ESMAP,, Productive Uses of Electricity, 4-2008

8/10/2019 ESMAP,, Productive Uses of Electricity, 4-2008

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Energy Sector Management Assistance Program

MaximizingtheProductiveUseso

fElectricitytoIncreasetheImpactofRura

lElectrificationPrograms

FormalRe

port332/08

Maximizing the

Productive Uses of

Electricity to Increase

the Impact of Rural

Electrification Programs

Formal Report 332/08

April 2008


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Energy Sector Management Assistance Program (Esmap)

Purpose

The Energy Sector Management Assistance Program (ESMAP) is a global technical assistance partner-

ship administered by the World Bank and sponsored by bi-lateral official donors, since 1983. ESMAPsmission is to promote the role of energy in poverty reduction and economic growth in an environ-

mentally responsible manner. Its work applies to low-income, emerging, and transition economies and

contributes to the achievement of internationally agreed development goals. ESMAP interventions

are knowledge products including free technical assistance, specific studies, advisory services, pilot

projects, knowledge generation and dissemination, trainings, workshops and seminars, conferences

and roundtables, and publications.

ESMAP work is focused on four key thematic programs: energy security, renewable energy, energy-

poverty and market efficiency and governance.

Governance And Operations

ESMAP is governed by a Consultative Group (the ESMAP CG) composed of representatives of the World

Bank, other donors, and development experts from regions which benefit from ESMAPs assistance.

The ESMAP CG is chaired by a World Bank Vice President, and advised by a Technical Advisory Group

(TAG) of independent energy experts that reviews the Programs strategic agenda, its work plan, and

its achievements. ESMAP relies on a cadre of engineers, energy planners, and economists from the

World Bank, and from the energy and development community at large, to conduct its activities.

Funding

ESMAP is a knowledge partnership supported by the World Bank and official donors from Australia,

Austria, Denmark, France, Germany, Iceland, the Netherlands, the State Department of the United

States of America, Norway, Russia, Sweden, and the United Kingdom. ESMAP has also enjoyed the

support of private donors as well as in-kind support from a number of partners in the energy and

development community.

Further Information

For further information on a copy of the ESMAP Annual Report or copies of project reports, please

visit the ESMAP website:www.esmap.org. ESMAP can also be reached by email at esmap@worldbank.

orgor by mail at:

ESMAP

c/o Energy, Transport and Water Department

The World Bank Group

1818 H Street, NW

Washington, D.C. 20433, U.S.A.

Tel.: 202-458-2321

Fax: 202-522-3018


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Formal Report 332/08

Maximizing the

Productive Usesof Electricity to

Increase the Imp

Rural ElectrificatPrograms

An Operation

Methodology


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Copyright 2008

The International Bank for Reconstructionand Development/THE WORLD BANK GROUP1818 H Street, N.W.Washington, D.C. 20433, U.S.A.

All rights reservedProduced in the United States of America.First Printing April 2008

ESMAP Reports are published to communicate the results of ESMAPs work to the development with the least possible delay. The typescript of the paper therefore has not been prepared in accorthe procedures appropriate to formal documents. Some sources cited in this paper may be informalthat are not readily available.

The findings, interpretations, and conclusions expressed in this report are entirely those of the aushould not be attributed in any manner to the World Bank or its affiliated organizations or to me


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Acknowledgments

Abbreviations and Acronyms

Executive Summary

Introduction: The Need for a New Approach to Rural Electrification to E

a Positive Impact on Communities

Waiting for Spontaneous Positive Effects of Electrification Projects to Trickle-Downin Rural Areas Is Not a Satisfactory Option

Proposing an Alternative by Focusing on Productive Uses of Electricity: Scopeand Structure of the Paper

1. Maximizing the Developmental Impacts of Rural Electrification Prog

Two Approaches Building on Cross-Sector Cooperation

An Increased Awareness of the Necessity of Working Across Sectors An Initiating Event that Provided High Level Buy-in: the Energy-Poverty Work

A Mind Shift, Reaching out to Other Sectors to Help Generate Their Outputs From Political Will to Implementation: The Multisector Committee in Senegal

The Context of the Reform of Rural Electrification in Senegal National Background to the Senegalese RE Program

Poverty Reduction in Senegal Earlier Attempts from the Energy Sector to Contribute to Poverty Reduct

The New Senegalese Rural Electrification Strategy Key Policy Decisions that Support the RE Program The ASER, the FER, and the Private Sector: Key Players that Support the D

for Rural Electrification Mechanisms for the Award of Concessions and the Support to ElectrificatProgress in the Implementation of the RE Concessions

Two Approaches Contained within the Rural Electrification Strategy and Targetingto Increase the Impact on Rural Communities

The Systematic Approach: Identification and Promotion of Productive UsThe Pragmatic Approach: Collaboration with Other Sectors Key Program

Contents


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CONTENTS

Step 4: Establish the Economic Viability of a New Production Process and of the Condifor Its Implementation

Step 5: Design and Implement Promotion Campaigns Tailored to Each Type of End UseA Practical Application of the Systematic Approach: the Case of the Senegal Project

Identification of the Activity Champion and Its Team Categorization of Productive Activities Electricity Contribution to Gains in Production Process, Identification of Required

Equipment and Determination of Basic Economic Viability Program and Tools for Advocacy of Change

3. Methodology for the Implementation of the Pragmatic Approach:

The Multisector Energy Investment Projects (MECs) An Opportunistic and Practical Method to Speed up the Delivery of Positive Impact

of RE: The Multisector Energy Investment Projects (MECs) Step 1: Inventory of Other Sectors Programs Whose Outputs Could Benefit from Electr

and Joint Evaluation of Sectors Interest in Creating a MEC Step 2: Localization, Design, and Costing of Electrical Components, Including after

the Meter Step 3: Decision to Collaborate, Definition of Each Sectors Roles and Responsibilities,

Establishment of Contractual Documents, and Implementation How the MECs Were Developed in the Case of Senegal Analysis of the Rural Development Priorities, Identification of Sector Programs, A

of Cooperation, Technical Design, and Costing Who Does What? Establishing Effective Stakeholder Cooperation within the RE

Concessions: Example of MEC Implementation in St. LouisDaganaPodorFostering Stakeholder Cooperation: Example of the Dairy and Cattle Feed MEC

in St. LouisDaganaPodor

Conclusion

Annexes on CD-Rom

List of ESMAP Formal Reports

Figures

Figure 1.1 Examples of Energy-Derived Outputs and Contribution to Other Sectors OutpFigure 1.2 Map of Rural Electrification Concessions

TablesTable 2.1 The Sector-System Matrix Table 2.2 Illustration of Sector-System Matrix, for Agriculture in Region A Table 2.3 Example of Electricity Contribution to the Commodity Value Chain: Case of the

Transformation for Peanut, Fish, and Dairy Commodities Table 2.4 Example of Estimated Cost Reduction Obtained from the Use of Electric EquipmT bl 2 5 Li t f St k h ld Th t C ld B I l d i P m ti C m i


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This paper was prepared and written by Christophe de Gouvello, senior energy sand Laurent Durix (consultant, AFTEG).

The World Bank funded activities discussed in this paper were conceived Christophe de Gouvello and Stephan Garnier for the World Bank project team, Alioand Mustapha Fall for the Senegalese Rural Electrification Agency (ASER). The deprepared by Exa Development, headed by Pape Papa Ibrahima Ndao, under a twsupervised by the World Bank (AFTEG) under joint funding from ESMAP and ID

The detailed design of these activities also received comments and suggestiogroupings of firms prequalified under the bidding process of the rural electrificaSaint-Louis-Dagana-Podor in Senegal. We also would like to thank Dominique Lalfor inspiring us to undertake this cross-sectoral approach to Rural Electrificatiolike to thank Mohua Mukherjee and Koffi Ekouevi for their thorough peer reviesuggestion for improvements. Special thanks to ESMAP staff, Ananda Swaroop anfor compiling, producing and disseminating the final manuscript.

