Helping utilities in developing countries leverage innovation to achieve the energy transition
The energy sector is undergoing a transformation driven by decarbonization goals and technological advancements. These factors challenge the traditional utility system and the adequacy of existing regulations. In addition, the increasing availability of cost-effective digital technologies is opening new opportunities for enhanced data-driven decision-making, automation, and new business models that can help improve the flexibility and reliability of power grids. This is critical for the higher penetration of variable renewable energy, distributed energy resources, and clean energy transition. However, for utilities in developing countries, the lack of knowledge and financial resources, can be challenging. Yet, it also presents an excellent opportunity to deliver on the urgent goals of universal access and full decarbonization.
ESMAP’s Utilities for the Energy Transition Program supports utilities in developing countries contending with this changing landscape. The program provides technical assistance and pilot programs to guide utilities’ investments in digital and decentralized technologies, such as advanced metering infrastructure and grid-connected distributed energy resources. In addition, the program seeks to help client countries design and implement new utility business and regulatory models that bolster the energy transition, harnessing the deployment of new technologies and service providers in the energy sector.
The Utilities for the Energy Transition program supports teams across the World Bank and utilities and governments in developing countries through two main workstreams:
- Country and regional grants: Through its grants, the program supports several types of initiatives with activities that help utilities improve their performance through the design and implementation of new lending operations. It works to prevent utilities’ finances from deteriorating if investments in electrification are not accompanied by demand increase through assessment, design, and piloting of utility enabled appliance financing to stimulate demand. It also increases data gathering, automation, and the creation of business models that can help improve the flexibility and reliability of the grid to support decentralization, renewable energy penetration, and clean energy transition. The program also works to modernize the grid to make it “smarter” with technology adoption and digitalization to increase the reliability and flexibility of the grid, benefiting both utilities and consumers.
- Global knowledge and dissemination: The program collaborates with other ESMAP programs to generate advanced global knowledge, integrated, and incorporated into knowledge products for governments in developing countries, especially utilities and regulatory agencies. Furthermore, the program supports World Bank teams to identify and prepare investment projects and policy dialogue. It works with the World Bank’s Global Knowledge team to compile a series of global knowledge and advocacy activities on the “Utility of the Future.” These activities seek to build on synergies with country engagements. They include a series of case studies, a platform for global exchange on the emerging technologies and practices, with the potential to improve core utility functions, planned reports on regulatory frontiers, and associated training workshops.
Between 2020 and 2021, the program has allocated US$ 1.257 million in country grants for activities in 11 countries in Latin America and the Caribbean, Sub-Saharan Africa, South Asia, and Eastern Europe and Central Asia. These include a series of activities around automation of the distribution grid, including through digitalization, for greater penetration of Distributed Energy Resources (DER) in Bangladesh, Costa Rica, India, and Uzbekistan.
Some of these activities include:
- In Kenya, which implemented an expansive electrification project, and in Niger, the Utilities for Energy Transition program supported studies on electricity demand. The program collaborated with ESMAP’s Innovative Financing for Access Program to leverage utility data and piloted appliance finance and distribution options to make demand-stimulating appliances affordable to consumers.
- Closing gender gaps: The program partnered with the South Asia Gender Facility to close the gender gap in female employment in the energy sector, especially utilities. It built a strong demand pipeline through outreach to World Bank regional teams, knowledge-sharing, and follow-up funding requested for ongoing country grants. Alongside the ESMAP Gender team, the program is creating a ‘cheat sheet’ to help country teams identify barriers to reducing gender gaps in employment in electric power utilities, and design interventions to address these.
- In Europe and Central Asia, Utility for the Energy Transition grants fund activities to help utilities manage the impact of a transition to a decarbonized district heating sector. In Sub-Saharan Africa, the program is working on a series of pilots on appliance financing in Kenya and Niger, collaborating with ESMAP’s Innovative Financing for Access program.
- In India, the program supports the automation in electricity distribution to increase the capability for integrating Distributed Energy Resources (DERs). The project aims to support distribution utilities’ investment in distribution management systems (DMS), outage management systems (OMS), and advanced metering infrastructure (AMI). The grant will provide technical assistance to help the distribution utility in the Andhra Pradesh state to develop centralized smart grid operations integrating these different systems.