Norwegian Development Assistance To Rural Electrification

Norad Report 18/2009 Discussion
Norwegian Development
Assistance to Rural
Electrification
Best Practice Guide for Planning
Foto omslag: Ken Opprann, Rodolfo D. Gomes
Norwegian Agency for Development Cooperation

P.O. Box 8034 Dep, NO-0030 OSLO
Ruselkkveien 26, Oslo, Norway
Phone: +47 22 24 20 30
Fax: +47 22 24 20 31
ISBN 978-82-7548-414-5
ISSN 1502-2528
Responsibility for the contents and presentation of findings and recommendations rests with the study team.
The views and opinions expressed in the report do not necessarily correspond with those of Norad.
NORWEGIAN DEVELOPMENT ASSISTANCE TO RURAL

ELECTRIFICATION
BEST PRACTICE GUIDE FOR PLANNING
OKTOBER 13, 2009
Prepared by:
Solveig Ulseth and Joakim Arntsen, Norplan AS
In close cooperation with:

Rolv Bjelland and Lasse Vannebo, Norad
NORAD
Guide for Rural Electrification Planning
Page i
EXECUTIVE SUMMARY
The impact and approach of Norwegian development assistance to rural electrification has
had large variations in different countries, indicating a potential for improvement through a
consolidated approach. The challenge is to tailor the rural electrification projects towards
achieving basic development objectives such as combating poverty and climate changes,
while promoting gender equality, economic growth, environment protection and private sector
development.
There is no correct way to plan a rural electrification project as projects can be quite different in terms of context and technology. There are however some recurring critical elements
and sustainability issues to consider, and the following guiding principles for the planning of
rural electrification projects are suggested:
1) Rural electrification projects must be consistent with overall plans and institutional arrangement for the country and/ or region. If a project is part of a national/ regional
master plan it is easier to avoid assistance to projects influenced by ad-hoc factors or
local/ political interests. The development assistance should be coordinated and harmonized with other donors plans for the sector.
2) Electrification through grid expansion should be first priority when feasible. Due to its
high quality services, potential for economic development and the possibilities in a diversified production system, grid extension should always be the preferred solution
when feasible. Feasibility should attach importance to factors like distance to the existing grid (cost) and potential customer base (income). Using cost-effectiveness criteria ensure the financial stability of the service provider, and the feasibility of the
project (investment, operation and maintenance).
3) Off-grid systems should be considered when grid extension is not feasible. Off-grid
solutions based on renewable energy technologies (small hydro, solar PV, wind power, biomass) should be the preferred alternative to reach rural communities when grid
extension is not feasible. The final choice of technology must be based on the recipient countrys overall strategic priorities; however, mature technologies with proven
performance such as hydropower should always be preferred.
4) Rural electrification projects must be institutionally viable. Projects are institutionally
viable when they have adequate organization and funding for operation, maintenance
and follow up. Capabilities and plans to manage operation and maintenance should
be assessed for each project. Appropriate models for local ownership, operation and
maintenance should be selected. If the organization lacks competence, support to
training and other arrangements for institutional strengthening might be required,
such support may be necessary for a considerably longer time than what is necessary for constructing the physical project.
5) Subsidies and other incentives should be considered to optimize economic sustainability. All rural electrification projects should be financially sustainable and economically viable. Expansion of access to electricity will normally require subsidies, but as a
general rule subsidies should not be provided for operation and maintenance costs.
Part of the capital costs for rural electrification is related to the connection of customers. The connection fee is recognized as a main barrier for increasing the number of
connections. A pro-poor approach could be to use subsidies for reduced initial payment.
6) Rural electrification projects should be planned with focus on productive and social
sectors. Lack of knowledge of potential users and lack of financial means to acquire
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relevant equipment are two of the most important barriers to productive use of electricity in rural areas. Experience shows that lack of cross-sector planning and implementation has resulted in suboptimal effects on economic development and poverty
reduction from electrification. Complementary initiatives to stimulate small-scale business and productive use of electricity should therefore be considered for all rural electrification projects financed by Norway.
7) Social and environmental considerations must be mainstreamed in all project phases.
Both grid extension and isolated grids with central power generation should adhere to
the relevant national regulations on environmental and social management. If these
are lacking or insufficient, international best practice (World Bank) guidelines appropriate to the scale of the project should be used. Gender considerations are best integrated into project design and monitoring if handled already at the onset of planning
and included in preliminary assessments.
8) Training needs at all levels should be assessed and addressed as part of project
planning. This includes both governmental staff, public and private companies, local
communities, providers and consumers. When new organizations are established as
part of the project (energy to new areas, local ownership models, etc.) the need for
technical and managerial capacity building can be substantial. Capacity building and/
or technology transfer must be considered in the planning phase and discussed as
early as possible with the cooperating partner.
Use of result planning and management at an early planning stage is instrumental to increase the probability of achieving wanted effects from rural electrification. Practical examples on use of result management tools for rural electrification projects have been provided in
this report.
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LIST OF ABBREVIATION/ ACRONYMS

CBO
Community Based Organisation
CDM
Clean Development Mechanism
DCM
Development Cooperation Manual
ESAP
Energy Sector Assessment Programme (UNDP/World Bank)
ESMAP
Energy Sector Management Assistance Programme (World Bank)
F/M
Female/Male
HIV/Aids
Human Immunodeficiency Virus / Acquired Immune Deficiency Syndrome
IEA
International Energy Agency
IEG
Independent Evaluation Group
PfD
Platform for Dialogue
PoA
Programme of Activities
PPP
Public-Private Partnership
PV
Photovoltaic
MCDM
Multi-Criteria Decision Method
MDG
Millennium Development Goals
MFA
Ministry of Foreign Affairs
NGO
Non-Governmental Organisation
Norad
NREL
National Renewable Energy Laboratory
ODA
Official Development Assistance
O&M
Operation and Maintenance
PD
Project Document
PPA
Power Purchase Agreement
PV
Photo-Voltaic
RE
Rural Electrification
RBM
Result Based Management
RETs
Renewable Energy Technologies
SHS
Solar Home Systems
Sida
Swedish International Development Cooperation Agency
STD
Sexually Transmitted Disease
SWER
Single Wire Earth Return
UD
Utenriksdepartementet (The Norwegian Ministry of Foreign Affairs)
WB
World Bank
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TABLE OF CONTENTS
EXECUTIVE SUMMARY...........................................................................................................................i
LIST OF ABBREVIATION/ ACRONYMS ...............................................................................................iii
TABLE OF CONTENTS ..........................................................................................................................iv
1
CONTEXT AND BACKGROUND .............................................................................................. 1-1
1.1
1.2
Norads rural electrification project ............................................................................................. 1-1

The report ................................................................................................................................... 1-2
NORWEGIAN FRAMEWORK FOR RURAL ELECTRIFICATION PROJECT

PLANNING................................................................................................................................. 2-1
IMPORTANT ELEMENTS IN PROJECT PLANNING............................................................... 3-1
3.1
3.2
3.3
3.4
3.5
Selection of an appropriate technology for rural electrification .................................................. 3-1

Safeguard institutional sustainability .......................................................................................... 3-3
Ensure economic sustainability in projects ................................................................................ 3-5
Optimise productive and social uses of electricity ..................................................................... 3-8
Mainstream cross-cutting issues .............................................................................................. 3-10
RESULT MANAGEMENT IN RURAL ELECTRIFICATION ...................................................... 4-1
4.1
4.2
4.3
Supporting tools ......................................................................................................................... 4-1

Project planning.......................................................................................................................... 4-1
Result management ................................................................................................................... 4-3
REFERENCES/ BIBLIOGRAPHY
APPENDICES
Appendix 1: List of resources
Appendix 2: Technologies for rural electrification
Appendix 3: Eligibility criteria for selection of system
Appendix 4: Cross-sector planning approaches
Appendix 5: Rural electrification performance indicators
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CONTEXT AND BACKGROUND

Approximately 1.6 billion people worldwide lack access to electricity.
The situation is most serious in Africa where 85% of the rural poor
lack access to electricity. Unless new policies and approaches are
adopted 1.4 billion people might still lack access in 2030.1
The energy sector has important links with other sectors and contributes to generation of income, employment and social benefits. These
are preconditions for economic growth and sustained poverty reduction. A widened access for the poor is essential in achieving the Millennium Development Goals related to poverty alleviation, education
and health. Providing access to a larger share of the population who
presently lacks access to electricity or modern energy services is
therefore high on the agenda in most developing countries.
Norwegian development assistance has focused on rural electrification for years and this will continue2. The impact and approach of
Norwegian assistance has had large variations in different countries,
indicating a potential for improvement through a consolidated approach. Rural electrification should be tailored towards achieving basic development objectives such as combating poverty and climate
changes, promoting gender equality, economic growth, environment
protection and private sector development.
1.1
Norads rural electrification project