Acknowledgments


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AfDB African Development BankAFDS Social Development FundASER Senegalese Rural Electrification AgencyCFA Franc African Financial Community Franc, 1 Euro = 656 FCFACIMES/RP Senegalese Multi-Sector Committee that aims at reducing poverty

synergies between the energy sector and other sectors.DSRP French for Poverty Reduction Strategy Paper (PRSP)

ERIL Locally Initiated Rural Electrification ProjectFER Rural Electrification FundGEF Global Environment FacilityGoS Government of SenegalGVEP Global Village Energy PartnershipIDA International Development Agency (part of the World Bank GIFIP Private Financing InstitutionsIRR Internal Rate of Return

MEC Multisector Energy Investment Projects (also called PREM in FOBA Output Based AidPADMIR Support Program to Decentralization in Rural AreasPAOA Program Providing Support to Agro-industryPAPASUD Program Providing Fisheries in the SouthPAPEL Program Providing Support to StockbreedingPDMAS Program Providing Support to Agriculture Markets and Agro-PERACOD Program Promoting Rural Electrification and Use of DomesticPNIR Rural Infrastructure National ProgramPPER Priority Rural Electrification ProgramsPPP Public-private PartnershipPRAESC Program Providing Revival of Economic Activities in CasamanPREMS French for Multisector Energy Investment Projects (see MEC)PSAOP Program Providing Support to Service Providers in Agricultur

Abbreviationsand Acronyms


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Rural electrification programs are generallymotivated by the effective and lasting impactsthat they are expected to generate in the field.While there may be some natural trickle downeffect from the massive investments requiredto reach high rates of rural electrification,spontaneous positive effects on social and

economic development are generally limited bya number of local bottlenecks. Two of the mostimportant deterrents to the productive uses ofelectricity are the lack of technical knowledgeand skills of potential users and the financialmeans to acquire the relevant equipment.

Waiting for electrification projects togenerate spontaneous positive effects in

rural areas appears to be a very passiveattitude. This is especially undesirable whenthe budgetary resources of governments areseriously constrained, and when the multilateraland bilateral donor community requires seriousinvestments in the social sectors to meetMillennium Developments Goals.

This paper argues that to be successful,

rural electrification programs should targetdirect impact on livelihoods and revenuegeneration beyond the provision of connectionsand kilowatt-hours by implementing electricityprojects that affect livelihoods and generate newrevenues

Executive Summary

The systematic approatechnologies used in the proof goods and services in a spIt identifies the bottlenecks, use of electricity can contribuor removing the limiting factcosts and gains, and provid

induce the proposed change iis systematicin the sense that itreview of all productive ortaking place in a designated substantial interaction with thwhich these activities take plaapproach proposes to follow

1. Identification of the protaking place in a projesupporting sectors

2. Careful analysis of the proinvolved, identificatiimprovements and limita

3. Review of the contributiothese expected improve

equipment is required4. Analysis of the technic

feasibility and the sociaelectrically based solution

5. Targeted promotion camusers about the gains


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MAXIMIZING THE PRODUCTIVE USES OF ELECTRICITY TO INCREASE THE IMPACT OF RURAL ELECTRIFICATION PROGRAMS

opportunities resulting from the ongoing orplanned implementation of another project orprogram in a given area. It is implemented whenconditions are ripe for a quick-win project thatwould provide rapid revenue-enhancing gains,thanks to access to electricity. It ispragmaticin thatthe focus is on existing projects or programs inother sectors, for which most of the identificationand preparation work has been completed.The magnitude of the gain, while important,matters less than the feasibility and rapidity ofthe implementation of the Multisector EnergyInvestment Projects (MECs) that will provide theexpected gains. The proposed method for theirimplementation follows three steps:

1. Identify the sectors that have activities takingplace in the area of the electricity project, andevaluation of the impact electricity can haveon the sectors outputs.

2. Design and cost out electric equipmentproposed, both before and after the meter.

3. Secure formal agreement among stakeholderson the MEC, respective duties, and modalitiesof cooperation. Establish contractualdocuments and coordination of teams forimplementation.

Both the systematic and papproaches are being tested and impleSenegal, where they were initially devimplemented within the Electricity SRural Areas Project (ESRAP) co-finanWorld Bank. The case of Senegal provworld and practical reference, demthat the approaches are complemeare generic enough to be appliedvaried rural electrification programmethods described are flexible enoadapted to each countrys or programsituations.

In Senegal, the overarching crural electrification included establisconcessions to be attributed to the prifollowing a bidding process, and the a new entity, the Senegalese Rural EleAgency, which assisted and oversaw tThe implementation of the appradapted to the local setting, while inthe concept of cross-sector collaboratipractice of including a livelihood comthe countrys rural electrification pro


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Waiting for Spontaneous PositiveEffects of Electrification Projectsto Trickle-Down in Rural Areas IsNot a Satisfactory Option

It is commonly agreed that access to modernor improved energy services is one of thenecessary conditions to move societies up

from a subsistence economy, but it is now alsounderstood that it alone is far from sufficient tomove people out of poverty. When the energysource in question is electricity, evaluating theeffective benefits of access is complex, especiallyin rural areas. The end results depend highlyon the type and structure of the program thatprovides the platform for delivery.

Among key factors are the techniques usedand the breadth of access to electricity of thedifferent players (rich and poor households,small business, etc.) in each electrified village.In fact, while electrification has long beensold to stakeholders as a central piece of the

Introduction: The Need a New Approach to RurElectrification to Ensura Positive Impact

on Communities

wealthiestwhile draining thstates or utilities to build exte

To accelerate access coveraof effort went into decreasingelectrification projects througinstitutional innovation, and aoptions.1In parallel, some wundertaken to better estim

economic benefits deriveduses, including the evaluatioconsidered intangible, such aor security.2

Although the efforts mobthe costs of electrification the valuation of the end-ucommendable, the conven

to rural electrification is no Solely extending the netwominigrids and individual syscustomers to the meter (reacor all customers, using cussubsidies or other financi


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weakness of such an approach is that it doesnot address the basis of customer consumptiononce the connection is enabled. It also doesnot address the question of who will benefitfrom electrification, the optimal conditions forthese benefits to materialize, the time frame foreffectiveness, and the projected true benefits.

One factor that contributes to suchdeficiencies in rural electrification programsis that once the policy decision of expandingaccess to the rural area is made, often at thehighest levels of government, it becomes anend goal in itself rather than a mean toward alarger rural development goal. This is partlybecause a physical electricity connection is avery measurable item, whereas the effect of theconnection is less palpable from a target-orientedstandpoint. It is easier for a policy maker ora development organization to claim that thecontribution helped raise the connection ratein a given location and to cite some genericbenefits attached, such as cheaper lighting foreasier reading and increased productivity, thanto target and quantify the effective developmentimpacts.

This even leads in some cases to misleadingsituations where the whole population of avillage is counted as having access to electricity,with the implied assumption that all can enjoyall the benefits of electricity, while in fact only afew customers are connected and little to none ofthe connections are used for revenue generation.All too often, only the wealthiest gain access to

grid electricity, a connection that may sometimesonly replace earlier access through personalgenerators.

Waiting for spontaneous positive effects onsocial and economic development to stem fromtheproximityof electricity appears to be a very

i i d i h ff b ild

while there may be some natural trieffect from the massive investmentto reach a high rate of rural electproactive action is needed to ensure thrural electrification is effectively fundevelopment and not just the expanselectricity sector.

Proposing an Alternative b

Focusing on Productive Usof Electricity: Scope andStructure of the Paper

This paper argues that the most effito deliver effective and lasting impdesigning a rural electrification (RE)to ensure that such programs provid

impact on livelihoods and revenue gin addition to the more conventionon standards of living. Increasinggeneration can be accomplished by productivity of an existing productiand by creating new lines of activitiegenerate employment and local dem

Targeting positive impacts on

generationbeyond good faith statesuch thing will happen spontaneouslythat the specific activities to develop puses be included as a full componenproject. However, to do so, one needsof information and knowledge of ruraand social dynamics that are not oftento the energy specialists driving suc

Therefore, it is necessary to initiateactivity to reach across sectors and relevant information. Such activianalyze the existing state of the pprocess in rural areas and inforproject proponents of proactive actio

h d l d


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Introduction: The Need for a New Approach to Rural Electrification to Ensure a Positi

where a similar approach could nonetheless beused with comparable end results. The approachwas originally designed and first implementedin Senegal, so the lessons learnt from this countrywill be used as an illustration throughout thedocument. By sharing lessons learned, we wishto demonstrate that such an approach andits related methodology can be used in manyother countries to increase impacts of ruralelectrification programs.

