Revision as of 14:12, 25 June 2018

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Legal Basis: The basis on which organisations are legally entitled to sell electricity

Concession

Definition:

An exclusive right (monopoly) granted by government to sell electricity or standalone systems

A concession may:

Cover the entire country or a specific area
Be time-limited or unlimited
Relate to one, several, or all means of electricity provision

Concessions are usually granted to attract private investment by guaranteeing the investor protection from competition, or to protect public investment.

Internactions wiht other NAE Categories:

	Technology	Grid systems and larger grid-connected mini-grids / distribution systems and isolated mini-grids almost always require concessions (because of the substantial investment required). As a result, the right to transmit and sell electricity is often reserved to the national grid company and/or mini-grid/distribution system operator (at least within the area they reach). For smaller mini-grids, with lower, shorter-term capital investment, a license (which grants a non-exclusive right to sell electricity) may be seen as more appropriate, and mini-grids below a certain size are often unregulated. A key question for private mini-grid investors will be what happens when the main grid arrives? Grid extension into a mini-grid concession area within the concession period may be prohibited, or there may be explicit provision for compensation and transfer of assets to grid ownership. Grid and mini-grid concessions thus often interrelate (with each preventing or having explicit provision for extending into the other’s area). Concessions are more rarely used for standalone systems. This reflects policy-makers’ perception of them as product retailers rather than infrastructure providers, but also that without long-term fixed capital investment private companies have not needed the protection of a concession to attract private capital (and would regard it as a regulatory burden). Concessions may however be used to bring standalone system companies into a market which they might otherwise be unwilling to enter. It’s also possible where pay-as-you-go arrangements are used, where the provider retains ownership of the system until the user has bought it through monthly payments, or even over its full life with the user paying for electricity used, a concession arrangement may be appropriate. Where grid or mini-grid concessions are set up, these rarely forbid sale of standalone systems by others, and vice versa, though standalone systems may be included as one means of providing electricity within an integrated electricity concession encompassing mini-grid and/or grid access.
	Delivery Model	Public delivery models are frequently combined with what are effectively concessions, though the monopoly may be created by, for instance, reserving the right to sell electricity to a national utility company, and may not therefore be labelled as a concession. Oversight and control may then be through organisational hierarchy rather than any explicit regulatory framework. Concessions are used to attract private participation in private and public-private models and may be the means through which public-private models are established.
	Price/Tariff Regulation	Where a concession is granted prices will almost certainly be regulated both to enable private investors to estimate revenues over the concession period and to protect users and ensure that the concessionaire is not over-exploiting their monopoly position. This regulation may be through the terms of the concession itself, rather than through a wider framework. Prices may be set on either a uniform or an individual basis.
	Finance	A concession is a means of attracting private finance, by offering the investor higher levels of sales (in the absence of competition) and lower risk in predicting those sales. It may also be used to protect public investment in infrastructure such as grid systems, and as a means of channelling public financial support into electricity provision.
	Non-Financial Interventions	National energy planning is key to establishing the optimum mix of technologies to meet electrification needs across the country, regardless of the regulatory model employed. Institutional restructuring (eg of the national utility company) and regulatory reform may be needed to enable concessions to be established and capacity building or technical assistance may be required if the key actors lack the capacity to undertake this regulatory reform or design concession arrangements. Awareness raising and demand promotion amongst users and service providers, as well as training (capacity building) to develop the skilled workforce needed by concessionaires can be beneficial alongside financial forms of public support.

Advantages and Disadvantages

The key advantage of a concession is that, by removing the potential for others to sell within the concession area, it allows demand to be captured by a single supplier, giving them economies of scale, and makes it easier to forecast volume of sales and so easier for investors to forecast future revenues (whereas license-based price/tariff regulation only reduces price uncertainty). As well as attracting more private finance this may reduce required return on investment and hence finance costs, but it also removes the benefits of competition once the concession has been granted and so places heavier demand on regulation to protect users, though potential providers may be required to compete for the concession through a tender process. Concession approaches can be rigid, and require significant capacity within regulatory authorities to design approaches which attract private finance while avoiding over-exploitation of users. Concessions also, by their nature, create boundaries and so push investors towards project finance and thinking by limiting their ability to expand their business beyond pre-set borders or to continue it beyond the end of a concession period. For capital-intensive infrastructure-based means of electrification (grid and mini-grids), however, a concession may just represent recognition of a natural monopoly and the need for explicit arrangements for arrival of the grid, and it is for these that a concession is most likely to be appropriate.

