Global Environment Facility United Nations Environment Program Medium Sized Project Proposal Building Sustainable Commercial Dissemination Networks for Household PV Systems in Eastern Africa Using Shared Experiences to Help Companies and Consumers Develop Markets Final Version (6) Nairobi. Kenya June 2004 Submitted By Energy for Sustainable Development AFRICA, Ltd. PO Box 76406 Nairobi Telephone: 254-2-577942/575902 mhankins@esda.co.ke Energy for Sustainable Development, Africa PROJECT SUMMARY Project Identifiers 1. Building Sustainable Commercial Dissemination Networks for Household PV Systems in Eastern Africa; 2. GEF Implementing Agency: UNEP 4. Country eligibility: Country/ies in which the project is being implemented: Kenya Tanzania Uganda Ethiopia Eritrea Kenya: 30 August 94 Tanzania 17 April 96 Uganda 8 September 93 Ethiopia 5 April 94 Eritrea 24 April 95 5. GEF focal area(s), and/or crosscutting issues: 5. Operational program/Short-term measure: Climate Change Operational Program 6: Removing barriers and Reducing Implementation Costs to adoption of Renewable Energy. The project will share successful commercial experiences and experiences of GEF PV projects (including UPPPRE Uganda, ERT World Bank Uganda, PVMTI Kenya, UNDP-GEF Tanzania and WB-GEF Ethiopia) 7. Project linkage to national priorities, action plans, and programs: All of the countries proposed have stated explicitly in their energy policies and development plans that rural electrification is part of their national priorities. Government officials have welcomed a project building the commercial development of PV. In 4 of the countries GEF efforts to develop the PV market have begun or are in the planning stages. Eritrea. The sufficient, reliable and sustainable production and supply of affordable energy throughout Eritrea is the main objective of the Ministry of Energy and Mines in the energy sector (MoEM, 1997). The general policy is to provide energy services based on a diversified supply of energy sources. The policy aims at improving the living standards of the population through the provision of affordable energy. It goes on to state that the implementation of the policy must be mindful of the desire to halt, and in some cases, reverse the recent trend in environmental degradation, including climate change causing green house gases. Solar electricity is mentioned in policy documents as one of the environmentally friendly sources of lighting for households. Policy documents mention a policy goal ”To exploit the potential of renewable energy sources when the development is economical or when it complements the Government's social policy.” Much of the solar energy work is carried out by the Energy Research and Training Center of the Ministry of Energy and Mines (Habtetsion and Tsighe, 2001). The section below (from Habtetsion, 2001) lays out how ERTC is mandated to carry out this policy: The Energy Research and Training Center will continue to be supported in order to become a UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 2 Energy for Sustainable Development, Africa center of excellence in its research, training and promotional activities in renewable energy technologies, its specific roles being to: Collect data on energy needs and develop and maintain a data base of the geographic variations and potentials, and the climatic conditions conducive to renewable energy exploitation; Collect data on existing renewable energy technologies, including list of manufacturers and design an energy information system that can combine socio-economic data with technological and energy source potential information to enhance planning activities; Assess existing and new energy technology products and processes for suitability and effectiveness, and, when appropriate, adapting to meet local needs, rather than developing new products and processes; Offer various training programs for technicians in the energy sector; Promote public awareness of the potential of efficient energy appliances and processes and offer advisory services on renewable energy technologies; Identify and promote local business opportunities in the design, production, installation and maintenance of renewable energy products and processes; Provide an initial repairs and maintenance service to renewable energy products and processes, until such times as the private sector can fulfil that role. International co-operation and support will be stimulated for the development and installation of all renewable energy sources. Over 500 kWp of PV has been installed; virtually all of this is by donors and a Government energy center. There has been a number of training courses and installations, to raise awareness and bring about promotions, mostly coordinated by the Government energy center (which also maintains many of the country’s PV systems). IGAD conducted a market study for commercial PV solar home systems, a national stakeholder’s awareness workshop and an exchange visit for Eritrean entrepreneurs to Kenya. See the bibliography and stakeholders report in the Annex for more details. Uganda Uganda faces significant constraints to its continued rapid economic recovery because of the lack of adequate electrical power to meet economic and social demands. Less than 5 percent of Uganda’s population is served by the Uganda Electric Board (UEB), the national state utility that maintains and operates the national grid. Just over 85 percent of Uganda’s population reside in rural areas. Fewer than 15,000 rural households are connected to the grid, considerably less than 1 percent of Uganda’s rural population. Due to demand and pressure, UEB and Energy Department of the Ministry of Natural Resources is promoting the expansion and diversification of its rural electrification program. The strategy adopted by the Government’s Energy for Rural Transformation project (co-financed by the World Bank and other partners) is to provide energy services to rural people (1) using least cost methods (possibly with a one-time subsidy) and (2) using the private sector as a vehicle for the delivery of energy. Policy papers explicitly mention PV as a key energy source for those portions of the rural population, which are uneconomic to connect to the grid (see Uganda ERT Project Appraisal Document). The $1.2M UNDP-GEF Uganda Pilot Photovoltaic Project for Rural Electrification (UPPPRE) is close to winding up. The project conducted a number of technical courses for PV businesses, put in place a pilot finance program for companies and helped organize the industry into a working group (Uganda Renewable Energy Association). However, the project did not adequately address the need for linkages between Kampala and rural target areas, and the proposed project will build UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 3 Energy for Sustainable Development, Africa on the work of the previous project. The Energy for Rural Transformation project has been approved by Uganda parliament, and includes a considerable PV component. The proposed project will collaborate with this project by assisting companies to develop their sales outreach programs. The project will invite major stakeholders from to the project to participate in project activities. Further, it will, in policy and outreach activities, promote associated elements of ERT’s program, including smart subsidies for PV and co-financing of PV companies. In the target district (Rakai and Kalangala) it will assist companies to promote the ERT project benefits at grassroots levels. Further, it will share the successful elements of this program with other countries (especially the results of the smart subsidies in market development. See the bibliography and stakeholders report in the Annex for more details. Tanzania During the 1990s a profound transformation of Tanzania’ economy was initiated. Macro-economic restructuring and liberalization, as well as political and social reforms were initiated, of which some are still under implementation. The newly established Energy and Water Utilities Regulatory Authority (EWURA) is now revising the Electricity Ordinance and will prepare a bill for deregulation, licensing for Independent Power Producers, regulations, for unbundling of electricity sector into private generation, transmission and distribution utilities. In order for the energy policy to comply with the new framework of macro-economic policies and structural changes in the energy sector, the 1992 National energy policy was revised in 1999 and completed in 2000. The policy has been under review by various stakeholders and cleared by the Inter-Ministerial Technical Committee and is now awaiting Cabinet approval. In section 76, the policy paper acknowledges that utilization of solar energy in the country is still in its infancy. It makes a number of references to the use of solar PV and renewable energy in the provision of rural energy needs. New energy policy includes the establishment of “A “Rural Energy Fund” to meet the financial constraints of the rural energy supply, including renewable energy and rural electrification”. “Promotion of entrepreneurship and private initiative in the production and marketing of products and services for rural and renewable energy”. Ensure continued electrification of rural economic centres and make electricity accessible and affordable to low income customers. In Tanzania, a number of small initiatives have been conducted (mostly by NGOs) to promote PV (i.e. the Karadea Solar Training Facility). However, the size of the country and the isolation of many of the high potential areas (Mwanza, Mbeya, etc) have prevented development of the industry. The Dutch Government has approved a $500k two year project that will assist the development of joint Dutch-Tanzanian company. This company, Umeme Jua Ltd., has received a loan from the Triodos Renewable Energy for Development Fund , and expects to fully cooperate with the project. As well, UNDP-GEF is currently developing a PV initiative targeted for Mwanza and the lake region, and World Bank ERT has made initial contacts with the Tanzanian Government to establish a program similar to that of Uganda in Tanzania. Further SIDA has developed a multimillion dollar project aimed at building commercial infrastructure for PV. This GEF project will bring regional and international players to the Tanzania market, and help them to take advantage of the new PV projects and the emerging Tanzania market. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 4 Energy for Sustainable Development, Africa Kenya1 Kenya provides one model for commercial PV development. The industry has a strong private base, active promotional activities and creative sales – Kenya’s market has consistently stayed at about 500 kWp per year since 1998 (this is worth over US$6 million). Over 150,000 households (3% of the rural population) have a solar system. Other PV installations in the country include several hundred PV water pumps, institutional power systems, electric fencing, communication systems, and health center fridge systems. Real progress is being made in building sales to less affluent groups through customer credit and competitive pricing. Presently installed PV systems in Kenya (>3 MWp) displace on the order of 15000 tonnes/CO2 per year. In the region, the Kenya government has had the most proactive PV policy in the region (even if it is “hands-off”). Government policy statements since the early 1980s have consistently encouraged increased use of PV electricity. The government added solar energy to its entire national education syllabus in the late 1980s. It removed the 45 per cent duty on photovoltaic (PV) equipment in 1986. Unfortunately Government re-introduced duties and value-added tax (VAT), albeit on a lower level, on PV equipment in 1991 in a bid to increase government revenue. PV systems continue to sell in the thousands. However, applying import duties and VAT on solar systems is still arbitrary due to the ambiguous definitions of equipment and components set out by the Ministry of Finance. The problem is compounded by the lack of quality control and code of practices for PV systems and systems component. The government is in the process of addressing the above problems as it has just received a World Bank-funded report which: recommends an appropriate taxation regime for solar PV systems, components, spare parts and accessories recommends quality and service specifications and guidelines for solar PV systems and equipment, and recommends a mechanism for their implementation and dissemination. This report entitled “Study on Solar Photovoltaics (PV) Quality and Service Specification and Market Penetration” was presented to the Ministry of Energy in August 2001. Among others, the report recommends the use of rural electrification fund to further promote PV electricity in the rural areas. The IFC/GEF PVMTI project in Kenya (US $5 million) has introduced new methods of financing solar electric systems to address customer inability to pay high up-front costs for systems. The program is anticipated to finance 5 million dollars worth of PV systems between 2001 and 2002, but thus far no loans have been issued. PVMTI will test the potential for finance arrangements with solar home systems, and it is likely to open up a wider market. The project is targeted to address the needs of large companies, but is not addressing demand at local (i.e. community/district) levels. This project will cooperate with PVMTI by seeking to link up new markets with the finance sources that PVMTI is bringing to the table. It will also help the successes of PVMTI to be replicated in other countries. See the bibliography and stakeholders report in the Annex for more details. Ethiopia In 1994, the Government issued a new national energy policy intended to pave the way for privatization of energy services2. It was also intended to move consumers from consumption of 1 In this proposed project, Kenya will be a source region, rather than a target region. Positive (and negative) experiences of the Kenya PV experience will be shared with the other countries. Kenya will benefit from the project through the projects’ sharing of other country developments and through expanded access to markets of Kenyan companies. 2 IPPs up to 25 MW are now, theoretically, allowed to operate, though there is no experience. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 5 Energy for Sustainable Development, Africa traditional sources of energy to more modern ones, to “alleviate prevailing energy generation, supply and utilization problems”, to make energy supply more dependable and to reduce any environmental degradation caused by use of traditional and conventional fuels. In 2001-2002, the Ethiopian Government went through a process of reorganization, resulting in new operational and policy approaches to rural electrification. Up until 2001, strategies for rural electrification were limited to grid extension and isolated generator sets in rural centers. Like many African countries, Ethiopia has been late to actively incorporate the use of renewables into rural energy or electrification programs. EREPDC is the Government department charged with non-grid rural energy development and promotion. However, now the newly created Ethiopian Electricity Agency regulates implementation. In March 2002, a new draft rural electrification strategy was unveiled. The draft links rural electrification with rural development priorities. It relates provision of electricity with agriculture, health, education, water supply and promotion of the private sector, NGOs and community groups in rural areas. It provides a strategy basis for parts of RE program, including for institutional, technological, capacity building and financing. It also lies out how a Rural Electrification Fund would be created and administered, and its interface with a Government RE unit, users committees and EEA. As well, over the last 2 years, there has been a growing awareness among policy-makers and Government executing agencies about the role of renewables in power supply. There is general agreement that solar PV will play a role in rural energy development. Lessons from the IGAD household energy project have re-enforced this. In Ethiopia, there has been little “formal” commercial development work with PV. An IGAD project has conducted a number of activities to stimulate awareness and activity. These include 1) a PV market survey, 2) technical courses for equipment manufacturers and installers 3) business awareness meetings and 4) pilot installations for awareness raising in a high potential areas. The pilot work in Awasso (southern region) has resulted in the commercial sales of several score of systems, and results indicate that there is considerable repressed demand for PV among households in the country. A GEF project, under a much larger World Bank-supported program is proposed which will remove identified barriers through a combination of policy reform, mass promotion of technologies, and price reductions. A competitive market model for the dissemination of MHP and PV systems is proposed. The PDF-B grant proposal specifically mentions the role that this proposed UNEP-GEF project would play in strengthening its impact. See the bibliography and stakeholders report in the Annex for more details. 8. GEF national operational focal point endorsements (see attached letters in separate file) Eritrea Mesghena, Tekleab General Director Department of Environment Ministry of Land, Water and Environment Ethiopia Egziabher, Tewolde Berhan G. General Manager UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 6 Energy for Sustainable Development, Africa Environment Protection Authority Kenya K. Omudho, Benard O. Director National Environment Secretariat Ministry of Environment & Natural Resources Tanzania Rajabu, A.R.M.S. Permanent Secretary Vice President's Office Uganda Kassami, Chris K. Permanent Secretary Ministry of Planning and Economic Development 9 Project Objectives and Activities Project rationale Throughout East Africa, there is demand for modern electricity services from rural-based consumers. However, grid-based power has reached less than 5% of rural households and small market places in East Africa, and consumers are forced to pay extremely high rates for poor power services (i.e. dry cells, kerosene, generators) because they have no other alternatives. The unelectrified rural population constitutes a demonstrable, quantifiable demand for the electrical services that solar PV can often provide. Where household energy demand is low and homesteads are not located close together (i.e. where rural electrification is not practical), PV is often a cost effective way to provide power for lighting and amenities. The most sustainable and viable method of delivering solar PV products and services to rural markets is through the private sector. However, in many parts of East Africa, neither rural consumers nor key delivery agents are aware of the potential of the technology. Among companies, consumers, decision-makers and other stakeholders, a lack of understanding of the role solar PV in rural electrification is a primary barrier to the development of the industry. There are a number of successful East African experiences in the development and dissemination of PV, both commercial and technical from which the rest of the region can learn. For example, Eritrea has among the highest installed PV capacity per capita in the world, while Kenya has thriving commercial markets for PV. Meanwhile, Uganda, Ethiopia and Tanzania are set to embark on large GEF-funded PV projects. As these countries develop projects, it is important that they exchange experiences and learn from one another to avoid costly mistakes. This project will show how properly developed linkages between companies, consumers and communities can result in self-perpetuating markets for solar technology. In four countries, the project will strengthen the private sector’s ability to supply small PV systems to commercial markets in targeted districts. Replacing kerosene and petroleum-fueled grid expansion with PV can displace significant amounts of CO2 emissions and provide a “clean development” future. This project will build linkages between consumers and institutions on the one hand, and suppliers and installers of PV systems on the other. It will build awareness of the existing market for small PV systems in selected areas in each of 4 target countries. Through promotion and training activities focused in target regions, the project will assist stakeholders to develop sustainable UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 7 Energy for Sustainable Development, Africa commercial supply chains. The project will benefit: household consumers by providing them with competitively-priced alternatives for electric power national solar companies, installers and sales agents by helping them develop commercial business that will grow after the project institutions and small businesses by making available power systems for lighting, pumping, refrigeration and ICT power. policy makers by enabling them to see how other countries in the region and elsewhere in the world have built enabling environments for the PV industry regional and international solar PV suppliers by providing them information about markets and players in each of the countries. Finally, and perhaps most critically, the project will provide needed investment to growing companies to enable them to become sustainable enterprises. As part of its existing plan, Triodos Renewable Energy for Development Fund (TREDF) (formally Solar Development Foundation) seeks to invest $400,000 or more over the course of the project in companies which have the qualities necessary to prosper in the market. Much of the work of this project will revolve around selecting and supporting these companies, as well as others now emerging. Triodos Renewable Energy for Development Fund (TREDF) investments will ranging between $20,000 and $100,000 or higher, depending on the capacity of the company to absorb and repay the investment, the risks of the loan and the decisions taken by the TREDF board (which will have the final word in all investment decisions). The over-riding purpose of the TREDF loans is to invest in growing companies with soft loans, and to provide them with basic assistance, so that they can become more attractive for equity investment in the future. It should be noted that all TREDF decisions are made by the TREDF board, and that this project will not be able to make final decisions about loans for companies. It will be able to facilitate introductions and the development of agreements between companies and TREDF, and it is hoped that the Regional PV project will result in $400k of additional TREDF investments. Further, the project will be able to provide TREDF clients with technical support, in addition to other beneficiaries. See Annex for a description of the TREDF programs. During the PDFA activity, stakeholder workshops were held in each country to introduce the project and to solicit ideas on the development of the project. As well, stakeholders selected the districts in which the project would work based on the following criteria: Regular incomes from agriculture, mining, etc. High population density Accessibility of district for businesses Low grid expansion rate Demand for radio, TV and light The selected districts were are follows (see Workshop reports for each country for details): Uganda: Rakai and Kalangala Tanzania: Iringa Eritrea: Mendifera Ethiopia: Jimma There are a number of other projects in the region, both active and planned that can be complimented by this project. The project will endeavor to ensure co-operation and exchange of information throughout the duration of the project. These were discussed in the previous section. In particular the project will collaborate with the UNEP/GEF Renewable Energy Enterprise Development project as described below. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 8 Energy for Sustainable Development, Africa Linkages to the Proposed REED Project The project will cooperate closely with the proposed UNEP/GEF Renewable Energy Enterprise Development project. The REED project, as proposed, is targeted to assist in the development of renewable energy enterprises. It will be active in a number of African countries; Tanzania is the only one with which this project overlaps. Unlike the proposed Regional PV Commercialization, the REED project will focus on a number of renewable energy technologies. However, it is similar in that it proposes to help build business infrastructure, and works from the premise that building renewable energy businesses is a key method of promoting renewable energies. The proposed Regional PV Commercialization project will work closely with the REED project. First, upon approval, the project managers of the Regional PV project will meet with the managers of the REED project to discuss how the efforts can strategically assist one another and avoid duplication of efforts (the results of this meeting will be provided in a report). Secondly, the Regional PV Project will utilize the business training material that has been developed by REED and AREED in its business training packages. Thirdly, the Regional PV project will actively invite companies with which REED is working with the participate in training activities and conferences, particularly in Tanzania where the REED project will have activities. Finally, the Regional PV project will be able to assist REED PV entrepreneurs with specific information about PV as necessary, and to introduce them to Triodos Renewable Energy Development Fund, should they be in need of financing. Objectives: Indicators: The overall objective is to stimulate increased rural sales of PV by increasing consumer awareness and by sharing experiences between commercial markets and projects in region. Other objectives are to: Select, prepare and make investments in 510 PV companies with $400,000 of Triodos Renewable Energy for Development Fund finance This target investment $400,000 is for the region as a whole. Build linkages between East African country PV sector stakeholders, including companies, dealers, NGOs, rural energy projects and international companies. Increase involvement of international PV companies in the region by building awareness of potential markets, linking them with local players In each country, assist to develop market linkages between the major commercial center (Addis, Asmara, Dar, and Kampala) and a selected rural district. In each district, to increase awareness of PV among consumers, suppliers, sales agents and technicians. Increase in activity, number and diversity of national companies active on national basis in each country (target is to move from 3 to 5 in Eritrea, from 3 to 6 in Ethiopia, from 5 to 8 major players in Uganda and from 3 to 6 in Tanzania). NB Work focus will be to increasing capacity and linkages between rural and urban dealers and international and national dealers. Increase in number of PV dealers, technicians active at target district level. Two dealers to stock PV in each of the 4 target districts, 10 technicians to be involved in PV installation in each target district. 5 sales people to be involved in each target district. Increase in number of small solar PV systems sold and availability of equipment in target regions. At present, PV is not available. Target is to make PV available in a minimum of 2 shops in each district. $400,000 approved by TREDF board and invested in companies in the 4 countries. Investments will be made in a minimum of 5 companies (NB. This UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 9 Energy for Sustainable Development, Africa To develop local capacity to sell, install and service PV systems. outcome is subject to TREDF Board approval and not within the scope of the project) UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 10 Energy for Sustainable Development, Africa Indicators: Project outcomes: Increase in numbers of importers and linkages of importers with target regions. target is to move from 3 to 5 in Eritrea, from 3 to 6 in Ethiopia, from 5 to 8 major players in Uganda and from 3 to 6 in Tanzania). Companies will sell a total of $400,000 value of equipment to target areas over the course of the project. Increase in numbers of dealers of PV and 12VDC equipment at local level from zero to a minimum of two stockist/dealers per district Increased in numbers of trained technicians and sales people involved in PV installation in target regions. 10 technicians to be trained in PV installation in each target district. 5 sales people to be involved in each target district. Increased participation by international PV companies in the PV markets of Uganda, Tanzania, Eritrea and Ethiopia. As a direct result of project activities, installation of more than 750 PV solar home systems in the targeted districts, and a measurable growth in the rural PV sales in Uganda, Tanzania, Eritrea and Ethiopia. Five years after the project, we expect that 3000 systems will have been installed in the 5 districts. Increase in number of collaborating finance groups interested in developing finance schemes for PV and sustainable rural energy. Target is one pilot finance program in place in each target district with a total loan value of $50,000. At present there are no PV loan programs in place. Increase in numbers of systems sold. Project targets combined sales of 750 PV systems (SHSs) in 4 target districts over period of the project, worth a total of over $400,000. Increased levels of transactions between importers, manufacturers and distributors active at the national level and regional businesses. Target is a total of $400,000 worth of business in the target districts, and increase of 80%. Numbers of policy makers that attend workshops Actual changes in duties, taxes, or policies towards PV/rural electrification in target countries. Documents forwarding the harmonization of policies in the region. Number of relationships between An operational commercial delivery route in place between the capital city and one rural district of each country. This will include: • at least one national importer, • several dealers in the target district, • at least ten technicians and sales agents in the target district, • interested community development NGOs • interested micro-finance groups and • hundreds of potential PV customers Educated PV businesses in cities of each countries that are actively seeking to develop commercial rural markets A network of influential policy makers --- who are aware of the necessity of including PV in rural electrification plans and will actively lobby for such plans. The project will reduce carbon emissions from kerosene lanterns in 4 districts. From systems installed within the project timeframe, a relatively small amount of reductions would be experienced (i.e. <300 tonnes/year per district). However, there are two points that need to be considered: a) if each of the PV sectors continues to grow sustainably, within 5 years the 4 target districts would have a combined cumulative CO2 displacement of almost 6000 tonnes from 3500 installed systems. b) If the companies applied the methods learned to other districts, we would expect the CO2 displacement to be 5-10 times that experienced in the target districts. Ethiopia would be likely to surpass Kenya’s present level of 15,000 tonnes/year displaced due to PV systems UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 11 Energy for Sustainable Development, Africa international traders and target countries. Direct communication between international PV companies and national/urban based PV dealers. Reduced carbon emissions from kerosene lanterns (2400 tonnes CO2 displaced over period of the project). Much larger amounts due to spillover affects of the project. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 12 Energy for Sustainable Development, Africa Planned activities to achieve outcomes Activity A: Management and Technical Support A management team will be put in place to lead the project over its two-year duration. The team will consist of a project director (25% time), a project field manager (100% time), 4 in-country consultants for each country (25% time) and a technical team. For other activities, assistance will be out-sourced. Indicators: Team identified and in place to manage project in each country. All contracts, ToRs and agreements prepared. Final work plan prepared. The project management team will make regular trips to the participating countries. As planned, the team will visit each country 8 times over the course of the project (i.e. once per quarter). The management team will be experienced in the PV industry, and will, in addition to running the day-to-day activities of the project, serve as facilitators who are able to provide both technical advice and business assistance to companies. The management team will have the following responsibilities Identification and hiring of consultants, promotion agents, and other project related assistance in each country Production of site specific work plans. Day-to-day management and coordination of the project. Technical input as required. Interface of project with private sector, multilateral projects, GEF-UNEP. TOTAL COST: $334,740 GEF Contribution: $334.740 TREDF Contribution: $0 Company Contribution $0 Activity B: PV SHS Trade Fair and Project Kick Off Meeting A meeting will be held in Nairobi at UNEP to examine progress and prospects for PV in rural electrification in East and Southern Africa, focusing especially on commercial successes. Approaches used to develop rural PV markets in Africa and elsewhere will be explored. This will be the first of 3 meetings (see below). Meeting report prepared which contains: Analysis of PV experiences in each country so that there is complete baseline data for the project. Financing case studies SHS technology updates Sales and marketing case studies UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 13 Energy for Sustainable Development, Africa The meeting will invite stakeholders from each of the participating countries, emphasizing the involvement of the private sector, including Triodos Renewable Energy for Development Fund clients. It will look at the “state of the art” of PV for SHS in the world and each participating country. The 2 day meeting will have workshops in the following topics: Financing. This session will examine successful models of SHS finance, and will present case studies. Technology. This session will examine types of equipment available for the SHS market, and present and future trends in equipment sales. Promotion. This session will present successful marketing and sales case studies from the region and elsewhere. Policy. Harmonization of duties and taxation, subsidies, and relevant Government policies will be discussed. Standards. There will be sessions on progress that each country (and/or project has made on standards as well as methods of harmonizing them regionally. Multilateral programs and their stakeholders. Presentations by WB (ERTUganda, Energy Access Project –Ethiopia and Mozambique and others) and UNDP Tanzania. Projects will be explained, giving role of PV in rural electrification. As well, the outputs and lessons of such programs as the UNEP-E&Co AREED initiative will be discussed. The meeting will host a trade fair, inviting interested companies to set up stands demonstrating their products. It is hoped that a meeting in Nairobi with participation from PV companies all over the region would attract major international PV and BOS suppliers. Policy report Briefs on active solar PV projects in the region Lists of companies and products available Detailed project work plan produced and distributed to project team (management, consultants, partners) At the end of this 2.5 day meeting, a one-day project kick off meeting would be held with the project team from each country to plan project activities. TOTAL COST: $36,800 GEF Contribution: $11,000 TREDF Contribution: $17,000 Company Contribution $8,800 Activity C: Market Assessment in Target Regions of each Country. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 14 Energy for Sustainable Development, Africa To meet the objective of building capacity and awareness at district level, the project will hold a series of activities in each target district which involve private sector stakeholders. The target districts, as identified during stakeholders meetings in each country are: Target District/Regions Uganda: Rakai and Kalangala Tanzania: Iringa Eritrea: Mendifera Ethiopia: Jimma A baseline survey for each country and market study will be conducted in each district. The markets study of each district will: Identify population sectors willing and able to afford systems. Aggregation of demand in kWp, projection of demand growth. Identify existing market and base of installed systems. Survey use of DC appliances and battery Develop market profile including SHS consumers, businesses, NGOs, etc. Assessment of system sizes demanded and demanded. Assessments of finance players in district and their interest in working with project. Development of relationships. Identification of potential outlets, sales people and technicians in target district. Market report and study prepared for each country. Copies distributed to companies and organizations working in target districts. Meeting held in each country and target district to discuss output and implication of market report. Awareness seminar about PV and SHS held in each target area During this activity, initial awareness raising seminars about PV and 12VDC appliances will be held Local consultants will manage this activity. Companies will be actively encouraged to participate in this activity and to begin forming relationships with agents and technicians. TOTAL COST: $11,880 GEF Contribution $7,740 TREDF Contribution: $0 Company Contribution: $4,140 Activity D: Business Opportunity Awareness Raising, Business Assistance and Investments in Companies This portion of the project will be financed and managed by Triodos Renewable Energy for Development Fund -- in close collaboration with TREDF trips to each country to meet companies, introduce TREDF program, and shortlist viable companies UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 15 Energy for Sustainable Development, Africa the project team. The project will seek to increase TREDF investment in the region by over US$ 400,000, through identification of 5 to 10 additional companies that would not be included in their portfolio. This investment will be entirely dependant on (1) the financial climate in each country, (2) the existence of viable companies (TREDF has already identified a number) and (3) the approval of these companies by the TREDF board. It should be noted that this investment has already been mobilized and committed and that TREDF is already actively seeking to engage companies to build PV business. The efforts of this project will complement the TREDF strategy by building linkages upward (i.e. with international companies), laterally (i.e. with regional companies) and downward (i.e. into rural market areas) in ways that are presently not being done. This project will seek to “open the eyes” of businesses to the potential and real markets that are in rural areas. One-on-one meetings with PV companies to assess their capacity to absorb investment and grow $400,000 invested in 5 to 10 companies in the region by Triodos Renewable Energy for Development Fund . Note that this is fully dependant on the approval of TREDF board. Management and business development assistance rendered to selected companies The activity will raise awareness among companies about the potential for PV SHS business, particularly concentrating on opportunities in each of the target districts. It will be an interactive process focusing on several major sub-tasks: Raise awareness among the urban business community of the potential of the PV market Present the results of the recently completed PV SHS survey Highlight viable business areas Build business linkages among PV businesses locally (i.e. with battery manufacturers, appliance suppliers, etc.), “upward” (i.e. regionally and internationally) and “downward” (i.e. into the target district). Provide assistance in the specialized nature of the PV businesses Assistance to develop and execute business plans, particularly where the project is active. Management training This activity will incorporate the experiences of other organisations and activities, such as REED, other PV projects and experiences. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 16 Energy for Sustainable Development, Africa Triodos Renwable Energy Development Fund, ESDA, and local consultants will develop resource delivery methodology. TOTAL COST: $400,000 GEF Contribution: $0 TREDF Contribution: $400,000 Company Contribution: $0 Activity E: Technician and Sales Training In order for PV to be taken up by companies in the target district, a minimum level of technical and sales capacity must be in place. Technical and sales training courses will be facilitated in each country, based on the priority needs of each country and its stakeholders. These courses will be held in the target districts, involving local people and companies. Training of trainers sessions will be held in a central location (one each for SHS technical training and SHS sales) with pre-selected instructors from each country. The purpose of the ToT will be to enable one or more key trainers from each country to be able to return to the country and conduct training courses. Basic installation training courses will be held in each country using the instructors trained in the above-mentioned ToT. The purpose of these courses is to give private sector-based installers practical skills and knowledge of SHS installation, design and after-sales service. Technicians will be instructed on how to train end-user to maintain and service systems as well. Participants will include installers, system maintenance and marketing personnel from participating companies and NGOs. Criteria for participation in the courses will include (1) having minimal academic or experience qualifications (2) likelihood of participant working in target district after completing course, (3) ability to contribute to cost of course, (4) existing links with participating businesses. The local consultants and project officers will make decisions for choice of participants in training courses. Training of Trainer course held in central location for SHS installation and PV sales. 10 trainers representing all 5 countries attend. Training course manual and kits distributed to three participating companies in each country. One or more trainer with capacity to run sales and technical training in each country. Basic installation course held in each target region (at least one course, though individual companies may hold more) attended by 10 installers from target region. Sales and PV agent support courses held in each country and in target region. At least 10 people from each target region and participating companies attend. AREED Business Information packages, developed under the AREED project, will be distributed at these sessions. Basic sales and marketing courses will be held with participating distributors and agents. This course will teach interested local agents about the SHS and PV technologies, methods of selling, displaying UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 17 Energy for Sustainable Development, Africa and planning market programs. The involved groups will be encouraged to market and install systems, according to business plans developed by companies in the business training work. The training courses will be synchronized with other elements of the project to reduce travel costs. TREDF has expressed a willingness to cofinance some of this activity for selected companies, though it is not included in the existing budget. The project will also approach other entities (companies, projects, etc. to seek co-funding for these activities). TOTAL COST: $81,440 GEF Contribution: $75,000 TREDF Contribution: $0 Company Contribution: $6,440 Activity F: Country PV Trade Fairs and Seminars Over the course of the project, three international “PV fairs” will be held (the first is the meeting in Nairobi described in Activity B) to help regional companies refine their product offerings on a local basis. Meeting held in Uganda and attended by major stakeholders including 5 international PV companies, GEF projects from Kenya, Tanzania, Uganda and Ethiopia, major customers financiers, etc.. Seminar report prepared One meeting will focus on PV SHS and the variety of equipment available (to be held in Uganda). It will coincide with a regional meeting on PV policy (see Activity I) One meeting will focus on local manufacturing opportunities and consumer demand for PV appliances (to be held in Tanzania)). It will coincide with a regional meeting on PV finance opportunities (see Activity J). Meeting held in Tanzania and attended by major stakeholders including the international PV companies, GEF projects, major customers financiers, etc.. Seminar report prepared These meetings will provide opportunities for international, regional and local companies to interact, form business linkages, and learn from each other. It is crucial that representatives of the major PV companies, balance of system suppliers and major projects are attracted to these meetings. These meetings will provide updates on standards and code-of-practice development in each country. These meetings will give international and regional companies full overview of active UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 18 Energy for Sustainable Development, Africa markets and projects. They will include: 1 day formal presentations from selected PV companies and case studies 1-2 days exhibition and individual meetings and demand driven side events (i.e. country meetings, project discussion meetings) After one of the meetings the project will conduct the sales training ToT (see Activity E). TOTAL COST: $46,300 GEF Contribution: $22,800 TREDF Contribution: $22,500 Company Contribution: $1,000 Activity G: Inter-Country Exchange Visits & Information Exchange The purpose of the exchange visits and information exchange is to provide entrepreneurs and other stakeholders with a broad view of how various experiences and projects have overcome market barriers. It is proposed that visits be made to two countries that have mature PV industries. Kenya and Sri Lanka are proposed as viable models that provide important lessons but are distinct from each other. Regional Visits. PV entrepreneurs and key stakeholders from Uganda, Tanzania, Eritrea, Kenya and Ethiopia will be invited on several day study visits to learn how successful solar home system markets developed and how they presently operate. Key among these will be visits Kenya, where there is a US$10 million PV market in place. Entrepreneurs will visit consumers in the field, regional agents in small towns, and distributors in large towns, as well as key project and NGO players. At the end of the visit, they will have a clear idea of how the market operates, as well as the positive and negative aspects of the model. Study visits to the Kenya market will be made during the Kenya trade fair. International Visit A team of key players from the region will visit a successful commercial PV market in an Asian country (Sri Lanka is suggested). The trip will focus on business models, consumer relationships, warranty and QC issues, financing schemes, industry associations, etc. The Visit to Kenya market held for 12 interested entrepreneur during “kick-off” meeting. 