META| Assessment of Electricity Supply Options
Decisions about electricity planning are becoming increasingly complex, due to the pace of technological change, rapid shifts in equipment and fuel prices and the ever-expanding availability of data. To help electricity policy-makers and planners select the most appropriate electricity generation options, ESMAP launched the Model for Electricity Technology Assessment (META) in FY2012, as part of its work on global energy planning tools and toolkits.
META provides a comparative assessment of the levelized costs for a range of electricity supply options, including renewable energy. The model takes into account changes in capital and operating costs over time, as well as transmission and distribution options. One of the advantages of META is that it covers a comprehensive range of technologies, ranging from solar, wind, and geothermal, to fossil fuel-based power. Users can look at options categorized by scale: off-grid, mini-grid, and grid-connected. The model is able to incorporate environmental externalities such as costs for local pollution and carbon emissions.
META was launched at a workshop at the World Bank in Washington DC in June 2012,. The META model is now available for use by client countries, researchers, consultants, and other stakeholders upon request, as well as by World Bank teams as part of engagement with countries on energy issues. A number of teams and consulting firms have begun using the tool in their work. Feedback from those users is being incorporated into the model in preparation for it being updated and made more widely available.
Policy Dialogue and Power Sector Support in South Asia
The South Asia Regional Electricity Study Series (SARESS) of papers was launched in FY2011 to provide focused knowledge pieces to examine a specific set of related policy questions in the areas of improving operational and financial performance of the energy sector; and strengthening governance to improve the contribution of energy to equitable economic development. The work under this initiative has clear operational links, that aims to enrich the World Bank’s dialogue with client governments, and to inform ongoing work on electricity in South Asia.
SARESS has been completed, with 18 analytical pieces delivered. Topics have included the distributional impact of electricity tariff changes in Nepal and Bangladesh; the cost of rural power supply in South Asia; least cost expansion study for Bangladesh; and lessons from international experience for the regulation of renewable energy in India. These papers have in many cases been tailored and delivered to help inform specific client decisions. This approach has allowed for a strengthened dialogue between the World Bank and clients.
SARESS work in India was designed to complement another ESMAP-supported activity, the India Power Sector Diagnostic Review, which is still ongoing. This activity is a comprehensive stocktaking of India’s power sector, covering access levels and challenges in improving access to energy, the financial and operational performance of the sector, and corporate governance in power sector utilities. Outputs from this work have already had an impact. The background paper on energy access, prepared as part of the review, provides recommendations on policies for increasing access to modern energy services, and has been used as an input for preparation of India’s 12th Five-Year Plan.
Helping Mitigate the Risks from High and Volatile Oil Prices
World oil prices have risen substantially in the last decade—since 2002, the price of oil has increased more than fivefold. In the period since prices reached their peak in 2008, ESMAP has been helping countries manage their energy sector’s responses to oil price volatility. The latest work in this series focuses on the experience of the power sector in Latin America and the Caribbean, where some countries are acutely vulnerable to oil price shocks.
Mitigating Vulnerability to High and Volatile Oil Prices, published in early 2012, follows on from earlier ESMAP-supported work done in South Asia and Europe and Central Asia, exploring potential government actions to strengthen the resilience of the power sector to financial and market shocks. The report, which highlights the particular vulnerability of Central American and Caribbean nations to high and volatile oil prices, offers a menu of complementary measures to increase resilience. In the short term, market-based risk management solutions (physical and financial instruments) such as forward contracts and futures can be used to manage oil price risk. In the long term, more structural measures, such as investment in renewables, efficiency measures on both the generation and demand side, and regional integration, can help decrease dependence on oil and oil-derived products.
The report has been widely disseminated in Latin American and Caribbean countries. Additionally, the findings of the report were used to advise governments in the Pacific, where small island developing states share many similarities with their Caribbean counterparts, including an acute vulnerability to oil price increases. Recently, Central American governments have requested World Bank technical assistance in identifying the potential for natural gas use as an alternate fuel source aimed at helping reduce their vulnerability to high and volatile oil prices. Another related study, which aims to assess the impact of sustained high oil prices on the energy sector in Latin America and the Caribbean, is expected to be completed in FY2013.
Improving the Institutional Framework for Energy in the Maldives
A 2010 World Bank project, funded by ESMAP, set out to support the Maldives in its goals of reducing dependence on diesel-powered electricity and moving towards carbon neutrality. The country depends heavily on imported fossil fuels to meet its energy and transport needs. The electricity sector runs almost entirely on imported diesel fuel. And the geographic dispersion of the country means there is no national grid. The activity was focused on helping the government develop and implement a robust regulatory regime for the energy sector. At the time the work started, the government had only a small unit devoted to regulating energy within the Ministry of Housing and the Environment, the Maldives Energy Authority (MEA), which had a hard time executing its mandate due to resource constraints. Before the regulatory architecture could be improved, the foundation—the regulator itself—had to be strengthened.
The team working on the project carried out a study of the current sector and the obstacles MEA was facing to find what it would take to achieve efficiency and economy of scale by comparing regulatory bodies from other countries similar to the Maldives. A skills gap analysis was also conducted to see where technical capacity would need to be increased within the MEA. An interim report was delivered to the government in early 2011 with two options: (a) to strengthen the existing MEA as a stand-alone body responsible for all energy regulation, or (b) to set up a combined authority merging two or more regulatory bodies together.
In March 2011, the government expressed its desire to move forward with the first option, and use the existing MEA to focus solely on the energy sector. A comprehensive set of draft regulations for licensing of electricity operators, procedures for investment approvals, utility performance standards, and an institutional development plan for the MEA was completed in 2012. The recommendations emphasized the paramount importance of safety and network security, and called for regulations that promote investment, are suited to the geographic spread of the country, and that institute standards and compliance while not putting an undue burden on suppliers.