The paper is structured around twocomplementary approaches: a systematicapproach and an opportunistic approachcalled thepragmatic approach. We will alternatea conceptual description of the methodologyand a case-specific illustration using the Senegalexperience. For easier reading, the Senegalese-specific sections are included in shaded boxes inorder to better distinguish them from the moreconceptual parts of the text.

More specifically, the paper is composed ofthree chapters:

Chapter 1describes the background that led tothe design of the proposed approaches and introducesthe key concepts. It explains why and how thenotion of cross-sector collaboration was raisedand became a central activity. It introduces

the general rural electrificatiwhich the Senegal example isIt introduces the concepts anthe systematic and pragmatiare then developed further inchapters.

Chapter 2describes the systeidentification and promotion ofelectricity. It describes the mto identify and assess the access to electricity in key sarea. It identifies the conditiointervention required to induto adopt electricity in their prFor each step, the Senegal casea field-tested illustration.

Chapter 3describes the pragthe instruments designed to implehow the Multisector Energy Cis structured to quickly booaccess to electricity to end usesuch MECs are identified, appin the context of the collabowith all beneficiary sectors. Athe generic method is illustexamples from the Senegal pr


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Maximizing the

Developmental Impactsof Rural ElectrificationPrograms: Two

Approaches Building onCross-Sector Cooperati

1

The two approaches, systematic and pragmatic,that will be introduced later in this chapter anddeveloped further in Chapters 2 and 3, wereinitiated by taking advantage of the confluenceof three dynamics: The goal of overcoming thesector silo thinking that tends to bog down

the energy sector; an ongoing restructuringof the Senegal rural energy subsector; and theexistence of a team open to new ideas bothwithin the Senegalese government and withinthe World Bank. Knowing the specific dynamicsthat led to the design of the systematic andpragmatic approaches helps explain how someof the choices were made, and can also show

how such an approach may be replicated indifferent circumstances.

The chapter begins by describing the moveto cross-sector collaboration, then describesthe reforms taking place in the Senegal ruralelectrification subsector and then introduces

An Increased Awarof the Necessityof Working Across

Although it may be releva

focusing on the physical implrural electrification drive to san end result, those in charge oprograms ought to keep a broathe question. For the power sreverting to the original functservices to electricity users.

Such users will be in oth

agriculture, health education,and industries. Some of thbe considered a national pelectricity sector itself may nconsidered a priority sector, bproviding services to the prio


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An Initiating Event that Provided

High Level Buy-in: the Energy-Poverty Workshops

The realization of the value of cross-sectorcollaboration was at the core of the discussionsbetween delegation members to the Energyfor Poverty Reduction5 workshops. Thesemultisector regional workshops, held in Africabetween 2002 and 2004, brought together

representatives from 20 countries with the jointsupport of the World Bank and UNDP on behalfof the Global Village Energy Partnership.

Senegal was the host of the second ofthese workshops, which was attended bydelegations of seven West African Francophonecountries. Each of these country delegationswas composed of ten members. It included two

or three specialists from the energy sector andthe other seven representing sectors that useenergy in order to deliver their own services,such as education or health for the social sectorsand agriculture or small enterprises for theproductive sectors.

These sector specialists (agronomists, doctors,teachers, small private business owners, as well

as civil servants) took great care to inform energyspecialists of the end use of their respectivesectors energy needs and mulled over the bestways to meet such energy needs in a mannerthat would enhance their own end products. Thedelegates to the workshop collectively becamemindful of how proper access and use of energyservices can contribute to the availability andefficient delivery of quality outputs in social andproductive sectors.

For example, the health impact of modernenergies may not be easy to isolate, butfitting to the precise energy needs of healthspecialists daily activities rather than simply

care thus improving the final healIn such a case, while the claim that dhealth services has improved cannot linked to the energy sector as soleimprovement, the energy sector can nplay a central, if indirect, role in enaimprovement.

Workshop participants founddemand for energy services is not nexpressed as such by other sectors sIt is often articulated as a request fothat are derived from the use oservices. This generates a difficultenergy specialists often know howproper technical answers to energissues, but if the question expreneed is structured differently, thmiscommunication is considerable

For example, issues such as wproblem with delivering babies atthe health sector or we can only milking a day because of heat incattle industry are not necessarily exan energy-centered manner. But sucentered questioning in the first caseWhat are the reliable, cost-effectivereadily available energy technologies four operating room, as well as the oubuilding for safety of personnel anas well as heating water in minutesecond case, it could be, How can wcooling (and possibly basic transformilk between daily collections withreliability that increasing the yield ofwill not backfire?

Note that in examples providelectricity could technically answer amay not necessarily be the most adequto answer all three issues put forwa

l (li h i h i d f


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Maximizing the Developmental Impacts of Rural Electrification Programs: Two Approaches Building on

A Mind Shift, Reaching out to

Other Sectors to Help GenerateTheir Outputs

In the case of rural electrification, reaching acrosssectors enables energy specialists working onproject design to start viewing the whole deriveddemand for electricity. The derived demand model6shows that electricity is never in demand foritself, but for the outputs derived from the use

of electric appliances such as lighting, cooling,and pumping. These energy-derived outputsare used, in turn, by other sectors as an inputin their productive processes to generate theirown final outputs such as medical care, classestaught, and product transformed.

Figure 1.1 provides a few examples ofenergy-derived outputs, the electric appliances

that produce them, and how other sectors canuse them in the production process of their ownfinal outputs. A large part of the description inthe coming chapters focuses on the shaded areain Figure 1, which lies after the production anddistribution of electricity but before the deliveryof other sectors outputs. Since such work onelectric appliances and their derived outputs is

generally out of either sectors focus, it tends tobe neglected.

The electricity sector is in a unique position,because once it has produced and distributedits electricity, it has formally produced its finaloutput, but this output becomes useful onlywhen consumed by an appliance and producesthe derived output. This is why the energy-

derived outputs usually remain in the areaof knowledge of the energy specialists whoare familiar with electric appliances and theirrequirements in electricity, both in terms ofquantity and quality. Considering the energy-derivedoutputshelpsboththeenergy specialists

enables mutual understandiinteractions.

From Political Will toImplementation: The Committee in Senega

The approach of bridging gapwas embraced by the Senegat the West African regiona

workshop. Its delegates agreetogether after the closing of ttheir unique commitment tcross-sector collaboration ledestablish a multisector commsynergies between the energysectors. This committee, callacronym CIMES/RP was an

group until was it rendered oministerial decree.

The committee was idetermining how to move of cross-sector collaboratimplementation on the fielmaximizing the productive aelectricity to increase the pelectrification programs in rnational level, the committerepresentatives from the key min rural areas (energy, indplanning, education, finances, hand fisheries), as well as frorural councils, business bureutility, the rural electrificatioand several NGOs.

Formally attached to the mthe committee holds sessiquarterly depending on thcreates subcommittees when

ifi i ifi


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The multisector committee provided astrong support to the definition and the practical

implementation of the systematic and thepragmatic approaches. It directed consultantsin their identification of sector needs and in thedetection of possible cross-sector cooperation;it opened doors to identify and provide accessto the relevant specialists within each sectorand contributed to problem solving wheneverpossible. Given their duties and affiliationsto their respective employers, the committeemembers were not expected to do the core of theproject identification work; such responsibilityfell on the consultants.

Such a multisector committee would havebeen effect ive in the context of the formervertically integrated structure of the powersector, but the reform undertaken by theSenegalese authorities created an unprecedentedwindow of opportunity to test innovativeways to apply a cross-sector approach to ruralelectrification.

The Context of the

Reform of RuralElectrification in Senegal

National Background to theSenegalese RE Program

Poverty Reduction in Senegal

Starting with the devaluation of the CFA francin 1994, Senegal undertook a successful seriesof economic adjustments that led to a periodof historically high growth rate. However,despite this good performance, Senegal stillhas a significant portion of its reform agenda tomeet. The economic growth after the devaluationh d l ll i i ll

reduction. Public policies, noof taxation and investment

sufficient incentives and hanslowing down private-sector

As a result, close to 60 percSenegalese population is consthe absolute poverty level,7ango up to 90 percent in some electricity sector, it is estima4 percent of the villages in Senand that less than 30 percent of the electrified villages effecto electricity.