To review best practice and develop a guide for planning of Norwegian supported rural electrification projects, Norad initiated a rural
electrification study process early 2009. Throughout the first half of
the year a series of thematic meetings were arranged by Norad to
discuss the challenges of rural electrification and consult the Norwegian expertise. In addition, an extensive study of updated literature
and experiences was also carried out. Norad used Norplan as its
consultant in the study, and Rolv Bjelland in Norad was the team
leader.
The main output from the rural electrification project is (all reports are
available on www.norad.no):
1) Main report Norwegian development assistance to rural electrification. Best practice guide for planning (this report)
2) Sub-report Assessing technology options for rural electrification.
Guidelines for project development (Sweco, 2009)
3) Sub-report Appropriate uses of subsidies and tariffs in rural electrification projects (Norplan, 2009)
4) A seminar in June 2009 to discuss conclusions and the way forward for Norwegian rural electrification engagement.
1
2
IEA, 2006
Norad/UD, 2009
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1.2
Page 1-2
The report
This report concludes Norads rural electrification study. It aims at establishing a common platform for Norwegian efforts through a review
of international best practice. The report is intended as a guide for
good project planning of Norwegian supported rural electrification projects.
The focus is on rural electrification and not the broader field of rural
energy. Rural electrification has in this report been defined as grid extensions, isolated grid networks with a centralized power generating
system, and stand-alone electricity systems for individual customers.
Primary target groups for the report are foreseen to be personnel at
Norwegian embassies, Norad and the Ministry of Foreign Affairs
working with energy related development assistance. Other relevant
target groups are energy partners in Norway and Norwegian partner
countries, consultants, NGOs and academia working with Norwegian
energy development assistance.
The report focuses on planning elements that apply to most rural
electrification projects. Inevitably project planning must be adjusted to
the specific context in field as reality differs to the theoretical world.
The report contains four main chapters and appendices.
Chapter 1 is an introduction to the project and the report
Chapter 2 presents the essential policy documents and practical manuals guiding Norwegian rural electrification
Chapter 3 presents and discusses the critical elements in rural

electrification project planning
Chapter 4 illustrates how result management can be used to

increase the probability of achieving wanted effects from rural
electrification projects
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NORWEGIAN FRAMEWORK FOR RURAL ELECTRIFICATION PROJECT PLANNING

Norwegian development assistance to rural electrification is governed
by several policy documents with the Clean energy for development3 initiative as the overall framework. In addition to the policy
documents, Norad has published a series of practical guides and manuals for desk officers at Norad and the Norwegian embassies. The
following are key documents guiding Norwegian development assistance to rural electrification in 2009:
Essential policy documents:
Clean energy for development, April 2007
Ren energi for utvikling. Tiltaksplan 2009-2012, Jan 2009
St.meld. nr.13 (2008-2009). Klima, konflikt og kapital.
Practical guides and manuals (Norad):
Local anchoring
3
4
Development Cooperation Manual, 2005
Assessment of Sustainability Elements/Key Risk Factors:

Practical Guide, 2007
Results Management in Norwegian Development Cooperation: A practical guide, 2008
Climate Change Risk Management: Practical Guide, 2008
Nordic Plus : Practical Guide to Delegated Cooperation, 2007
Working with Sector Development Programmes: Practical

Guide, 2007
Logical Framework Approach: Handbook for objectivesoriented planning, 1999
Guide for institutional cooperation, Norad, 2001
It is a fundamental premise that Norwegian bilateral assistance

is anchored in the development strategies and policies of the partner
country, and that the partner countrys systems and procedures
should be used as far as possible.4 Following from this, the local authorities should have an important role in coordination and facilitation
of rural electrification projects. To ensure positive results from Norwegian development assistance to rural electrification; planning
should always be in coherence with national electrification master
plans and other social and infrastructure development plans, and coordinated with other donors efforts.
Norad/UD 2007a
Norad/UD, 2009 s 5
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IMPORTANT ELEMENTS IN PROJECT PLANNING

To become sustainable a rural electrification project depends on a
series of critical planning decisions. Some important elements in project planning are selection of appropriate technology, ensuring institutional and economic viability, securing financing, safeguarding of social and environmental issues, and optimising productive uses of
electricity. The purpose of this chapter is to highlight and describe important elements as a basis for planning and project design.
3.1
Selection of an appropriate technology for rural electrification

Choosing the appropriate system and technology can be the difference between success and failure of a rural electrification project.
Once it has been decided that an area is going to be electrified, the
first step is to decide which technology is most appropriate based on
a pre-feasibility study from the area (both distribution and production).
The technological choice should take into consideration information
on potential customers and their expected energy consumption, productive potential, ability and willingness to pay among the various
sectors, their requirement of reliability of supply, information on distance to existing grid and availability of local energy resources. In this
report it has been distinguished between grid extension and off-grid
solutions for rural electrification.
More detailed background information on the various technologies
and systems are presented in Appendix 2, and a selection of potential
eligibility criteria for selection of technology is presented in Appendix
3.
3.1.1
Grid extension
A grid extension is a network expansion from the national power
transmission system to new areas and communities. Due to its flexibility to meet future demand and low maintenance requirements
(compared to isolated grid networks with central power generation)
this should be the preferred solution if feasible. Eligibility of grid extension should mainly be based on consideration of costeffectiveness, and attach importance to factors like distance to the existing grid (cost) and the potential customer base (income). Using
cost-effectiveness criteria will ensure the financial stability of the service provider and the feasibility of the project (operation and maintenance). These criteria will favour grid connections where customers
are many and concentrated, and distance to the existing national grid
network is relatively short.
In many places however, it is a duty and priority for the national utility
to extend electricity to rural areas that do not fulfil the eligibility criteria
of financial operational viability. These cases often imply crosssubsidies between urban and rural areas.
3.1.2
Off-grid systems
If it is found that a grid extension is not feasible, off-grid solutions
should be assessed. Off-grid solutions include both isolated distribution grids (mini-grids) with central power generation and individual
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stand-alone systems. Smaller and local-based systems will to a larger

degree than grid extension reach the rural population, thus providing
benefits to the poorer segments of the population5. Combined with innovative local operation and maintenance arrangements, off-grid systems can lead to very positive social impacts.
Isolated grid
An isolated grid is a distribution grid that is energized by local power

generation instead of by connection to a national transmission grid.
The main difference from grid extension is that a local power generation facility will have to be constructed, operated and managed. The
production technology will depend on available local resources (small
hydropower, diesel generator, hybrid diesel-renewable, or other renewable technologies). The final choice of technology must be based
on the recipient countrys overall strategic priorities; however, mature
technologies with proven performance such as hydropower should
always be preferred.
Where the customer base is relatively strong and a feasible local energy resource is available, an isolated grid network with local power
generation should be considered.
Stand-alone systems Stand-alone systems are power supply systems that only cover the
needs of one single user (household, farm, etc.). Neighbours pooling
resources or paying fee to a generator based on informal agreements
are also considered to be stand-alone systems.
Where the customer base is weak (customers living dispersed, and
little or no productive use of electricity) stand-alone systems should
be considered. Solar PV systems are often considered the most feasible alternative. However, the electricity from PV systems is normally
limited to household lighting and other simple applications, and it is
not sufficient for productive uses requiring high power or much energy. Other technologies such as small-scale wind power or small
fossil fuelled generator sets may be relevant. Where water resources
are available pico-/ micro hydropower systems should be considered
for small communities.
3.1.3
Combined systems
Although grid extension and off-grid systems are discussed separately, they are not mutually exclusive. Grid expansion in rural areas
can never reach all potential customers, and stand-alone systems
can often be an additional component of the project to increase the
coverage and customer base.
Figure 1 illustrates some critical factors and decisions to consider
when selecting technology for a rural electrification project.
Scanteam, 2007
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Figure 1: Critical factors in selection of technology for rural electrification6,7
3.2
Safeguard institutional sustainability

It is often a challenge for power utilities to balance financial sustainability with expanding grid coverage. Experience shows that grid extension to rural areas can easily over-stretch the resources of the responsible national utility and become an economic burden8. If management, operation and maintenance duties increase without a costrecovering project to support the increased work load, a weaker utility
and a poorly managed project will be the end result. As an illustration,
a review of the World Banks rural electrification portfolio9 notes that
the Bank has had limited success with institutional development.
Problems commonly relate to lack of financial sustainability of the utility responsible for distribution, as tariffs are set below cost recovery.
Institutional models
An efficient and relevant model for ownership, operation and maintenance is a prerequisite to sustain a strong and financially viable utility.
It is important that ownership models are assessed for the individual
projects, as variables are many and no general recommendation on
De Gouvello, 2008
SHS: Solar Home Systems, WHS: Wind Home Systems
8
Norad, 2009
9
IEG, 2008
7
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suitability can be made. A selection of typical alternative ownership

models for both grid and off-grid rural electrification projects are: 10
Owned and managed by a national utility

The national utility is the most common operator of grid extensions and isolated grids. This model is more challenging for distant rural grids that may not receive the necessary attention in
a large organisation. In some countries this model works relatively well with isolated grids, in other they are ineffective in
managing the usually diesel-based supply. Part of the reason
may be that national tariffs that do not cover the cost of supply.
In the area of stand-alone supply national or local public utilities
seldom engage.
Owned and managed by a local public utility (local government)

Both the advantage and disadvantage of this model is the proximity between utility and users. Local public authorities may find
it difficult to disconnect non-paying customers and institutions,
and often lack necessary technical skills.11 Normally, local public authorities are better suited to supervise relations between
the utility and customer than to be the utility itself. In isolated
grids they often struggle to keep diesel engines working. National or local public utilities seldom engage in the area of
stand-alone supply.
Owned and/ or operated by local private utilities.

