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S c a l i n g U p A c c e ss t o E l e c t r i c i t y :

2014/21

The Case of Bangladesh

88702
A KNOWLEDGE NOTE SERIES FOR THE ENERGY PRACTICE

THE BOTTOM LINE

Since its inception in
2003, Bangladeshs solar
home system program has
installed about three million
electrification systems in rural
households, two-thirds of them
in the last three years. The
program is the most dynamic
off-grid electrification program
in the world, benefitting more
than 15 million people and
contributing about 130 MW in
renewable energy generation
capacity.

Zubair Sadeque is a
senior energy specialist
in World Banks South
Asia Energy practice.
Dana Rysankova is a
senior energy specialist
in the World Banks
Energy Practice.
Raihan Elahi is a senior
energy specialist in
World Banks Africa
Energy Practice.
Ruchi Soni is an energy
specialist consultant in
the World Banks Energy
Practice.

Scaling Up Access to Electricity:

The Case of Bangladesh
Why is this case interesting?
Off-grid electrification is crucial to reaching
universal access
Worldwide, 1.2 billion people lack access to electricity. Many live far
from the existing electrical grid. To ensure them access to electricity
by 2030, two-thirds of future energy investments will have to scale
up off-grid options as well, including mini-grids and stand-alone
systems (IEA 2013).
Achieving universal access to modern energy services is one of
the three complementary objectives of the Sustainable Energy for All
(SE4ALL) initiative. Formally launched in the UN General Assembly in
September 2012 and co-chaired by the president of the World Bank
Group and the UN Secretary-General, SE4ALL calls on governments,
businesses, and civil society to address urgent energy challenges,
including universal access, by 2030 (SE4ALL 2012).
Despite significant challenges in its power sector (box 1),
Bangladesh has succeeded in developing the largest and most
dynamic national off-grid electrification program in the world, yielding lessons that may be applicable to other countries considering
off-grid solutions to improve access to electricity.
Since its inception in 2003, Bangladeshs solar home system
(SHS) program has installed household electrification systems
in three million rural households, two-thirds of them in the last
three years. In the same time period, the countrys rural electricity
cooperatives have extended access to the national electrical grid to
about 1.3 million households. Currently, the SHS program is providing
electricity to about 50,000 new households each month, making it

the most dynamic off-grid electrification program in the world. Solar

home systems are small, household-level electrical systems powered
by solar energy. They consist basically of a solar panel, inverter, and
battery. Depending on their size, they can power various domestic
appliances, including lights, radios, TVs, fans, and refrigerators.
This success evolved from a small pilot introduced in 2002
by the World Banks Rural Electrification and Renewable Energy
Development (RERED) project. RERED initially relied on subsidies,
but these have been phased out over time as system prices declined
thanks to economies of scale and technological advances. Today, the
solar home systems are provided practically on commercial terms.
A modest subsidy is available only for small systems designed for the
poorest households.

Box 1. Key facts

Population: 161 million
Population density: 1,238 persons per km2
GDP per capita: US$ 752
Electrification rate: 55 percent
Bangladeshs electrification rate is 90 percent in urban areas, but just
43 percent in rural areas (2011), where four in five Bangladeshis live.
The countrys power sector faces numerous challenges, including
inadequate generation capacity, dependence on high-cost emergency
power, weak financial conditions and governance structure of power
sector entities, and limited technical capacity.
The installed generation capacity is about 6,500 MW against a peak
demand of 8,000 MW, resulting in widespread power outages.

S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h

By 2002, it had become

apparent that an off-grid
approach was needed to
complement efforts to
extend the grid. A pilot was
introduced to test whether
solar home systems could
help reach more remote
rural households.

Some aspects of the Bangladeshi SHS program may be unique to

Bangladesh and difficult to replicate in other countries. For example,
the program has benefitted from a strong pre-existing network of
competitive microfinance institutions (MFIs) with deep reach in rural
areas, including the world-known Grameen Shakti MFI. Other factors
contributing to the programs success were (i) the high density of
Bangladeshs rural population, which fostered competition and
economies of scale; (ii) rising rural incomes and remittances from
abroad, which stimulated demand for the off-grid solar systems; and
(iii) the existence of entities interested in doing business with rural
customers and the countrys entrepreneurial culture.
But Bangladeshs experience also conveys many lessons that
are applicable to any off-grid electrification initiative. Among those
lessons:

The presence of a competent and passionate local champion

with a strong capacity to promote and manage an off-grid
elecrification program

Technical and financing solutions that match the target

populations ability to pay

The quality of the solar home system and consumers awareness

of its availability

The patience to allow the program to evolve over time to reflect

targets. Although rural cooperatives extended power to many rural

households, by the early 2000s concerns about the pace and costs
of rural grid electrification had arisen.
It was estimated that at the prevailing pace of grid electrification,
Bangladesh would take 50 years to reach universal access. The REB
was connecting four to five hundred thousand consumers annually
to the gridfar fewer than required to reach universal accessand
connection costs were rising. Given that rural households tended to
use electricity primarily for lighting, the government was interested in
exploring more cost-effective solutions for remote households. The
reliability of grid power had also been a concern, with grid-connected
households facing frequent power outages because of insufficient
generation.
By 2002, it had become apparent that an off-grid approach
was needed to complement efforts to extend the grid. A pilot was
introduced to test whether solar home systems could help reach
more remote rural households.
When the World Banks first RERED project was being designed
in 2002, a two-pronged approach was adopted to promote the
use of solar home systems in rural areas, thereby leveraging the
countrys renewable energy potential, while continuing to help the
REB and rural cooperatives improve their operational and financial
performance.

new technologies and market trends.