A new push toward povestarted in 2002 with the creatPoverty Reduction StrategyDSRP in French). The pillars are: (i) wealth creation; (ii) and social services; (iii) assistagroups; and (iv) implementastrategy and monitoring of it

Earlier Attempts from the Eto Contribute to Poverty Re

In its early efforts to reduce poimbalances in development, tSenegal (GoS), with the assidonors, undertook numerousat bridging the rural/urbathrough the development of renewable energy systems.

Several pilot projects, usin(primarily solar) and conve(grid extension, small diesetesting different technical arrangements were implemthese pilot projects had posiconfirmed the demand andpopulations for consumption

ll th i t t f l l


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Senegal; were not fully taken up by the privatesector; and were not able to prove their long-

term sustainability. Some reasons were the lackof a coherent RE strategy and the appropriateinstitutional and legal set-up, as well as thelimited availability of public financing and a lowlevel of donor interest.

Strict sector compartmentalization hasprevented the development of a supportiveenvironment that would nurture thedevelopment of the productive and social useof electricity. In fact, projects and programsimplemented by other sectors have sufferedfrom the lack of appropriate and timely deliveryof energy services. As a result, the previousrural electrification operations only had avery limited impact on rural poverty and haveappeared largely disconnected from PRSPsobjectives.

The New Senegalese RuralElectrification Strategy

Learning from past experience in Senegal aswell as in other countries, GoS has developedand adopted a new RE strategy that relies

on two strategic partnerships: a private-public partnership (PPP) and a multisectorpartnership.

The PPP acknowledges that to scale-up ruralelectrification in an efficient manner requires theparticipation of the private sector, which canincrease the implementation capacity and bringinnovative ideas, new skills, and additional

financing. The multisector partnership aims atmaximizing impacts on rural development andpoverty reduction.

Key Policy Decisions that Supportthe RE Program

establishment of rural electrificationallowing small-scale electrification p

the application of technological neutralconcessions.

To be conducive to a truly successprivate partnership, the GoS estabad-hoc institutional, legal, and rframework. It removed the monopthe national utility, SENELEC, for electricity to rural areas, transferesponsibility to private sector invoperators. This created a favorable enfor a variety of private players to play arole in rural electrification, and thusthe implementation capacity. To ovebarrier of high up-front connectioninstallation costs, and to ensure consisrural households ability to pay, theallowed the creation of a new tariff scelectricity (monthly lump sum payincorporated prefinancing of connecinternal installation, and efficient lam

The government chose to resoelectrification concessions as the mato implement Senegals rural elecprogram. For the purpose of impthe RE program, the GoS divided thinto 18 geographical areas, the co(see Figure 1.2 below). These concesdesigned to be compact and large enviable and attract large private sectEach concession has a minimum p30,000 connections, defined as the number of nonelectrified rural hoThe GoS plans to contract these coto the private sector under a competransparent international bidding prselection criteria maximizing the nbeneficiaries.

I ddi i h 18 i


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business productivity and improved socialservice delivery. These MECs will be discussedin detail in Chapter 3.

Since it is expected to take more than10 years to award the 18 concessions to privateoperators, some communities facing socially

sensitive situations may require access toelectricity without waiting their turn, asdesignated by the overall electrification plan. Toaddress such situations, small-scale concessions(called ERILs10 in French) can be awardedwith a waiver from the larger concessions

community-based associatientities). To be eligible for a wahave to be locally initiatedlimited (usually to a small aand not part of an area taelectrification in the short ter

Finally, against usual prneutralitywill be enforced forThis means that, to the extenthe minimum service requirtender documents, bidders fowill be free to choose the te

Figure 1.2 Map of Rural Electrification Concessions


24/67


GoS to level the playing field for renewabletechnology. It will finance technical assistance

and capacity building activities, and enable theinternalization of positive global environmentalexternalities through the use of some targetedinvestment subsidies.

The ASER, the FER, and the Private Sector:Key Players that Support the Drive for RuralElectrification

The GoS has created a single, national, andautonomous entity, the Agence Sngalaise delElectrification Rurale, or ASER, to implement therural electrification program. The agency wascreated in 1998 through the Electricity ReformLaw, and its principal mission is to promoterural electrification by providing the requisitetechnical and financial assistance pursuant tothe energy policy formulated by the minister ofenergy. ASER now has 25 staff members, and itscapacity is being reinforced as part of the WorldBank funded project.

More precisely, the missions of theASER are:

Developing services relative to the RE;

providing project evaluation, technicalfinancial, and jurisdictional packagingsupport; review of innovative technologiesand of technical services to RE material andequipment

Providing information to all partners on theoptions and available alternatives relative toRE projects

Providing supervision on behalf of theMinistry of Energy for the rollout of ruralelectrification concessions

Designing the concessions, supervising, andundertaking all steps for their attribution

d idi i d i t t th

A Rural Electrification Fund (was created and funded from r

provided by the national budget andinternational donor organizations. Mof these resources is subject to specifiprocedures. Within FER, special accoopened by ASER allowing a separatioallocated to investment in concessfunds allocated to other supportingan easier tracking of sources and disb

of funds (national budget, donors,to meet some donors specific requOver time, it is envisioned that theinstruments may comprise direct refinancing; guarantees backed up bor other instruments; interest-reliefand specific funding facilities for ERcosts. However, in the initial project pthe subsidy account and the funds forbe activated by ASER.

Finally, the private sector is explay a central role in the implementaprogram, and great care was giventhis. Throughout the project preparatspecial emphasis was placed on mclose contacts with private-sector stato assess their perception of the ptheir understanding and acceptainstitutional, legal and regulatory frSeveral workshops were held in 2003, 2004, 2005, and 2006 that rattendance far beyond expectatiothan 200 representatives from overincluding 14 international firms, attenworkshops.

Mechanisms for the Award of Concand the Support to Electrification

The award of concessions to privatei d i t ti ll d


25/67


chooses individual photovoltaic (PV) systemsor other technologies.

The bidding process is designed to be resultsoriented. The concessionaire is chosen using atwo-stage international competitive bidding(ICB) process with prequalification. The firmthat offers to provide the maximum numberof connections within the first three years,for a preset subsidy amount, is awarded theconcession. Such criteria maximize private funds

committed for a given subsidy and motivatethe bidders to increase their contribution andserve more clients. It also encourages bidders toseek a lower unit cost as a way of increasing thenumber of clients served with a given amountof public resources available.

In addition to the core investment subsidyallocated to the concession area, an additional

subsidy, which targets exclusively renewableenergy solutions and is financed under a grantreceived from the Global Environment Facility(GEF), is also made available to level the playingfield for renewables. The selection criteriaremain the maximum number of connectionsindependently of whether or not bidders claimthe GEF subsidy. To overcome the barrier ofhigh up-front connection costs, and to leverageprivate financial resources and ensure the qualityof connections, the concession program usesoutput-based aid(OBA) type of capital subsidies.Under OBA subsidies, a significant part of thesubsidy is disbursed only after the connections(including internal installations) are made andverified. A full ex-post OBA disbursement wasnot deemed feasible, since it would entail ahigh up-front capital financing requirement onconcessionaires. In addition, it was determinedthat private bidders would not be willing totake such a financing risk without a higher

f b id H i d id d

the operation and maintenancosts, and replacement cos

well as at least 20 percent of cost, assuming a 20 percenTherefore, the concession agreconcessionaire to contribute of the total investment coscommitment of the concessioservice delivery throughouterm, since consumers mo

remain the source of return the concessionaire.

Progress in the Implementaof the RE Concessions

The bidding process for thein Dagana-Podor Saint Loulaunched in early June 2006

Phase I of an IDA-GEF projectwelcomed the OBA subsidy firms formally applied for preqon their own or in consortiumThese results were particulasince these firms represent private participants being tarprogram: local private sector

Matforce), private sector fromfrom Morocco), as well as in(Electricite de France (EDF) aDvelopement from France, Rural Electrification Coopera(NRECA) from the United St

Out of the four applicatprequalification, two were prfrom Morocco and a consortiand CSI-Matforce. Final bidsAugust 2006 and the evaluacompleted in November 2006

The winning bid led to a i th b f ti



26/67


was estimated at US$725 and the averageestimated subsidy per connection requested was

around US$286, representing 40 percent of totalcost, far less than originally expected.