Local private utilities are usually more effective in collecting
money and operating the system. Given supportive policies
these utilities can work well. Still, it may be difficult to attract
private entities to a business perceived as risky and less profitable. Use of a private operator for operation and maintenance
proved to be a success in grid extension projects funded by
Norway in northern Namibia12. However, other experiences
show that local private utilities often struggle under the national
political framework.
Local private utilities have been extensively involved in standalone electrification, in what is usually called a fee-for-service
approach (where people pay a fixed monthly charge independent of actual consumption). These public-private partnerships
usually entail exclusive right to a subsidy for the concessionaire, but not exclusive right to market access.
Local cooperative for management.

A local cooperative for management of a local grid or power
system can work, provided it is possible to establish the necessary technical skills. The complexity increases when generation
has to be added to the system. It takes considerable effort to
assure the viability of local cooperative utilities, but when well
10
Sweco, 2009
However, this also applies to national utilities.
12
Tobich, 2008
11
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designed it is a strong model for ensuring local involvement

and ownership.
The Barefoot College in India has together with the Norwegian
Church Aid used a cooperative model for electrification of rural
villages by solar panels in Afghanistan. The communities manage, control and own the project, and through this demonstrating that it is possible to have technically and financially self sufficient solar electrified villages13.
Bangladesh has had success with cooperative based rural grid
electrification giving strong loyalty and small non technical
losses. Their model has been based on a strong military derived organization governing the different cooperatives. The
scheme has in resent time been strained by lack of production
capacity, low tariffs, political interference and reduced willingness for rich cooperatives to cross subsidize poor cooperatives
through uniform tariffs.14
Dealer based approach

For stand-alone systems, dealer based approaches for making
systems available have been tried, either as cash sale (with or
without subsidies), credit sales or leasing schemes. The advantage of this approach is that rural entrepreneurs (lodges and
other local businesses) can participate. As the economy develops, the business should become self-sustaining. Credit
schemes are usually important to overcome the financial hurdle
of first cost.
Capacity building
For off-grid projects it might be relevant to create one or more local

organisations to collect charges, make new connections, arrange
maintenance/ repair of lines and power producing systems. These organisations will often need considerable capacity building to get the
necessary commercial and technical capabilities. Capacity building
efforts will normally have to be sustained significantly beyond the implementation of the physical project. Local organisations can if well
planned and managed ensure strong local ownership, perform satisfactory operation and maintenance, and through this create jobs and
yield better developmental results.
3.3
Ensure economic sustainability in projects15

Subsidy mechanisms, financing models and cost reductions are imperative elements to consider for sustainability of a rural electrification
project. A project should from a financial perspective generate more
income for the service provider than the supply costs (including potential capital subsidies), and from an economic perspective provide
larger benefits to the society than its costs. Further, a sustainable pro-
13
Note that no there is no experience yet on whether the cooperatives will manage cost of replacing
batteries after approximately 6 years of operation.
14
Norplan 2007b
15
All definitions and information in this chapter are based on Norplan, 2009
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ject should generate enough surplus capital to enable reinvestments

when needed.
It is often beyond the reach of a single rural electrification initiative to
influence national tariff regimes, but there are several design measures in the toolbox that can strengthen the economic sustainability of
a project. Cross subsidies and a rural electrification levy are possible
measures to promote certain prioritized customers groups; subsidies
addressing the initial connection fee another.
3.3.1
Subsidies
Since electricity is seen as a catalyst for economic growth and
development many governments and donors have been willing to
provide subsidies to cover part of the cost of electricity supply. It is
however a question how these subsidies should be granted to
maximize the benefits from the project and at the same time ensure
financial sustainability.
Capital costs
If it is decided to pay for part of the costs of providing electricity, the

subsidies should be limited to capital subsidies covering all or part of
the capital costs. This could include subsidies on generation
equipment, transmission lines and substations, distribution network
and connection costs.
To keep capital costs down and to reduce the need for subsidies, low
cost technical solutions should be assessed and used as much as
possible. Utilities are normally not very interested in least-cost options, often due to a desire to standardise equipment and solutions. It
is important not to compromise on quality to reduce the investment
costs16 as poor performance of the power system is an inherent sustainability risk. However, it is possible to design low-cost solutions
without compromising acceptable quality, but then one must know
what the power is going to be used for and to ensure that the quality
is adequate for this use.
O&M costs
Few (if any) advocate subsidising operation and maintenance costs,

and it is generally not recommended to commit to significant permanent operating subsidies to rural electrification. If however operation
subsidies are considered, a cost/ benefit analysis should quantify the
impact on the local community from providing access to electricity
versus the costs. Norway should demand transparency on main cost
elements in the utilities systems, including any power purchase
agreements (PPAs) and fuel supply agreements.
3.3.2
Connection fee
A cost recovery based connection fee usually constitutes a main barrier to customer connections as it is often high compared to income
levels in the local population. It is therefore particularly important to
consider the role of subsidies to reduce the upfront connection fee.
Experience shows that poorer household often have both the ability
16
Note that quality is a concept related to the users needs. The most basic criteria are availability of
power and voltage stability. For more technologically advanced loads frequency stability, harmonic
content and the ability of the source to provide reactive power become relevant. [Sweco, 2009]
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and the willingness to pay for electricity consumption, but not for the
connection fee. Subsidies and other alternative mechanisms for financing customer connections could therefore be imperative to obtain
a high connection rate and harvest larger benefits from the investments.
A model can be based on direct subsidies, reduced connection fee
compensated through a higher price per kWh or loan arrangements.
A common subsidy model on connection cost is to have the same initial payment for all customers and a subsidy covering the difference
up to the actual connection cost for each customer. A model for reduced initial payment must make sure that it is encouraging connections, and is easy to understand and implement for the utility. For
more detailed information on alternative subsidy models reference is
made to Norplan (2009).
As an illustration; a success factor in rural electrification programmes
funded by Norway in Northern-Namibia was the provision of free
connections to all public institutions, businesses and households
within 500 metres from distribution transformers (all subsequent
connections 50% subsidised) and introduction of cost-reflective tariffs
to cover operational costs17.
3.3.3
Clean Development Mechanism

The Clean Development Mechanism (CDM) is an arrangement under
the Kyoto Protocol, and one of the possibilities under the CDM is
Programme of Activities (PoA) projects. A PoA is where a number of
similar projects are packaged under the same umbrella, allowing
project developers to bundle up the total amount of emission reductions from many small similar projects, making the entire project umbrella cost-effective. The PoA approach does not require that all programme activities are identified at the time of registration, allowing
additional project components to be added at a later stage.
The CDM potential in rural electrification can be boosted by the programme of activities approach, especially when considering solar
home systems and other stand alone systems. For these kinds of rural electrification projects the CDM can be an important element in financing, however the cash flow from selling emission reductions will
usually be a minor portion of the cash flow generated by the project.
The CDM application process is time consuming, methodologies are
quite complex and transaction costs for small scale projects are often
high. In addition the CDM rules on Official Development Assistance
(ODA) states that investments in CDM projects must not come from a
diversion of ODA funds. As many rural electrification projects are financed by ODA this can be a barrier. Therefore, despite the large potential, few rural electrification projects with CDM-funding have materialized so far.
17
Tobich, 2008
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3.4
Page 3-8
Optimise productive and social uses of electricity

The rural population in many cases lack knowledge of modern energy
services, and this is a major barrier to realise more of the potential
from provision of electricity. Two of the most important barriers to
productive use of electricity are the lack of technical knowledge/ skills
of potential users, and the lack of financial means to acquire relevant
electrical equipment18. Even in villages that have been connected for
15-20 years it is not uncommon for 20-25% of households to be unconnected, mainly due to absence of credit markets19.
Rural electrification projects previously funded by Norway have to a
large degree focused on connecting public institutions and existing
businesses. The projects have to a lesser degree targeted the specific productive and social sectors and focused on strengthening
these. The 2007 review of Norwegian funded rural electrification interventions in Namibia between 1990 and 2000 recommended that
rural electrification should be integrated with plans and strategies for
local business development to maximize positive income generating
effects20. Similarly, the 2008 World Bank review of their rural electrification portfolio concluded that their projects had been lacking complementary measures to ensure poverty reduction and positive social
impacts21.
Although experience shows that positive effects from electrification
will materialise after some time without complementary initiatives, it is
a passive and uncertain approach to wait for effects to trickle-down.
Lack of cross-sector focus results in suboptimal effects on economic
development and poverty reduction.
3.4.1
Electricity in the productive and social sectors