What challenges were faced?

Extension of the national grid to rural areas was
slow and costly
Bangladeshs rural electrification program was initiated in 1977 with
the creation of the Rural Electrification Board (REB). The program was
modeled after the rural cooperatives system of the United States.
The REB oversees rural electric cooperatives (palli bidyut samity),
which are autonomous organizations that own and operate rural
distribution systems in specific areas. The REB arranges financing to
build the distribution lines and hands over the finished infrastructure
to the cooperatives for commercial operations (billing, collection,
and regular maintenance). The performance of the cooperatives is
monitored by the REB under agreements that specify performance

What approach was taken?

An ownership model based on microfinance
proved most successful
The first approach tested by the RERED project was the ownership approach that had previously been successful in Sri Lanka
(Govindarajalu, Elahi, and Nagendra 2008). In that model, private
dealers in solar home systems would make agreements with MFIs to
extend financing to eligible customers.
This model was considered in Bangladesh, but there were
concerns about the ability of private dealers to gain household
trust. Instead, the SHS program opted for a modified approach that
leveraged the strong presence of Bangladeshs MFIs in rural areas.
These MFIs (most of which are nongovernmental organizations,
NGOs) became dealers, responsible for all aspects of the solar home

S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h

The partner organizations

offer a buy-back guarantee
that gives customers an
option to sell their system
back if the household
obtains a grid connection
within a year. Most
customers have preferred
to keep their solar system,
because grid electricity
remains unreliable.

system business (technical, commercial and financial). The

Figure 1. The microfinance ownership model for solar home systems
advantage of this approach was that these MFIs already
Technical
had established relationships with their clients to whom
Provides approval
Standards
Suppliers
they could offer yet another service. For this approach to
Seek approval
Committee
Supply
work, however, it was necessary to ensure that the MFIs
equipment
Pay for
gained proficiency in the new market. This was addressed
equipment
PO
Apply
Provides grants and loans
Partner
by substantial training in technology, supplier-selection,
Selection
IDCOL
Organizations
Selects POs
Seek grants and loans
Committee
and after-sales services.
n
io s
Sell
at
This unique feature of Bangladeshs approach has
ns
er ion
Grants and
SHS and
tio
Pay downop olut
s
Repayment
olu
k ds
soft term
s
provide
e
payment
proven difficult to replicate in other countries, where MFIs
e
Se late
d
i
credit
v
service
and
o
re
Pr
in general have been reluctant to venture outside of their
installments
Operations
core role of financiers.
Donors
Households
Committee
The second approach was a fee-for-service approach
to be implemented by REB and the cooperatives. This
Source: Presentation by IDCOL at Energy Week, 2013.
model built on the cooperatives strong presence in rural
SHS = solar home system(s)
areas. Instead of extending the grid, the cooperatives
would provide solar home systems to more remote
All partner organizations are private (mostly NGOs with a strong
households and charge a monthly fee for the use of the systems.
base in microfinance), ranging from large, well-known organizations
Because each approach had merits, the RERED project piloted
such as Grameen Shakti to very small entities operating in specific
them both. The microfinance model proved more dynamic, primarily
areas. They procure solar home systems from various suppliers and
because of the greater commitment and interest of the implementsell them to households and small businesses on microcredit terms
ing agency (Infrastructure Development Company Limited, IDCOL)
spelled out in purchase contracts. They are expected to prefinance
and MFIs to promote solar home systems as a core business line,
the systems, for which they can often obtain supplier credit. They
whereas for REB and the cooperatives solar home systems remained
also install the systems using their own technicians.
peripheral to extension of the grid. By 2009, MFIs had installed
Once the systems are installed, IDCOL verifies the installations
320,000 systems, compared to just 14,000 systems installed by the
and refinances a portion of the partner organizations credit to the
cooperatives. The fee-for-service approach was then discontinued,
households. It may also release a subsidy to the partner organization.
and the focus shifted to fine-tuning and scaling up the ownership
The refinancing and subsidies that IDCOL provides are drawn from
model.
its financiersoriginally the World Bank but now other development
IDCOL is a government-owned financial intermediary with the
partners as well.
mandate to provide long-term financing for private infrastructure
Partner organizations remain in contact with customers during
projects. Although owned by the Ministry of Finance, IDCOL is govthe loan repayment period (typically 23 years), collecting payments,
erned by an independent board of directors drawn from government
providing maintenance, and training customers in both operation and
and the private sector.
maintenance. Once the loan is repaid, the partner organizations offer
IDCOL works with development partners, suppliers of solar
service contracts for an annual fee. They also extend a buy-back
home systems, and participating MFIs, which are considered partner
guarantee that gives customers an option to sell their system back to
organizations. IDCOL sets technical specifications, certifies products
IDCOL at a depreciated price if the household obtains a grid connecand components, and selects partner organizations based on clear
tion within a year of purchase. Most customers have preferred to
eligibility criteria.
keep their solar system, because grid electricity remains unreliable.

S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h

From the start, the SHS

program emphasized
quality assurance in
order to build consumer
confidence in solar home
systems, which were not
yet widespread in rural
areas.