Further Informaiton and Guidance

EUEI PDF (2014), Mini-grid Policy Toolkit: Policy and Business Frameworks for Successful Mini-grid Roll-outs http://www.euei-pdf.org/sites/default/files/field_publication_file/RECP_mini-grid_Policy_Toolkit_1pageview_(pdf,_17.6MB,_EN_0.pdf
IRENA (2016), Policies and regulations to support renewable energy mini-grid development through private sector involvement <u>http://www.irena.org/DocumentDownloads/Publications/IRENA_Policies_Regulations_mini-grids_2016.pdf</u>
Senegal. Agence Senegalaise d’Electrification Rurale (2009), Concession d’Electrification Rurale au Senegal, The Africa Electrification Initiative (AEI) Workshop, Maputo, Mozambique 9-12 Juin 2009. <u>http://siteresources.worldbank.org/EXTAFRREGTOPENERGY/Resources/717305-1264695610003/6743444-1268073657582/15.4.Senegal.pdf</u>
World Bank, (2000), Regulatory Approaches to Rural Electrification and Renewable Energy: Case Studies from Six Developing Countries http://www.martinot.info/Martinot_Reiche_WB.pdf
Senegal. OBA (2007), OBA in Senegal – Designing Technology-Neutral Concessions for Rural Electrification https://openknowledge.worldbank.org/bitstream/handle/10986/11034/396090SN0OBApp1140Electric01PUBLIC1.pdf?sequence=1&isAllowed=y

Relevante Case Studies:

License

Definition:

A non-exclusive permission granted by government (or regulator) to sell electricity or standalone systems.

Licenses are employed to enable regulatory authorities to control who provides electricity or electricity goods, to ensure that they meet quality and safety standards and to allow price controls. At the same time licensing is a means of making clear that electricity providers are entitled to sell – without which private financiers may be reluctant to invest. A license may:

Cover the entire country or a specific area or project
Be time-limited or unlimited
Relate to one, several, or all means of electricity provision

Internactions wiht other NAE Categories:

	Technology	Grid systems and larger grid-connected mini-grids / distribution systems are usually licensed through a concession arrangement as, often, are larger isolated mini-grids. For smaller mini-grids, with lower and shorter-term capital investment, a licensing regime (with its non-exclusive right to sell electricity) may be more appropriate, with greater flexibility and a generally less demanding process balancing lack of protection from competition for the investor, while still providing the means to protect users through price/tariff regulation and setting technical and safety standards. (mini-grids below a certain size, are often unregulated, as the administrative burden (and costs) of regulation are seen as disproportionate to the protection it would provide to investors and users, and the right to operate instead being granted through a general derogation from licensing). Without a concession, a key question for private mini-grid licensees will be what happens when the main grid arrives, and it may be beneficial to establish a compensation regime in the event of grid extension, to encourage private mini-grid investment in the interim. Standalone system providers are rarely subject to licensing (beyond general business licensing requirements) though they may be required to meet certain standards in order to access subsidies and tax exemptions. In part this reflects both policy-makers’ and businesses’ perception that as product retailers rather than infrastructure providers or sellers of electricity itself they do not require licensing. Also, without long-term fixed capital investment, private companies have not needed the protection of a concession or license to attract private capital (and would regard it simply as a regulatory burden). With standalone system providers increasingly looking to pay-as-you-go arrangements, where they retain ownership of the system until the user has bought it through monthly payments, or even over its full life with the user simply paying for electricity used, more formal regulation of standalone system businesses may become more appropriate.
	Delivery Model	Licensing may be regarded as unnecessary with a public delivery model, since one arm of the state is granting a license to another, though it can act as a mechanism for establishing independent and transparent oversight. With private and public-private delivery models, licensing is used to explicitly establish the right for the licensee to sell electricity (or a technology used to provide electricity) as the basis for attracting private participation and protecting users through standards and price controls.
	Price/Tariff Regulation	One of the purposes of licensing is to provide the vehicle and framework for price/tariff regulation, with license withdrawal being the sanction for failure to comply with price/tariff regulation. Prices may be set on either a uniform or an individual basis.
	Finance	The right to sell conveyed by a license is the most fundamental requirement for attracting private finance. A licensing regime may also provide a transparent regulatory framework to attract private investment (see below), and may be linked to access to grants, subsidies, tax exemptions and guarantees.
	Non-Financial Interventions	National energy planning is key to establishing the optimum mix of technologies to meet electrification needs across the country, regardless of the regulatory model employed. Regulatory reform is the path to establishing any licensing framework, including quality and technical standards, and capacity building or technical assistance may be required if the key actors lack the capacity to undertake this regulatory reform. Awareness raising and demand promotion amongst users and service providers, as well as training (capacity building) to develop the skilled workforce needed by licensed electricity businesses can be beneficial alongside financial forms of public support.

Advantages and Disadvantages

The key advantage of licensing electricity providers is that it provides the means to impose technical and quality standards and price controls, and thereby protect users, in return for the explicit right to operate. The clarity provided by a well-designed and managed licensing arrangement can serve to attract electricity providers, particularly if long-term capital investment is involved. If licensing is complex, bureaucratic and time-consuming, or imposes disproportionate costs, it may instead delay projects and discourage potential providers, which is the main disadvantage of licensing.