Electricity alone can thus not be regarded as a final output, but rather
a prerequisite for development of productive sectors and social welfare. A main focus for rural electrification planning should therefore be
the other productive and social sectors. It is a common situation in
developing countries that the energy sector does not satisfactorily coordinate with these other sectors.
Productive sectors
Productive use of electricity in rural areas is often related to agriculture production and processing, fish processing and farming, livestock
breeding and other small-scale processing industries as well as tourist activities. Efforts targeting productive use of power may also have
to consider measures to improve access to markets. Economic development is closely linked to productive activities, and strengthening
these will have a direct effect on the sustainability of the rural electrification project. Optimal design should therefore include measures to
both develop existing and initiate new productive activities in the local
area.
18
De Gouvello, 2008
IEG, 2008
20
Tobich, 2008
21
IEG, 2008
19
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Social sectors
Page 3-9
Key social uses relate to services like operation of schools, health

centres, water facilities and other public institutions/ offices. Performance in the social sectors of education and health can be significantly
strengthened through provision of electric lighting, refrigeration, educational TV and radio, improved access to means of communication
and computers. Providing street lights improves security (traffic and
violence), provides possibilities for studying, playing and social communication in tension areas.
As an example Figure 2 below illustrates the relation between electricity and the agricultural sector. Similar figures can be presented for
other sectors.
Electricity input
Agriculture sector input
Appliances:
Equipment andtools
Bulbs
Electronics
Energyderived output:
Pumping
Altering
Refrigeration
Shaping
Cooking
Lighting
Intermediate output
fromagriculture sector
Finaloutputfromagriculture sector:Goods and

commodoties (raw goods andtransformed goods)
Finalimpact on households (income generation,use

of services,consumption)
Figure 2: Electricity contribution to agriculture sector output22
3.4.2
Cross-sector planning
Methodologies
To optimise productive and social uses of electricity a holistic crosssector planning approach should be adopted. ESMAP has for this
purpose developed two different planning methodologies with opposite approaches for cross-sector rural electrification programmes23.
The systematic approach is used when the rural electrification is
planned without a clear picture of other sector activities are in the
22
23
Based on De Gouvello, 2008

De Gouvello, 2008
23/10/2009
NORAD
Page 3-10
area. The pragmatic approach is used when the rural electrification

project is planned and follows because of other sector activities in the
area. Appendix 4 provides a summary of the key planning steps of
these methodologies.
To promote increased and optimal use of electricity both the lack of
knowledge and financing must be addressed. The following key activities have focus on the consumers and should be part of a crosssector approach to rural electrification:
Training
Technical assistance should in general be consumer education in

form of campaigns targeting end-users. Programmes for increased
knowledge of electricity should be a part of the project. This could include households, businesses, entrepreneurs and other social endusers. Training should be combined with arrangements for financing
or purchase of relevant equipment.
Financing
Lack of financial means to purchase relevant electrical equipment is a

main barrier for productive use. Arrangements for financing and credits schemes should therefore be promoted and implemented as an integrated part of a rural electrification project. This is ideally and more
realistically done in cooperation with already established micro-credit
institutions in the area. The project should preferably be integrated
with general strategies and plans for small business development in
the area. Subsidies for connection fee and purchase of equipment
should also be considered.
3.5
Mainstream cross-cutting issues

Critical cross-cutting issues in rural electrification planning relates to
gender, corruption, rights and participation of indigenous peoples,
and in general social safeguard and environmental considerations.
For a relevant practical planning tool reference is made to Norads
Practical Guide for Assessment of Sustainability Elements/ Key Risk
Factors24. This guide includes checklists for assessment of crosscutting elements in project planning.
3.5.1
Gender in rural electrification

Experience shows that provision of electricity usually has positive effects on both men and women. Several studies indicate that introduction of electricity has had positive effects on womens safety, knowledge level regarding own health and rights, and improved access to
education. Electricity may open up a potential for improved productivity in agricultural activities and development of home businesses, also
by means of saving time as reduced burdens of household chores
may lead to more time allocated for productive activities.
However, introduction of modern energy services has differentiated
consequences. Men and women have different access to energy resources and input into the decision making process be it at household, community or society level25. In energy planning little attention
has traditionally been given to the different ways men and women
24
25
Norad/UD 2007b.
Ljung, 2007
23/10/2009
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Page 3-11
produce, distribute and use energy. Berthaud (2004) notes that absence of gender considerations in policy and practice is evident in the
energy sector compared to other sectors like health and education.
Energy related issues are often wrongly assumed to be gender neutral26.
Gender in planning
Energy planning, project design and implementation must therefore

be based on a good understanding of the gender dimension of energy
use and potential. The planning should ensure that men and women
can have equal access to opportunities from the electrification. These
issues are best integrated into project design and monitoring if handled already at the onset of planning, and included in preliminary assessments. Norads existing planning guidelines should be utilised for
gender planning in energy projects.
Targeted actions
A range of targeted actions can promote positive effects on women

from rural electrification projects. The rural population, especially
women, lacks technical knowledge of modern, decentralised energy
services27. Lack of skills contributes to electricity not being used for its
full potential. Training of end-users in productive uses (households,
entrepreneurs, businesses, public institutions) should therefore ensure equal participation of men and women in all training. Training
should also target men and women separately and the timing should
accommodate womens other responsibilities in the households.
To acquire productive use appliances and adoption of new energy
sources might often require initial funds beyond the reach of the poor,
and access to micro-finance can play a critical catalytic role. Microfinance institutions can play an important role in increasing access to
credit for development purposes and provide capacity building in
business and managerial skills, especially for women28. Grameen
Bank in Bangladesh is maybe the best known example of success.
A balanced participation of men and women in management and implementation of project should be ensured. This includes development of competence through courses and education (within implementing utility, partner organisations or local communities).
Positive effects on women might also appear if public services traditionally used by women are electrified, i.e. water pumping facilities.
Consultations with women will indicate if this is wanted and acceptable.
26
Note that a high percentage of the energy sources in the rural areas in developing countries come
from biomass fuels, which are overwhelmingly the responsibility of women. This report focuses on
electricity provision, and will therefore not consider issues related to biomass fuel or other nonelectric energy.
27
Berthaud, 2004
28
Ljung, 2007
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3.5.2
Page 3-12
Anti-corruption efforts
Electricity production, distribution and use generate considerable
cash flows. Experience has shown that corruption in the energy sector takes many forms and appears on many levels, from petty corruption in meter reading and billing to grand corruption29. Rural electrification projects often require large investments in poor areas, creating
new opportunities for personal gain for the people involved. Off-grid
energy systems based on local energy sources provides local people
more control over the supply and reduces the opportunities for corruption. Distribution of electricity in rural areas can involve large numbers of customers each accounting for small shares of final consumption, and corruption in this part of the sector is typically small-scale.30
Generally, possible forms of corruption in rural electrification projects
involve collections and procurement of services and goods, operating
materials and consultants.
The most important activity to curb corruption is ensuring transparency. This includes increased transparency in contracts, transactions
and budgets. Donors should clearly express that no financial irregularities will be tolerated, and stress the need for an appropriate legal
framework, an autonomous regulatory body, and clear guidelines for
accounting practices, auditing systems and financial reporting31. To
prevent possible problems it should be ensured that the planned
funding is sufficient and that the required input is justifiable in terms of
the expected output. The use of monitoring consultants or other independent third parties in contract management can prevent fraudulent
practices.
3.5.3
Environmental and social safeguards

Relevant environmental and social considerations depend on the size
of the project and type of technology used, combined with the local
environmental and human conditions of the area in consideration.
In general, land acquisition and resettlement, watershed protection,
and land use are issues related to grid extensions and hydropower
projects of all sizes. A construction project is likely to create new dynamics and affect both size and constitution of the population in the
local communities. Such projects often require a substantial number
of migrant workers to be based in the area for a longer period of time
and this may also attract further migration to the area. Common social
issues therefore include increase in disease infection rates (particularly HIV/Aids and other STDs) and pressure on local public services.
These issues become increasingly more pertinent when the project
size increases.
Individual PV solar systems have few environmental and social issues related to implementation. A main issue is safe disposal of hazardous waste, mainly lead-acid batteries that have to be replaced at
regular intervals. If national or local arrangements for waste handling
exist, the project should coordinate with this. In countries with no es-
29
MSI, 2002
MSI, 2002
31
Lovei, L and McKenchie, A, 2000
30
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Page 3-13
tablished waste management systems, the project should establish its

own arrangements for safe disposal of hazardous waste.
Standards
Both grid extension and isolated grids with central power generation
should adhere to the relevant national regulations on environmental
and social management. If these are lacking or insufficient, international best practice (World Bank) guidelines appropriate to the scale
of the project should be used (see Environmental and Social Standards
at
www.ifc.org
and
Safeguard
Policies
at
www.worldbank.org/safeguards)
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Page 4-1
RESULT MANAGEMENT IN RURAL ELECTRIFICATION