The SHS ownership program has been successful primarily

because it has provided technical and financing solutions to users
that matched their needs.
Financing. The program has made systems affordable through
a combination of consumer credit and (declining) subsidies. The idea
was to bring monthly expenditures as close as possible to existing
household spending on kerosene and dry cells. Subsidies were
initially required to bring the overall costs of the systems down, but
they have been gradually phased out.
Partner organizations provide microfinance loans to households.
Households are required to make a downpayment equivalent to
1015 percent of the cost of the system. The remainder is repaid in
23 years at prevailing market interest rates (typically 1215 percent).
Sixty to eighty percent of the credit that the partner organization
extends to the household is eligible for refinancing from IDCOL at
the prevailing market interest rate of 69 percent, with a 57 year
repayment period and a 11.5-year grace period. After technical and
other verifications, IDCOL releases the credit to the partner organization, along with any applicable subsidy, within 21 days of the claim.
Partner organizations also often receive supplier credit of up to
three months as a sort of bridge loan while awaiting refinancing by
IDCOL.
Subsidies have evolved over time with regard to both purpose
and amount. Originally conceived as market-development tools,
subsidies were designed to help partner organizations market the
systems by making them more affordable, while also covering the
costs that new partner organizations incurred in setting up a new
business line in solar home systems.

The market-development approach worked in Bangladesh, as

economies of scale brought unit costs down. At the same time, the
global costs of solar home systems fell, reflecting lower prices for
photovoltaic panels and other components, efficiency improvements,
and the emergence of more efficient appliances, including LED lights.
When the SHS program started, the average subsidy was $90
per system. By 2006 it had been halved and by 2013 eliminated
except for the smallest systems (table 1). The remaining $20 subsidy
for systems of 30 Wp and below is to enable poorer households to
participate in the program.
The program has also provided indirect subsidies in the form
of cofinancing for consumer training and awareness building.
These activities were developed on a cost-sharing basis, with the
partner organizations bearing 20 percent of the cost. The partner
organizations are now responsible for most consumer training and
awareness building.
In addition, the RERED project financed training for partner
organizations and a comprehensive media campaign to promote the
use of solar home systems throughout the country. These activities
helped build consumer confidence in solar home systems in a way
that partner organizations could never have done on their own.
IDCOL continues to train partner organizations on topics such as
cash flow management, business planning, and technical features.
Technical features. From the start, the SHS program emphasized quality assurance in order to build consumer confidence in
solar home systems, which were not yet widespread in rural areas.
IDCOLs technical standards committee prepares specifications
and certifies products. Specifications are periodically updated to

Table 1. The gradual reduction of subsidies for the installation of solar home systems, 200314 (in US dollars)

Year

2003

2004/05

2006/07

2008/09

2010/11

2012

2013/14

Capital buy-down grant

70

55

40

40

25

25

20*

Institutional development grant

20

15

10

Source: Authors.
* Applies only to solar home systems below 30 Wp. An institutional development grant of $3 per system applies to new and smaller partner organizations only.

S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h

When the program

started, batteries were the

reflect new technical advances. Product warranties are required for

all key components (panels, batteries and charge controllers).
In the programs early stage, every installation was verified
by IDCOL. Since the program reached the 50,000 target in 2005,
installations have been verified on a sample basis. IDCOL verifies that
the installations are in eligible areas, that the partner organizations
have used certified products, and that the installations are consistent
with technical requirements and are fully operational. Only then are

only component produced

in Bangladesh. Today, all
components (including
solar panels on a limited
scale) are produced
locally.

Box 2. World Bank support for the Rural Electrification and

Renewable Energy Development (RERED) program
Preparation of the Banks first RERED project was supported through
various grants, including a grant of $340,000 from the Global
Environment Facility to IDCOL to test the proposed microfinance
approach. IDCOL bought 250 solar home systems and provided 50
systems each to 5 selected partner organizations. The performance of
these partner organizations in installation, loan collection, and other
challenges was tracked to hone the project design and selection
criteria for partner organizations.
RERED 2002. About $16 million from a larger credit from the
International Development Association was allocated for the solar
home system program, complemented by an $8.2 million grant from
GEF. The original credit supported 650,000 grid connections and
236,000 solar home systems.
RERED 2009. Additional financing of $130 million supported sale of
another 300,000 solar home systems, in addition to other support
for lighting and generation of electricity (including from renewable
sources).
RERED 2011. Additional financing of $172 million supported
installation of about 630,000 solar home systems.
RERED II (2012). Beyond supporting additional 550,000 solar home
systems, the project (valued at $155 million) is also extending the
solar home system model to additional areas, including (i) solar
irrigation pumps, (ii) renewable mini-and micro-grids), and (iii) cleaner
cookstoves, including biogas digesters for cooking.
RERED II (2014). Additional financing of $78.4 million is supporting
sale and installation of another 480,000 solar home systems.
The program has also received funding from GPOBA, a World Bank
administered trust fund, for output-based subsidies ($7.2 in original
funding in 2010 and $6.75 in additional funding in 2011).