12 entrepreneurs adopt practices and ideas encountered during visit Visit to acceptable country held 12 for selected entrepreneurs. Entrepreneurs adopt practices and ideas encountered during visit UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 19 Energy for Sustainable Development, Africa purpose of this visit is: To see how Asian companies have driven down prices and delivered equipment by concentrating on volume sales (Asian prices are much less than those of Africa) To critically assess how the private sector has worked with successful GEF projects, focusing particularly on how projects have built the market through use of quality control, industries associations, business loans and micro-credit and subsidies and grant. To examine how finance, policy, technical training, quality control, industry association formation and awareness raising has been done in these countries. To build business linkages between traders in Sri Lanka, Asia and Africa Information from the AREED business experience will be circulated as part of this outcome. Entrepreneurs will be expected to co-finance their own hotel and DSA costs during the trip. The project management team and TREDF representative will select entrepreneurs for international visits. Criteria for the selection of participating entrepreneur will include: Demonstrated activity in PV business in the country Quality business plan/proposal for development of PV in their country Demonstrated ability to co-finance DSA and hotel expenses Participation in the target district PV development activities Demonstrated capacity and interest in building the PV market Solid company financial base, including audited accounts, etc. Solarnet issues circulated to 100 additional businesses in the region with useful information about the industry. Solarnet reports on country visits provided to project management. Information Exchange Access to information is key for companies to grow and expand their markets. The project will provide participating companies with access to technology information and finance information through its regular activities. Two year subscriptions of Solarnet magazine will be provided to all participating stakeholders, The purpose of the proposed activity is to use Solarnet magazine as a vehicle for sharing information about PV in the region. Solarnet staff will produce regional supplements --- i.e. additional material over and above the magazines’ normal material --- 8 times over the UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 20 Energy for Sustainable Development, Africa course of the project. These supplements will be coordinated with project activities as they occur. They will explain project activities (as well as other PV projects and initiatives) to companies, finance groups, Government, and NGOs. The proposed budget includes extra funding to allow the magazine to reach 100 more stakeholders (i.e. over and above its present subscribers). Four of these supplements will focus on the PV industry of the involved target countries (Ethiopia, Eritrea, Uganda and Tanzania).. They will contain lists of active players, descriptions of markets, articles about experiences unique to the country. They will explain how companies and interested parties can benefit from on-going activities. As indicated in the budget, Solarnet magazine will visit each country at an appropriate time to research the status of the industry, to identify stakeholders and to collect information about on-going projects and opportunities. The project will also distribute resources, including the SDG PV Entrepreneur’s Handbook and the AREED Business Planning guide. TOTAL COST: $58,850 GEF Contribution $53,850 TREDF Contribution $0 Company Contribution $5,000 Activity H: Region-Based Awareness Raising and Promotional Campaigns The major barriers that the project is seeking to address in the target regions are a) the lack of awareness of the SHS technology (as opposed to larger community systems) and b) the lack of business infrastructure to deliver SHS and small PV systems to the target rural. To overcome these barriers, the project will work closely with entrepreneurs in the target area and at the national level to develop delivery through existing outlets. A series of promotional activities will be held in target areas that introduce and demonstrate PV SHS technology, get local businesses interested and provide an opportunity for villagers to see, understand and purchase solar home systems. At the same time “awareness raising and promotional” community or income generating systems (at a “first-time” buyer discount) will be installed to At least 3 – 5 systems will be installed for larger uses for awareness raising and promotion (schools, video cinema, battery charging, etc) depending on the desires of the community A minimum of 30 PV systems installed in each target (total of 120 in project) by local companies and technicians. Maintenance contracts in place for all systems. Over course of project, 750 customers purchase systems on a cash basis within target districts. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 21 Energy for Sustainable Development, Africa provide awareness raising and promotion. Companies and technicians (identified and trained through the project) will be fully involved in this campaign. The promotion campaign will primarily use the following mediums, depending on the needs and preferences of each country: Drama: Short plays promoting solar home systems will be written and adapted for each country. Acting troupes will translate play into local languages, and train local actors to present it. Radio: Programs about solar will be created. Plays will also be adapted for radio. Support for radio campaigns will be sought from local companies. Brochures: General brochures promoting solar home systems as an alternative for rural electrification will be produced in local languages. These will be used on a national level (i.e. distributed by energy centers and by regional Governments) and as a key tool during the promotional campaign in target districts. The project will also distribute approved brochures supplied by participating companies. Banners and posters: Banners and/or posters will be produced to encourage use of solar home systems. These will be used during promotion campaigns and erected permanently in the villages. Each company will develop its own portable awareness raising and promotional exhibits during the project. These will be utilized by companies and technicians to exhibit the products each company has on offer. Each company will be encouraged to use any of their own promotional material during the project promotional campaign. Even though PV is fairly well known at the national level, it is still relatively unknown as a consumer product at district levels in Ethiopia, Tanzania, Eritrea and Uganda (especially in the districts targeted for the project). This project will use awareness campaigns (see above) and promotions to help “kick-start” the PV SHS market in the selected target districts. Units to raise awareness and promote the technology will be strategically placed and designed so that they show how PV can be cost-effective and attractive for rural customers (including both households and small UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 22 Energy for Sustainable Development, Africa businesses). Units for raising awareness and promotion of the technology will be provided through local PV suppliers at an attractive rate to encourage “early-adopters” to take them up. Additional financing could be sought through Activity D. Minimum standards will be enforced by the project when selecting installation companies and maintenance contracts will be set up with each system installed. $15,000 in funds will be available in each of the 4 target districts in order to allow the project implementers to creatively place systems in the market through the new channels being developed by the project to raise awareness and promote the technology. These funds will partially support purchase of systems from participating dealers in each district. Such systems will be used in the awareness raising and promotional campaigns described above. The systems will be sold to early adopter endusers in the districts on condition that the endusers allow the campaigns to make use of them during project activities. System installation for awareness raising and promotion will be managed in conjunction with the other promotion activities described above. The local partner will coordinate this activity with Government offices, companies and NGOs. TOTAL COST: $268,320 GEF Contribution: $203,520 TREDF Contribution: $0 Company Contribution: $64,800 Activity I: Policy Workshops Each East African Government has a different rural electrification strategy, as well as different approaches to PV duties (or subsidies), standards, and capacity-building. This project will bring together players working on PV within Governments and projects to discuss the current status of PV technology and their Government’s policy with regard to the technology. Policy workshop held Report prepared and distributed to relevant stakeholders Once key people are aware of what is happening in neighboring countries, they will be able to discuss regional potential for harmonization of policies and ways that there can be a shared benefit from major projects. The project will hold one policy workshop which UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 23 Energy for Sustainable Development, Africa will enable policy makers to exchange experience in: Duty and tax regimes Standards and codes of practice Subsidies/Rural Electrification policy Capacity building Licensing procedures etc Project experience and policy As well, the potential for harmonization of policies and taxes using regional trading blocks (e.g. EAC, COMESA) will be discussed. TOTAL COST: $9,950 GEF Contribution: $9,950 TREDF Contribution: 0 Company Contribution -0Activity J: Finance Workshops Previous projects have shown that it takes quite a bit of time to build up awareness of potential PV finance partners, especially at local levels. Even with dedicated projects (i.e. PVMTI, UPPPRE), it still takes considerable effort to convince conservative finance institutions to take up new products. Finance workshop held Report prepared and distributed to relevant stakeholders This project help to create PV financing opportunities in two ways: Catalyzing links between finance players in each country and in the target districts (this will be especially important in Tanzania, Eritrea and Ethiopia) Sharing of country experiences in PV and SHS finance. One international workshop on regional PV finance will be held (institutions like the World Bank, AREED and TREDF will use these opportunities to explain their programs) The project will develop linkages between larger financing players --- including Triodos Renewable Energy Development Fund/PVMTI and regional financiers (i.e. country-based finance organizations) and local players (i.e. Savings and Credit Associations, consumer credit groups, dealers, etc). TOTAL COST: $9,950 GEF Contribution 0 TREDF Contribution $9,950 Company Contribution 0 Activity K: Monitoring and Evaluation Monthly reports prepared UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 24 Energy for Sustainable Development, Africa The project management team will prepare monthly progress reports that will be assembled into semi-annual progress reports. The project steering committee will meet 5 times over the course of the project (i.e. at project commencement again after six months, at the project mid-term, after 6 months, and again at the end of the project). During steering committee meetings, progress reports will be carefully evaluated. They will then be forwarded to UNEP. At the end of the project a final report will be compiled by an independent consultant, and submitted to the project steering committee for final review. Steering committee meetings 5 times over the course of the project Semi-annual progress reports prepared and submitted to UNEP-GEF Final evaluation exercise completed and report prepared TOTAL COST: $20,350* GEF Contribution $20,350* TREDF Contribution 0 Company Contribution 0 *Not included in project budget 12. Estimated budget (in US$ or local currency): PDF: GEF: Co-financing: TREDF Company contributions: Total: 13. Information on project proposer: Energy Alternatives AFRICA, Ltd. PO Box 76406 Nairobi, Kenya Tel. 254-2-714623/ Fax/Tel: 254-2-720909 Email: <energyaf@iconnect.co.ke> US$ 24,400 US$: 693,600 US$ 449,450 US$: 90,180 US$: 1,257,630 Established in 1993. Became a 50% owned joint venture of Energy for Sustainable Development (UK) Ltd. in 1998. ESDA is locally registered in Kenya as a limited company active in the area of energy and development consulting. has a full time staff of 8 consultants and support staff with expertise in rural energy planning, project design and management, energy management, off-grid system design and installation and renewable energy training. Board of Directors: Mark Hankins (Chair, American) Daniel Kithokoi (Kenyan) Bernard Osawa (Kenyan) Stephen Mutimba (Kenyan) Mike Bess (ESD UK) Jeremy Doyle (ESD UK) ESDA’s mission is to help build local sustainable energy infrastructure by providing technical, policy, training and management expertise in Eastern, Southern and the Horn of Africa. We work UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 25 Energy for Sustainable Development, Africa in partnership with clients ranging from local communities to industry to international organizations to help them choose energy options appropriate to their needs. Energy for Sustainable Development AFRICA, Ltd. is a joint venture of Energy for Sustainable Development. ESD and ESDA’s combined turnover is over US$2 million per annum from a variety of clients including : World Bank European Union Dutch government Kenyan government IGAD DFID GTZ UNDP GEF Small Grants Kenya USAID IUCN ITDG Shell Foundation Winrock International Ashden Charitable Trust Commonwealth Science Council (UK) Various Kenyan hotels and institutions including Safari Park Hotel, Mater Hospital, Crater Lake Hotel and others. Booker Tate Ltd. ESDA/ESD has been involved in planning of GEF activities for the World Bank and UNDP in Mozambique, Uganda, Ethiopia, Tanzania and elsewhere. ESDA’s managing director serves on the board of the Kenya UNDP GEF Small Grants Program. ESDA is currently managing several PV technology commercialization projects in the East Africa region. On behalf of IGAD and the European Union, ESDA is currently working with companies in Ethiopia (Addis and Awasso) to increase develop the market for PV in the region. The project is scheduled to end in October 2001. The project also includes promotional work in Eritrea. ESDA is working for the Dutch Government’s PSOM project in Tanzania. The project is helping to establish a Dutch-Tanzanian solar PV company. ESDA is providing expertise on market development and technician training. ESDA was recently hired on a 2-year USAID-funded project managed by ADRA to assist in development of renewable energy infrastructure in Puntland, Somalia. Other ESDA projects include: Renewable energy training: ESDA has more than a decade of experience in training technicians, NGOs companies and projects about all aspects of renewable energy technology. ESDA has conducted PV training courses in Kenya, Uganda, Malawi, Zimbabwe, Somalia and Tanzania for UNDP-GEF, IGAD, the European Union, GTZ, DANIDA, the Commonwealth Science Council and private companies Renewable energy promotion and company assistance: ESDA has designed , installed and supported PV systems in Tanzania, Kenya, Uganda, Malawi, and Somalia for a variety of clients. ESDA designs and installs appropriate sustainable energy systems for applications ranging from hospitals to ecotourism to remote households. Promoting small- and medium-scale renewable energy enterprises is a key to developing the overall infrastructure of solar energies. ESDA has assisted in the incubation of scores of businesses in the region. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 26 Energy for Sustainable Development, Africa Financing of RET businesses and end-users: ESDA has worked with a number of finance groups to catalyze finance programs that meet the needs of rural communities and businesses alike. ESDA designed and ran a project for ESMAP/World Bank to establish a pilot solar home system loan program in Kenya (1995-98). In 1996, ESDA worked on a pilot solar home system loan project in Kasase Uganda funded by the US Department of Energy. Product design and test marketing: ESDA works in partnership with local and international groups to develop new RET products that meet the specific needs of the region. Through test marketing initiatives we help companies ensure that products will be successful. Recent projects include test marketing of lanterns (funded by DFID/ITDG and the World Bank) and development of smaller batteries and specialized PV products for the Kenya market (ESMAP/World Bank and European Union). Market study: ESDA conducts market studies for RET products throughout the East African region. We have conducted PV market studies in Ethiopia, Eritrea, Kenya, Tanzania, Uganda and Somalia for ESMAP/World Bank, the Dutch Government, the European Union and others. Clean Development Mechanism. ESDA/ESD is working with Booker-Tate and the Prototype Carbon Fund to develop East Africa’s CDM project. The proposed project (which has been issued a letter of intent by the World Bank) is a grid-connected 15 MW cogeneration plant fueled by bagasse from sugar outgrowers in Busia, Kenya. Improving biomass production, conversion and end-use technologies: ESDA uses proven, commercially-viable project methods to catalyze better management of forest resources in East Africa and the Horn of Africa. ESDA recently completed a project introducing improved charcoal stoves in Somaliland and Puntland that was funded by IUCN/EU and the British Lotteries. 14. Information on proposed executing agency (if different from above): (information on the entity that will actually execute the project should be written here) 15. Project concept submission date: December 2001 16. Project Identification number: to be determined 17. Implementing Agency contact person: Ahmed Djoghlaf, Director, DGEF; email:gefinfo@unep.org UNEP, P.O.Box 30552, Nairobi, Kenya 18. Project linkage to Implementing Agency program(s): The United Nations Environment Programme has initiated an African Rural Energy Enterprise Development (AREED) initiative. AREED seeks to develop new sustainable energy enterprises that use clean, efficient, and renewable energy technologies to meet the energy needs of under-served populations, thereby reducing the environmental and health consequences of existing energy use patterns. The AREED approach offers rural energy entrepreneurs a combination of enterprise development services and start-up financing. This integrated financial and technical support allows entrepreneurs to plan and structure their companies in a manner that prepares them for growth and makes eventual investments by mainstream financial partners less risky. What AREED has to offer includes: - Training and tools to help entrepreneurs start and develop energy businesses - Enterprise start-up support in areas such as business planning, structuring and financing - Seed capital for early stage enterprise development - Partnerships with banks and NGOs involved in rural energy development Tanzania is the East African country involved in this project. Other countries involved include Botswana, Senegal, Mali, Ghana, Zambia. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 27 Energy for Sustainable Development, Africa Project Description (maximum 5 pages) 9. Project rationale and objectives: In rural Africa, there is demonstrable, quantifiable demand for the electrical services that solar PV can provide. Where household energy demand is low and homesteads are not located close together (i.e. where rural electrification is not practical), PV is often a cost effective way to provide power for lighting and amenities. The most sustainable and viable method of delivering solar PV products and services to rural markets is through the private sector. However, in Africa connecting the market demand (middle and high-income rural people) with product supply (usually companies in cities) requires a sustained effort that addresses (and sometimes creates) all links of the commercial supply chain. The private sector will not develop existing demand on its own, without strategic assistance. Energy for Sustainable Development, Africa proposes to use proven, commercial practices to help develop the PV supply sector through a sustained program that combines investment (on the side of TREDF and other finance groups) and market stimulation in rural areas. The project will overcome the major incremental barrier faced by companies, which is a lack of finance to invest in market building. In all 5 of the countries involved in this project, Government bodies have recognized solar electricity as a useful technology for rural electrification. In fact, Kenya, Uganda, and Eritrea already have significant experience with rural PV, while Ethiopia and Tanzania are presently developing large-scale projects. However, the private sector for PV in the latter 4 countries is still relatively undeveloped. This project will show how properly developed linkages between companies and communities can result in self-perpetuating markets for solar technology. Replacing kerosene and petroleumfueled grid expansion with PV can displace significant amounts of CO 2 emissions and provide a “clean development” future. The purpose of this project is to improve the commercial delivery of PV systems to rural areas by facilitating links between international suppliers, regional importers and manufacturers, local dealers and local equipment markets. The strategy of the project is to create “commercial delivery corridors” for solar equipment between capital cities and high potential rural markets in each of the countries. The project will demonstrate how, once various parts of the delivery infrastructure are in place, PV solar home systems can be traded on a non-subsidized sustainable basis. The project will exchange experiences between countries in East Africa, encouraging all stakeholders but particularly companies and policy makers to take up bestpractice positions. The overall objective of this project is to stimulate increased rural sales of PV by increasing consumer awareness and by sharing experiences between commercial markets and projects in region. Specific objectives are to: 1) To create awareness and to put in place the required technical capacity to market, design, install, maintain PV systems for small needs in one rural district of each country. To assist to develop market linkages between the major commercial center (Addis, Asmara, Dar, Kampala) and a selected rural district. The project will create a sustainable “commercial corridor” of PV supply between importers, dealers and rural consumers in a high potential district. If there is an interested micro-finance group, the project will also attempt to catalyze microfinance in each of the countries. This awareness raising and promotion will assist stakeholders to further develop the market in other localities. 2) To raise awareness among policymakers and development partners about the role for PV as a part of rural electrification in all countries, and to share policy experiences between the countries UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 28 Energy for Sustainable Development, Africa 3) To build linkages between East African country PV sector stakeholders, including companies, dealers, NGOs, rural energy projects and international companies. To assist commercial companies to develop viable PV businesses in each of the countries, to share successful models, and to enhance trade and information links between neighboring countries 4) To encourage international PV companies to participate in the development of the business in East Africa by building awareness of potential markets and by linking them with local stakeholders 5) To identify and assist companies that are eligible for TREDF finance. To stimulate interest of local finance players in supporting PV projects. Current Situation The 5 proposed countries have a combined population of over 150 million people, or 30 million families. Over three-quarters of the region’s population are rural-based, and, of these 23 million rural-based families, more than 20 million have no access to electricity at all. For their lighting, communication and entertainment needs, they rely on kerosene, dry cells and centrally recharged lead-acid batteries, which provide poor service at high costs. Furthermore, there are high local and national environmental costs associated with these fuels. For household needs, solar electricity is a viable and cost effective alternative to kerosene, dry cells and lead acid batteries. There has been much successful experience with solar electric systems for lighting, communication, health care and water pumping in the region. Given the huge un-electrified market in the region, PV should be able to supply a significant portion of the un-electrified population with entry-level electric power. The worldwide solar industry has grown from less than 10 MWp production per year in the early 1980’s to close to 400 MWp production per year in 2001. Over the past 5 years, equipment prices have been steadily dropping and the industry has been growing at a rate that is over 20% per year. However, more and more of the production is moving to large-scale grid connected systems in the North (i.e. Germany, Japan). Despite the obvious potential for PV to supply the 2 billion rural people in the world with basic electric services, the industry is increasingly serving Northern demand because it is easier to sell modules in the north than in the south. While subsidized programs in the North help build demand there, there is a corresponding need to assist industry to build demand in the south. Market surveys verify that there is a viable demand for solar electric products and appliances in the East African region. Surveys have been conducted by UNDP/ESMAP (Uganda, Kenya), Shell Foundation (Uganda, Kenya, Ethiopia) and the Inter-Governmental Authority on Development (Ethiopia, Eritrea). This demand is fueled by a rural middle class which owns (or aspires to owning) various amenities (radios, lamps, TV’s, stereo systems, etc.). In the proposed countries, this economically active group makes up between 5 and 25% of the rural population. In many cases, this group is willing to outright purchase a PV system. However, significant commercial development of the potential PV market in the region has only occurred in Kenya, and to a lesser degree Uganda. In the other countries addressed by this proposal, commercial development of the market has not occurred. This project will address the primary barrier to development of the PV market, which is a poor awareness among suppliers and consumers, and poor supply linkages for the technology. Other barriers (see below) will be systematically addressed in the project activities. Lack of finance is often cited as the major barrier to development of PV markets --- but this is only part of the picture. Development of PV markets has as much to do with local private sector interest in the technology, availability of equipment (such as modules and batteries and DC appliances) and market awareness as it does with consumer incomes. Without a private sector infrastructure supplying the pieces, a market will not develop. Equipment needs to be delivered from cities to remote customers. This requires a whole network of players including importers, UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 29 Energy for Sustainable Development, Africa distributors, assemblers, technicians and marketing agents – none of whom will invest if they don’t understand the technology and the potential demand. The required pieces are only in place in a handful of countries. In some countries, awareness among sellers and among rural consumers is low or non-existent. In other countries, such as Eritrea, there is a great deal of experience with PV, but it is all in the hands of a Government agency, and it is only used to deliver PV for applications that donors are willing to pay for. The view of the proposers is that the chief barrier to the development of the industry is the lack of commercial infrastructure for sales and delivery of PV equipment. Existing sales of radios, pressure lamps, cassette players, bicycles, lead-acid batteries and other amenities in the region indicates clearly that there is ample demand for the power that solar can provide. The key is mobilizing companies to supply PV equipment in packages that are appropriately sized and priced for rural customers. There must be clear channels for dissemination of information and equipment from importer to dealer to consumer. Without a competitive industry to market, sell, deliver and provide after-service for PV systems, prices for equipment will remain high, and services provided will be minimal. In Kenya, small household PV systems and lanterns range in costs from under $100 for a one light and radio system to $1500 for a large system which can power a video/TV unit and light 6 rooms. In the other countries covered in the project, low-cost systems are either much more expensive or simply unavailable. For example, in Uganda and