The purpose of this chapter is to illustrate how result management
can be used to increase the probability of achieving wanted effects
from rural electrification projects.
4.1
Supporting tools
Relevant supporting tools for evaluation and result management are:
Results management in Norwegian Development Cooperation: A
practical guide, Norad, 2008
Development Cooperation Manual, Norad, 200532
Looking Back, Moving Forward, Sida Evaluation Manual 2004
Ten steps to a Result Based Monitoring and Evaluation System,
WB, 2004
Managing for Development Results (www.mfdr.org)
Assessment of Sustainability Element/ Key Risk Factors: Practical guide, Norad 2007
4.2
Project planning
Project proposal
The development partner is responsible for developing a project proposal containing all necessary information on the proposed rural electrification project. Optimally the project proposal should be a result of
a participatory process and dialogue between partner and donor. This
can be achieved through early focus on wanted results through clear
and proactive communication from the Norwegian side.
A project proposal should include:
1) Overall goals and a goal hierarchy, the purpose of the programme
and a result chain
2) Identified sustainability elements, risk factors and mitigating actions
3) Monitoring and evaluation system
4) Relevant feasibility studies and impact assessments
5) Baseline data
Assessment
32
33
Prior to a decision of funding an assessment of relevance, feasibility,

potential risks and sustainability of the programme must be made.33 A
preliminary assessment of a proposed project should focus on
Will be replaced in 2010

Norad/UD, 2005
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Page 4-2
whether the rural electrification can contribute to the broader development agenda.
The following questions might be considered when undertaking an
assessment of the sustainability and risk factors of a proposed rural
electrification project:
Technical development
Is the proposed system in line with national priorities and coordinated with other programmes?
Has alternative technological systems for electrification been
considered (grid extension, off-grid or individual systems)?
Has compatibility with future grid services been assessed?
Are there bottlenecks such as capacity shortage in the transmission system, or power or energy shortage in generation? When
will potential or actual bottlenecks be taken care of?
Are locally available energy resources identified and assessed?
Social/ ethical development

Have the links between electricity and productive/ social sectors
in the area been identified?
Have availability of micro-credit schemes been considered for
productive uses of electricity services?
Are there other development initiatives in the area that could be
relevant for cross-sector collaboration?
Are connection of social services included (schools, health centres, street lights, etc.)
Have needs, roles and priorities of men and women been addressed in the project proposal?
Have potential barriers for active participation of both men and
women in all phases of the project been identified and possible
mechanisms to ensure equal participation been developed?
Have rights and participation of indigenous peoples been taken
into account?
Economic development
Have subsidy mechanisms, financing models and other incentives been considered to optimize economic sustainability?
Will the project be financially viable, i.e. generate more income
than the operational costs?
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Environmental development
Does the project have potential significant adverse impacts on
the environment (soil, water, air)?
Are there serious land and resettlement issues related to the project?
Institutional / organisational development

Have sufficient capacity building arrangements been included?
Can the project be technically sustained over time (competence
and capacity for operation and management)?
Has local participation and ownership been ensured?
Is the institutional capacity (knowledge and financial) sufficient for
sustained operation over time?
For more general information on risk management and assessment of

sustainability elements refer to Norad/UDs Assessment of Sustainability Element/ Key Risk Factors: Practical guide34.
4.3
Result management
Proper result management increase probability of achieving wanted
effects and makes it possible to measure the effects of the rural electrification intervention on people and surroundings. It is important that
due emphasis is given already at the stage of the project proposal.
Result planning
Result planning starts with identifying the intended effects (impacts

and outcomes) of the intervention, and then later the concrete activities, input and outputs required to achieve these effects. It has been a
common mistake in development planning to start planning activities
without keeping necessary focus on the wanted effects. For example,
when electrifying an area the electrification itself often becomes the
main goal of the project. However, the number of connections established or kilometres of grid network built cannot establish that there
has been a positive development for the people in the area.
Figure 3: The result chain35
34
35
Norad/ UD 2007b
Norad/UD, 2008b
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Using a result chain
Page 4-4
A result chain (Figure 3) is a useful planning tool to systematically

consider the various project elements and through this manage the
planning process. It illustrates the anticipated causal relationships between the various planning elements over time. Table 4-1 below is a
practical example proposing possible elements in a result chain for a
rural electrification project.
Input
(innsatsfaktor)
Activity
(aktiviteter)
Financial assistance
Installation of
generation capacity
Output
(produkter/
tjenester)
Additional generation capacity
Outcome
(brukereffekt)
Impact
(samfunnseffekt)
Access to reliable, high quality energy services
Enhanced business
environment
Technology
transfer
Competence
Training of personnel for operation, management and

maintenance.
Improvements in the
provision of social
services (rural
health sector,
schools etc.)
Higher level of competence. Improved
power system.
Trained personnel,
courses and
reports.
Competent personnel securing

a reliable power
system.
Arrangements
for O&M
Access to
reliable, high
quality energy
services
Enhanced business
environment
Improvements in the
provision of social
services.
(rural health sector,
schools etc.)
Building transmission and distribution lines
New transmission and distribution lines
Reliable local
power distribution and high
quality energy
services
Enhanced business
environment
Installation of
street lights
New street
lights
Improved security due to lighting of streets.

Reliable access
to lighting for
reading
Access to reliable, high quality energy services
Reduced criminality
Connecting new
customers.
Customer connections
23/10/2009
Improvements in the
provision of social
services.
(rural health sector,
schools etc.)
Improved literacy
Higher living standards

More economic activity
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Table 4-1: Result chain practical examples for use in rural electrification projects
4.3.1
Monitoring of performance
A properly designed monitoring system should provide results information during implementation of the rural electrification project. Progress reports can provide data at output level and measure progress
on key indicators compared with milestones and time schedules. Annual (monitoring) meetings are forums where results are discussed
and possible adjustments can be made. Other possibilities to verify
results are through field visits where stakeholders can be met, or
through reviews assessing progress.
Baseline
Measuring impacts from a specific intervention is done by comparing

data from before and after implementation of the project. Baseline
data describing the situation before the project has been implemented
is the foundation on which all future monitoring of performance and
effects are based. Relevant baseline information for rural electrification projects could be related to:
Social data (access and use of public services, access to information, communication, etc.)
Economic data (use and consumption of energy, income levels,
employment and economic activities, etc.)
Environmental data (land use, erosion, water quality, etc.)
It is paramount that all relevant data are sex disaggregated.

RE indicators
Indicators, milestones and budgets should accompany the elements

in the result chain and be elaborated in a monitoring system. A baseline might consist of large amounts of data, and performance indicators are used to present the data in a comprehensible form.
Indicators must be verifiable and quantifiable, and connected to the
baseline study to realise monitoring of progress and long term effects.
They should be simple to understand and apply, transparent and inter-subjective, robust, comprehensive and fair.36 The indicators serve
as quantitative targets and they can be used to communicate
changes and trends. Specific indicators must be developed to follow
the impact on men and women in terms of equality in participation
and benefits.
Appendix 5 presents examples of performance indicators in rural
electrification projects.
36
Ihlskog, 2008
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REFERENCES
REFERENCES/ BIBLIOGRAPHY
Anderson, R. 2008
Approaches and Financial Models for Scaling up Norwegian Development Assistance to Clean Energy. Norad Report 11/2007
Berthaud, A. 2004
Integrating Gender in Energy Provision. Case Study of Bangladesh.

ESMAP report
Braend, Tore 2008
Transfer of Climate-Friendly Technologies. How can NGOs constribute? Report from Norges Naturvernforbund
CMI, 2006
Socio-economic baseline data for rural electrification projects supported by Norway 2005 (Namacurra RE Project). Report prepared for
the Norwegian embassy in Mozambique.
De Gouvello 2008
Maximizing the Productive Uses of Electricity to Increase the Impact

of Rural Electrification Programs. An Operational Methodology. ESMAP Formal Report 332/08
IEA 2006
World Energy Outlook 2006. International Energy Agency (IEA),

Paris, France, 2006
Ihlskog, E. 2008
And Then They Lived Sustainably Ever After? Experiences from rural
electrification in Tanzania, Zambia and Kenya. Doctoral Thesis, KTH
Royal Institute of Technology, Stockholm, Sweden.
IEG 2008
The welfare impact of rural electrification: A reassessment of the

costs and benefits. A World Bank Independent Evaluation Group
(IEG) Impact Evaluation
Ljung, Per 2007
Energy sector reform: strategies for growth, equity and sustainability.