the subsidy and refinancing released. IDCOL has 21 days from the
date of a partner organizations claim to carry out the verifications. It
employs more than 100 technical inspectors to carry out the verifications and maintains a call center to handle customer complaints.
Partner organizations are responsible for providing maintenance
and customer training during the loan-repayment period. They also
offer after-sale service contracts to households that have repaid their
loans.
The SHS program has offered different system sizes to match
customers willingness to pay. In the early years, the smallest eligible
system was 40Wp, as smaller systems were considered unreliable.
The best-selling system was 50Wp. Over time, technical improvements have driven system sizes down. Today, the program offers
systems as small as 10Wp. The best-selling system is 30Wp, reflecting
the fact that a 30Wp system today can offer more end uses (including powering a color TV) than a 50Wp system could in 2003.
Since the first RERED project was approved in 2002, the World
Bank has provided continuous support (box 2). Funding has been
used to provide (i) a credit line to IDCOL to refinance microfinance
loans made by partner organizations; (ii) an output-based subsidy,
and (iii) technical assistance, including for training and implementation of a consumer-awareness campaign.
In addition to providing financing, the Bank has offered critical
advisory services and helped the government to obtain funding
from other development partners. The SHS program is now also
supported by the Global Partnership for Output-Based Aid, the
Asian Development Bank, the Islamic Development Bank, the
Japan International Cooperation Agency, KfW, GIZ (German Federal
Development Corporation), and the U.S. Agency for International
Development.
IFC is also contributing to the development of the off-grid electrification market in Bangladesh. Grameen Shakti was first exposed
to solar home systems in 1998 through an IFC-financed program
for small and medium-sized enterprises. Today, IFCs Lighting Asia
program is testing an introduction of solar lanterns (smaller than
10Wp) to further enhance the affordability of good-quality lighting
for the poorest of the poor, and to develop micro-grids for more
concentrated populations.

S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h

Figure 2. Solar home systems installed each year, 200314

900000

852,388
Smaller LED
systems
introduced

800000

Overcoming the

700000

affordability barrier for

600000

Bangladeshi households

500000

through a combination

400000

of consumer credit,

300000

subsidies, and product

choice opened the way
to widespread adoption
of solar home systems.

Buy-back
scheme
introduced

1 million
solar home systems
installed by
mid-2011

172761

169,916

200000
100000
0

469,572

324,775

11,697

20,635

27,579

37,151

2003

2004

2005

2006

Rural households will pay

for a solar home system

643,812

First target:
50,000 reached

Start of
IDCOL program

Subsidy eliminated
except for systems
under 30 Wp

69,562

2007

103,301

2008

2009

Systems installed each year

2010

2011

2012

2013

2014
(through March)

Source: IDCOL.

if monthly payments are

commensurate with their
current expenditures for
alternative energy sources.

What was the outcome?

Installations of solar home systems have
mushroomed
Household access. In 2003, when the SHS program started, no
more than 12,000 solar home systems had been installed throughout
Bangladesh. The original target of the program was to install 50,000
systems by 2008. That target was achieved three years earlier than
anticipated at a cost that was $2 million less than anticipated. By
mid-2011, the program had installed a million systems, and as of
March 2014, that figure had risen to 2.9 million, benefitting more
than 15 million people and contributing about 130 MW in renewable
energy generation capacity. The program is currently installing more
than 50,000 systems per month. IDCOLs target is to reach a total of 6
million solar home systems by 2016.
Off-grid electrification programs typically have an S shape
(figure 2). In the initial phases, the pace of connections tends to be
slow, as the program concentrates on building enabling conditions

and fine-tuning approaches. That focus pays off in later stages, as

evidenced by the exponential market growth in Bangladesh from
2006 onward.
When the SHS program started, it had five partner organizations,
with Grameen Shakti holding a dominant market share. At present,
the program works with 49 organizations, contributing to the creation
of a vibrant renewable energy sector, although Grameen Shakti still
accounts for the majority of sales (figure 3).
Initially, batteries were the only component produced in
Bangladesh. Today, all components (including solar panels on
a limited scale) are produced locally. In 2013, the International
Renewable Energy Agency (IRENA) ranked Bangladesh as having the
sixth-largest renewable energyrelated workforce in the worldwith
114,000 jobs.
An impact evaluation study (Samad and others 2013) confirmed
a variety of benefits from solar home systems. It estimated that
household access to the systems increases per capita food
expenditure by 9.3 percent, per capita nonfood expenditure by 4.7

S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h

Figure 3. Market share of partner organizations, 2013

Others, 14%
BRIDGE, 1%
UBOMUS, 2%

The programs final design

is a good example of how
international experience

Grameen Shaktki, 56%

Hilful Fazal, 3%
Srizony, 4%
BRAC, 5%

and local know-how can

come together to yield

RSF, 15%

an innovative design
that suits the countrys

Source: Samad and others 2013.

circumstances.
percent, and total per capita expenditure by 5.1 percent, because
of savings derived from the solar home system or time freed up for
productive activity. The study also found that evening study hours
for both boys and girls have increased thanks to the installation of
solar home systems. Solar power was also found to have a positive
health impact, especially for women, partly owing to avoidance of
kerosene fumes. Adopting a solar home system reduced respiratory
disease in women by aged 16 and above by 1.2 percent. Separately,
a gender-responsive social assessment of RERED carried out in 2012
found that owning a solar home system increased mobility and
entrepreneurial ambitions among women.
In many places around the world, the ownership model has
been as unsustainable because of the need for after-sale service.
This has not been the case in Bangladesh. Optional after-sale
services are provided by partner organizations that have a strong
local presence and are both willing and able to provide such services
to their customers.
Financial sustainability has also been strengthened through the
presence of MFIs with strong financial track records. Partner organizations have an average loan-collection efficiency of more than
90 percent while servicing their debts to IDCOL on time. Meanwhile,
dependence on subsidies has been significantly reduced.

What have we learned?