Tanzania, PV module prices are as much as two times the price of equivalent prices in Kenya where they are available, and there is little equipment available outside of the large cities. In Ethiopia and Eritrea, PV prices are extremely high, and there are virtually no distribution networks outside of the capital. The “high cost barrier” has as much to do with lack of competition and limited selection as it does with low incomes. For example, for middle class consumers who cannot afford large PV systems, modules are available throughout Kenya for $50 or less (14 Wp). The same modules are not available at all in Ethiopia and Eritrea, and they sell for $75 or more in Uganda and Tanzania. The project has targeted selling PV systems to the top quarter of rural income earners. This group of people is present in each of the selected target districts (this is why the criteria for choosing districts included income) and the project has evidence that there are sustainable PV markets in this group in each of the chosen districts. Without a sustained effort to support PV companies to build their commercial markets, the PV sector will remain donor dependant (as it largely is in Tanzania, Ethiopia and Eritrea now), and focus only on systems that donors can pay for. Further, rural people will not become aware of PV, and banks and businesses that serve rural areas will not go into the business. Figure 1 shows the supply chain as currently in place, and the actions required at various levels to stimulate it. By focusing on the commercial aspects of small PV system supply, this project will build a competitive approach to the PV market. Once companies recognize that market-building approaches work, they will apply approaches learned in this project to other regions, and, at the same time, they will be better equipped to work with the large-scale PV projects being developed now. Using the “supply chain” approach, the project will seek to help develop finance mechanisms that fit the needs of the suppliers and customers in the rural areas. Recognizing that a small project like this does not have the resources to develop full-scale finance mechanisms directly, it will address the problem through experience sharing and catalyzing pilot finance efforts where there is interest from finance stakeholders. The project will work closely with national suppliers, dealers, local finance organizations and finance partner TREDF to explore various finance methodologies that could be used to reduce costs to rural consumers. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 30 Energy for Sustainable Development, Africa During finance workshops and business development meetings the project will explore methods that have been used successfully in the region and elsewhere to lower prices for consumers. Practical ideas that the project will explore include: Selling systems by component to reduce up-front charges (i.e. working with battery charging ESCOs) Lay-away plans Hire purchase (this is the most common method of PV financing in Kenya) Credit through finance institution (i.e. MFIs, SACCOs, rural banks) Supplier-agent credit schemes (i.e. methods of helping dealers gain credit) Fee-for-service possibilities Quality control will be an important aspect of the project. In order to receive support from the project, companies will be required to provide a minimum level of after-service and warranties on products sold. All of the systems sold as part of the project promotion will be covered by clear customer protection agreements. Note that TREDF normally only works with companies that are willing to provide customers in suitable warranties and after-service. Figure 1: The PV Product Supply Chain Financing Appropriate Products Product Awareness Raising Sales Training Supplier Importers/ Assemblers Distributors Linkage s Agents Policy Customers Market Study Installation Training Price Reduction Quality Control UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 31 Energy for Sustainable Development, Africa Expected Project Outcomes In all of the countries to be involved in the project, there is already an active private sector that provides household goods, agricultural inputs, hardware items amenities and clothes to the rural areas. In general, they are effective at doing this, and they consider themselves to be agents of positive rural change. This project will actively seek to mobilize the rural-targeted private sector to get involved with PV SHS. The project will actively address the barriers identified that have been identified as obstacles to the development of PV industries, namely: Poor commercial infrastructure Low awareness among all stakeholders High prices and lack of financing for systems. Poor policy environment At the end of the project, an operational commercial delivery route will be in place between the capital city and one rural district of each country. This will include: • several national importers in each country, • several dealers in the target district, • at least ten technicians and sales agents in the target district, • interested community development NGOs • interested micro-finance groups and • hundreds of potential PV customers The primary interest of the project is creating sustainable regionally based business entities that work with nationally (or capital-city) based companies. It is likely that many of these businesses will be previously existing businesses that are interested in expanding into PV, such as electronics shops, hire purchase shops, consumer goods shops, hardware stores, or battery charging stations. These entities will operate as cash-sales outlets or as “Energy Service Companies” depending on the prevailing economic climate and their own beliefs in what is possible. The project will help companies to evaluate potential models that they would like to put in place. The project will interact with these groups in a number of ways. First, in the initial field surveys, it will hold regional meetings to introduce the idea of solar PV to groups that are potentially interested in selling the product. Secondly, it will introduce them to suppliers from the major urban centers (or internationally if they are able to import), it will provide them with advice on products and services that could be offered, and help them to forge links with suppliers. Thirdly, it will help them critically examine sales opportunities and to devise appropriate business plans to enter the market. Fourthly, it will provide technical and sales training to companies through the training activities. Fifth, it will encourage the businesses to participate in the various international forums and field visits that the project will be sponsoring (though it can not cover the costs for all businesses to attend all of the meetings). Finally, the project will facilitate links between TREDF and companies that are eligible for TREDF support. As well, there will be educated PV businesses in cities of each countries, actively seeking to build commercial rural markets. There will be a network of influential policy makers --- who are aware of the necessity of including PV in rural electrification plans and will actively lobby for such plans. There will be increased participation by international PV companies in the PV markets of Uganda, Tanzania, Eritrea and Ethiopia. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 32 Energy for Sustainable Development, Africa As a direct result of project activities, installation of more than 750 PV solar home systems in the targeted districts, and a measurable growth in the rural PV sales in Uganda, Tanzania, Eritrea and Ethiopia. Five years after the project, we expect that 3000 systems will have been installed in the 5 districts. The exit strategy of the project is to hand over follow-up work to the private sector and the numerous longer-term PV projects and initiatives in the region. To ensure that these links are maintained, a Regional PV Development Committee will be set up at the commencement of the project (its terms of reference to be developed by the project). This committee will include key representatives from the private sector, UNEP GEF project, the Uganda ERT World Bank GEF PV project, the Tanzania UNDP GEF project, the Tanzania Sida PV project, IFC, AREED, the Ethiopia GEF PV project, the Triodos Renewable Energy Development Fund. Meetings will be held during project activities and self-financed by members. The Solarnet magazine will assist in the dissemination of information from the above group. The project will reduce carbon emissions from kerosene lanterns in 5 districts. From systems installed within the project timeframe, a relatively small amount of reductions would be experienced (i.e. <300 tonnes/year per district). However, there are two points that need to be considered: a) if each of the PV sectors continues to grow sustainably, within 5 years the 5 target districts would have a combined cumulative CO2 displacement of almost 3000 tonnes from 3500 installed systems. b) If the companies applied the methods learned to other districts, we would expect the CO2 displacement to be 5-10 times that experienced in the target districts. Ethiopia would be likely to surpass Kenya’s present level of 15,000 tonnes/year displaced due to PV systems This is an awareness raising, promotional and experience-sharing project. A major assumption of the project is that the private sector is best equipped to develop rural markets. Furthermore, the type of assistance required by the private sector to do this job is “eye-opening” assistance, linkages with companies, financiers and investors, and assistance to develop reach into rural markets. Businesses will have most respect for --- and be most likely to imitate --- other successful businesses experiences in the region; hence the focus of this project on business-tobusiness sharing. A second major assumption of this proposal is that there is a viable market for PV SHS in high potential rural areas, namely in Rakai and Kalangala (Uganda), Iringa (Tanzania), Mendifera (Eritrea) and Jimma (Ethiopia) (these districts were selected by stakeholders during the PDF A stakeholders meetings). The project will work with the private sector to develop real markets in each of these “new” markets. The lessons they learn while addressing these markets can then be applied elsewhere. An earlier IGAD project he pilot work in Awasso (southern region) has resulted in the commercial sales of scores of systems, and results indicate that there is considerable repressed demand for PV among households in the country. Presently, 150,000 SHS are already in place in Kenya averaging 20 Wp which means that present GHG substitution is already well above 15000 tonnes/ CO 2 per year. If the 5 other countries could match Kenya’s PV success, a much more significant CO 2 emissions reduction target could be achieved. In addition, PV electric lights create a considerably cleaner indoor atmosphere for study and reading than smoky kerosene lamps. This project targets an emissions reduction of 3000 tonnes over a 5-year period in the 5 target districts. However, the marketbuilding aspects of the project, and its partnership with other programs, should result in a net emissions reduction that is 5-10 times the figure for the target districts. PV systems for rural electrification have a relatively low CO 2 reduction per system, and would seem to be a poor candidate for GEF funding. However, CO 2 displacement per kWh rate is much higher (as much as 10 times) for off grid PV than grid-connected PV because off-grid PV directly displaces kerosene use. For example, "…a 40 Wp module connected to electric grid in US would UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 33 Energy for Sustainable Development, Africa displace 40 kgs CO2 /year while a 40 Wp module connected to a Kenyan household would displace 350 kgs from inefficient lighting" 3. This high incremental decrease in CO2 output, combined with high incremental increase in living standard make solar home system an attractive technology for GEF funding. Reduced GHG emissions from PV systems would come from: 1) Substitution of electric lights for kerosene lamps. If average kerosene use in Kenya is 515 l/mo. per family, emissions reduction per system would be on the order of 130 - 400 kgs CO2 4. Higher income families tend to burn far more kerosene than low-income families; this means that serving higher income groups with solar home systems has a proportionally higher GHG use reduction potential. 2) Reduction of GHG emissions from battery charging. This would be on the order of 15-30 kgs CO2/year for 50-100 Ah battery for grid based recharging5 Note that electrification with PV has a high value for avoided emissions compared to grid extension. Usually, households would prefer grid electricity because of the versatility of highvoltage grid power. However, because of the high costs associated with extending lines and distribution networks to rural communities, most rural communities cannot be reached with subsidized grid-based rural electrification. Project Implementation Plan and Costs The project will be executed over 2 years and will involve a series of closely co-ordinated activities in Uganda, Tanzania, Eritrea, Ethiopia and Kenya. The activities will seek to provide an “arena” where private companies (local and international), the public sector and major PV projects can interact and gain from each others experience and linkages. The project will actively promote positive synergies between all players. Activity A: Project Management Project management is described in section 9 above. Its costs are as follows: TOTAL COST: GEF Contribution: TREDF Contribution: Company Contribution $339,740 $334.740 $0 $0 Activity B: PV SHS Trade Fair and Project Kick Off Meeting A meeting will be held in Nairobi at UNEP to examine progress and prospects for PV in rural electrification in East and Southern Africa, focusing especially on commercial successes. Approaches used to develop rural PV markets in Africa and elsewhere will be explored. This “kick-off” meeting will include regional and international stakeholders and will address the state of art in PV technology, financing programs, promotion methods and policy. Representatives of major regional PV projects will be encouraged to attend the meeting. The meeting will incorporate a PV SHS trade fair and a planning meeting for the project. TOTAL COST: GEF Contribution: TREDF Contribution: Company Contribution 3 $36,800 $11,000 $17,000 $8,800 "Rural Electrification with Solar Energy as a Climate Protection Strategy", REPP. 1 liter of kerosene: 2.45 kgs CO2, assume 90% displacement? 