Sida Studies No. 20.
Lovei, L. et.al. 2000
The cost of corruption for the poor the energy sector. Viewpoint
207, The World Bank, Finance, Private Sector and Infrastructure
Network, Washington, D.C., 2000
Mostert, W 2008
Review of Experiences with Rural Electrification Agencies. Lessons

for Africa. EUEI-PDF
MSI 2002
Corruption and the energy sector. Management systems International

(MSI), Washington, USA, 2002
Norad 2009
Identifying possible Norwegian interventions in the energy sector in

Mozambique 2011 2014. Report from a fact finding mission to Mozambique in March, 2009.
Norad/ UD 2009
Ren energi for utvikling. Tiltaksplan 2009-2012, Norad/UD, Jan 2009
Norad/ UD 2008a
Norads resultatrapport 2008: Veivalg i bistanden: ingen snarveier til

resultater. Norad, 2008
Norad/ UD 2008b
Results Management in Norwegian Development Cooperation: A

practical guide, Norad, 2008
23/10/2009
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REFERENCES
Norad/ UD 2008c
Climate Change Risk Management Climate Proofing: Practical

Guide, Norad, 2008
Norad/ UD 2007a
Initiativ for ren energi i utviklingsarbeidet (Clean energy Policy Platform), Norad/UD, 2007
Norad/ UD 2007b
Assessment of Sustainability Elements/Key Risk Factors: Practical

Guide, Norad, 2007
Norad/ UD 2007c
Nordic Plus: Practical Guide to Joint Financing Arrangements, Norad,

2007
Norad/ UD 2007d
Working with Sector Development Programmes : Practical Guide,

Norad, 2007
Norad/ UD 2006
Nordic Plus : Practical Guide to Delegated Cooperation, Norad, 2006
Norad/ UD 2005
Development cooperation manual, Norad, 2005
Norad 2001
Guide for Institutional Cooperation, Norad, 2001
Norad/ UD 1999
The Logical Framework Approach (LFA): Handbook for objectivesoriented planning, Norad, 1999
NCG, 1999
Rural energy in developing countries. Report prepared for Norad.

NCG, Oslo, 1999.
Norplan 2009
Appropriate uses of subsidies and tariffs in rural electrification

projects. Norplan, Oslo, 2009
Norplan 2007
Uganda, Sida Phase II. Norplan, Oslo, 2007
Norplan 2007b
End review of Area Coverage Rural Electrification (ACRE) in Bangladesh. Norad Collected Reviews 15/2007. Norplan in association with
SFA Bangladesh, Oslo, 2007
Scanteam 2007
Evaluation of Norwegian Power-related Assistance. Norad Evaluation

Report 2/2007
Sida 2005
Sustainable Energy Services for Poverty Reduction. Sida Policy Paper
Sida 2004
Looking Back, Moving Forward. Sida Evaluation Manual 2004.
St.meld.nr. 13
Stortingsmelding nr. 13 (2008-2009). Klima, konflikt og kapital.
Sweco 2009
Assessing technology options for rural electrification. Guidelines for

project development. Draft report. Sweco, Oslo, 2009
Sweco 2005
Tanzania Rural Electrification Study. Master Plan and Programme

Report. African Development Bank Group. Sweco International and
Decon, in association with Inter-Consult limited, 2005
Tobich, Ralf 2008
Impact assessment of Norad-funded rural electrification interventions

in Northern Namibia, 1990-2000. Norad collected reviews 1/2008.
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REFERENCES
Winther, Tanja 2006 Social Impact Evaluation Study of the Rural Electrification Project in
Zanzibar, Phase IV (2003-06). SUM, University of Oslo, 2006
World Bank 2009a
Project Appraisal Document for Second Phase of the Energy for Rural Transformation Program, Uganda. World Bank Report No: 47183UG
World Bank 2009b.
Africa energy poverty, G8 Energy Ministers Meeting 2009, World

Bank, Rome, 2009
World Bank 2008.
Designing sustainable off-grid rural electrification projects: Principles

and practices. Operational guidance for World Bank staff, 2008.
World Bank 2004.
Ten steps to a result based monitoring system. A handbook for development practitioners. World Bank, Washington, D.C., 2004
kesson, G. 2006.
Study of the Socio-economic and Poverty Impact of the Ribaue/Iapala

Rural Electrification Project, Mozambique. Study prepared for the
Swedish embassy in Mozambique
Personal communication (2009):

Drflot, N. Royal Norwegian Embassy, Kampala
Lkke, K. Royal Norwegian Embassy, Maputo
Oftedahl, T. Royal Norwegian Embassy, Maputo
Repp, K. NVE, Oslo
Strm, . Royal Norwegian Embassy, Dar es Salaam
Synnevg, G. Noragric, Oslo
degaard, A. Royal Norwegian Embassy, Kathmandu
Thematic meetings (2009):

11.02.09
Solar energy in rural electrification (REC, Scatech, KN)
16.02.09
The Swedish approach to rural electrification assistance (Sida)
03.03.09
The role of nongovernmental organisations in rural electrification (KN,

Naturvernforbundet, Tibetmisjonen)
17.03.09
The World Banks experience with cross-sector planning (World Bank)
24.03.09
Technological options for rural electrification (Sweco)
02.04.09
Subsidies and incentives for rural electrification (Norplan)
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APPENDICES
APPENDICES
APPENDIX 1: LIST OF RESOURCES
APPENDIX 2: TECHNOLOGIES FOR RURAL ELECTRIFICATION
APPENDIX 3: ELIGIBILITY CRITERIA FOR SELECTION OF SYSTEM
APPENDIX 4: CROSS-SECTOR PLANNING APPROACHES
APPENDIX 5: RURAL ELECTRIFICATION PERFORMANCE INDICATORS
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APPENDIX 1
APPENDIX 1: LIST OF RESOURCE BASES

The following list of web-based resources is not complete, but includes resource bases in the
field of rural electrification.
Name
Description
Web address
African Development
Bank (AfDB)
Checklist for Gender Mainstreaming in

the
Infrastructure
Sector.
Issued
10/02/2009.
www.afdb.org/en/documents/policydocuments
ENERGIA
Energia is an international network on

gender and sustainable energy. Topics
range from integration of gender into
national energy policies to in-depth studies on womens energy use and to practical training manuals and tool kits.
www.energia.org
ESMAP
On-line database with reports and studies on energy poverty, energy security,
market efficiency and governance, and
renewable energy
www.esmap.org
Global Network on Energy for Sustainable

Development
(GNESD)
GNESD is a UNEP facilitated knowledge

network renowned for their work on energy, development and environment issues. GNESD has as a main objective to
work for reaching the Millennium Development Goals.
www.gnesd.org
Renewable Energy
Background information on renewable

energy technologies
www.renewable.no
RETScreen Clean Energy Decision Support

Centre
Decision making software tools and

training courses for renewable energy
and energy efficiency projects.
www.retscreen.net
Sri Lanka Renewable

Energy for Rural Economic
Development
(RERED) Project
Resources and documents on grid and

off-grid electrification. Specifically on
environmental and social assessment
and management framework.
www.energyservices.lk
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APPENDIX 2
APPENDIX 2: TECHNOLOGIES FOR RURAL ELECTRIFICATION

All information in this appendix is from Sweco (2009). Refer to this report for more detailed
background information (technical information, eligibility criteria and cost levels) on technology options for rural electrification.
GRID EXTENSION
Main technical components:
A high voltage (HV) transmission line with necessary transformers for transport between
existing grid and communities to be connected.
Low voltage (LV) grids distribution grids for distributing the power to consumers. A distribution grid is connected to the transmission line by a step-down transformer.
Advantages:
Additional cost for providing a significant capacity margin is small. Increase in demand is
easy to handle, and all foreseeable power requirements covered.
The maintenance cost is low and technical installations reliable.
Limited needs for advanced local organisation, mainly for collecting charges, making
new connections and arranging for maintenance and repair of lines.
Drawbacks:
Substantial investment cost, disfavouring small and dispersed communities (small load)
located far from the grid
High losses in a distribution grid limits the expansion, and power grids are therefore often unsuited for communities living dispersed.
Three-phase or single-phase grid extension?