Further Informaiton and Guidance

EUEI PDF (2014), Mini-grid Policy Toolkit: Policy and Business Frameworks for Successful Mini-grid Roll-outs http://www.euei-pdf.org/sites/default/files/field_publication_file/RECP_mini-grid_Policy_Toolkit_1pageview_(pdf,_17.6MB,_EN_0.pdf
IRENA (2016), Policies and regulations to support renewable energy mini-grid development through private sector involvement http://www.irena.org/DocumentDownloads/Publications/IRENA_Policies_Regulations_mini-grids_2016.pdf
World Bank, (2000), Regulatory Approaches to Rural Electrification and Renewable Energy: Case Studies from Six Developing Countries http://www.martinot.info/Martinot_Reiche_WB.pdf
World Bank. 2014. From the Bottom Up. How Small Power Producers and Mini-Grids Can Deliver Electrification and Renewable Energy in Africa. https://openknowledge.worldbank.org/handle/10986/16571

Relevante Case Studies:

Unregulated

Definition:

A regime under which anyone may sell electricity and/or standalone systems without any license or other permission, beyond that required for any business to operate, and without any regulatory control of electricity tariffs or standalone system prices.

An unregulated regime may:

Be explicit (ie law/regulation may state that there is no need for licensing, other permissions or regulatory approval of prices/tariffs), or implicit (in that there is no law or regulation)
Cover the entire country or a specific area (eg the area more than a certain distance from the national grid)
Relate to one, several, or all technologies

Internactions wiht other NAE Categories:

	Technology	Grid systems and larger grid-connected mini-grids / distribution systems and isolated mini-grids are generally subject to some form of regulation to set technical and quality standards and allow for price/tariff regulation to protect users. Mini-grids below a certain size are often unregulated, as the administrative burden (and costs) of regulation are seen as disproportionate to the protection it would provide to investors and users, with the right to operate instead being granted through a general derogation from licensing. Standalone system providers are rarely subject to specific licensing requirements though they may be required to meet certain standards in order to access subsidies and tax exemptions. In part this reflects both policy-makers’ and businesses’ perception that as product retailers rather than infrastructure providers or sellers of electricity itself they do not require licensing. Also, without long-term fixed capital investment, private standalone system companies have not needed the protection of a concession or license to attract private capital (and would regard it simply as a regulatory burden). (With standalone system providers increasingly looking to pay-as-you-go arrangements, where they retain ownership of the system until the user has bought it through monthly payments, or even over its full life with the user paying for electricity used, more formal regulation of standalone system businesses may become more appropriate.)
	Delivery Model	Public delivery model based electrification may be unregulated where, as in the early stages of Vietnam’s electrification, multiple public institutions provide electricity to users, without central direction or oversight. (Though public electricity providers will often be controlled through the state organisational structure, and even in the context of a public delivery model a regulatory framework can act as a mechanism for establishing independent and transparent oversight.) Private and public-private delivery models which use infra-structure based means of providing electricity (ie mini-grids) are generally subject to regulation in order to protect users under what is often effectively a monopoly even if no formal concession has been granted. Only where the means of electricity provision is very dispersed, as with very small mini-grids or standalone systems, is it usually regarded as appropriate to leave private or public-private electricity providers unregulated.
	Finance	Grants and subsidies will often be linked to some form of regulation to ensure proper use of funds, and cross-subsidies between electricity providers are generally impracticable outside a regulatory framework. Some more indirect forms of public financial support, such as import tax exemptions, may be viable in the absence of regulation. An unregulated market may be considered unnecessary to attract private finance provided that the right to sell is clear, the privately-financed provider is not looking for protection from other providers (eg grid extension), and there is no concern that later introduction of price/tariff regulation might threaten returns on investment (ie generally where long-termed fixed capital investment is not required) – for instance where there are multiple solar lantern suppliers. In a primarily privately financed context, with limited public financial support, payments from users are needed to fund operations and provide return on investment.
	Non-Financial Interventions	National energy planning is key to establishing the optimum mix of technologies to meet electrification needs across the country, regardless of the regulatory model employed. If regulation is deemed unnecessary, regulatory reform is unlikely to be required (unless this necessitates removal of existing regulations) and this would appear to imply little need for capacity building or technical assistance to policy makers and regulators. However, lack of regulation is itself a regulatory choice and its implications must be understood if unforeseen and unwanted consequences are to be avoided. Though forms of public financial support are limited without regulation, non-financial support such as awareness raising and demand promotion amongst users and service providers, making market information available, and providing training to develop the skilled workforce needed by businesses can support market growth.

Advantages and Disadvantages (Including Level of Electricity Provided)

The main advantage of unregulated electricity provision is the absence of bureaucracy, costs and delays and the opportunity this provides to businesses to move swiftly and innovate, and hence to accelerate electricity access provision. It also avoids the burden on state institutions of designing and managing a regulatory system. The major disadvantage is lack of clarity and protection from competition (including grid extension) for private investors and businesses, while users will rely solely on market competition for protection from over-pricing and poor quality and even unsafe products and services.

