abolition of subsidies for fossil fuels. German development cooperation also helps its partner countries improve the investment climate for environmentally sound energy technologies. Finally, it contributes to capacity building by providing further training for the staff of energy ministries and regulatory institutions and by establishing national energy agencies. Partner countries also call on German and international experience and expertise to help them formulate laws and promotion schemes.

Depending on the context, funding may be provided for small distributed solutions such as solar home systems, for renewable energy in island grids or for large grid-connected energy generation projects. German development cooperation leads the way not only in financing wind parks and hydropower plants but also in solar thermal systems and large photovoltaic systems (Project Ex. 5). Reducing investment risks is another important task. For example, Germany bore the cost of trial drillings for geothermal projects in Africa, thereby trigge-ring a surge in investment.

Modern and efficient electricity grids are nee-ded if energy from water, wind, sun, biomass and geothermal heat is to reach the consumer. Developing and expanding these grids and feeding in the energy from renewable sources are among the major challenges for the expan-sion of sustainable energy systems. BMZ is making a significant contribution in this field in many partner countries.

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PROJECT EXAMPLE 4: Impetus for renewables in Brazil In terms of area, population and economic output, Brazil is the most important country of Latin America. On account of its key role in the political and economic development of the region, it is one of the global development partners of German development cooperation.

Reconciling economic growth with environmental conservation is one of the greatest challenges facing Brazil. In pursuit of sustainable development, German development cooperation has been supporting Brazilian institutions since 2009 to promote renewables and improve energy efficiency in the country. The fact that renewable energy sources such as wind and solar power are being used more and more widely in Brazil is also a result of Germany’s involvement. For example, the German Government has helped private energy suppliers install grid-connected solar power systems on football stadiums. This has resulted in the first solar stadium in Latin America (Pituaçu) in Salvador da Bahia and the first photovoltaic system on the roof of a World Cup football stadium, called Mineirão in Belo Horizonte.

Both projects adopted innovative approaches to electricity marketing. The electricity generated in the Pituaçu stadium’s installation, which has a peak capacity of 0.4 MW, is set off against the stadium’s electricity consumption by being paid for at the rate charged to final consumers for their power supply. The approach, known as net metering, has proved extremely successful and has therefore been extended country-wide to renewable electricity generating systems up to a peak capacity of one megawatt. At the Mineirão stadium (1.4 MW peak capacity), a specially developed solar electricity label is to be used. If environmentally-aware and climate-smart companies buy solar energy from the World Cup stadium, they can use the electricity label for advertising purposes. The 2014 Football World Cup is drawing additional attention to the project and hence increasing acceptance of solar energy. The German Government hopes that the solar stadiums will provide impetus for the expansion of this clean and climate-friendly tech-nology in Brazil.

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PROJECT EXAMPLE 5: Electricity from the Moroccan desert

In 2012, Morocco’s economy grew by more than four per cent. New infrastructure and indus-trial enterprises, as well as a rising standard of living, increase the demand for energy. But Morocco still depends on imported fossil fuels for 95 per cent of the energy it uses. The Moroccan government is therefore seeking to promote the development of a ‘green economy’: with an ambitious National Charter for Environment and Sustainable Development and stringent policies for the environmental, climate and waste sectors, it plans to utilise more of the enormous potential of renewable energy and resource efficiency while at the same time creating ‘green jobs’.

By 2020, the government plans to build five solar thermal power plants with a combined capacity of 2,000 MW and to expand wind energy on a similar scale. The share of renewables in the energy mix will then be 42 per cent – a pioneering achievement.

The city of Ouarzazate on the edge of the Sahara is a good location for the country’s first

large-scale solar thermal power plant. It currently has an installed capacity of 160 MW; this will eventually be increased to 500 MW. Parabolic mirrors erected in long rows collect the sun’s rays and conduct the heat onto a pipe in which thermal transfer fluid circulates. This heats a water/steam circuit, which in turn drives a turbine. A molten salt tank can store the heat for three hours, enabling electricity generation to continue after sunset.

This first power plant of its kind will produce environmentally sound electricity for about 530,000 people. Carbon emissions will be reduced by some 310,000 tonnes per year by comparison with conventional electricity generation. In addition, the country will save valu-able foreign currency because energy imports will fall.

The investment costs for the first phase total around 630 million euros. Morocco cannot muster such a large sum by itself. A number of international finance providers, including in addition to Germany the European Investment Bank and the World Bank, are therefore involved in the project. The project is being led by the Moroccan Agency for Solar Energy

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(MASEN). German development cooperation is supporting the project through KfW: it is contributing 100 million euros. For the second phase of the Ouarzazate solar park, the German Government will again provide a low-interest loan through KfW.