Single phase grid extension is commonly used in many developing and some developed
countries as well. The main reason for selecting a three-phase line rather than single-phase
is increased efficiency for transmitting power as well as the ability to serve three-phase
loads. For serving larger load centres the better transmission efficiency of three-phase lines
is an important advantage. A disadvantage with single-phase supply is that only small induction motors of 5 - 10 kW can be used. Beyond this size, three phase motors are required.
Three-phase equipment is generally more efficient, less expensive, and more readily available than the single-phase equivalent. Single-phase power supply is adequate for most domestic appliances, whereas three-phase would be beneficial for farms, hospitals, workshops
and home industries. Single-phase Single Wire Earth Return (SWER) technology is typically
20 60% cheaper than 3-phase, whereas 2-wire systems are somewhere in between 3phase and SWER in both cost and transmission capacity.
SERVICE MODELS FOR CONNECTION AND METERING
Selection of appropriate service model for connection and metering is of essence to realise
higher connection rates for low-income groups. The technologies most commonly used in
pro-poor service models are pre-payment metering, power limiters and ready boards.
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APPENDIX 2
Pre-payment meter:
Pre-payment meters is a common and well proven solution that allow customers to pay electricity in advance and through this have more control of their own consumption. It may also
improve revenue collection and reduce the losses for the service provider. Traditionally, electricity credits have been purchased from a central office of the service provider. Modern systems (like the future standard pre-payment system of Tanesco in Tanzania - LUKU) open up
for purchase of credits via the mobile network. Prepayment systems are generally more expensive than ordinary meters.
Power limiter:
In small grids where consumption patterns are predictable and transparent, a meter may be
substituted with a power limiter. Power consumption will then be paid as a fixed monthly fee.
This is reducing operational requirements and investment costs. However, a power limiter
will not limit the energy use and the costs may become relatively high.
Ready board:
In an effort to reduce the cost for house wiring and allow electrification of more precarious
dwellings, so called ready-boards have been introduced. A ready-board is a board or
cabinet with the meter, fuses and a few sockets factory-installed. Connection of a house via
ready-board consists of fixing the ready-board at a convenient place in the dwelling and connecting it to the grid. It substantially reduces need for house wiring and allows for simpler
dwellings to be connected to the grid.
Discussion of service models for low-income customers:
The 2005 Tanzania Rural Electrification Study37 discusses service models and subsidy arrangements to achieve higher connection rates for poorer customer segments in rural Tanzania.
1) Service model 1 - standard pre-payment metering: The future standard pre-payment
service model of Tanesco implies relatively high costs for meters and customer attention, and therefore the customers will have to pay a corresponding high connection
fee. In the reference case it is estimated that 5% of the low-income customers will be
connected.
2) Service model 2 ready board with pre-payment metering: In this service model the
ready board should be part of the capital cost and provided to the low-income customers free of charge. The customers should however pay the connection fee. In the
reference case it is estimated that 30% of the low-income customers will be connected.
3) Service model 3 ready board with power limiter: In this service model the ready
board should be provided free of charge. Power limiters are cheaper than meters and
do not imply high connection costs. The customers do not pay a connection fee, but
rather a monthly fee for estimated average electricity use. In the reference case it is
estimated that 45% of the low-income customers will be connected.
37
Sweco 2005
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APPENDIX 2
ISOLATED GRID NETWORK

Isolated grids for supply of small communities have traditionally been powered by diesel engines. The distribution part of the system is not very different from a distribution grid in a system connected to a transmission network. In addition to the distribution network, it requires
an autonomous power supply.
As in the case of grid extension, isolated grids require a minimum threshold level of electricity
demand and certain load densities to be cost-effective. According to a study published by the
National Renewable Energy Laboratory (NREL), the minimum economic scale for mini-grids
in China is around 100 households. There are several examples of successful projects of a
smaller scale, but size clearly matters when it comes to the probability of success.
Main advantages:
Isolated grids can normally make better use of energy sources compared to stand-alone
systems (effect of scale)
The system can easily be connected to the national grid if grid extension becomes viable
in the future. Local power plants can export power to grid if costs are competitive.
Main drawbacks:
As for grid extension, it might not be viable to connect dispersed customers
The available power will be constrained. However, demand in rural areas is normally not
growing quickly.
STAND-ALONE SYSTEMS (20W 10kW)

Stand-alone systems are either based on a fuel based energy system (diesel oil, vegetable
oil or oil esters, wood-fuel etc.), or a flux-based (solar energy, wind power, hydro power etc.).
With the exception of hydro power, the energy flux as such can not easily be stored. Instead,
such systems usually rely on a battery to provide electricity when the primary energy source
is not available. Stand-alone systems can be quite large, but in the context of rural electrification they are normally of the order of 14 1000 W. When there is an industrial user, for example a telecommunication base station, the capacity can be considerably larger.
Advantages:
It can service dispersed rural populations
The investment cost can be adapted to the individual users ability or willingness to pay.
Management of rural systems can be improved through establishment of a decentralised

arrangement with considerable user participation
For small loads stand alone systems usually represent the least cost option
Drawbacks:
The available power allows limited household use; lighting, radio/tv and charging of cellphones. It can also be used for some productive uses as light office equipment and
charging of hand tools.
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APPENDIX 2
In the case of battery storage, the system must be carefully sized to the planned load, or
it will malfunction quickly. This requires technical skills, and also regular reinvestments
for replacement of batteries
Battery storage:
The battery storage, when such is needed, is a critical part of the equipment, and it is also
quite costly, representing up to 30% of the total investment for a PV system. It is also sensitive to abuse, and operating the battery outside its design values can drastically reduce its
service life. The battery bank is often the weakest component of the system and the highest
contributor to its life cycle cost. Currently it must be considered that lead-acid battery technology is still the most viable alternative in developing countries. Other technologies, like
NiMH, NiCd, Li-ion etc. are still not so easily available and are more expensive.
TECHNOLOGIES FOR POWER GENERATION
Only the main technologies discussed in the report have been included here. For more new
renewable technology options, reference is made to Sweco (2009).
Pico- and micro hydropower
Pico- (< 10 kW) and micro hydro (< 100 kW) power schemes are normally run-of-the-river
schemes which operate by diverting part or all of the available water flow. Pico-hydro electromechanical equipment is often assembled as one self-contained unit.
Advantages:
It is more cost effective than solar or wind power if there is a good resource available.
No battery storage is required.
Challenges:
Requires a perennial stream (or almost) if economy is going to be good.
Requires more maintenance than photovoltaic modules.
Availability of equipment varies considerably from country to country.
Except for the smallest sizes, execution of the civil works requires considerable knowhow.
Assessing the resource require considerable experience.
Small hydropower
Mini-hydro is usually considered to be a hydro power scheme below 10 MW. It is thus already a significant investment, suitable for a large isolated grid or for feeding into a national
grid. In principle, there is no difference between micro- and mini-hydro. However, the size of
the installation means that expert knowledge is required for the design and construction of
the plant.
PV solar technology
The market for photovoltaic technologies has been growing with more than 30% per year for
the last 10 years, and market forecasts are indicating further increased efficiencies and reduced costs. A solar home system consists of a photovoltaic module, a charge regulator, bat-
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APPENDIX 2
tery storage and loads (lights, radio, TV). The smallest systems, only powering one or two
lights, are based on 14W PV modules. About 50 W would do for most uses in a modest rural
home, whereas 300 W would allow a refrigerator. PV systems are also used in isolated grid
systems (at Tangtse in India 100 kW photovoltaic system supplies an average load of about
45 kW).
Advantages:
Solar resources are generally good in most developing countries
Size is flexible. The smallest commercial modules are about 14 W, and modules with
power of 150 W and above are commercially available.
Systems can be added to in a modular fashion, thus allowing for capacity increase as
the users wallet permits.
The PV modules are extremely reliable and durable. It is possible to obtain warranties for
25 years.
Challenges:
The cost is relatively high, but may still be least cost for small loads.
Proper sizing of systems require considerable experience and skill.
Proper installation is very important, requiring trained technicians.
High power loads, even for short times, are challenging for battery storages.
Requires battery replacement at frequent intervals (every 5-6 years)
Hybrid systems
Diesel engine generators are increasingly being supplemented with renewable energy-based
hybrid power systems. However, also diesel engines in small systems with peaky load profiles can benefit from battery storage, since that allows the engine to run at optimum load for
most of the time. Such a system is often referred to as a hybrid system. Several studies from
Canada indicate that this is highly cost efficient. Wind power or photovoltaics may be added
to such a system for saving fuel. The higher the fuel cost, the more interesting is it to complement the system with a renewable energy sources. Hybrid systems are however complicated and require highly skilled operators.
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APPENDIX 3
APPENDIX 3: ELIGIBILITY CRITERIA FOR SELECTION OF SYSTEM

Eligibility criteria for selection of the appropriate technological system could be based on either social considerations, cost-effectiveness criteria or a combination of both. It has been
recommended in this report that rural electrification projects, in particular grid extensions,
should be based on cost-effectiveness criteria to ensure the overall sustainability of the
project.
Social criteria
Criteria can be expressed in a way giving preference for electrification of the more deprived
areas. This can be achieved by linking decision rules to poverty or other social indicators. For
example, in a Brazilian project socio-economic indicators such as a poor natural resource
base and few people were chosen as the main eligibility criteria. 38 A problem with social criteria is that they may be influenced by political interference, and they are likely to influence
the long-term sustainability of the project negatively.
Cost-effectiveness criteria
Cost-effectiveness criteria typically include distance to the existing grid, population size, affordability and productive potential. One example of using cost-effectiveness criteria is how
the Pakistan Rural Electrification Project selected communities.39 They selected communities
with I/K ratios > 24, with I being the population size and K the distance to the grid. A consequence of using cost-effectiveness criteria is that they are likely to promote the connection of
communities with less poor people. A cost-effectiveness approach can be justified due to its
emphasis on financial sustainability. 40
The 4 boxes below present a set of suggested rules of thumb for community selection, based
on cost-effectiveness criteria41. These rules do not take ability- and willingness to pay into
consideration. The rules can be used for a rough pre-assessment in a preliminary phase, but
more thorough analysis is needed for each particular project. For more information refer to
Sweco 2009.
Box 1: Rule of thumb for grid extension
Estimate the total number of potential connections* (N) in a rural community
Find the average distance (D) from the rural community to the centralized grid
Calculate the number of connections (N) per distance = N/D
N/D < 2 connections/km
=> Grid extension is not likely to be viable
N/D > 30 connections/km => Grid extension is likely to be a viable alternative (compared to
off-grid systems)
*
Normally households are the dominating customer group, but usually not all of them will connect. The existence of any high demand, industrial consumers must also be factored in.
38
IEG, 2008
IEG, 2008
40
IEG, 2008
41
Sweco, 2009
39
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APPENDIX 3
Box 2: Rule of thumb for single-phase versus three-phase configuration