Further Informaiton and Guidance

EUEI PDF (2014), Mini-grid Policy Toolkit: Policy and Business Frameworks for Successful Mini-grid Roll-outs http://www.euei-pdf.org/sites/default/files/field_publication_file/RECP_mini-grid_Policy_Toolkit_1pageview_(pdf,_17.6MB,_EN_0.pdf

IRENA (2016), Policies and regulations to support renewable energy mini-grid development through private sector involvement http://www.irena.org/DocumentDownloads/Publications/IRENA_Policies_ Regulations_mini-grids_2016.pdf

Relevante Case Studies:

References

Authors

Authors: Mary Willcox, Dean Cooper

Acknowledgements

The Review was prepared by Mary Willcox and Dean Cooper of Practical Action Consulting working with Hadley Taylor, Silvia Cabriolu-Poddu and Christina Stuart of the EU Energy Initiative Partnership Dialogue Facility (EUEIPDF) and Michael Koeberlein and Caspar Priesemann of the Energising Development Programme (EnDev). It is based on a literature review, stakeholder consultations. The categorization framework in the review tool is based on the EUEI/PDF / Practical Action publication "Building Energy Access Markets - A Value Chain Analysis of Key Energy Market Systems".

A wider range of stakeholders were consulted during its preparation and we would particularly like to thank the following for their valuable contributions and insights: - Jeff Felten, AfDB - Marcus Wiemann and other members, ARE - Guilherme Collares Pereira, EdP - David Otieno Ochieng, EUEI-PDF - Silvia Luisa Escudero Santos Ascarza, EUEI-PDF - Nico Peterschmidt, Inensus - John Tkacik, REEEP - Khorommbi Bongwe, South Africa: Department of Energy - Rashid Ali Abdallah, African Union Commission - Nicola Bugatti, ECREEE - Getahun Moges Kifle, Ethiopian Energy Authority - Mario Merchan Andres, EUEI-PDF - Tatjana Walter-Breidenstein, EUEI-PDF - Rebecca Symington, Mlinda Foundation - Marcel Raats, RVO.NL - Nico Tyabji, Sunfunder -

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Any feedback would be very welcome. If you have any comments or enquires please contact: mary.willcox@practicalaction.org.uk, benjamin.attigah@euei-pdf.org, or caspar.priesemann@giz.de.

Download the Tool as a Power Point: https://energypedia.info/images/a/aa/National_Approaches_to_Electrification_-_Review_of_Options.pptx