Some conditions are unique to Bangladesh but
many key lessons are transferable
Some program features may be unique to Bangladesh.
Strong microfinance support from established grassroots MFIs/
NGOs helped penetrate rural markets. The SHS program leveraged
an extensive MFI network that has historically provided microfinance
for income-generating activities in rural areas. Early on, the program
benefitted from the extended network and reputation of Grameen
Shakti, but as it evolved, additional MFIs have become solar home
system dealers, deepening penetration in rural areas.
Rising rural incomes helped reduce the need for subsidies.
Improved agricultural productivity and the huge influx of remittances
from Bangladeshi workers abroad have made solar home systems
more affordable than they were a few years ago, a factor that has
made it possible to reduce subsidies almost to the vanishing point.
The feasibility of phasing out subsidies, of course, depends on what
is happening with household income levels.
High population density has enabled economies of scale, contributing to the price reductions. As one of the most densely populated
countries in the world, Bangladesh was able to leverage economies
of scale. The average cost of a 40 Wp solar home system, which is
enough to run a few lights, a mobile phone charger, and a TV, is about
$300. This is less than half the cost of a similar system in Uganda, for
example. High population density also promotes competition in the
market, as dealers compete vigorously to provide attractive credit
packages to consumers. While economies of scale can be achieved
in less densely populated countries, the approach to achieving the
scale may need to be different (competition for customers is likely to
be more limited).
Many of the programs lessons may be applicable in
other countries. Finding a competent and passionate local
champion is important. One of the early challenges that the program
encountered in Bangladesh was that the traditional financiers of
the partner organizations were unwilling to finance nonproductive
loans such as those for solar home systems. An alternative source
of funding was found in IDCOL, which at the time was facing a

S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h

Scalability is more
important than scale.
In other words, it is less
important to aim at
developing a a large-scale
program than to focus
on developing scalable
solutions.

slowdown in its core financing activities and was looking for a

new area in which to expand. IDCOL has turned out to be both an
enthusiastic promoter of off-grid solutions and an extremely effective
implementer. Its professional management is overseen by a qualified
board.
The program must take into account the target populations
ability and willingness to pay. Overcoming the affordability barrier
for Bangladeshi households through a combination of consumer
credit, subsidies, and product choice (different system sizes to match
varying consumer needs) opened the way to widespread adoption
of solar home systems. Rural households will pay for a solar home
system if monthly payments are commensurate with their current
expenditures for alternative energy sources. Although microfinancing
hinges on having institutions willing to lend for solar home systems
(which is not the case in all countries), alternative payment methods
are possible, such as pay-as-you-go schemes.
Even with affordable financing, actions to foster consumer trust
in the new technology are needed. If consumers are expected to
invest a significant share of their income in a solar home system,
they have to know that the system will work. That confidence has
been built in Bangladesh through a combination of several parallel
efforts:

Ensuring technical quality. The need to set standards and provide

quality assurance for solar home systems was recognized early.
Stringent quality standards were set, including a 20-year warranty
for the solar panel and a 5-year warranty for batteries, and the
standards were strongly enforced. Optional after-sale services
have helped keep customers satisfied with the systems.

Consumer awareness and training. Consumer awareness

and training in the use of new solar home systems promote
sustainability. Fostering a sense of ownership helps ensure
proper maintenance and upkeep. Consumer awareness has
included a broad set of activities from face-to-face interactions to
media campaigns, particularly in the early stages of the program.

Risk perception. Initially, the partner organizations followed the

REBs electrification plans to avoid areas that were scheduled
to be electrified, but they soon found that they were missing
customers that they could have served. Conversely, many

households hesitated to buy a solar home system if they

believed that they would soon be connected to the grid. To
deal with this twin challenge, dealers introduced a guarantee to
repurchase the solar home system within a year if the household
obtained a grid connection. The buy-back scheme has proved
very persuasive. In reality, the guarantee has rarely been called
upon, as grid electrification has been slow and even most
electrified households elect to keep their solar systems due to
the unreliability of the grid.
Successful programs must evolve over time to reflect new
technologies and market trends. The Bangladeshi SHS program
adapted its technical specifications over time to take advantage of
new technology developments. The program often faced trade-offs
between the desire to bring new technologies to customers quickly
and the need to maintain the reputation for reliability of solar home
systemsit has typically chosen the cautious approach. For example, the program initially offered only systems of 40Wp and larger,
owing to the reliability problems of the smaller systems then available. Over time, however, the program introduced smaller systems
that increased affordability, while updating technical specifications to
allow new components, such as LED lighting.
Operational lessons from the World Banks RERED I and II
projects. RERED took about two years to prepare. Time was needed
to adapt the model the Bank had used in other countries, to find
implementing agencies and develop institutional arrangements in
a country in which solar home systems were not widespread, and
to test the new approaches. Ultimately, the time spent in project
preparation hastened implementation. The SHS program reached its
initial target three years ahead of schedule.
The programs final design is a good example of how international experience and local know-how can come together to yield an
innovative design that suits the countrys circumstances. The Banks
initial design ideas were similar to the approach applied in the earlier
Sri Lanka project, but insights from IDCOL and partner organizations
produced the microfinance ownership approach, which leveraged
the countrys unique strengths.
The projects design was flexible (with a range of subsidies and
system sizes, for example), allowing for quick adaptation to evolving
technology and market conditionsand to consumer feedback.