Around one-fourth of all connections willbe achieved through individual PV systems,lowering the incremental GEF subsidy to onlyUS$1.03 /Watt peak or Wp (US$400,000GEF subsidy for 389,000 Wp). These resultsdemonstrate that the combination of international

competitive bidding with OBA can leveragesignificant amount of private resources andpotentially deliver far better results than atraditional non-OBA-based rural electrificationapproach.

The PPER program plans to launch atleast three new concessions every year. Theprequalification process for the next wave of

concessions was launched at the end of 2006,with two concessions being funded underPhase 1 of the IDA/GEF project and one underan African Development Bank (AfDB) loan.AfDB and KfW, the German CooperationAgency, have committed 14 million euros and8 million euros, respectively, to finance twoadditional PPER concessions each.

Two ApproachesContained within theRural ElectrificationStrategy and Targetingto Increase the Impacton Rural Communities

Although innovative in many respects, theSenegalese rural electrification strategy did notspecifically address the issues of limited impacton income generation and of lack of cross sector

within the health and education sensure collective gain as well as to

productive uses of electricity fogeneration that support gains at indivThe productive uses of electricitydeas uses of electricity that support any awill generate revenue to the userareof this document. The uses of electare here defined as productive can vand are subject to interpretation. Fo

lighting will be considered nonprodis used in a household to go about dnight, but will be productive if used grocer to attract customers after darsame household uses it to sew clothesat a market.

Each time, depending on the economic activities found in regions a

the rural electrification project, a diffeof sectors will be targeted in order the most promising activities for improvement and social developmenbe small businesses in one regionanother, and support to agriculturetransformation in a third.

The Systematic Approach:Identification and Promotioof Productive Uses of Elect

The systematic approach analyzes in rural area, the technologies used in tproduction chains. It identifies the band sees whether the use of elect

contribute to diminishing or remlimiting factors.

It is systematic in the sense thata thorough review of all productivactivities taking place in a designate

i b t ti l i t ti ith


27/67


28/67


29/67

As was briefly presented in Chapter 1, thesystematic approach serves to develop anaccurate picture of existing productive activities

in order to direct energy investments in a mannerthat will serve the goal of rural development. Tothis end, a multi-step approach is described inthis chapter. It is first explained in a genericfashion and then illustrated by using the caseof the Senegal experience.

This chapter will focus on electricity. Othersources of energy might provide as goodor better outputs depending on the type ofactivity considered and in such case, this willbe acknowledged and a swap to electricitywill not be advocated. All types of sources ofelectricity are considered, whether it is providedby a central grid, a mini-grid, or self-generatedsuch as generators, solar, hydro, or wind. Thesource of the electricity matters less than how itis used and how adequate it is to meet the endusers needs.

More specifically, the focus will be onproductive uses of electricity, setting asidehousehold uses as well as social uses for

Identification and

Promotion of ProductivUses of Electricity:A Systematic Approach

2

A Generic Overviethe Systematic Ap

to Promote ProducUses of Electricity

Using the collaborative liwith sector practitioners (Collaboration in Chapter 1gathering and fact checkinundertaken both at central

field. This is done using snetworks, ministries and officgovernment as well as NGOdata gathering enables the dunderstand the socioeconomwhich the decision to bring ais made and how it may contreconomic activities and incom

It is recommended that a dedichired to undertake or coordinbecause as one ventures intostakeholder knowledge, the rcan be high.

Th t ti h t



30/67

and areas of possible improvement of theseprocesses.

(iii) Analyze the role electricity can play andwhat equipment is required.

(iv) Analyze the technical feasibility andeconomic and social viability of theelectrically based solution proposed.

(v) Implement a promotion campaign tocommunicate the gains that can be obtained.Based on the results of the earlier analysis,

the campaign should target specific energyusers and promote a specific use of electricitythat can provide them with clear benefits.

The first two steps usually lay outside ofthe usual sphere of knowledge of most energyspecialists, but they are nonetheless central to agood identification and analysis of the following

steps, which are more energy-centered.

Step 1: Identify the Typeof Productive Activities TakingPlace in Each Sector and Subsectorof the Targeted Rural Areas

Having identified the region where an energy-

related project is to be implemented, the ruralareas are scanned to identify major sectors andsubsectors. The mining sector, energy generationfacilities, and large industries should be setaside, since they are usually either self-sufficientor large enough to be provided for by dedicatedprojects.

In rural areas, the regionsare characterized

by the specific agricultural systems that adaptto local conditions, and by the related cottageindustries or artisan networks supportingproductive activities. It is likely that most ofthe other sector activities will revolve aroundth i i lt l t hi h

crops, food crops, fresh market crops,fishing, timber, and livestock farmin

to these are cottage industries and hoactivities in the small industry ansectors and their subsectors. Thinclude agriculture products transsuch as bakeries, drink and juices makproducts, meat and fish transformatioand woodwork. Support to productiosuch as production and repairs of e

building, fertilizers and pesticides, anto households and small businesses, fotransport, markets and grocers, clorestaurateurs could also be included

All of these sectors and subsectors processes are intertwined, making to identify each activitys contributwhole and how energy can fit as an

tool. Furthermore, the range of knothe sector specialist may only spanthe activities in consideration, andcomplicate the global review. Onaddress the complexity is to use thSystem Matrix,11 with examples Table 2.1 and Table 2.2.

The Sector-System Matrixshows th

commodities produced within each The rows list the different tasks reproduce and transform these commofinished products. Using a simplifithe matrix can provide an overvisubsectors present in a region studthe commodities produced in this more complex format of the matr

list carefully for each commodity eaactivity required of its production anplayers involved.

It is useful to note that at that stage, and understanding the activities

l i i d b i

Identification and Promotion of Productive Uses of Electricit


31/67

process. It may be, for example, that a specificstep of the process to produce a commodity couldsee its productivity greatly improved by using

electricity but that investing in electricity wouldnot make sense because the step immediatelybefore suffers from a nonelectricity-relatedbottleneck.

Although systematic, the approach doesnot necessarily need to be exhaustive. Thereis a trade-off to be considered between thetransaction cost of analyzing one additional

commodity or subsector and the benefitexpected from the information generatedin terms of economic development. Priorityshould be given initially to existing or potentialactivities that are already acknowledged to be ofmajor importance for the region. The simplifiedversion of the matrix maps out the activitiesundertaken in each region and can help spot

gaps (lack of one type of activity in a regionthat could create a bottleneck) and identifycross-dependency (between corn subsector andlivestock production, for example).

In addition to the agriculture system matrix,other system matrixes could be developed

specialists, local administratrepresentatives, equipment and grocers, and cottage ind

with rural development exinitial mapping exercise mighspecialist keep focus.

Step 2: Analyze the PProcess for Each Comand Identify the Area

ImprovementOnce all the productive activin a targeted project region haand mapped out by sectors afollowing step is to analyze in the production process in the active in the region. Dependinof productive tasks required, t

done for groups of commodi(the threshing activity is ccereal plants for example) ocommodity (watering needs crops for example). Table 2.2 illustration of a possible outp

Table 2.1 The Sector-System Matrix

COMMODITIES,

TASKS and

PLAYERS

SECTOR X, in REGION A

Subsector Subse

Commodity1

Commodity2

Commodity3

Commodity4

Com

Task 1

Task 2

. . .

Task n



32/67

explanation of it. Comparing the best-casematrix (with well functioning subsectors and

a full set of tasks implemented) with the fieldmatrix (the reality as seen in the field) canpinpoint areas of improvement on which thestudy could concentrate.

For example, the illustration in Table 2.2shows that the dairy and the river fisheriesonly cater to local markets and do not providetransformation, transport, and storage. Looking

into it, by field investigation and interrogationof the key players might provide differentreasons explaining this. The situation could bedue to lack of transportation infrastructure dueto remoteness, coupled with a lack of marketfor the transformed commodities, and thus notransformations effort is deemed necessary.Another possibility may be that a transportation

network may exist (as for the peanut commodity)but not be used because no transformation ofthe raw commodity occurs, thus diminishingthe relevance of the commodity to the outermarkets. This may be because the untransformedcommodity itself is not transportable.