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-<span style="color:#FFFFFF;"></span><span style="color:#FFFFFF;">Delivery Models</span><span style="color:#FFFFFF;"></span><br/>
+<span style="color:#FFFFFF;"></span><span style="color:#FFFFFF;">Delivery Model</span><br/>
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 *Senegal. Agence Senegalaise d’Electrification Rurale (2009), Concession d’Electrification Rurale au Senegal, The Africa Electrification Initiative (AEI) Workshop, Maputo, Mozambique 9-12 Juin 2009. <u>&lt;u&gt;[http://siteresources.worldbank.org/EXTAFRREGTOPENERGY/Resources/717305-1264695610003/6743444-1268073657582/15.4.Senegal.pdf http://siteresources.worldbank.org/EXTAFRREGTOPENERGY/Resources/717305-1264695610003/6743444-1268073657582/15.4.Senegal.pdf]</u>&lt;/u&gt;<br/>
 *World Bank, (2000), Regulatory Approaches to Rural Electrification and Renewable Energy: Case Studies from Six Developing Countries <u style="font-size: 13.6px;">[http://www.martinot.info/Martinot_Reiche_WB.pdf http://www.martinot.info/Martinot_Reiche_WB.pdf]</u>
-*
+*Senegal. OBA (2007), OBA in Senegal – Designing Technology-Neutral Concessions for Rural Electrification <u>[https://openknowledge.worldbank.org/bitstream/handle/10986/11034/396090SN0OBApp1140Electric01PUBLIC1.pdf?sequence=1&isAllowed=y https://openknowledge.worldbank.org/bitstream/handle/10986/11034/396090SN0OBApp1140Electric01PUBLIC1.pdf?sequence=1&isAllowed=y]</u>
-Senegal. OBA (2007), OBA in Senegal – Designing Technology-Neutral Concessions for Rural Electrification <u>[https://openknowledge.worldbank.org/bitstream/handle/10986/11034/396090SN0OBApp1140Electric01PUBLIC1.pdf?sequence=1&isAllowed=y https://openknowledge.worldbank.org/bitstream/handle/10986/11034/396090SN0OBApp1140Electric01PUBLIC1.pdf?sequence=1&isAllowed=y]</u>
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+<span style="color:#FFFFFF;">Technology</span><br/>
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+*EUEI PDF (2014), Mini-grid Policy Toolkit: Policy and Business Frameworks for Successful Mini-grid Roll-outs <u>[http://www.euei-pdf.org/sites/default/files/field_publication_file/RECP_MiniGrid_Policy_Toolkit_1pageview_(pdf,_17.6MB,_EN_0.pdf http://www.euei-pdf.org/sites/default/files/field_publication_file/RECP_mini-grid_Policy_Toolkit_1pageview_(pdf,_17.6MB,_EN_0.pdf]</u>
+*IRENA (2016), Policies and regulations to support renewable energy mini-grid development through private sector involvement <u>[http://www.irena.org/DocumentDownloads/Publications/IRENA_Policies_Regulations_minigrids_2016.pdf http://www.irena.org/DocumentDownloads/Publications/IRENA_Policies_Regulations_mini-grids_2016.pdf]</u>
+*World Bank, (2000), Regulatory Approaches to Rural Electrification and Renewable Energy: Case Studies from Six Developing Countries <u>[http://www.martinot.info/Martinot_Reiche_WB.pdf http://]</u><u>[http://www.martinot.info/Martinot_Reiche_WB.pdf www.martinot.info/Martinot_Reiche_WB.pdf]</u>
+*World Bank. 2014. From the Bottom Up. How Small Power Producers and Mini-Grids Can Deliver Electrification and Renewable Energy in Africa. <u>[https://openknowledge.worldbank.org/handle/10986/16571 https://]</u><u>[https://openknowledge.worldbank.org/handle/10986/16571 openknowledge.worldbank.org/handle/10986/16571]</u>
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-<br/>
+*[[NAE_Case_Study:_Cambodia_“Light_Touch”_Regulation|Cambodia “Light Touch” Regulation]]<br/>
+*[[NAE_Case_Study:_Kenya,_Off-Grid_for_Vision_2030|Kenya, Off-Grid for Vision 2030]]<br/>
+*[[NAE_Case_Study:_Rwanda,_Sector-Wide_Approach_to_Planning|Rwanda, Sector-Wide Approach to Planning]]<br/>
+*[[NAE_Case_Study:_Tanzania,_Mini-Grids_Regulatory_Framework|Tanzania, Mini-Grids Regulatory Framework]]<br/>
 |}
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 {| border="1" cellspacing="1" cellpadding="1" style="width:100%;"
 |-
-| style="width: 130px; background-color: rgb(100, 203, 248);" |
+| style="width: 130px; background-color: rgb(248, 152, 0);" |
 '''<span style="color:#FFFFFF;"><span style="font-size: 13.6px;">Definition:</span></span>'''<br/>
 | style="width: 618px;" |
-'''Delivery of electricity access by an entity which is part publically and part privately owned or by a mix of publically and privately owned entities or using a combination of public and private finance'''<br/>
+'''A regime under which anyone may sell electricity and/or standalone systems without any license or other permission, beyond that required for any business to operate, and without any regulatory control of electricity tariffs or standalone system prices.&nbsp;'''<br/>
-This includes cases where:
+An unregulated regime may:
-*a joint venture has been created between a state-owned organisation and a private company to provide electricity<br/>
+*Be explicit (ie law/regulation may state that there is no need for licensing, other permissions or regulatory approval of prices/tariffs), or implicit (in that there is no law or regulation)&nbsp;<br/>
-*one or more state-owned organisation fill some of the functions along the market chain1, while others are filled by private businesses<br/>
+*Cover the entire country or a specific area (eg the area more than a certain distance from the national grid)<br/>
-*electricity provision is undertaken by private businesses with public financial support (subsidies, grants, loans etc)&nbsp; &nbsp;&nbsp;
+*Relate to one, several, or all technologies
 |}
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-| style="width: 10px; background-color: rgb(100, 203, 248);" | <br/>
+| style="width: 10px; background-color: rgb(248, 152, 0);" | <br/>
 | style="width: 117px; background-color: rgb(0, 101, 0);" |
-<span style="color:#FFFFFF;">Technologies</span><br/>
+<span style="color:#FFFFFF;">Technology</span><br/>
 <br/>
 | style="width: 616px;" | <span style="color:#FFFFFF;"></span>
-Public-private models for grid systems might include:
+Grid systems and larger grid-connected mini-grids / distribution systems and isolated&nbsp; mini-grids are generally subject to some form of regulation to set technical and quality standards and allow for price/tariff regulation to protect users. Mini-grids below a certain size are often unregulated, as the administrative burden (and costs) of regulation are seen as disproportionate to the protection it would provide to investors and users, with the right to operate instead being granted through a general derogation from licensing.&nbsp;<br/>&nbsp;&nbsp;&nbsp;&nbsp;<br/>Standalone system providers are rarely subject to specific licensing requirements though they may be required to meet certain standards in order to access subsidies and tax exemptions. In part this reflects both policy-makers’ and businesses’ perception that as product retailers rather than infrastructure providers or sellers of electricity itself they do not require licensing. Also, without long-term fixed capital investment, private standalone system companies have not needed the protection of a concession or license to attract private capital (and would regard it simply as a regulatory burden).&nbsp; (With standalone system providers increasingly looking to pay-as-you-go arrangements, where they retain ownership of the system until the user has bought it through monthly payments, or even over its full life with the user paying for electricity used, more formal regulation of standalone system businesses may become more appropriate.)
-*Publically owned generation and transmission combined with privately owned distribution;<br/>
-*Independent Power Producers (IPPs) connected to a publically owned transmission/distribution system;<br/>
-*<span style="font-size: 13.6px;">A privately owned grid system using grants from public sources to connect new users.</span>
-<span style="font-size: 13.6px;">For grid connected mini-grids and distribution systems:</span><br/>
-*Mini-grids owned by a private developer connected to the (publically-owned) main grid, and thereby drawing on publically owned generation to meet demand;<br/>
-*A private company, or public-private joint venture, taking on operation of a section of the publically-owned grid distribution system;<br/>
-*Public grants or subsidies supporting development of a privately-owned mini-grid or distribution system.<br/>
-For isolated mini-grids:
-*Mini-grids developed on a Build-Own-Operate-Transfer basis (initially owned and operated by a private developer, but transferred to public ownership at the end of a concession period);<br/>
-*Mini-grids built and operated by a public-private joint venture;<br/>
-*Public grants or subsidies supporting development of a privately-owned mini-grid.
-Use of public finance (grants, subsidies and loans) to enhance affordability and support market growth often results in a public-private model for standalone systems, even when there is a purely private-sector chain of manufacturers, importers, distributors and retailers. There could also be benefits in some circumstances from government energy agencies becoming directly involved in the standalone system market, by forming a joint entity to supply systems or by taking on one of the roles along the value chain (eg providing a distribution service for all system providers), as a means of supporting market development.
 |-
-| style="width: 10px; background-color: rgb(100, 203, 248);" | <span style="color:#FFFFFF;"></span><br/>
+| style="width: 10px; background-color: rgb(248, 152, 0);" | <span style="color:#FFFFFF;"></span><br/>
-| style="width: 117px; background-color: rgb(154, 103, 0);" |
+| style="width: 117px; background-color: rgb(52, 103, 152);" |
-<span style="color:#FFFFFF;">Legual Basis</span><br/>
+<font color="#ffffff">Delivery Model</font>
 <br/>
 | style="width: 616px;" | <span style="color:#FFFFFF;"></span>
-Because a public-private model involves private ownership and investment, an explicit legal framework will be required for any form of electrification which involves significant long-term capital investment in order to attract private finance and allow for price regulation to protect users. A concession, which offers protection from competition, will provide the greatest attraction for private financiers. Where no long-term capital investment is involved, as with standalone systems sold directly to users, no legal control (beyond that for any business) may be necessary – however if there is partial public sector ownership, a transparent legal framework&nbsp;<span style="font-size: 13.6px;">may be required to convince private market participants that they are not facing unfair competition, and also to ensure that&nbsp;</span><span style="font-size: 13.6px;">any public finance is not being misused.&nbsp;</span>
+Public delivery model based electrification may be unregulated where, as in the early stages of Vietnam’s electrification, multiple public institutions provide electricity to users, without central direction or oversight.&nbsp; (Though public electricity providers will often be controlled through the state organisational structure, and even in the context of a public delivery model a regulatory framework can act as a mechanism for establishing independent and transparent oversight.) Private and public-private delivery models which use infra-structure based means of providing electricity (ie mini-grids) are generally subject to regulation in order to protect users under what is often effectively a monopoly even if no formal concession has been granted. Only where the means of electricity provision is very dispersed, as with very small mini-grids or standalone systems, is it usually regarded as appropriate to leave private or public-private electricity providers unregulated.<span style="font-size: 13.6px;"></span>
 |-
-| style="width: 10px; background-color: rgb(100, 203, 248);" | <span style="color:#FFFFFF;"></span><br/>
+| style="width: 10px; background-color: rgb(248, 152, 0);" | <span style="color:#FFFFFF;"></span><br/>
-| style="width: 117px; background-color: rgb(205, 52, 0);" |
-<span style="color:#FFFFFF;">Price/Tariff Regulation</span><br/>