The Ouarzazate power plant acts far beyond the borders of Morocco as a lighthouse project for a low-carbon and climate-smart technology that holds great promise for the future. Alt-hough the electricity it generates will at this stage be entirely for the country’s own use, the project raises hopes that Morocco may one day export solar electricity to Europe.

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ENERGYEFFICIENCY

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“Energy efficiency is the so-called ‘hidden fuel’. ”

Maria van der Hoeven, IEA Executive Director

Doing more with less

While acceptance and use of renewables is gro-wing worldwide, energy efficiency has so far been a relatively minor aspect of development cooperation. The International Energy Agency nevertheless regards energy efficiency as the most cost-effective way of reducing carbon dioxide levels. Under the two-degree scenario, which involves limiting the global temperature increase to a maximum of two degrees cen-tigrade, energy efficiency measures account for half of the world’s avoidable emissions in the period to 2035.

In highly developed energy supply systems, however, only one third of the primary energy is used at present; around two-thirds is lost during conversion, storage and transmission. In many developing countries, the loss is signifi-cantly higher. The potential for saving energy is therefore considerable: in developing and newly industrialising countries, up to 85 per cent of the energy used could be saved. Fur-thermore, the potential for improving energy efficiency can usually be harnessed cheaper in developing countries than in industrialised ones. For example, when buildings are renova-ted in Mongolia, around 30 per cent more carbon dioxide can be saved than when comparable measures are undertaken in Germany. At the

same time, investment costs in Mongolia are about 70 per cent lower than in Germany.

Energy intensity, which describes the relation-ship between primary energy consumption and GDP, is usually higher in developing countries than in industrialised ones. The reasons for this include outdated energy infrastructure in developing countries, insufficient incentives for energy efficiency, lack of expertise and limited resources for servicing and maintenance.

To prevent economic growth from automatically resulting in higher energy consumption, states must create an appropriate enabling environ-ment. Attention must focus on saving energy where it is generated, distributed and used – in power plants, grids, buildings, in industry, in homes and local institutions and not least in transport. For example, the efficiency of electricity generation, transmission and distri-bution can be significantly improved almost everywhere. In the majority of developing and newly industrialising countries, very little attention is currently paid to energy efficiency in buildings, even though the estimated savings can be as much as 40 per cent. Energy could be used much more economically and efficiently also in industry: for example, there are oppor-

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tunities in the use of pump systems and high-efficiency electric motors. With growing indus-trialisation and rising economic output, traffic

volumes usually increase too. Efficiency aspects should therefore be considered whenever new means of transport are introduced.

Germany’s contribution to the promotion of energy efficiency German development cooperation promotes efforts to improve energy efficiency in energy generation, transmission and distribution, in trade and industry, in the transport and service sectors, in public institutions and in private households.

Technical cooperation focuses on advising gov-ernments, ministries and administrative authorities on the creation of the legal frame-work for a shift towards sustainable energy pol-icy (Project Example 6). A further aim is to pro-mote the use of modern, efficient technologies in developing countries. To achieve this, engi-neers and business people do not simply trans-fer solutions from the industrialised countries; much of their work involves adapting these solu-tions to local conditions. Technical cooperation last but not least helps to develop research and

development capacities locally, to devise financing arrangements, manage risks, docu-ment successes, learn from mistakes – and above all, create markets. This is because sus-tainable development must be self-supporting. Another aspect is the training of energy experts, such as energy auditors who will work in local governments or industry. Significant results can also be achieved through information and awareness-raising campaigns and the labelling of energy-efficient products; such measures inform, create awareness of the problems and motivate energy-saving behav-iour. Pilot projects play an important part in this, serving as models for others.

31

Financial cooperation offers support both for major single investments, such as efficient thermal power plants and electricity grids, and for funding and promotion programmes oper-ated by local banks. These programmes aim to implement energy efficiency measures on a broad scale (Project Example 7). KfW’s success-ful promotion programmes operated within Germany provide a valuable and internationally acclaimed reference framework in this field worldwide.

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PROJECT EXAMPLE 6: Improved energy efficiency through an Open Regional Fund for Southeast Europe

Since the end of the wars in the Balkans, the countries of Southeast Europe have been endeavouring to catch up with the European Union in terms of their level of development. Slovenia and Croatia have already joined the EU, and Brussels is holding accession talks with other countries in the region. To promote cooperation between the different countries and facilitate rapprochement with the EU, BMZ has set up several Open Regional Funds (ORF), including one for energy efficiency.

