There is increasing interest in results-based approaches (sometimes referred to as Payment by Results) from both client and donor countries, but their deployment in the energy sector has been limited in comparison to other sectors such as health, ICT and transport. In response, ESMAP has initiated a work program that aims to assess how, and under what circumstances, results-based approaches can be used to improve outcomes and scale up financing for energy sector development. It will support the design, implementation and assessment of results-based approaches—with a particular focus on opportunities under the Climate Investment Funds (CIF) and Energy+ (an international initiative to accelerate efforts towards universal access to energy, energy efficiency and low carbon development).

Payment by Results refers to development assistance that is provided in response to verified results (for example, households provided with a working electricity connection), rather than providing funding up-front for inputs (for example, electricity meters, wires and poles). It can include funding provided from donors or development organizations to governments for results achieved at the national level (“results-based aid”), and also funding for the delivery of basic services (such as health, water and energy) by private sector companies, community organizations, and public providers (“results-based financing”).

This cross-cutting work program includes three components:

• Analytical work on indicators and the economic opportunities for results-based financing
• Knowledge management to disseminate guidance on designing results-based programs and projects and share lessons learned from other sectors
• Operational support to the World Bank regional energy units to develop a pipeline of projects to test out new results-based concepts and ideas

For further information, please contact Oliver Knight or Almudena Mateos Merino at esmap@worldbank.org

Resources

• Results-Based Funding in the Energy Sector: An Analytical Guide
• Blog post: Paying for results: Energy+
• Energypedia articles providing definitions for the key terms: Payment By Results | Results-based aid | Results-based financing.
• ESMAP work program on results-based approaches: Summary Document.
• Use of output-based aid (OBA) approaches for energy access projects: Summary Table.
• ESMAP Knowledge Exchange Forum 2012 looking at the use of results-based approaches in other sectors, and implications for the energy sector: Summary and presentations.
• Presentation on results-based financing given at an international workshop on innovative financing mechanisms on June 5, 2012 (hosted by the Asian Development Bank's Energy for All program, Energy+, the United Nations Environment Program (UNEP), and the World Resources Institute (WRI): Introduction to results-based financing.