Vivien Foster, the World Bank Global Lead for Energy Economics, Markets & Institutions talks to us about the Access Investment Model and how we can reach un-electrified communities faster and most affordably.
Listen to the Q&A or read the full transcript below.
Power for All: You have recently launched the Access Investment Model to estimate the cost of energy access and determine the best approach to electrifying communities, can you tell us a little more about that tool?
Vivien Foster: The Access Investment Model is a spreadsheet based tool that enables you to estimate the cost of meeting universal access to electricity. It is a country specific model so it is based on the actual parameters of demand and power system configuration in individual countries--and we have developed this for about 15 countries so far. What is particularly interesting about the Access Investment Model is that it enables you to aim for different levels of electrification. Energy practitioners have long questioned this idea that electrification is just about having a wire coming into your house. As we know, the quality of electricity supply, the type of technology that’s used, the capacity of energy that’s available, the hours of service, the reliability of service, the quality of service, all these things matter hugely for the experience of the consumer.
The Access Investment Model is based on an underlying multi-tier framework that provides essentially five stepping stones, from no access to full 24-7 grid power. In between there are four tiers which successively allow you to improve the quality of electricity service to support an increasing number of household applications. It all starts at Tier 1, where you are able to support a couple of light bulbs and a phone charger, Tier 2 that adds a few more appliances like a small TV and a fan, Tier 3 for a fuller range of appliances with greater reliability of service, by Tier 4 you can actually support refrigeration, and by Tier 5 you can do almost anything that you might want to do in a household with electricity, including cooking.
The great thing about AIM is that it builds on this Multi-Tier Framework and enables you to estimate the cost of making that electrification standard increasingly demanding over time.
Power for All: In terms of the model how are you seeing this lead to an acceleration in energy access?
Vivien Foster: We think that it is very important for countries to aim for the level of electrification that is right for them in each case. The reason for that is that the costs vary enormously. For example, we learned that if the world was to achieve universal energy access to electricity based on the Tier 1 level--which is that level that gives you a couple of light bulbs and a phone charger--that would cost about US$1.5 billion a year of investment between now and 2030. On the other hand, if the world was to aim for Tier 5 level access--which is the kind of electricity supply we have in the OECD countries--that would cost more than US$50 billion a year between now and 2030, at the mid-point of this range Tier 3 electrification costs only US$8 billion a year, so you can see how steeply costs rise between Tier 3 and Tier 5, as you place higher and higher demands on the kind of electricity service that you want.
It is important that countries find the right level. If you are, say, in an African country where maybe you have only got 10 percent or 15 percent electrification, you’ve got a huge challenge ahead of you. If you set the level too high in terms of service, you may end up spending your limited investment budget on just expanding electricity service to a relatively small number of customers. But if you aim for a more realistic level of service it may be possible to genuinely reach your entire population between now and 2030.
That’s why we think it is important for policy-makers to understand the relationship between the level of service of electricity and the investment cost that entails.
Power for All: If policy-makers and other stakeholders want to learn more about the model and some of the assumptions that underpin it, how are they able to do that?
Vivien Foster: The best place to do that is in the Sustainable Energy for All Global Tracking Framework 2015, a report called Progress Towards Sustainable Energy. AIM was developed for that report and the report has quite a good summary of the methodology and some of the results.
We are also planning to put out a more detailed paper for technical specialists who want to go into it more deeply. We do have the models available on demand for anyone who may be interested in a particular country. We plan to put a lot of these resources up on the web in due course but the product is still under development. The countries we have covered so far are: India, Nigeria, Ethiopia, Bangladesh, DRC, Tanzania, Kenya, Uganda, Myanmar, Mozambique, Madagascar, Afghanistan, Niger, Burkina, Malawi, Angola, Philippines and Yemen. Those are the countries that are already available.
Power for All: Lastly,...Power for All launched a Call to Action urging Multilateral Development Banks to integrate an energy access opportunity cost in their funding decisions. How do you feel such an opportunity cost assessment could impact the future of development bank investments and energy access?
Vivien Foster: Yes, it was good to be part of that interesting discussion at the World Bank Spring Meetings. AIM is a tool that MDBs can use in our policy dialogue. We work with many countries that are aiming to increase their electrification rates, and by having a tool of this kind we can have really informed discussion with policy-makers. We can simulate different strategies for universal electrification and give them a real time sense of what might be affordable in countries and how that might affect the speed at which they can meet their universal electrification targets.