The energy sector is in need of reform in almost all countries of Southeast Europe. Its infrastructure is frequently outdated. However, consumer prices for electricity are being kept low, so there is insufficient revenue to maintain and update grids and power plants. In addition, because of lax payment practices, energy services are not always paid for. State energy providers frequently operate at a loss, which puts public finances under strain. Furthermore, the attitude to the use of energy is generally very careless. All of this means, however, that there is great potential for energy efficiency.

In 2006, in order to tap this potential and at the same time bring standards in Southeast Europe closer to those of the EU, BMZ set up the Open Regional Fund for Energy Efficiency. GIZ manages the fund, through which energy efficiency projects can be implemented quickly and without any bureaucratic hurdles.

The projects supported by the fund include the so-called energy community, to which various governments in the region belong. In regular consultations with the secretariat of this com-munity, the member countries coordinate their energy and climate policies and align them with the European Union’s targets. They also develop systems for monitoring and evaluating their national energy efficiency action plans.

Another project supported by the ORF is the Network of Energy-Efficient Capital Cities in Southeast Europe. The capital cities of Croatia (Zagreb), Bosnia and Herzegovina (Sarajevo), Montenegro (Podgorica) and Macedonia (Skopje) founded this network in 2009 and set themselves the target of reducing their carbon dioxide emissions by at least 20 per cent by 2020. To this end, they have formulated action plans which focus in particular on upgrading the energy efficiency of municipal institutions such as kindergardens, schools and local government buildings. Such projects provide a model for other cities and districts in the participating countries. At the same time, the cooperation between capital cities sends a political signal in a region that less than 20 years ago was still embroiled in war. Tirana (Albania) has now become the fifth member of the network.

With projects such as these, the ORF is working to strengthen the links between the countries of Southeast Europe, consolidate their relationship with the European Union and at the same time modernise their energy systems.

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PROJECT EXAMPLE 7: Energy efficiency in India

For many years, the Indian economy grew at an impressive rate of more than seven per cent annually. However, its recent weak growth has revealed structural shortcomings, not least in relation to sustainability. The country is now endeavouring to find new ways of improving energy efficiency, since there is great potential in this area. As in Germany, the building sector is a particularly suitable target. Improving the energy performance of buildings commences already at the planning stage, involving issues such as the choice of materials, the deliberate use of self-shading, and the use of efficient building technologies for cooling, lighting and – in northern India – for heating.

These savings opportunities have in the past been largely ignored in India. Relatively low electricity prices and the absence of efficiency standards for materials and energy use in buildings meant that there was little incentive to consider them. The issue was first addressed in 2008: then, BMZ commissioned KfW to develop a programme that would utilise the experience, gained over several decades, of supporting home owners in Germany.

In order to develop a similar system for India, KfW first arranged cooperation between the Fraunhofer Institute for Building Physics in Germany and The Energy and Resources Institute (TERI) in New Delhi. This cooperation has resulted in an instrument for calculating energy levels in residential buildings that is based on European standards but takes account of Indian circumstances. The tool can be used to calculate a building’s energy requirements and the savings that could be achieved through various efficiency measures.

KfW then provided the Indian National Housing Bank with a low-interest credit line of 50 million euros. Via other banks, the National Housing Bank passes on this money in the form of housing loans to finance energy-efficient dwellings. Residential buildings can be certified and receive money from the KfW credit line if passive measures, for example in building design, bring energy consumption down to at least 18 per cent below the standard con-sumption level and if additional active measures, for example the use of energy-efficient air conditioning systems, bring consumption down to at least 30 per cent below the standard level. The key issue is the saving achieved, which is calculated using the tool developed by Fraunhofer and TERI. In addition, KfW is helping India define and introduce energy efficiency labels in line with the schemes tried and tested in Germany.

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More than 1,300 borrowers have now received loans totalling 30 million euros. 144 build-ings in twelve major Indian housing projects have been refinanced via the credit line. These buildings save 1,800 tonnes of carbon dioxide annually by comparison with traditional structures. In addition, many other buildings have been assessed and certified using the tool. Overall, the energy efficiency measures are preventing the emission of more than 30,000 tonnes of carbon dioxide annually. On account of its innovative nature, the National Housing Bank programme received the SKOCH Award for Financial Inclusion in 2012.

At the government negotiations in the summer of 2013, a further 100 million euros was pledged for the programme “Energy-efficient living II”; this will be used to expand the existing credit line.