In the first caseno existing transportinfrastructurethe fix may be well beyond

the reach of the energy sector and investingenergy resources may be wasted. In the secondcaseof the existing but unused transportinfrastructurewhile the energy sector maynot be the primary responder to the problem,it may contribute to the solution. For example,energy may help provide refrigeration or icingto provide conservation and enable transport

of fish to higher-valued markets, or it couldprovide heating to kill bacteria in collectedmilk, refrigeration for preservation, and furtherprocessing into cheese or another product.

The analysis of the production process is alsoi i h d d i

but may be of little use if upstreamcommodities remain constrained. Th

the production process might also henew opportunities to exploit complemor similarities between commodities pprocesses.

Step 3: Assess When ElectCan Contribute to Potentia

Gains; Identifying the RequEquipment

Having identified and investigatedof possible improvement, the natubottlenecks or inefficiencies should beAlthough some areas of improvemenbeyond the reach of the energy sectocases access to electricity may bring

value, added competitiveness, improvimproved productivity, or even the a new activity altogether. Thus, usinof improvement identified in collaborsector specialists, a closer look will be gones where electricity can provide impDuring this step, energy specialists sback leadership of the process, which

left to the other sector specialists dtwo previous steps. It is the energy stechnical knowledge that will be reidentifying the level of expected gainof electricity desirable, and the list oequipment needed. Equipment refers electricity generation or distribution ebefore the meter and the productive

using electricity after the meter.In many developing countries, fo

the harvesting and the initial p(primarily threshing) can take up to of the total time required for the co

d f h k d



33/67

Table 2.2 Illustration of Sector-System Matrix, for Agriculture in Region A

COMMODITIES,(in lines)

TASKS, (in

columns) and

PLAYERS,

(in cells)

AGRICULTURE SECTOR, REGION A

Cash Crop Subsector

Livestock

Subsector

Fishery

Subsector

Cotton Peanuts Etc. Dairy Meat Etc. River Fish Shell

Investment

(seeds,

material, heads)

Farmers

blacksmiths,

grocers,

cooperatives

Nets, boats

making,

cottage

industries,

fishermen

Preparation

(tillage, tools,

fertilizer)

Farmers,

cooperatives

Inputs (seeds,

feed)

Grocers,

farmers

Feed

providers,

farmers

Caretaking

(water, material,

pesticides)

Farmers,

utility, local

government

Farmer,

veterinary,

aid groups

Harvest (crop,

fish, milk)

Farmers,

cooperatives

Farmer,

health

authorities,

equipment

providers

Fishermen,

health

enforcement

Initial

processing

(threshing,

icing, etc.)

Farmers,

coop,

family, small

cottage

industry

Only

minimal

processing:

Family,

small

cottage

industry

No further

processing:

Sold live,

dried or

salted

Transport and

storage

Trans-

portation,

cooperatives

Transformation

(milling, cooking,

drying)

Small

cottage

industry,

coop

Resale (Grosser,

markets retail)

Direct in

markets

Direct in

markets

Intermediary Cottage



34/67

resources and thus increase the overall quantityof commodity harvestable. Hence, the gain

brought by electricity would be the sum of thegain in time and quality of the processing, as wellas the gain in additional harvesting renderedpossible by the reallocation of manpower toharvesting from processing.

A new matrix called Electricity Contributionto the Commodity Value Chain12 may beproduced and used to organize the outputs of

this step. Table 2.3 provides an example, referringto the possible contribution of electricity to thepeanut, dairy, and fish during the transformationtask previously identified as missing orincomplete in Table 2.2 for the theoreticalRegion A. This is given as a nonexhaustiveillustration, as other steps and commoditiescould also benefit from use of electricity in Table

2.2. Table 2.3 provides the link between thecommodities transformed and the intermediaryor final products. It outlines the type of genericequipment required for this transformation,as well as the required type of electricitysource (that will later need to be matched withavailable sources) and the potential providersof equipment available in the region of study. It

also provides a preliminary listing of the type ofsupport that will be necessary to encourage theacquisition, the correct use, and maintenanceof the equipment by potential users as well asa listing of expected beneficiaries and possibleproviders of such support.

Before the meter, the type of equipment andsource of electricity should be evaluated both

from availability and economic standpointsas well as from the standpoint of the typeof need in power and reliability. Althoughrenewable energies may provide practicalanswers in many cases and seem logical due toh f j i h

Thus, it is important to establisbetween the expected gains iden

the behind-meter type of equipmennecessary, and then match them witof electricity source required. A equipment and tools will be identiable to be produced locally, somto be imported from urban centerabroad. Some production processes to be reorganized to make the best

new equipment; some others may becost savings or increased speed witdisturbances, such as in the case of sthresher from diesel to electric.

Step 4: Establish the EconViability of a New Producti

Process and of the Conditiofor Its Implementation

Following the completion of the eaone should have gained a good overvcontribution of electricity to some pproduction process. The current stepthe case for an adaptation of the pprocess, primarily by identifying the

and financial gains expected fromto electricity. This step is also an oexamine the competitiveness of electriother production process and eliminawhere a feasible alternative bringeasier, or better results. Great care shotaken when the electricity option is csuperior for social or environmental r

is not directly financially viable. In otthe aim is to advocate the benefits ofbut not at all costs.

This step should entail thorowork to collect production costs, lai di i k



35/67

lectricityContr

ibutiontotheCommodityValueChain:Caseof

theTask

onforPeanut,F

ish,andDairyCommod

ities

rme

d

Ty

peo

f

Equ

ipmen

ts

Typeo

f

Elec

tr

icit

y

Equ

ipmen

tProv

iders

Bene

fic

iar

iesan

d

Suppor

tProvid

ers

Examp

leo

f

Requ

ire

dSuppo

rt

eanuts

Roaster/

sa

cking

Grid,Mini

Grid,Dies

el

set

Localindustries,

Internationalgro

ups.

Examples:Temdo

,

Tanzania

Euromat,France

Devraj,India

Beneficiaries:

Farmers/

Fishermen

Cooperatives

Womencoops

Smallcottage

industries

Supportprovide

rs:

Cooperatives

Equipment

providers

Traininginstitutes

Financeprovid

ers

Unions

Researchcent

ers

Donorprogram

s

Local

governments

Utilities

Financialsupport

forequipment

purchase.

Trainingofuse

rs

Trainingand

supportto

developlocal

producersof

equipment.

Businesstraining

ofuserstohelp

withinvestment

capacities.

Supportto

counterinitial

negativecash

flow

pasteor

Roaster/

Grinder

Grid,Mini

Grid,Dies

el

set

oil

Sheller/

Masher-

sq

ueezer

Grid,Mini

Grid,Dies

el

set

sh

Drier

Solar,Grid,

MiniGrid,

Dieselset.

Localindustries,

Internationalgro

ups.

Examples:Marinas,

Philippines

Jyoti,India

Lehman,USA

Narang,India

Petersime,Brazil

ur

Sifter/

Shredder/

Autoclave

Grid,Mini

Grid,Dies

el

set

fish

Coldstorage

Grid,Mini

Grid,Dies

el

set

oducts

enized

gurt,

b

t t

)

Sterilizer/

Churner/

Skimmer/

P

k

Grid,Mini

Grid,Dies

el

set

Localindustries,

Internationalgro

ups.

Examples:Udyog

,

I d i



36/67

practitioners to look further into the option ofusing electricity for their productive activities.

Table 2.4 provides another theoreticalexample of calculations and matrixes, usingthe peanut commodity that could be used toengage stakeholders. It provides calculationsof the expected cost reduction when movingfrom a baseline production process to the useof electricity. In this example, cost reductionshave been calculated for the three tasks where

a potential gain had been identified in theearlier steps. In most cases, the baseline used tocalculate the cost reduction was obtained fromfield surveys or was calculated in cooperationwith the given sector specialist.