Vivien Foster, the World Bank Global Lead for Energy Economics, Markets & Institutions talks to us about the Access Investment Model and how we can reach un-electrified communities faster and most affordably.
Listen to the Q&A or read the full transcript below.
Power for All: You have recently launched the Access Investment Model to estimate the cost of energy access and determine the best approach to electrifying communities, can you tell us a little more about that tool?
Vivien Foster: The Access Investment Model is a spreadsheet based tool that enables you to estimate the cost of meeting universal access to electricity. It is a country specific model so it is based on the actual parameters of demand and power system configuration in individual countries--and we have developed this for about 15 countries so far. What is particularly interesting about the Access Investment Model is that it enables you to aim for different levels of electrification. Energy practitioners have long questioned this idea that electrification is just about having a wire coming into your house. As we know, the quality of electricity supply, the type of technology that’s used, the capacity of energy that’s available, the hours of service, the reliability of service, the quality of service, all these things matter hugely for the experience of the consumer.
The Access Investment Model is based on an underlying multi-tier framework that provides essentially five stepping stones, from no access to full 24-7 grid power. In between there are four tiers which successively allow you to improve the quality of electricity service to support an increasing number of household applications. It all starts at Tier 1, where you are able to support a couple of light bulbs and a phone charger, Tier 2 that adds a few more appliances like a small TV and a fan, Tier 3 for a fuller range of appliances with greater reliability of service, by Tier 4 you can actually support refrigeration, and by Tier 5 you can do almost anything that you might want to do in a household with electricity, including cooking.
The great thing about AIM is that it builds on this Multi-Tier Framework and enables you to estimate the cost of making that electrification standard increasingly demanding over time.
Power for All: In terms of the model how are you seeing this lead to an acceleration in energy access?
Vivien Foster: We think that it is very important for countries to aim for the level of electrification that is right for them in each case. The reason for that is that the costs vary enormously. For example, we learned that if the world was to achieve universal energy access to electricity based on the Tier 1 level--which is that level that gives you a couple of light bulbs and a phone charger--that would cost about US$1.5 billion a year of investment between now and 2030. On the other hand, if the world was to aim for Tier 5 level access--which is the kind of electricity supply we have in the OECD countries--that would cost more than US$50 billion a year between now and 2030, at the mid-point of this range Tier 3 electrification costs only US$8 billion a year, so you can see how steeply costs rise between Tier 3 and Tier 5, as you place higher and higher demands on the kind of electricity service that you want.
It is important that countries find the right level. If you are, say, in an African country where maybe you have only got 10 percent or 15 percent electrification, you’ve got a huge challenge ahead of you. If you set the level too high in terms of service, you may end up spending your limited investment budget on just expanding electricity service to a relatively small number of customers. But if you aim for a more realistic level of service it may be possible to genuinely reach your entire population between now and 2030.
That’s why we think it is important for policy-makers to understand the relationship between the level of service of electricity and the investment cost that entails.
Power for All: If policy-makers and other stakeholders want to learn more about the model and some of the assumptions that underpin it, how are they able to do that?
Vivien Foster: The best place to do that is in the Sustainable Energy for All Global Tracking Framework 2015, a report called Progress Towards Sustainable Energy. AIM was developed for that report and the report has quite a good summary of the methodology and some of the results.
We are also planning to put out a more detailed paper for technical specialists who want to go into it more deeply. We do have the models available on demand for anyone who may be interested in a particular country. We plan to put a lot of these resources up on the web in due course but the product is still under development. The countries we have covered so far are: India, Nigeria, Ethiopia, Bangladesh, DRC, Tanzania, Kenya, Uganda, Myanmar, Mozambique, Madagascar, Afghanistan, Niger, Burkina, Malawi, Angola, Philippines and Yemen. Those are the countries that are already available.
Power for All: Lastly,...Power for All launched a Call to Action urging Multilateral Development Banks to integrate an energy access opportunity cost in their funding decisions. How do you feel such an opportunity cost assessment could impact the future of development bank investments and energy access?
Vivien Foster: Yes, it was good to be part of that interesting discussion at the World Bank Spring Meetings. AIM is a tool that MDBs can use in our policy dialogue. We work with many countries that are aiming to increase their electrification rates, and by having a tool of this kind we can have really informed discussion with policy-makers. We can simulate different strategies for universal electrification and give them a real time sense of what might be affordable in countries and how that might affect the speed at which they can meet their universal electrification targets.