S c a l i n g U p A c c e ss t o E l e c t r i c i t y : T h e C a s e o f B a n g l a d e s h

MAKE FURTHER
CONNECTIONS
Live Wire 2014/9. Tracking
Access to Electricity, by
Sudeshna Ghosh Banerjee and
Elisa Portale.
Live Wire 2014/20. Scaling Up
Access to Electricity: The Case
of Lighting Africa, by Daniel
Murphy and Arsh Sharma.
Live Wire 2014/22. Scaling
Up Access to Electricity: The
Case of Rwanda, by Paul
Baringanire, Kabir Malik, and
Sudeshna Ghosh Banerjee.

Details of the pilot implementation were left flexible, which made it

possible to adapt quickly to experience without resorting to restructuring or other lengthy administrative processes.
Scalability is more important than scale. The Bangladesh SHS
program, the largest off-grid electrification program ever supported
by the World Bank, began as a modest pilot aimed at reaching 50,000
connections over a five-year period. This experience shows that it is
less important to aim at developing a a large-scale program than to
focus on developing scalable solutions. The approach was developed in several phases, as detailed in box 2. The SHS program was
scalable because its design leveraged Bangladeshs strengths while
effectively addressing the identified barriers and allowing for careful
and timely adjustments to insights gained during implementation.

References
Govindarajalu, Chandra, Raihan Elahi, and Jayantha Nagendra. 2008.
Electricity Beyond the Grid: Innovative Programs in Bangladesh
and Sri Lanka. Energy Sector Management Assistance Program,
World Bank, Washington, DC.
IEA (International Energy Agency). 2013. World Energy Outlook 2013.
Paris.
IFC (International Finance Corporation). Lighting Asia: Solar OffGrid LightingMarket Analysis of India, Bangladesh, Nepal,
Pakistan, Indonesia, Cambodia, and Philippines. New Delhi.
http://www.ifc.org/wps/wcm/connect/topics_ext_content/
ifc_external_corporate_site/ifc+sustainability/publications/
publications_report_lightingasia.

Kumar, Geeta, and Zubair Sadeque. 2012. Output-Based Aid in

Bangladesh: Solar Home Systems for Rural Households, 2012,
OBApproaches 42, Global Partnership on Output-Based Aid,
World Bank, Washington, DC. https://www.gpoba.org/node/648.
Samad, Hussain A., Shahidur R. Khandker, M. Asaduzzaman,
and Mohammad Yunus. 2013. The Benefits of Solar Home
Systems: An Analysis from Bangladesh. Policy Research
Working Paper 6724, World Bank, Washington, DC. http://
documents.worldbank.org/curated/en/2013/11/18640651/
benefits-solar-home-systems-analysis-bangladesh
SE4ALL (Sustainable Energy for All Initiative). 2012. In Support of the
Objective to Achieve Universal Access to Modern Energy Services
by 2030. Technical Report of Task Force 1: New York. http://www.
sustainableenergyforall.org/about-us.
Sharif, Islam, and Marufa Mithila. 2013. Rural Electrification Using
PV: The Success Story of Bangladesh. Energy Procedia 33:
34354. http://www.sciencedirect.com/science/article/pii/
S1876610213000854.

The peer reviewers for this note were Migara Jayawardena (senior energy
specialist, Latin American and Carribean Energy Practice, World Bank), Monali
Ranade (senior environmental specialist, Climate Change Policy and Finance
Group, World Bank, and Chandrasekar Govindarajalu (senior energy specialist,
Sustainable Business Advisory Practice, IFC).

10

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U n d e r s ta n d i n g C O 2 e m i s s i O n s f r O m t h e g