The information from Table 2.4 is to beused as a discussion basis with farmer unions,cooperatives, and other stakeholders to

discuss the option of investment in electricityand productive equipment using electricity.Depending on the level or receptiveness of thestakeholders, further economic analysis willthen be undertaken, including valuation ofvolume increase and quality improvement thatare not included in the current calculations ofcost reduction.

The primary focus is placed on thesefinancial and economic assessments becausethey will indicate the cost recovery capacities ofthe electricity users, and therefore their capacityto repay the investment, as well as face thevariable costs. This, in turn, will determine thecertainty of payment for electricity and thereforethe level of risk that electricity providers will

bear for electricity purchase and investment indistribution network. Some attention shouldalso be paid to the other nonfinancial issuesand conditions that will contribute to theeffective success of a production process change.F i i d i d i

The work undertaken during this sprovide a helpful tool to rural electric

managers in prioritizing the localizatelectricity investments. It may also to task managers in charge of orieelectricity-related investments in a fafavors productive uses of electricity.this may be only one of multiple vconsider, using productivity increasecost reduction for each task may hel

areas where there are clusters of tasksbenefit from a new electricity access tasks and commodities that would befrom a selective access to electricity.

Step 5: Design and Implem

Promotion Campaigns Tailoto Each Type of End Users

Prior to this final step, the economic vthe change of production process toelectricity uses should be established;stakeholders should be convinced of tof the approach or at least view trying it in a given area and subsec

a promotional campaign or road shcontemplated. Depending on the momedium, such a campaign could bto target subsectors, tasks, regionsof the three. Table 2.5 gives an ovpotential stakeholders that could bin the design and execution of the incampaign.

Not all stakeholders listed here ato all information campaigns and it mto keep a campaign well-focused and end users, the number of stakeholdercan be narrowed to these immediatet th bj t di d



37/67

EstimatedCost

ReductionObtainedfro

mtheUseofElectricEquipment

Es

tima

te

d

Fixe

dCos

ts

(Fictiona

l

currency

)

Es

tima

tedYear

ly

Var

iableCos

ts

(Fictiona

lcurrency,

Fc

)

Pro

duc

tion

Capac

ity

Es

tim

ate

dVa

lueo

fCos

t

Re

duc

tion

(Compare

d

withbase

line

)

Es

tima

te

dGa

ininPercen

tage

(Compare

dw

ithbase

line

)

Tas

kCare

ta

king

30to90Fc

(Fc=

Fictional

currency)

(D=Depreciation,

E=Electricitycosts

M

=Maintenance)

M=Maintenance)

D=6to18Fc

E=1.2to7Fc

M

=3to9Fc

75to150m3/h

Hourlycostof

55Fc

Iffromrainfallbaseline:

Increaseofcost55Fc/h

Iffrommanualbaseline:

Decre

aseofcost21Fc/h

Iffromd

ieselbaseline:

Decre

aseofcostsof14Fc

Ne

tcostagainstrainfallbaseline.

Bu

t,ifinsufficientrainfall,ba

seline

be

comesmanualordieselpumping,

thusthereisanetcostdecreaseof

30

and20percent,respectively.

Nb

:Withrainfallbaseline:inc

reasein

yie

ldmayalsojustifyinvestm

ent

Task

InitialProcess

ing

56Fc

D=11.2Fc

E=8.55to11Fc

M

=5.6Fc

Additional6,5to

10ton/dayfrom

manualbaseline

Mach

ine40Fc/ton

Manu

al75Fc/ton

Costreduction:

35Fc

/ton

Re

duction47percent

Frommanualtoelectricengine

45Fc

D=9Fc

E=0.46to0.7Fc

M

=4.5Fc

Additional20

t/dfrommanual

sifting

Mach

ine30Fc/ton

Manu

al125Fc/ton

Costreduction:

90Fc

/ton

Re

duction76percent


Tas

kTrans

forma

tion

15Fc

D=5Fc

E=3.65Fc

M

=1.5Fc

150Kg/h

Mach

ine30.5Fc/h

Manu

al72.6Fc/h

Costreduction=42.1

Fc/hor

280F

c/ton

Re

duction76percent


300Fc

D=30Fc

E=39Fc

M

=30Fc

1600t/d

Mach

ine0.21Fc/t

Manu

al15.5Fc/t

Costreduction=15.4Fc/t

Co

streduction99.9percent

Frommanualtosemi-industrial

ele

ctricengine



38/67

the finished product (peanuts free of shellsand residues). Assuming that the productionof peanuts is done in very specific regions, aseries of meetings at the villages in production

k d ibl i

types of users. The electrician wouthe electric requirements and inmethods and would establish thexisting and forecasted electric ai h i i d A d fi ll l

Table 2.5 List of Stakeholders That Could Be Involved in a Promotion Campaign

Stakeholder Possible Role in Promoting Adoption of ElectricityManufacturers, suppliers:

Local distributors of targetedequipment

National manufacturers Local cottage industries Maintenance service providers

Demonstration of equipmentPossibly technical adaptation to local usesTraining of usersDevelop retail network to facilitate local purchase of targeted equipment

Energy sector:

Utilities Energy service providers

and their associations Retail technology vendors

RE targets; DSM; consumer awareness/support

Customer education and training; adherence to stanCustomer education and trainingCompleting the energy infrastructure to adjust to thegrowth of energy demand

Financial institutions:

Private banks Development banks Micro-finance and credit unions

Providing customized financing to potential users wilpurchase the targeted equipmentRisk analysisSector awareness

Customer education to loansSector-specific development

entities:

Agriculture and other institutes Enterprises promotion centers Donor-funded projects

Providing sector knowledge, field presence, user confinetworking and outreach capacities, demonstration cvocational training, etc.Training of users

Education sector Curriculum development For vocational classrooms

For teacher training For current practitioners

Policymakers, regulators:

In the electricity sector In other sectors central

to adoption of change ofproduction process

Adoption and enforcement of: Standards and quality productive uses adoption targets, support of adequaavailable electricity supply, price regulation



39/67

Although the design of a promotionalcampaign is not the subject of this work, a

few basic principles for such design can bementioned. Whenever possible, bearing inmind the feasibility factor, the design of thecampaign should be participative, engagingboth practitioners in the target sectors and thelocal authorities and populations. This willensure that the proposed technical response toa need effectively caters to and answers such

need and is acceptable from a local and socialpoint of view. It should be integrative, takinginto account existing and past initiatives in thetargeted sectors or areas to avoid duplication orrepetition of past well-intended errors. It shouldbe prospective, bearing in mind the impact ofproposed changes of customs in the productivefield, on the downstream tasks and the final

commodities or transformed goods. And itshould be empowering, both at the individualand the local level, avoiding catching end usersin a web of dependencies that they cannot master,and favoring local equipment manufacturersand outfitters whenever feasible.

In collaboration with stakeholders, thematicmeetings should be held in the regions. They

should involve suppliers, providers, andmanufacturers of electricity-powered productiveequipment to present, demonstrate, andobtain feedback on their materials, equipment,maintenance, capacities, after sale services, andpolicies. Possibly, energy specialists might haveearlier undertaken a review of performance andreliability of such products, within the specific

context of the tasks identified, and can sharethese neutral reviews with end users. Also,centralized resource centers can be establishedwhere individuals or cooperatives could findyear-round information on the techniques,h i il bili d h i l i S h

be adapted to encompass eldonor policies to be adapted

lending to be modified to takeopportunities.

The use of communicationadapted to habits, levels of liteknowledge of end users. It mfrom general mass media mesTV, newspapers, billboards, lefairs) to tailored information t

(cooperative meetings, villagand trade unions, peer meetin

A Practical Applicof the SystematicApproach: The Cas

of the Senegal ProAs explained in Chapter 1, substantial thought into, anin, finding the way to foscollaboration in order to obincrease of productive uses ofsteps as the ones describeoverview were followed, butundertaken simultaneously, following sequence:

1. Identification of the activits team

2. Categorization of produc3. Electricity contribution to g

process, identification of re

and determination of viability

4. Program and tools for ad

Identification of the A



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agency ASER in the subject. Given its hands-on capacity and its central role, it was decided

that ASER would be the leading agency andthat it would guide the work of the multisectorcommittee.

