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| Since capacity building can be applied in all areas of activity related to national electrification activities, each of the other NEA categories can be impacted to some degree. However, there are some categories where capacity building may have a significant effect, such as those indicated below.<br/> | | Since capacity building can be applied in all areas of activity related to national electrification activities, each of the other NEA categories can be impacted to some degree. However, there are some categories where capacity building may have a significant effect, such as those indicated below.<br/> |
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| Demand promotion can support electrification across [[National Approaches to Electrification – Technology|Technologies]], [[National Approaches to Electrification – Delivery Model|Delivery Models]] and [[National Approaches to Electrification – Legal Basis|Legal Basis]] and [[National Approaches to Electrification – Price/Tariff Regulation|Price/Tariff Regulation]] approaches. However, there are some categories where capacity building interact most closely.<br/> | | Demand promotion can support electrification across [[National Approaches to Electrification – Technology|Technologies]], [[National Approaches to Electrification – Delivery Model|Delivery Models]] and [[National Approaches to Electrification – Legal Basis|Legal Basis]] and [[National Approaches to Electrification – Price/Tariff Regulation|Price/Tariff Regulation]] approaches. However, there are some categories where capacity building interact most closely.<br/> |
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Interventions should be regarded as part of a National Electrification Approache only if they are integral to governement electrification policy/strategy
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Technology
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Institutional reform will have an impact on all approaches to electrification and the associated technology categories. For grid extension, existing institutions have extensive experience of practices that may no longer be most appropriate for electrification in more areas. New practices may be required to increase levels of efficiency in order to make further grid extension a viable option, new expertise and knowledge may be needed to support adoption of new forms of electricity provision, and cultural change may be needed to achieve increased focus on supplying new users alongside serving existing customers. mini-grids, whether isolated or integrated with the grid, require different support structures to be effective, reliable and commercially viable. Stand-alone systems again offer a different approach to the aims of electrification, with the satisfaction of basic needs being the principle driver, rather than a full power service. This too requires a different institutional perspective, skills and understanding that can only be delivered through the reform of existing support structures.
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Delivery Models
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The institutions originally established to deal with power generation and supply were almost exclusively public sector, centred upon the national electricity utility. With the increasing cost of reaching more remote areas, the need for upfront investment has become a serious constraint to network expansion. Rural electrification also raises new challenges regarding the need for more intensive community interaction and closer management of the local operations. Consequently, the resources that can more readily be offered by the private sector – including the scale of investment and commercial management in order to make sufficient returns – are increasingly required. There is a growing need for private models and public-private-partnerships, which face the barrier of public institutions that have experience of a single method of providing access to electricity. The reform of these institutions, taking account of private sector interests, can thereby create opportunities for partnerships that will bring mutual benefits to all involved.
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Legual Basis
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Establishment of either or concessions or licenses for electricity provider implies a wish to bring in private or public-private electricity provision. Setting up these arrangements will require competent institutions with responsibility for managing them, and institutional restructuring is a likely response to this need and a first step in establishing new legal arrangements for electricity provision.
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Price/Tariff Regulation
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Similarly any form of price/tariff regulation requires a regulator. A regulator independent from government and those with vested interests in the sector will carry greatest credibility with potential new electricity providers and investors. Subsequent changes and adjustments to regulatory frameworks will be the responsibility of the regulator.
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Finance
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An institutional structure convincing to private sector businesses and investors is key to attracting private finance. It is also through this institutional structure that the interests of users are protected and the portion of funding provided by users set. The institutional structure also governs how any grant/subsidy, cross-subsidy, tax exemptions and guarantee arrangements are set up and implemented.