2014/5

A KNOWLEDGE NOTE SERIES FOR THE ENERGY PRACTICE

THE BOTTOM LINE

Understanding CO2 Emissions from the Global Energy Sector

the energy sector contributes

about 40 percent of global
2014/4
Why is this issue important?
emissions of CO2. threexas
The Case of Te
r i d : emissions
o T h eofgthose
r g y Tquarters
Mitigating climate change requires knowledge of the
renewable ene
Figure 2. energy-related CO2
Figure 1. CO2 emissions
TransmiTTing
1
come from six major
sources of CO2 emissions
emissions by country
by sector
economies. although coal-fired
LICs
Identifying opportunities to cut emissions of greenhouse gases
0.5%
plants account for just
emisthose
of
requires a clear understanding of the main sources
Other
40percent of world energy
Residential
Other MICs
sectors
6%
I C E(CO2) accounts for more than 80 percent of
dioxide
T
Carbon
C
A
sions.
R
P
Y
G
R
E
were
N
E
E
15%
production, they
H
10%
1
TE SERIES FOR T
L E D G E N Ofor
China
total greenhouse gas emissions globally, primarily from the burning
A K N O Wresponsible
more than
Other HICs
30%
include
to
8%
sectordefined
energy
Energy
of fossil fuels (IFCC 2007). The
70percent of energy-sector
41%
Japan 4%
Industry
fuels consumed for electricity and heat generationcontributed 41
20%
emissions in 2010. if warming is
Russia
7%
USA
percent of global CO2 emissions in 2010 (figure 1). Energy-related
to be limited to two degrees
Other
19%
India
THE BOTTOM LINE
transport Road
CO2 emissions at the point of combustion make up the bulk of such
7%
EU
Celsius, therefore, steep
6%
transport
11%
emissions and are generated by the burning of fossil fuels, industrial
16%
states
reductions will have to be made
Texas leads the United
waste, and nonrenewable municipal waste to generate electricity
in the use of coal to generate
with 9,528 mw of installed
sector at the point
methane
carbon and did
face? and leakage emissions
Notes: Energy-related CO2 emissions are CO2 emissions from the energy
and heat. Blackchallenge
theyventing
electricity in the larger
bunkers, domestic
What
wind power capacitya
of combustion. Other Transport includes international marine and aviation
note.
are not included in the analysis presented in this
?
four
commercial/public
economies.
t was contingent on
aviation and navigation, rail and pipeline transport; Other Sectors include
level exceeded by only
Why is this case interesting
and heat generaTransmission investmen
services, agriculture/forestry, fishing, energy industries other than electricity
countries. The state needed
and accelerate
yet needed to precede it tion, and other emissions not specified elsewhere; Energy = fuels consumed for electricity and
commitm
from?
come ents
Texas needed to prioritize
transmit
do emissions
Wheregeneration
HIC, MIC, and LIC refer to high-, middle-,
more infrastructure to
trans-heat generation, as defined in the opening paragraph.
wind sites
tremendous needs for
from
and low-income countries.
development of remote
of countries
the challenge of meeting
handful
a
in
electricity generated
faced
concentrated
are
Texas
from
Emissions
of generation
producer
Source: IEA 2012a.
the
e triggered by the scale-up
century, Texas was a major
infrastructur
renewable sources, but
mission
coal
from burning
During much of the twentieth
primarily
can take longer to
advantage
come
e
and
taking
now
is
infrastructur
state
approve
Vivien Foster is sector
States. The
regulator could not
renewable sources. Transmission
of petroleum in the United
It currently
projects
the Sus- leads
wind.for
manager
resource:
The geographical pattern of energy-related CO2 emissions closely
energy
transmission expansion
renewable
low-income
all
by
percent
major
0.5
a
only
of
middle-income countries, and
power capacity
wind Departtainable Energy
mirrors the distribution of energy consumption (figure 2). In 2010,
9,528 MW of installed
in the absence of financially
the United States with
Bank
countries put together.
in wind
World
ment at therank
fifth
energy
two zones
with the
To solve
were associated
renewable
emissions
almost half of all1.such
competitive
were a country, would
committed generators.
Figure Texass five
(ERCOT 2011) and, if it
(vfoster@worldbank.org).
Coal is, by far, the largest source of energy-related CO2 emissions
a
largest global energy consumers, and more than three-quarters
the problem, Texas devised
generation worldwide.
globally, accounting for more than 70 percent of the total (figure 3).
Bedrosyan
in 1999, it vowed to were associated with the top six emitting countries. Of the remaining
quickly
program
its energyDaron
planning process that
When Texas reformed
This reflects both the widespread use of coal to generate electrical
for London
works
mix. It now uses a energy-related CO2 emissions, about 8 percent were contributed
energy
in its
connects energy systems
Toronto. to increase
increase the role of renewables
Economics in utilities
power, as well as the exceptionally high CO2 intensity of coal-fired
energy
by other high-income countries, another 15 percent by other
to the transmission system.
portfolio standard to require
an To minimize
Previously, he was
renewable
power (figure 4). Per unit of energy produced, coal emits significantly
the
renewable sources.
from eligible
The system is based on
energy analyst with the
their energy generation
more CO2 emissions than oil and more than twice as much as natural
energy program created
renewable
competitive
Inventory
of
Gas
Greenhouse
states
Change,
Climate
the
on
1
Practice.
designation
costs to the taxpayer, World Banks Energy rely on the private sector United Nations Framework Convention
gas.
DataComparisons By Gas (database). http://unfccc.int/ghg_data/items/3800.php
energy zones that
renewable energy zones.
competitive renewable
and transe and operations for generation
to provide infrastructur
and regulation
provides planning, facilitation,
mission, while the state
(figure 1).
electricity prostandard mandated that
The renewable portfolio
by 2009.
additional renewable energy
of
MW
2,000
viders generate
and was followed
Marcelino Madrigal
met in just over six years
This 10-year target was
and mandated
(mmadrigal@worldbank
20, which raised the targets
up in 2005 by Senate Bill
reach 5,880
.org) is a senior energy
energy generation must
that the states total renewable
specialist in the World
Furthermore, the
2015 and 2025 respectively.
Banks Energy Practice.
MW and 10,000 MW by
energy target
With
500 MW of the 2025 renewable
legislation required that
Rhonda Lenai Jordan
sources other than wind.
(rjordan@worldbank.org)
be derived from renewable

Transmitting Renewable
The Case of Texas

is an energy specialist
the same practice.

in

Energy to the Grid:

Source: ERCOT 2008.

11

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d: The Case of
rgy To The gri
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Transmitting Renewable
The Case of Texas

gy sector
s u lt s o f W o r l d B a n k l e n d i n g i n t h e e n e r
M e a s u r i n g t h e r eLINE

THE BOTTOM

Energy to the Grid:

2014/6

states
Texas leads the United
with 9,528 mw of installed
face?
What challenge did they
wind power capacitya
four
ting?
was contingent on
level exceeded by only
RIES FOR THE ENERGY PRACTICE
E S Einteres
N O Tcase
G Ethis
L E D is
A K N O WWhy
Transmission investment
countries. The state needed
e and accelerate
yet needed to precede it
Texas needed to prioritiz
transmit
generation commitments
more infrastructure to
for transsites
wind
from
meeting tremendous needs
development of remote
electricity generated
faced the challenge of
Texas
LINE
of generation from
producer
THE BOTTOM
the
triggered by the scale-up
century, Texas was a major
renewable sources, but
mission infrastructure
e
During much of the twentieth
take longer to
advantag
taking
sion infrastructure can
States. The state is now
regulator could not approve
renewable sources. Transmis
this note is the first report
petroleum in the United
of
leads
currently
It
n projects
resource: wind.
transmission expansio
of energy-sector indicators
of a major renewable energy
power capacity
ly
9,528 MW of installed wind
in the absence of financial
reflecting the World Banks
the United States with
zones
rank fifth in wind
To solve
ive renewable energy
were a country, would
five competit
committed generators.
to measure
the effort
Texass
broad lending patterns during
faced
1. in
Figure
(ERCOT 2011) and, if it
What challenges were
is this aissue important?
Whydevised
fy 200013. to compile it,the problem, Texas
generation worldwide.
1999, it vowed to
inresults?
quickly
program
that
the
energy
for
process
its
critical
it
made
has
2000
planning
energy projects back to fy
The need for accountability
When Texas reformed
It now uses a
energy mix.
aligned
and
systems
its
in
retrieved
be
to
les
energy
had
2000
FY
to
back
renewab
Data
for
of
connects
screened
role
were manually
results
increase the
Energy Practice to measure
utilities to increase
standard to require energy with the new CSIs
to the transmission system.
results data comparable with
renewable portfolio
le sources. To minimize
in order to
the tracks the outcomes
of its projects
on Bank
based
World
n from eligible renewab
The system is The
the standardized indicators
their energy generatio
created
program
poverty le energy
endingrenewab
of states
project in the energy sector had devised its own
the goalsthe
each
Previously,
competitive
how well they are advancingtaxpayer,
now used in the Banks designation ofunderstand
costs to the
made it difficult to report the Banks
on the private sector
those
zones. shared prosperity. For some yearslenow
and promoting
energy zones that rely indicators of results, which
renewable energy
corporate scorecard. in the
competitive renewab
n and transScorecards for generatio
Corporate
in terms that were both broad and precise. With the
achievements
outcomes have been reported in a Bank-wide
and operation
future, automation will make
n
to provide infrastructure
and
that measure
Corporate Scorecard, however, the clear advantages of
theregulatio
indicators (CSIs)
adventn,of
planning, facilitatio
based on a set of so-called core sector
provides
it easier to collect, aggregate,
mission, while the stateof standardized
results led the Energy Practice to examine
demonstrate
to
aggregation
being able
impact at the project level and permit
and analyze data on project
(figure 1).
proelectricity
that
to FY 2000 and, to the extent
outcome
d
back
or
output
projects
of
energy
indicator
Banks
an
mandate
is
the
CSI
Each
standard
data across the Bank.
outcomes.
The renewable portfolio
by 2009.
le energy
harmonize or align the indicators used in
theme, such as
sector or
to retroactively
possible,
that is strategically relevant to a particular
MW of additional renewab
viders generate 2,000
Madrigal
years and was followed
with those devised for the Corporate Scorecard. The
Marcelino
the energy sector.
was met in just over six those projects
nk
d
This 10-year target
mandate
and
(mmadrigal@worldba
Practice,
Energy
the targets
Banks
archaeological exercise are reported in this note.
this
results of
raised
which
Three CSIs are particularly central tobythe
20,
Bill
Senate
up in 2005
5,880 here for the fiscal years 200013 are the
reachreported
.org) is a senior energy
must
of the energy
results
in every steprenewab
le energy generationThe
because they reflect its engagement states
total
the
that the
specialist in the World
Furtherm
ely.
(T&D)
andbydistribution
of energy-sector indicators reflective of the broad
reportore,
such
first
value chainfrom generation to transmission
2015 and 2025 respectiv
Sudeshna Ghosh
Banks Energy Practice.
MW and 10,000 MW
With
le energyoftarget
are: of the 2025 renewab
the World Bank during this period.
three indicators
lending patterns
to last mile customer connections. The
500 MW
Banerjee is a senior
legislation required that
Rhonda Lenai Jordan
To compile the report, all World Bank projects approved in the
other than wind.
through
le sources
with access to electricity
energy specialist in the
people provided
ofrg)
The number
orldbank.o
(rjordan@w
be derived from renewab
energy space between FY 2000 and FY 2013 (approximately 7080
in
World Banks Energy
specialist
connections
household
is an energy
Source: ERCOT 2008.
projects per year on average) were screened to extract those
Practice (sgbanerjee@
practice.
thesame
T&D lines constructed or rehabilitated, measured in kilometers
worldbank.org)
that had adopted indicators similar enough to those used in the
(km)
Corporate Scorecard that they could be mined for comparable data.
Ruchi Soni (rsoni@
Generation capacity constructed, measured in megawatts (MW).
worldbank.org) is an
Information was extracted from two types of project documents:
energy analyst in the
the Implementation Completion and Results Report (ICR) for
More recently, additional indicators have been developed covsame practice.
closed projects and the most recent Implementation Status and
ering measurement of energy efficiency in heat and power (lifetime
Elisa Portale (eportale@
Results Report (ISR) for active projects. In some cases, information
savings, captured in MWh).
worldbank.org) is an
was referred back to project staff for confirmation or, where
energy consultant, also
discrepancies had been spotted, for correction. In a few cases
Practice.
in the Energy
where indicators were not explicitly mentioned in the ICR or ISR,

Measuring the Results of World Bank

Lending in the Energy Sector