Bilder aus dem Projekt

liegen nicht vor

a

06 GERMANY’S

INTERNATIONAL COMMITMENT

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International Renewable Energy Agency

IRENA

In addition to its bilateral programmes, BMZ participates in various international processes and institutions for the further expansion of renewable energy.

These include the European Union Energy Ini-tiative (EUEI), in which Germany plays a key role. This joint initiative of the European Com-mission and the EU member states aims to improve energy supplies in developing countries and thereby contribute to the achievement of the Millennium Development Goals.

Moreover, the German Government is also active in the Africa-EU Energy Partnership (AEEP); Germany and Austria chair the Euro-pean steering group together. The AEEP plans to provide an additional 100 million people in Africa with access to sustainable energy by 2020. This will be achieved mainly via an Africa-EU cooperation programme that will expand the use of renewables on the continent (10,000 MW of electricity from hydropower, 5,000 MW of wind energy and 500 MW of solar energy).

Access to improved, energy-efficient stoves also has an important part to play in reducing energy poverty. German development coopera-tion is therefore particularly involved in this area. Germany is a founding member of the Global Alliance for Clean Cookstoves, which seeks to enable an additional 100 million households to use clean cooking energy by 2020. The alliance is able to make use of the many years’ experience that German develop-ment cooperation has in this field.

To further accelerate the expansion of renewa-bles, the German Government was closely involved in the founding of the International Renewable Energy Agency (IRENA) in spring 2009. IRENA aims to become the global voice for renewable energy and hence a driving force in the global transformation of energy systems.

The German Government also supports the Renewable Energy Policy Network for the 21st Century (REN21). REN21 promotes the expan-sion of renewable energy by driving forward political developments and helping to shape decision-making processes at regional, national and international level.

In financing the extensive investment needed to develop and transform energy systems in order to make them more sustainable, German development cooperation works closely with other international financing institutions inclu-ding the World Bank, the European Investment Bank (EIB) and the French development bank (AfD). Germany also operates joint projects with the European Bank for Reconstruction and Development (EBRD) and the regional develop-ment banks (Asian Development Bank, African Development Bank, Inter-American Develop-ment Bank). Although multilateral funders are sometimes more prominent in the public eye, bilateral institutions frequently make significantly higher contributions, as a recent study on the funding of energy efficiency by the International Energy Agency has revealed.

07 THE NEXUS-

PERSPECTIVE

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Natural resources such as water, soil and energy are limited and coming under increasing pres-sure as a result of rising demand, changing environmental conditions and poor manage-ment. It is therefore important to prevent negative interactions between the sectors and their various demands by adopting a coherent approach. This “nexus-approach” aims to improve water, energy and food security, ensure that resources are used sustainably and increase energy efficiency. It is based on the view that there is considerable benefit in iden-tifying disparate user claims at an early stage and seeking solutions that prevent conflict and are therefore advantageous or at least non-det-rimental for everyone involved. The systematic approach of the nexus perspective is primarily a question of good governance and policy-making. The German Government provided important momentum with a conference it held in 2011 and which was called “The Water, Energy and Food Security Nexus – Solutions for the Green Economy”.

Many development cooperation projects already explicitly incorporate the nexus perspective. For example, the project “Adaptation to climate change in the water sector in the MENA region” aims to permanently improve the availability of water in North Africa and the Middle East, where it is a scarce resource – taking into account the effects of climate change in the process.

Activities include the preparation of studies, decision-making documents, plans and strate-gies for the future use of water, energy and land resources.

Morocco provides another example: in “Support to the Moroccan Solar Plan”, the availability of water is taken into account right from the plan-ning stage. Thus, for the Ouarzazate solar ther-mal power plant (Project Example 5), which is currently being realised with German assis-tance, the water requirement was analysed at an early stage and discussed with representatives of the water sector and of irrigated agriculture so that possible resource conflicts could be pre-empted. The project also includes extensive consultancy services at national level aimed at reducing the water needs of solar thermal power plants generally.

The nexus perspective is also widely welcomed at international level. Representatives of busi-ness and industry, science, other governments and multilateral organisations have also laun-ched nexus initiatives. BMZ will continue to advocate adoption of the nexus perspective on water, energy and food security at international level and to incorporate it even more firmly into German development cooperation work.

08 LOOKING

AHEAD

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The world is facing a twofold challenge. On the one hand, despite limited resources, rising glo-bal energy demand must be met so that people everywhere have access to energy and economies are able to grow sustainably. At the same time, greenhouse gas emissions must be reduced and the environment protected. Achieving these two objectives requires a global transition to sustainable energy systems.

