The ongoing lack of access to reliable and affordable sources of modern energy continues to hinder socio-economic progress in developing countries worldwide.
An estimated 1.4 billion people live without electricity, a constraint that compromises productivity and income generation, as well as healthcare delivery, learning, personal safety and many other aspects of daily life. Moreover, new research shows that there are around four million premature deaths every year from household air pollution caused by the burning of biomass.
Although omitted from the MDGs due to its geopolitical sensitivity, the issue of energy access has grown in importance over the past few years and was finally recognized as a global priority in 2012, when the UN launched an international response - the Sustainable Energy for All (SE4ALL) Initiative. As one of its three objectives, SE4ALL - which has since been joined by the World Bank- seeks to achieve universal energy access by 2030. Although an estimated US$50bn will be required annually to make the access target a reality, it is nevertheless considered a realistic objective, as demonstrated by successful experiences in China, India and elsewhere. Efforts are to be galvanized during the UN Decade of Sustainable Energy for All (2014–2024).
OFID, which has pioneered energy poverty alleviation since 2007, is a staunch supporter of SE4ALL and is committed to using its resources to step up its interventions both at an advocacy and an operational level. The strategic framework for these activities is the institution’sEnergy for the Poor Initiative, which is funded through a revolving endowment of US$1bn, a sum pledged by OFID’s supreme body, the Ministerial Council, in its June 2012 Declaration on Energy Poverty. OFID takes a nexus approach to energy poverty, addressing it holistically alongside food and water security.
As of December 31, 2013, energy operations accounted for almost US$3.3bn, or 21%, of OFID’s cumulative commitments. These resources have been distributed among 85 countries for a diverse range of projects, from infrastructure and equipment provision to research and capacity building, among others. OFID considers both traditional and renewable energy sources to be viable and pursues both in the quest for solutions.
In keeping with strategic priorities, the energy sector accounted for one-quarter of total approvals in 2013, receiving US$384.9m for 28 operations benefiting 31 countries, the majority of them in Africa.
The funds were channeled via a range of mechanisms, with the bulk going in public sector lending (70.0%), followed private sector financing (28.6%) and grants (1.4%).
Public sector loans approved in 2013 will support the following projects/programs:
Private sector investments included loans to:
Assistance channeled through the grants program amounted to US$5.5m for a total of 16 projects, mostly relating to small-scale renewable energy schemes, clean cookstove provision and knowledge development and exchange.
OFID maintained its advocacy efforts throughout 2013, working both independently and in collaboration with other lead actors to move forward the energy poverty agenda. The institution, represented by the Director-General, is a member of the UN Secretary-General’s SE4ALL Advisory Board, which is tasked with providing strategic guidance, rallying stakeholders and mobilizing funding on behalf of the Initiative.
Several high-level events were utilized as an advocacy platform during 2013. These included the:
In addition, OFID co-hosted with GIZ (the German Agency for International Cooperation) an experts meeting that brought together representatives of UN agencies, international NGOs and research institutions to share experiences and best practice and discuss solutions to the problem of energy access in rural areas.