The next action was to hire a consultant toundertake most of the legwork, coordination,data collection, analysis, policy recommendationand project identification. Using World BankTrust Funds ESMAP as the source of funding,

a recruitment process was undertaken followingWorld Bank guidelines. It should be noted thatthe activity that we describe in this chapter wasnot an isolated work but was bundled withina set of three major activities to be undertakenby the same consultant: (i) the analysis andpromotion of productive uses of electricity,discussed in this chapter; (ii) the identification

and development of the MECs, described in nextchapter; and (iii) a review of the role of localgovernment in RE projects, which is not includedin this paper. It was done this way because ofthe connection between the three activities, andtheir results were expected to feed each other ina timely fashion.

After technical and economic evaluation,

a local consultant company, the SenegaleseDakar-based EXA Development, was selectedand hired. EXA Development provided a fullylocal team, with a wide variety of sector expertsand a very good knowledge of Senegals ruralareas. The core consulting team includeda rural electrification expert, a cottage andmedium industry expert, and agronomist and

machinist specialist, a local collectivities expertand a socio-economist. The secondary teamincluded a health and education specialist,a project management expert, a trainingspecialist, additional energy and electricity

d ff i li d i d h i

international involvement. Consa longer-lasting effect was antici

the final results of the work, withreplications in other sectors.

To kick-start the work, severalwere held between the consultthe World Bank representatives tmethodology and plan of actiofollowed, over a two-year period, bof workshops, numerous meetings

investigations. Frequent meetings also between the interministry cthat has been set up to promote cractivities, the consultant, local sta(central and local authorities, locommunities and local NGOs amonthe ASER, and the private sector.

Categorization of ProductiActivities

The data collection work started wreview of the public triennial inprogram (PTIP) for the targeted rucovering all sectors both productivand medium industries, commerce, fa

agriculture, fisheries etc.) and nonp(health, education, social and admservices, etc.). This was coupled withstrategies and current levels of invothe key central ministries and adminas well as interviews with their staff amanagers. This provided the start-of project planning, as well as th

description of current field conditionsby the central level.

The next step was to identify and lof technologies currently used in the psector. Table 2.6 provides the teb li f h i d



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This review of the level use of technologyfeeds intothe mappingexercise that identifies, for

Electricity ContributiGains in Production P

Table 2.6 Type of Technologies Currently in Use in the Cottage Industry Sectors i

Line of Trade, Occupation Type of Technology Used

Bakerypastry shop Traditional wood oven

Wine and palm oil Rudimentary equipment (cask, barrel, bow

Small dairy industry Traditional tools (Bowls, hand wood batter,

Drink production (juices, liquor) Rudimentary equipment (marmites, casks,

Jam producer Rudimentary equipment (marmites, casks,

Fish drying and smoking Wood stoves, sun drying by spreading on fl

Clothing industry Sewing machine, manual or electric

Tanning, leather Simple tools only

Cobbler, shoe maker Small hand tools, sanders

Woodwork, joinery, millwork Small hand tools, multipurpose machines

Calabash transformation Small hand tools

Sawmill Manual or electric saws

Potteryceramics Small hand tools, traditional stoves

Small quarries Simple tools (hammers, pick ax)

Smelters Wood mold, simple coal oven

Metallurgy Spot welders, soldering irons, hand drills, s

Blacksmithing Anvil, hammer, pliers, etc.

Boiler making, pots pans, brassware Spot welders, soldering irons, hand drills, s

Tool making for agriculture Spot welders, soldering irons, hand drills, s

Masonry, stonework Spatula, clamp, etc.

Salt harvest and treatment Pick ax, shovel, casks, hand sorting, and su

Soap factory Rudimentary equipment (cask, barrel, bow

t n ce

s nd

nd


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mMatrixforth

eSt.LouisDaganaPodorRegionKeyCommoditiesandTasksCurrentlyUndertaken

ks

Crop

Su

bsec

tor

An

ima

lSubsec

tor

Cott

age

Indus

try

Sec

tor

Other

Rice

Fru

it

Grower

Su

b-

sistence

Crops

Fisher

ies

Poultry

Da

iry

Co

bbler,

Lea

ther

Goo

ds

Me

ta

llurgy

Clothing

Indus

try

Mar

ke

t

Garden

Pro

duc

, erial)

Byhand

Byhand

Notlocally

Notloca

lly

Diesel

pumps

Hand

watering

Diesel

pumps

uits)

Byhand

Hand

threshing

Byhan

d

Limited

Byhand

Byhan

rage

None

Byhand

ordiesel

Sun

drying,

hand

pressing

Limited,

byhand

Limited

Byhand

Simplified

Byhand

Byhan

Local

mostly



43/67

and sectors that had needs, and then prepareproposals to foster change of production

methods and advocate for their improvement.Once the generic step 3 (analysis of gains onproduction process and required equipment)was completed, the focus moved rapidly to theestablishment of Multisector Energy InvestmentProjects (MECs, explained in details in theChapter 3) and to the practical implementationof step 4 (economic viability and conditions

for implementation), rather than deepening itsformal analysis as described earlier in the genericversion. The process described in steps 3 and 4of the generic method was nonetheless followed,and the details of the calculations are providedin the CD-Rom attached in the Annex.

This sequence of work provided theinformation summarized in Table 2.8, which

classifies subsectors and taskproductivity increase expect

the use of electricity. The indone at the regional level and by thorough work to establishat the project level.

Table 2.8 provides the reof cost reduction expected electricity for specific tasks process in agriculture and i

medium industries. The gena sense of processes that shoufor electricity investment. In toward the need to focus the itransformationlevel, which prlevels of potential cost reduct

Table 2.9 shows that to analysis should have required

Table 2.8 Estimated Cost Reduction, by Subsectors and Tasks, Brought by the Us

Levels

of Cost

Reduction Agriculture Sector Cottage and Medium Ind

High Dairy and poultry inputs(feed crusher, 69 percent, feed mixer,

73 percent)*

Fruit transformation (extpercent)

Dairy harvest (milking machine,75 percent)

Fishery transformation (r98 percent)

Rice transformation (husking,84 percent, stone sorter, 75percent)

Dairy processing (sterilizpercent)

Fishery initial processing and storage

(refrigeration,

98)

Subsistence crop initial processing andtransformation (huller, 92 percent,miller, 64 percent, granulator,98 percent)



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examination of the increase of productivitythrough increased quantities or quality ofproducts obtained by use of electricity, inaddition to the analysis based on cost reduction.For example, in the clothing industry, nomonetary cost reduction per unit was found

to come from the use of electricity in theembroidery of Boubous, but using dressmakingelectric equipment provoked a dramatic increasein quantity produced, going on a monthly basisfrom 4 pieces to close to a 100. Also, throughuses of electricity, new activities can be createdthat did not exist before and therefore cannotbe valued from a cost-reduction standpoint.

Electricity used for refrigeration or conditioningof transformed dairy products, for example, canhelp increase their life duration to a point whereit becomes valuable to produce them, whereasbefore, rapid decay would lead to little interest

Table 2.9 Cases Where Electricity Does Not Reduce Monetary Unit Costs But IncreasesProductivity: Cases of New Activities Without Original Baseline

IncreasedProductivity

Agriculture Sector Cottage and Medium Industrie

Poultry incubator (increases number ofeggs incubated and decreases losses)

Clothing industry transformati(sewing, whipping, embroider, iUp to 2400 percent increase inoutputs

Fruit dryer (decreases time, evennessand decreases losses)

Leather transformation (hydrapress, sawing machine, and spl

Up to 900 percent increase in outputs

New Activity Storage and refrigeration of rawproducts (dairy, fishery, fruits andmarket gardens)

Conditioning, storage and refriof transformed products (dairyfruits and market gardens)

Bagging/sacking (crops, rice, marketgarden produce, fruits, fisheries)

Metallurgy transformation (wesoldering, metal grinding, borin

Program and Tools for Advof Change

The results of this work were used, support the work of the MECs describchapter, but also as a supporting tool to

(Senegalese Agency for Rural Electfor its Program to Maximize the Rural Electrification. This program increasing productivity in productiverural areas, as well as creating and new economic activities in these rby use of electricity. The scope of thwas defined in order to avoid duplica

stakeholders existing initiatives andpushing toward unjustified or unsulevels of use of electri

ESMAP,, Productive Uses of Electricity, 4-2008

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