-<br/>
-| style="width: 616px;" | <span style="color:#FFFFFF;"></span>
-Where significant capital investment is involved, a transparent framework for price/tariff regulation is likely to be required to attract the private element into any public-private partnership. Tariff regulation will also protect users and provide a means of ensuring that public finance is not being misused or exploited by the private sector. It may also demonstrate to private market participants that they are not facing unfair competition from partially publically-owned market participants.&nbsp;
-|-
-| style="width: 10px; background-color: rgb(100, 203, 248);" | <span style="color:#FFFFFF;"></span><br/>
 | style="width: 117px; background-color: rgb(32, 56, 100);" |
 <span style="color:#FFFFFF;">Finance</span><br/>
@@ Line 333: / Line 311: @@
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-All public-private partnerships will involve a combination of private and public finance. Private finance will come through ownership and investment in, and loans to electricity providers. Public finance may come through these routes, but may also be through various forms of grant, subsidy, tax exemption or guarantee. Ultimately public-private models, like other forms of electricity provision, will rely on connection and ongoing charges, and standalone system purchases from users. For multi-user systems (grids and mini-grids) there is also likely to be some element of cross-subsidy between users.&nbsp;
+Grants and subsidies will often be linked to some form of regulation to ensure proper use of funds, and cross-subsidies between electricity providers are generally impracticable outside a regulatory framework. Some more indirect forms of public financial support, such as import tax exemptions, may be viable in the absence of regulation. An unregulated market may be considered unnecessary to attract private finance provided that the right to sell is clear, the privately-financed provider is not looking for protection from other providers (eg grid extension), and there is no concern that later introduction of price/tariff regulation might threaten returns on investment (ie generally where long-termed fixed capital investment is not required) – for instance where there are multiple solar lantern suppliers.&nbsp; In a primarily privately financed context, with limited public financial support, payments from users are needed to fund operations and provide return on investment.&nbsp; &nbsp;&nbsp;
 |-
-| style="width: 10px; background-color: rgb(100, 203, 248);" | <span style="color:#FFFFFF;"></span><br/>
+| style="width: 10px; background-color: rgb(248, 152, 0);" | <span style="color:#FFFFFF;"></span><br/>
 | style="width: 117px; background-color: rgb(0, 100, 100);" |
 <span style="color:#FFFFFF;">Non-Financial Interventions</span><br/>
@@ Line 343: / Line 321: @@
 | style="width: 616px;" |
-National energy planning is key to establishing the optimum mix of technologies to meet electrification needs across the country, regardless of the delivery model employed. Institutional restructuring may be needed to establish public-private partnerships and capacity building or technical assistance may be required if the key actors lack the capacity to undertake regulatory reform or design arrangements for public financial support.&nbsp; Awareness raising amongst users and other potential market actors and service providers, as well as training (capacity building) to develop the skilled workforce needed by new energy access businesses can be beneficial alongside financial forms of public support. Public-private partnership may also provide the means to bring in new technology, with the private sector providing the technology know-how while the public sector bears the risk inherent in new technology which private investors may be reluctant to take on.&nbsp;<br/>
+National energy planning is key to establishing the optimum mix of technologies to meet electrification needs across the country, regardless of the regulatory model employed. If regulation is deemed unnecessary, regulatory reform is unlikely to be required (unless this necessitates removal of existing regulations) and this would appear to imply little need for capacity building or technical assistance to policy makers and regulators. However, lack of regulation is itself a regulatory choice and its implications must&nbsp;<span style="font-size: 13.6px;">be understood if unforeseen and unwanted consequences are to be avoided.&nbsp; Though forms of public financial support are&nbsp;</span><span style="font-size: 13.6px;">limited without regulation, non-financial support such as awareness raising and demand promotion amongst users and&nbsp;</span><span style="font-size: 13.6px;">service providers, making market information available, and providing training to develop the skilled workforce needed by&nbsp;</span><span style="font-size: 13.6px;">businesses can support market growth.</span>
 |}
@@ Line 353: / Line 331: @@
 {| border="1" cellspacing="1" cellpadding="1" style="width:100%;"
 |-
-| style="width: 10px; background-color: rgb(100, 203, 248);" | <br/>
+| style="width: 10px; background-color: rgb(248, 152, 0);" | <br/>
 |
-Public-Private partnerships offer the potential to combine the benefits of both models, with public security being combined with private efficiency, innovation and flexibility. Bringing in private finance can extend the capacity for electricity provision beyond that which the public sector alone can offer, while public financial support can be used to attract private finance and make electricity affordable for users.&nbsp; Combining public and private inputs is not, however, simple. Significant expertise is required to ensure that private investment is attracted while making optimum use of public resources. Moreover the appropriate form of public-private partnership will change as markets develop and levels of electricity access increase – and this must be recognised while at the same time creating regimes which can give the private sector the confidence in the future they require to invest.