Germany is one of the leaders in this field, pio-neering both technological innovation and the establishment of the necessary enabling envi-ronment. In 2011, the German Government re-affirmed its trailblazing role with its decision to proceed with the transition to a low-carbon energy system. Building on this knowledge and experience, Germany supports the goal of a global energy transformation in its cooperation with its partner countries. To this end, German development cooperation is piloting ways to decouple development and rising standards of living from energy demand.

Having adopted the Renewable Energy Sources Act (EEG) and created more than 400,000 ‘green jobs’, Germany has become a model of sustain-able industrial policy, demonstrating that rene-wable energy is a viable business field and a sound economic option even for a major econo-my: renewable energy and sustainable energy systems can generate affluence without endan-gering the development prospects of future generations.

The German EEG and other incentive systems for renewable energy now serve as a model in many parts of the world and, with locally appro-priate adaptations, are being applied successfully in more than 50 countries. For some years, BMZ, working with the German Ministry for the Environment and other partners, such as the International Renewable Energy Agency (IRENA), has been successfully operating sche-mes that promote the expansion of renewables worldwide.

Many countries have only limited capacity to assess their renewable energy potential and do not have the expertise to know how best to in-tegrate fluctuating renewable energy into the electricity supply system. German development cooperation therefore helps its partner countries analyse their potential and draw up forward-looking energy scenarios to facilitate the shift from fossil to renewable energy.

German development cooperation also pursues the goals of advancing the global transition to sustainable energy systems and enabling univer-sal access to energy in the context of the Decade of Sustainable Energy for All (2014 – 2024) de-clared by the United Nations General Assembly. From a BMZ perspective, the focus remains on the aim of the “Sustainable Energy for All”-ini-tiative - ensuring universal access to energy services for everyone – as a means of reducing energy poverty worldwide and creating new development opportunities for economically

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disadvantaged people in the partner countries. BMZ is therefore supporting this initiative in the long term. BMZ plans to enable its partner countries to provide an additional 100 million people with access to sustainable energy by 2030. To achieve this, it will make resources and rele-vant German development cooperation know-how available to the partners of this initiative.

Universal access is not the only objective: German development cooperation will also continue to work to remove fossil fuel sub-sidies, promote renewable energy and impro-ve energy efficiency on both the producer and the consumer side. The bilateral coopera-tion portfolio will remain oriented towards these aims.

The international community is currently dra-wing up the post-2015 sustainable development agenda. Building on the Millennium Develop-ment Goals (MDGs) in place up until 2015 and the outcome of the Rio+20 Conference, the aim is to produce targets for economically, environ-mentally and socially sustainable development that can be applied universally to all countries.

The German Government is working to ensure that the new agenda ensures the elimination of poverty in all its dimensions, as well as sustaina-ble prosperity and well-being for all people within the Earth’s ecological limits. Sustainable energy plays an important part in this ‘post-2015 debate’ because it is regarded as key to re-ducing poverty and protecting the environ-ment and climate. The German Government and German development cooperation are committed to this process and are actively in-volved in the committees and working groups where the future development agenda is being debated.

Imprint

Published by theFederal Ministry for Economic Cooperation and Development (BMZ),Division for public relations, information and education

Edited by theFederal Ministry for Economic Cooperation and Development (BMZ),Division for water; energy; urban development; geoscience sector

in CooperationDeutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH,Division for energy, transport and water

KfW Development BankDivision development and climate

Design&Illustrationscreative republic // Thomas Maxeiner Visual Communication Frankfurt/Germany

Printed byBonifatius Druck, Paderborn, Germany

The original document was printed on FSC-certified paper.

Photo credits© BMZ, GIZ (inkl. EnDev & PERACOD)© Martin Albrecht / Jörg Böthling / Jörn Breiholz & Michael Netzhammer / Karin Desmarowitz / Wolfgang Diederich/ Julije Domac

Moussa Doumbia / Fotohaus Heimhuber / Enrico Fabian / Ollivier Girard / Thomas Imo, photothek.net / Inensus GmbH / Farid Hegazy Kamikazz, Senegal / Fidel Karaz / Cordula Kropke / Markus Kirchgessner / Philipp Julian Kruschel / Yeny Medrano / Tim-Patrick Meyer North-west Croatia Regional Energy Agency (www.eumayors.eu) / Iro Olaleye / Dirk Ostermeier / Juan Carlos Quiroz / Christina Rentzmann Christa Roth / shutterstock / Julia Siewert / Michael Tsegaye / Gunnar Wegner / City of Zagreb

As atJanuary 2014

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