Provided that grid extension is viable, estimate the total number of connections (N) in a rural
community. Find the average distance (D) from the rural community to the grid and calculate
the number of connections (N) times the distance = N x D
N x D < 1500 connections x km
=> Single-phase is likely to be the most viable option
N x D > 10 000 connections x km
=> Three-phase is likely to be the most viable option
Box 3: Rule of thumbs for isolated grids

Estimate the total number of connections (N) in a rural community within a 500 metre radius
from the rural community centre.
N > 100 => Isolated grid could be a viable alternative to grid extension or stand-alone systems.
Viability depends on load density.
N < 100 => Technically, an isolated grid could be the least cost solution. It may however be
challenging to sustain an adequate level of O&M as well as efficient cash management over time due to the limited size.
Box 4: Rule of thumbs for grid extension versus off-grid systems

Estimate the expected load of a rural community (L). Appendix 3 (Sweco, 2009) can be used to
evaluate the load demand of different users. Find the average distance (D) from the rural
community to the centralized grid.
Calculate an approximate installed capacity (P) for the off-grid system by multiplying the load
(L) by a factor of 1.5 3.0. System reliability increases with a higher multiplication factor.
Modest energy resources require a higher multiplication factor.
P < 0.7 x D
=> An off-grid system is likely to be the most viable option
P>3xD
=> Grid extension is likely to be the most viable option
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APPENDIX 5
APPENDIX 4: CROSS-SECTOR PLANNING APPROACHES42

Reference is made to the ESMAP web page for the full report:
http://www.esmap.org/filez/pubs/618200840844_technical_april08.pdf
Key planning steps in the systematic approach:
The systematic approach analyses in a specific rural area, the technologies used in the current production chains. It identifies bottlenecks and investigates whether the use of electricity
can contribute to reduce or remove the limiting factors.
The systematic approach to identification and promotion of productive uses of electricity is to
be implemented in five steps:
1) Identify the productive activities and the sectors in which they currently take place
in the project area
2) Analyse the production processes involved within the region of interest. Identification of the existing limitations and areas of possible improvements of these processes.
3) Analyse the role electricity can play and what equipment is required
4) Analyse the technical feasibility and economic and social viability of the electricity
based solution proposed
5) Implement a promotion campaign to communicate the gains that can be obtained.
Based on the results of the earlier analysis, the campaign should target specific
energy users and promote a specific use of electricity that can provide them with
clear benefits.
Key planning steps in the pragmatic approach:

The pragmatic approach aims at taking advantage of pre-existing opprtunities in a given sector or specific rural area. It is implemented when conditions are ripe for a project or activity
that would rapidly obtain sectoral gains from access to electricity
Key steps in the approach:
1) Identify the sectors that have activities currently taking place or about to take
place in the area of the RE project, and evaluate the impacts el could have on the
sectors output
2) Design and determine the costs of the electric equipment needed to respond to
the needs, both before and after the meter
3) Secure agreement among the stakeholders , decide on respective duties and modalities of cooperation, establish contractual documents and coordinate the teams
for implementation
42
De Gouvello 2008
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APPENDIX 5
APPENDIX 5: RURAL ELECTRIFICATION PERFORMANCE INDICATORS

Ihlskog (2008) has selected a set of indicators for assessment of RE projects that are quoted
below. Indicators that can be distinguished between female and male are marked (F/M).
Sustainability dimension
Technical development:
Economic development
Key variable
Operation and maintenance
Indicator
Efficiency
Conformance with national standards
43
Technical losses
Compatibility with future grid service
Availability of support infrastructure
Technical clientrelation issues
Daily operation services

Availability of services
Financial perspective
Profitability
Costs for operation and maintenance
Costs for capital and installation
Share of profit set aside for re-investment in electricity service business
Tariff lag
Development of productive uses
Social/ ethical development
Employment generation
Competition
Business development (F/M)
Number of electricity service organizations in the

area
Improved availability of
social electricity services
Share of health centres and schools with electricity

Number of street lights in the area
Share of public places and specialized businesses
where TV/telecom/ internet is provided
Credit facilities
Micro-credit possibilities available for electricity services connection
Equal distribution
Share of population with primary school education

(F/M)
Share of population with access to electricity (F/M)
Distribution of electricity client households in income groups (F/M)
Subsidies offered for electricity services
Share of economically active children (F/M)
Global impact
Share of renewable energy in production

Emissions of carbon dioxide from production
Local impact
Share of electrified households where electricity

has replaced other energy sources for lighting (F/M)
Share of electrified households where electricity
has replaced other energy sources for cooking of
main meals (F/M)
Any serious local environment impact identified
Environmental development
43
Share of electricity consumed by businesses

44
(F/M)
Share of electrified households using electricity for
income-generating activities (F/M)
Constituted by distribution losses, over-consumption by clients (flat rate) and thefts
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Organisational/ institutional development
APPENDIX 5
Capacity strengthening
Client-relation
Stakeholder participation
Share of staff and management with appropriate

education (F/M)
Degree of local ownership
Number of shareholders (F/M)
Share of women in staff and management
Staff turnover in organization (F/M)
Number of years in business
Share of non-technical losses (losses by nonpaying clients) (F/M)

Level of satisfaction with energy services
Auditing of financial reports on a yearly basis
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Norad
Postal address:
P.O. Box 8034 Dep, NO-0030 OSLO
Office address:
Ruselkkveien 26, Oslo, Norway
Tel: +47 22 24 20 30
Fax: +47 22 24 20 31
postmottak@norad.no
www.norad.no

Norwegian Development Assistance To Rural Electrification

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Norwegian Development Assistance To Rural Electrification

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Norad Report 18/2009 Discussion

Foto omslag: Ken Opprann, Rodolfo D. Gomes

Norwegian Agency for Development Cooperation

NORWEGIAN DEVELOPMENT ASSISTANCE TO RURAL

BEST PRACTICE GUIDE FOR PLANNING

OKTOBER 13, 2009

In close cooperation with:

LIST OF ABBREVIATION/ ACRONYMS

Community Based Organisation

Clean Development Mechanism

Development Cooperation Manual

Energy Sector Assessment Programme (UNDP/World Bank)

Energy Sector Management Assistance Programme (World Bank)

Human Immunodeficiency Virus / Acquired Immune Deficiency Syndrome

International Energy Agency

Independent Evaluation Group

Platform for Dialogue

Multi-Criteria Decision Method

Millennium Development Goals

Ministry of Foreign Affairs

Norwegian Agency for Development Cooperation

National Renewable Energy Laboratory

Official Development Assistance

Operation and Maintenance

Power Purchase Agreement

Result Based Management

Renewable Energy Technologies

Solar Home Systems

Swedish International Development Cooperation Agency

Sexually Transmitted Disease

Single Wire Earth Return

Utenriksdepartementet (The Norwegian Ministry of Foreign Affairs)

CONTEXT AND BACKGROUND .............................................................................................. 1-1

Norads rural electrification project ............................................................................................. 1-1

NORWEGIAN FRAMEWORK FOR RURAL ELECTRIFICATION PROJECT

IMPORTANT ELEMENTS IN PROJECT PLANNING............................................................... 3-1

Selection of an appropriate technology for rural electrification .................................................. 3-1

RESULT MANAGEMENT IN RURAL ELECTRIFICATION ...................................................... 4-1

Supporting tools ......................................................................................................................... 4-1

CONTEXT AND BACKGROUND

Norads rural electrification project

Chapter 1 is an introduction to the project and the report

Chapter 3 presents and discusses the critical elements in rural

Chapter 4 illustrates how result management can be used to

NORWEGIAN FRAMEWORK FOR RURAL ELECTRIFICATION PROJECT PLANNING

Clean energy for development, April 2007

Ren energi for utvikling. Tiltaksplan 2009-2012, Jan 2009

St.meld. nr.13 (2008-2009). Klima, konflikt og kapital.

Practical guides and manuals (Norad):

Development Cooperation Manual, 2005

Assessment of Sustainability Elements/Key Risk Factors:

Results Management in Norwegian Development Cooperation: A practical guide, 2008

Climate Change Risk Management: Practical Guide, 2008

Nordic Plus : Practical Guide to Delegated Cooperation, 2007

Working with Sector Development Programmes: Practical

Logical Framework Approach: Handbook for objectivesoriented planning, 1999

Guide for institutional cooperation, Norad, 2001

It is a fundamental premise that Norwegian bilateral assistance

IMPORTANT ELEMENTS IN PROJECT PLANNING

Selection of an appropriate technology for rural electrification

stand-alone systems. Smaller and local-based systems will to a larger

An isolated grid is a distribution grid that is energized by local power

Figure 1: Critical factors in selection of technology for rural electrification6,7