+The main advantage of unregulated electricity provision is the absence of bureaucracy, costs and delays and the opportunity this provides to businesses to move swiftly and innovate, and hence to accelerate electricity access provision. It also avoids the burden on state institutions of designing and managing a regulatory system. The major disadvantage is lack of clarity and protection from competition (including grid extension) for private investors and businesses, while users will rely solely on market competition for protection from over-pricing and poor quality and even unsafe products and services.
 |}
@@ Line 365: / Line 343: @@
 {| border="1" cellspacing="1" cellpadding="1" style="width:100%;"
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-| style="width: 10px; background-color: rgb(100, 203, 248);" | <br/>
+| style="width: 10px; background-color: rgb(248, 152, 0);" | <br/>
 |
-*<span>Clean </span><span>Energy Solutions Centre & </span><span>iied</span><span>. (2015). Policies to Spur Energy </span><span>Access<u><span>[https://cleanenergysolutions.org/resources/policies-spur-energy-access https]</span></u><u><span>[https://cleanenergysolutions.org/resources/policies-spur-energy-access ://]</span></u><u><span>[https://cleanenergysolutions.org/resources/policies-spur-energy-access cleanenergysolutions.org/resources/policies-spur-energy-access]</span></u></span>
+*
+<span style="font-size: 16pt; font-family: &quot;Calibri Light";">EUEI PDF (2014), Mini-grid Policy Toolkit: Policy and Business Frameworks for Successful Mini-grid Roll-outs </span><u><span style="font-size: 16pt; font-family: &quot;Calibri Light";">[http://www.euei-pdf.org/sites/default/files/field_publication_file/RECP_MiniGrid_Policy_Toolkit_1pageview_(pdf,_17.6MB,_EN_0.pdf http://www.euei-pdf.org/sites/default/files/field_publication_file/RECP_mini-grid_Policy_Toolkit_1pageview_(pdf,_17.6MB,_EN_0.pdf]</span></u>
+*<span style="font-size: 16pt; font-family: &quot;Calibri Light";">IRENA </span><span style="font-size: 16pt; font-family: &quot;Calibri Light";">(2016), Policies and regulations to support renewable energy mini-grid development through private sector involvement </span><u><span style="font-size: 16pt; font-family: &quot;Calibri Light";">[http://www.irena.org/DocumentDownloads/Publications/IRENA_Policies_Regulations_minigrids_2016.pdf http://]</span></u><u><span style="font-size: 16pt; font-family: &quot;Calibri Light";">[http://www.irena.org/DocumentDownloads/Publications/IRENA_Policies_Regulations_minigrids_2016.pdf www.irena.org/DocumentDownloads/Publications/IRENA_Policies_ Regulations_mini-grids_2016.pdf]</span></u>
 |}
@@ Line 377: / Line 358: @@
 {| border="1" cellspacing="1" cellpadding="1" style="width:100%;"
 |-
-| style="width: 10px; background-color: rgb(100, 203, 248);" | <br/>
+| style="width: 10px; background-color: rgb(248, 152, 0);" | <br/>
 |
-*[[NAE Case Study: Bangladesh, IDCOL Solar Home Systems|Bangladesh, IDCOL Solar Home Systems]]<br/>
+*[[NAE Case Study: Ethiopia, Solar Market Development|Ethiopia, Solar Market Development]]
-*[[NAE Case Study: Brazil, Luz para Todos (Light for All)|Brazil, Luz para Todos (Light for All)]]<br/>
+*[[NAE Case Study: Kenya, Off-Grid for Vision 2030|Kenya, Off-Grid for Vision 2030]]
-*[[NAE Case Study: Cambodia “Light Touch” Regulation|Cambodia “Light Touch” Regulation]]<br/>
+*[[NAE Case Study: Nepal, Rural Energy Development Programme|Nepal, Rural Energy Development Programme]]
-*[[NAE Case Study: Costa Rica, Distribution Cooperatives|Costa Rica, Distribution Cooperatives]]<br/>
-*[[NAE Case Study: Ethiopia, Solar Market Development|Ethiopia, Solar Market Development]]<br/>
-*[[NAE Case Study: Kenya, Off-Grid for Vision 2030|Kenya, Off-Grid for Vision 2030]]<br/>
-*[[NAE Case Study: Mali, Rural Electrification Programme|Mali, Rural Electrification Programme]]<br/>
-*[[NAE Case Study: Nepal, Rural Energy Development Programme|Nepal, Rural Energy Development Programme]]<br/>
-*[[NAE Case Study: Peru, Concession Model for Standalone Systems|Peru, Concession Model for Standalone Systems]]<br/>
-*[[NAE Case Study: Philippines, Islanded Distribution by Cooperatives|Philippines, Islanded Distribution by Cooperatives]]<br/>
-*[[NAE Case Study: Rwanda, Sector-Wide Approach to Planning|Rwanda, Sector-Wide Approach to Planning]]<br/>
-*[[NAE Case Study: South Africa, Integrated National Electrification|South Africa, Integrated National Electrification]]<br/>
-*[[NAE Case Study: Tanzania, Mini-Grids Regulatory Framework|Tanzania, Mini-Grids Regulatory Framework]]<br/>
-*[[NAE Case Study: Vietnam, Rapid Grid Expansion|Vietnam, Rapid Grid Expansion]]<br/>
 |}

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National Approaches to Electrification – Legal Basis

Revision as of 14:12, 25 June 2018

Contents

Concession

Internactions wiht other NAE Categories:

Advantages and Disadvantages

Further Informaiton and Guidance

Relevante Case Studies:

License

Internactions wiht other NAE Categories:

Advantages and Disadvantages

Further Informaiton and Guidance

Relevante Case Studies:

Unregulated

Internactions wiht other NAE Categories:

Advantages and Disadvantages (Including Level of Electricity Provided)

Further Informaiton and Guidance

Relevante Case Studies:

References

Authors

Acknowledgements

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National Approaches to Electrification – Legal Basis

Revision as of 14:12, 25 June 2018

Contents

Concession

Internactions wiht other NAE Categories:

Advantages and Disadvantages

Further Informaiton and Guidance

Relevante Case Studies:

License

Internactions wiht other NAE Categories:

Advantages and Disadvantages

Further Informaiton and Guidance

Relevante Case Studies:

Unregulated

Internactions wiht other NAE Categories:

Advantages and Disadvantages (Including Level of Electricity Provided)

Further Informaiton and Guidance

Relevante Case Studies:

References

Authors

Acknowledgements