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Other Forms of Non-Financial Interventions
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The institutions charged with managing the sector and delivering electricity access will also be responsible for designing and managing non-financial interventions. One key element of institutional change will be to match the capabilities of staff to new requirements. Training to familiarise staff with new approaches, and to transfer the new skills required to provide the associated support will be an important requirement for any lasting reform process (and, if fulfilled adequately, will also incur a significant cost due to the large size of the institutions involved and the broad range of their activities – this should be budgeted in advance to set clear expectations). A first step in this process will be to educate staff regarding the need for reform, to convince them of the benefits, and so secure ownership and commitment to the change process. In the case that existing staff are unable or unwilling to adapt their approach, or when new skills are required to support modern demands, then the recruitment of new staff should be considered to establish the target capacity). Having raised the awareness and understanding of staff, they will become more receptive to the transfer of skills, equipping the institution with sufficient capacity to move forward, with minimum disruption.
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Technology
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For all forms of electricity, the first requirement is safety. For grid systems, and for any grid-connected distribution systems or mini-grids, this is followed closely by technical compatibility – a grid system can only operate if all parts of it are compatible with each other. Most grid systems are designed to give a high level of performance, but sadly many in developing countries are unreliable and provide poor quality electricity, with variations in voltage and frequency leading to damage to users’ equipment. Key questions for isolated mini-grids are whether they aim to provide a grid-equivalent electricity supply, or a lower level of service (eg to power lighting and a small number of low-powered appliances per user), and whether they should be technically compatible with the grid system (facilitating subsequent grid-connection). For standalone systems, standards relate to the level of electricity provided and also, particularly for solar-based systems, to duration (hours/day) and life (especially battery life).
In relation to enforcement, a clear distinction can be made between different types of rural electrification (grid extension, mini-grids, and stand-alone systems). The process for enforcing standards for grid and mini-grid applications should be more straightforward since it can be done at the permitting stage, via tendering with clear technical specifications built into the tender documents; regular monitoring, and site inspections. The standard of service experienced by the users will, however, depend as much on subsequent operation and maintenance. For stand-alone systems, some form of partnership is required to help implement the required standards; for example, if donor or government funds are involved, then quality standards can be made a condition for the disbursement of funds (in this case, the standards for the systems can be developed by national regulators and stipulated clearly upfront).
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Delivery Models
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Within a public delivery model, particularly where there is a single national utility, standards may be set relatively informally and be treated as internal documents. One of the challenges of bringing in other, private and public-private providers is the need to formalise and make widely available these standards.
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Legual Basis
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Technical and Quality Standards may be imposed and enforced through the conditions set for concessions and licenses. Making standards part of regulation is the strictest imposition. In an unregulated context, general legislation must be used, or voluntary standards established through industry associations may be more appropriate. The cost implications of standards should be recognised when prices or tariffs are being set – and price/tariff regulation can be one mechanism for enforcement of standards, with discounts being required if agreed quality standards are nor achieved.
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Price/Tariff Regulation
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Finance
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Standards have direct impact on costs, for instance allowing low-cost distribution systems or service drops can reduce the cost of grid extension and mini-grids, and this should be borne in mind when they are being set. At the same time standards can make users more willing to pay charges as they have greater confidence in receiving what they are paying for, and this in turn will strengthen private investors willingness to provide finance. If donor or government funds are involved (eg as grants, subsidies or tax exemptions), then quality standards can be made a condition for the disbursement of funds.
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Other Forms of Non-Financial Interventions
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Regulatory reform can provide a practical mechanism for introducing appropriate quality/technical standards. Institutional reform and capacity building (including setting up test facilities and training standards officers) may well be needed to support establishment and enforcement of new standards and well-targeted technical assistance which draws on experience and lessons learned elsewhere may help with this process. Raising users’ awareness of standards is a further critical step in ensuring that standards are applied in practice and don’t just exist on paper. The use of appropriate new technology for remote electrification applications will be dependent upon technical standards. On the one hand out-dated or inappropriate standards may exclude adoption of new technologies which could provide electricity at lower cost. On the other, a lack of relevant standards may mean that market forces drive the implementation of the lowest cost versions of available technologies which, almost invariably, will be of lower quality than required to meet customer needs.
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Since capacity building can be applied in all areas of activity related to national electrification activities, each of the other NEA categories can be impacted to some degree. However, there are some categories where capacity building may have a significant effect, such as those indicated below.
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 -