5 REPP UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 34 4 Energy for Sustainable Development, Africa Activity C: Market Survey in Target Regions of each Country. The first step in building capacity and awareness in each district level, the project will be to make a full assessment of consumer markets, dealers, technicians, financiers and other players that might be interested in participating in the PV market. This survey will consist of a series of activities in each target district which involve project stakeholders. The information gathered in this activity will be made available to stakeholders in the project and will form the basis of future work in each district. During Activity C, private sector players in target districts will be contacted and involved as stakeholders in the project. A list of potential companies in the target region will be a clear outcome of Activity C. Criteria for selection of private sector will be finalized during Activity C. Criteria will include: a) active in sales of related equipment (i.e. TV’s, electronic appliances, batteries, consumer goods), b) demonstrated interest in the project and participation in the market study, c) demonstrated capacity to buy PV equipment and support project, d) wide network of consumers, respect among community, e) willingness to abide by national or local PV standards, f) strong links to finance organizations. TOTAL COST: $11,880 GEF Contribution $7,740 TREDF Contribution: $0 Company Contribution: $4140 Activity D: Business Opportunity Awareness Raising and Planning Assistance The over-riding purpose of this portion of the project is to develop the business capacity of companies to deliver PV systems to the respective markets. Triodos Renewable Energy for Development Fund (pending board approval) will make investments in selected companies, provided there is a viable market, and the partner companies have the capacity to grow. This activity will raise awareness among companies about the potential for PV SHS business, particularly concentrating on opportunities for development of markets in each of the target districts. It will work with companies to help them assess how they can enter the PV market (or diversify existing product lines) using the data from the completed market survey. It will seek to build linkages and provide sets of resources that companies can use independently. TOTAL COST: $462,640 GEF Contribution: $0 TREDF Contribution: $462640 Company Contribution: $0 Activity E: Technician and Sales Training In order for PV to be taken up by companies in the target district, a minimum level of technical and sales capacity must be developed. Central “training of trainers” for solar home system installation and PV sales, attended by representatives from interested companies, will take place in one country. Following this, each country will organize and hold their own training courses with support from the project. TOTAL COST: $81,440 GEF Contribution: $75,000 TREDF Contribution: $0 Company Contribution: $6440 Activity F: Country PV Trade Fair & Awareness Seminars Over the course of the project, two international “events” will be held (in addition to the first meeting) to help regional companies refine their product offerings. These will be staged in the middle (in Uganda) and last trimester of the project (Tanzania). They will focus on specific aspects of PV technology applicable to this region. They will continue the project’s objective of UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 35 Energy for Sustainable Development, Africa bringing together international companies and local companies, fostering better understanding of local markets (and projects), linkages and investment opportunities. TOTAL COST: $46,300 GEF Contribution: $22,800 TREDF Contribution: $22,500 Company Contribution: $1,000 Activity G: Inter-Country Exchange Visits, Information Exchange & International Visits PV entrepreneurs and key stakeholders from Uganda, Tanzania, Eritrea, Kenya and Ethiopia will be invited on several day study visits to learn how successful solar home system markets developed and how they presently operate. During these visits they will be encouraged to develop trade linkages. Visits will be within the region and also to countries with successful PV development (Sri Lanka, Indonesia). These visits will also focus on successful finance experiences in the various countries visited. TOTAL COST: GEF Contribution TREDF Contribution Company Contribution $58850 $53,850 $0 $5,000 Activity H: Region-Based Awareness Raising and Promotional Campaigns Through the duration of the project, a series of promotional activities will be held in each country target district to introduce and demonstrate PV SHS technology, and provide an opportunity for villagers to see, understand and purchase solar home systems. At the same time “larger” community or income generating systems will be installed to raise awareness. Companies and technicians (identified and trained through the project) will be fully involved in this campaign. During the market survey activities in each target region, the project team will contact and appraise finance organizations (including hire purchase agents, micro-finance organizations, commercial banks and NGOs focusing on finance) .about the project. Throughout the project, these groups will be actively encouraged to become involved in the financing of PV solar home systems or PV company support. Further, the project will help develop linkages between local finance organizations and national organizations that are interested in providing and developing PV finance. The project will encourage co-operating companies and beneficiary companies to adhere to a policy of “Truth in Advertising”. Recognizing that the GEF has experienced problems when consumers were poorly informed about the actual possibilities of PV, the project field workers will spell out clearly what the limitations of PV are in its education activities, and will encourage companies to do the same. TOTAL COST: $268320 GEF Contribution: $203,520 TREDF Contribution: $0 Company Contribution: $64,800 Activity I: Policy Workshops Each East African Government has a different rural electrification strategy, as well as different approaches to PV duties (or subsidies), standards, and capacity-building. This project will bring together players working on PV within Governments and projects to discuss the current status of PV technology and their Government’s policy with regard to the technology. The long-term outcome of this activity will be harmonized policy in the region, and better intra-country understanding of how rural electrification strategies. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 36 Energy for Sustainable Development, Africa TOTAL COST: $9950 GEF Contribution: $9950 TREDF Contribution: 0 Company Contribution -0- Activity J: Finance Workshops The purpose of these workshops will be sharing of country experiences in PV and SHS finance. These workshop will attempt to catalyze links between finance players in each country and in the target districts. Through information sharing and this type of networking, the project will develop linkages between larger financing players --- including Triodos Renewable Energy Development Fund/PVMTI and regional financiers (i.e. country-based finance organizations) and local players (i.e. Savings and Credit Associations, consumer credit groups, dealers, etc). TOTAL COST: $9950 GEF Contribution 0 TREDF Contribution $9950 Company Contribution 0 Activity K: Monitoring and Evaluation (Not included in master budget) See below for an explanation of the monitoring program. TOTAL COST: $20,350 GEF Contribution $20,350 TREDF Contribution 0 Company Contribution 0 UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 37 Energy for Sustainable Development, Africa Post-Project PV Business Sustainability and Risk Assessment This project aims to create and expand viable PV businesses and regional agencies in 5 countries. The premise of the project is that there is an existing un-exploited market in many rural areas; the activities that the project undertakes will enable the viable markets to be developed. The project is concentrating on private sector companies to be the primary vehicles of the work carried out. After the 2-year project period is over, it is expected that, having accomplished key objectives, the work of disseminating PV will have been handed over to the private sector. The private sector will take over marketing of equipment on a long-term basis. There are several levels at which this is expected to occur. National level: Companies will have a better idea of how to assess and develop rural markets --- in short, how to plan and carry out a business plan for PV SHS sales in rural areas. They will have a core of trained sales and installation crews that can operate in rural district. Based on their experiences in this project, they will be able to manage promotion and sales programs in new regions. Target district level: At the target district level, consumers, traders, sales agents and technicians will have been alerted about the potential for using and selling PV SHS. Consumer demand will have been initiated through active promotion. Trading will have been initiated through the supply chain driving efforts of the project. International level. International PV and balance of systems suppliers will see East Africa as a key SHS market. Rather than looking at the region as individual countries (or projects) marketing agents will have plans to develop the entire region. There are a number of issues and risks that need to considered. First, of all, there are a variety of risks that affect trade in the region --- such as armed conflict, drought, political instability, etc. There is little this project can do to avoid these when they come up. Future management costs of the PV sector will be entirely taken over by the private sector. However, by the time this project is over, it is likely that a number of initiatives will be underway in the region (ERT WB GEF – Uganda and Tanzania, Energy Access Project WB GEF Ethiopia, etc) and these projects are likely to continue providing stimulation to the SHS sector through smart subsidies that will be phased out. Another issue is capacity building. Consumers and installers of solar PV systems need minimum levels of knowledge and technical expertise to maintain and install systems. The capacitybuilding work to be executed under this project will be limited, and cannot meet all of the demands. However, by transferring training capacity (through ToT activities) to companies and stakeholder bodies, a start will be made, on which further growth can be built. An additional risk is that companies may not be able to grow to the point that they become “sustainable” by the end of the project period. There are two ways the project seeks to get around this. First, the project will actively shortlist and work with companies which are most likely to succeed (such as retail outlets that are already involved in other related products and services). Secondly, TREDF will carefully pre-select companies that have the necessary preconditions for being successful businesses, and sustain them by engaging them over a long period. A final concern is that quality of PV systems may degrade after the project is over due to company desire to make sales and beat the competition. This is a legitimate concern. In Kenya, PV system quality is a serious issue and in the market there are both “cowboys” who sell substandard equipment without regard for how consumers, as well as companies committed to quality. In the end, customers make the choice between quality and price; the more consumers UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 38 Energy for Sustainable Development, Africa are informed, the more likely they are to make an informed choice. The objective of this project is to (1) educate consumers in the target districts about PV system quality and (2) to work with the suppliers that are committed to supplying quality systems. The project will encourage companies to follow PV codes of practice where they have been established. Stakeholder Involvement During the PDF A formulation of the project stakeholder workshops were held in Kenya, Tanzania, Uganda, Ethiopia and Eritrea to discuss the project and how different stakeholders would be involved. Workshops included participants from the private sector (city PV companies, BOS suppliers, agents), Government, non-government organizations involved with energy (these would include consumer interest groups), GEF focal points (or their representative) interested consultants, finance organizations and community organizations. In each meeting the following activities took place (see summary notes in Annex 5,6 and 7): Consensus was reached upon the major barriers to PV in the country and suggest methodologies for overcoming them How the project would be designed, its expected outcomes, objectives and activities, Agreement was reached on priority concerns and expectations and the stakeholder participation plan. Target rural regions in which the project would be active were selected. The stakeholders meetings identified similar barriers to PV industry growth. In Uganda and Eritrea high prices and lack of financing facilities were seen to be the highest barrier, while in Ethiopia and Tanzania other barriers ranked more highly (awareness, policy, commercial infrastructure). Virtually all involved in the meetings agreed with the proposed approach of the project. Target regions were selected during the meetings based on regular incomes, high population density, accessibility of district for businesses, low grid expansion rate, and demand for radio, TV and light. In Uganda and Tanzania, stakeholders decided to choose districts that did not always have receive projects (i.e. Arusha was seen as a choice with good potential, but too many projects were done there so the project chose Iringa). During the meetings and subsequent consultations, inputs were sought in the design of the project in overcoming demand barriers, infrastructure barriers, product and service barriers. During breakout sessions in these meetings (and later one-on-one meetings with companies), practical ideas were solicited on how to best develop rural markets (see notes). These ideas were used to develop the range of activities proposed, and, for each country, specific ideas will be taken up when the project is executed. The project will be managed by Energy for Sustainable Development, Africa, Ltd. from Nairobi Kenya. Local consultants will manage activities in each of the participating countries. The central secretariat of the project will be with Energy for Sustainable Development, Africa while each country will have a secretariat (under the local consultant). These two offices will keep all project stakeholders updated and involved with the project. For example, results of the market studies will be provided to all interested stakeholders. INCREMENTAL COST ASSESSMENT To varying degrees, the Governments of Kenya, Uganda, Tanzania, Ethiopia and Eritrea have all drafted rural electrification plans and are in the process of implementing them. All of the countries are moving towards private-sector led rural electrification strategies that include use of renewables and specifically PV technology where grid is not practical. Uganda, in particular, has UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 39 Energy for Sustainable Development, Africa re-oriented its plan to include renewable energy and PV in its strategy under the World Bankfunded Energy for Rural Transformation program. Tanzania (with WB ERT) and Ethiopia (with the WB-assisted Energy Access Program) are also reviewing their rural electrification initiatives to include PV, micro-hydro and other renewable energy sources. Kenya, which has not had World Bank investment in its Rural Electrification sector for over a decade, has one of the most active commercial PV SHS markets in the world. However, PV sector activities in the above countries are occurring in relative isolation and markets function independently of each other. Although Kenya does participate in the Uganda and Tanzania markets, little information is exchanged across the borders. Neither projects nor private sector companies are sharing information across borders. Baseline Scenario If things continue according to the existing situation, the PV and SHS markets in each of the target countries will continue to grow slowly. Expansion of sales to rural areas will not take place very quickly, as there is little connection between urban and isolated rural markets, and little incentive to develop them. Given the present small size of the markets (40-70 kWp/year) the business as usual baseline would expect modest growth in the markets, though much of this growth would be in the “traditional” donor-oriented market. As shown in the table below, growth in markets is likely to continue to be little more than 5% per year. Further, even the growth benefits that might be expected from major World Bank initiatives (such as Energy for Rural Transformation) would be slower to accumulate because of the delays in getting companies “up to speed”. Table 1: Baseline Development of Market: Estimated Sales (kWp/year) Country Kenya Uganda Tanzania Ethiopia Eritrea Present 500 70 40 50 40 2003 2004 2005 2006 2007 2008 2009 2010 74 42 53 42 77 44 55 44 81 46 58 46 85 49 61 49 89 51 64 51 94 54 67 54 98 56 70 56 103 59 74 59 2011 Total Value of PV Systems @ $10/Wp (000's/$) 109 62 78 62 8105 4631 5789 4631 In the baseline case, it is estimated that the PV markets in the 4 target countries would be worth approximately $23 million over the next ten years. The GEF Alternative With the GEF project, the private sectors in the countries would see the commercial potential of the rural PV market and would quickly develop capacity to exploit that market. Given their experience in the initial target regions, they would apply these lessons to other regions and build their sales networks. Further, international companies would be more engaged with the region because of linkages created by the project. The cross-fertilization benefits of free and faster flow of information within the region would result in more competition and lowered prices. Markets would grow faster because businesses will be in a better position to deliver products. Consumers and dealers at the regional and district levels will be better educated and have more capacity to choose and deliver products. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 40 Energy for Sustainable Development, Africa As shown in the tables below, a doubling and tripling of the PV sales growth rate catalyzed by this project would result in significantly larger market sizes over the next 10 years. An aggressive program to work with the private sector could result in the total accumulated PV sales being between $30 to $39 million. This is $7 to $16 million dollars more than the baseline case, a number of times the GEF investment in this project. Table 2: Accelerated Case 1 ACCELERATED CASE I (10% growth/year) Country Kenya Uganda Tanzania Ethiopia Eritrea Estimated Present Sales (kWp/year) 500 70 40 50 40 2003 2004 2005 2006 2007 2008 2009 2010 77 44 55 44 85 48 61 48 93 53 67 53 102 59 73 59 113 64 81 64 124 71 89 71 136 78 97 78 150 86 107 86 2011 Total Value of PV Systems @ $10/Wp (000's/$) 165 94 118 94 10456 5975 7469 5975 Table 3: Accelerated Case 2 ACCELERATED CASE II (15% growth/year) Country Kenya Uganda Tanzania Ethiopia Eritrea Estimated Present Sales (kWp/year) 500 70 40 50 40 2003 2004 2005 2006 2007 2008 2009 2010 81 46 58 46 93 53 66 53 106 61 76 61 122 70 87 70 141 80 101 80 162 93 116 93 186 106 133 106 214 122 153 122 2011 Total Value of PV Systems @ $10/Wp (000's/$) 246 141 176 141 13513 7721 9652 7721 Although predicting exact numbers is a “fuzzy” process, it can be shown that similar catalyzing activities in Kenya during the late 1980’s and early 90’s did cause Kenya’s PV market to grow rapidly. Between 1994 and 1999, commercial PV sales in Kenya increased by an average of 25% per year, and even in 2001 they are likely to have increased by 15% over the previous year. Further, the project will leave companies in each country in a better position to work with proposed World Bank or other GEF initiatives. Groundwork completed under this project will help organize the industries in each country, mobilizing the interest of BOS, appliance companies, local battery manufacturers and consumers. It will also prepare a group of companies to be capitalized (possibly by SDC), enabling them to make faster returns on a large project. Table 4 calculates the incremental costs of the project. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 41 Table 4: Incremental Cost Matrix Project Activity Baseline Regional Promotion Nationally based companies unaware Activities and Information of wide selection of PV technologies available. Companies unaware of Exchange Project KO Meeting (Act B) Country PV Trade Fair Awareness Seminars (Act F) & Inter-Country Visits & Information Exchange (Act G) Finance Workshops (Act J) Policy Workshops (Act I) successful experiences with PV in neighboring countries and worldwide. International PV companies unaware of local companies in Eritrea, Uganda, Tanzania, Ethiopia. International and local PV companies do not understand PV markets or the various GEF and bilateral PV programs underway in the region Local companies and finance organizations unaware of successful finance experiences in the region and worldwide. Decision-makers from key Ministries not fully sensitized to the role that PV can play in rural electrification programs. Cost: US$ 0 Alternative Increment Organize trade fairs that are attended by international PV companies, local PV companies and major projects in the region. During meeting, encourage companies to exchange experiences with companies from the region. Companies assist to link with suppliers and sources of service and equipment. Better awareness of products among local companies. Organize study tours for companies, decision-makers and finance groups to countries that have successfully implemented PV-based off-grid rural electrification programs. Organize finance workshops to discuss finance experiences and opportunities among companies and finance agencies that are interested in rural energy. Organize policy workshops for key Ministries to discuss the role of PV in regional rural electrification projects, to discuss regional project activities, and methods to harmonize policy and standards. TOTAL COST: GEF Contribution: TREDF Contribution: $49450 Company Contribution $161850 $97600 $14800 Improved linkages between international suppliers and regional dealers. Better knowledge among companies about the role of PV in rural electrification and about the possibilities of PV and BOS as profitable products. Increased knowledge among finance agencies and companies of finance methodologies for PV in rural areas Better awareness among policy makers of what is happening with PV-based rural electrification in the region. A shift toward harmonization in PV standards and policy among East African countries. Incremental cost: US$ 161,850 Energy for Sustainable Development, Africa Target District-Based Market Consumers in target districts (Iringa, Conduct market assessments with the Kalangala, Rakai, Mendifera & Jimma) private sector in the target districts to Activities Market Assessment in Target District (Act C) Awareness Raising Campaigns (H) are not fully aware of the potential of utilizing PV, as an alternative to kerosene, to obtain safe and efficient lighting/electricity services in off-grid situations. Demand for PV develops slowly. The private sector will not seek to develop regional agents, sales networks or technician support staff. Kerosene and dry cells will continue to be viewed as the only potential source of lighting and power of off-grid consumers in rural areas. identify the real cash and finance market. Disseminate the results of these market surveys with urban and target-district based companies. Raise awareness of vendors and sales agents of the potential and actual demand for PV systems and appliances. Formulate outreach programme in each target district utilising multi-media (radio, plays, print, video); organise general awareness campaigns in conjunction with the private sector. Increased awareness of the public at large in the potential of PV to meet their basic electricity needs. Development of local private sector interest in sales of PV and PV appliances. Links developed between national and target district vendors. Increased availability of PV in regional outlets. Lowered prices to consumers. Confidence among consumers and PV sellers in the ability of PV to meet basic lighting and power requirements. Install PV systems in key sites where market is likely to build. Cost: US$ 0 Technical Assistance (Act E) Training Agents involved in supply of PV and Training of Trainers, Technician and Sales Training TOTAL COST: $280,200 GEF Contribution $211260 TREDF Contribution: $0 Company Contribution: $68940 Marketing and sales capacity for PV systems will remain at rudimentary levels in target areas. Training of trainers held developed for basic technicians and sales people. Technical curriculum teaches vendors/technicians to properly size, install, maintain and repair PV systems. ToT held with attendees from key private sector organizations from each country. Technical training does not take place Technical training courses held for battery systems in target areas will continue to be unable to properly size, install or maintain systems. Incremental cost: US$ 280,200 Local vendors and technicians are able to assist consumers in properly sizing, installing, maintaining and repairing PV systems. Sales people are able to more effectively market systems through coordinated campaigns with national and international UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 43 Energy for Sustainable Development, Africa in the target areas. participating sales people, vendors in the target areas. brands. Cost: US$ 0 TOTAL COST: $81,440 GEF Contribution: $75,000 TREDF Contribution: $0 Company Contribution: $6440 Incremental cost: US$ 81,440 TREDF invests an additional $400000 in client companies. They are provided with opportunities to build linkages upward (i.e. with international companies), laterally (i.e. with regional companies) and downward (i.e. into rural market areas) in ways that are presently not being done. Companies have greater confidence in PV as a product. Business Planning TREDF invests as in its existing plan Assistance and Loans (Act and covers the cost of its staff time. D) Business Planning Assistance Urban companies do not interact with others in the region or get an international view of market opportunities. Urban companies do not have support to develop linkages to rural markets. Growth of sales does not penetrate rural areas as fast. Cost: US$ 62640 (existing costs) Client companies are introduced to successful financing methods, and attempts are made to pilot viable finance strategies with willing PV companies, finance groups and NGOs. Companies gain experience developing market chains into high potential target areas Companies have much greater knowledge of products and marketing techniques. Companies develop their own finance strategies based on experiences outside their country. Incremental cost: US$337360 TOTAL COST: $400000 GEF Contribution: $0 TREDF Contribution: $400000 Company Contribution: $0 Local & Benefits 750 rural households will continue using kerosene and open fires for their lighting needs. Each household will spend an average of US$ 120/year on kerosene and dry cells. This will result in emissions of green house gases into the atmosphere as well as pollution Consumers have opportunity to purchase PV systems and components due to project activities in region (as described) There will be decreases in the number of people suffering from respiratory and eye problems related to poor indoor air quality. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 44 Energy for Sustainable Development, Africa from particulate and discarded batteries as mentioned in the text, There will be slow and very limited development and utilisation of PV energy in the target regions. Global Benefits Environmental Emissions of green house gases into Project Management Costs the atmosphere Low GHG emitting technology market is accelerated No project. Project is managed and implemented. Cost $0 TOTAL COST: GEF Contribution: TREDF Contribution: Company Contribution Total: Costs Total: US$ 62,640 Total: $334,740 $334,740 $0 $0 US$ 718,600 (GEF) US$ 449,450 (TREDF) US$ 90,180 (Companies) _____________ US$ 1,258,230 Over 260 tonnes of CO2 will be avoided annually in the target regions after 2 years. This is likely to increase to 3000 tonnes per year in the target regions if the market grows as it has elsewhere. There is likely to be spill over effect in other regions of the involved countries, resulting in a much higher amount of CO2 being avoided. Project successfully meets objectives Incremental costs $334,740 Total: US$ 1,195,590 UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 45 IMPLEMENTATION PLAN Energy for Sustainable Development, Africa will carry out the project in conjunction with selected local consultants in each country. A project steering committee will be formed to guide the project. It will include representatives of Triodos Renewable Energy Development Fund, country representatives from the PV private sector, project management and Government officials. Specifically, the committee will include: ESDA/ESD project management (2 members) Triodos Renewable Energy Development Fund appointed member (1 member) GEF UNEP (if viable and useful) 3 representatives selected from the target country private sector (to be chosen at commencement of project) 3 representatives from Government in the target countries and Kenya (to be chosen upon commencement of project) NB All countries will be represented in the combined membership. The steering committee will receive quarterly reports of project progress and will be copied all monitoring and evaluation outputs. A full-time manager based at ESDA in Nairobi will carry out day-to-day project management. This manager will delegate work to consultants in each country. Consultants in each country will be chosen based on competitive tender. The project will be carried out over a 24-month period (see Implementation Schedule below). Project activities will follow a logical sequence (see project descriptions). The first activity will be an East African meeting on PV for rural electrification that will involve the project team as well as companies, project, international suppliers and promotion agents. This will be followed by market assessment and survey activities in the target districts of each country. Essentially, the project will attempt to focus the private sector on developing linkages to than market. Simultaneously, the project will work with interested businesses to help them develop business plans for the target region and the country as a whole. Triodos Renewable Energy Development Fund will work closely with their pre-selected group of partner companies. Subsequent activities, including technical training, international PV company visits, policy and finance workshops will be held as shown below. Inter-country visits and information exchange will be an ongoing-activity. Over the course of the project, Solarnet Kenya will produce 8 issues “Solarnet” magazine which will focus on each country, and on particular issues such as finance, policy, technology and local manufacture. Awareness-raising campaigns and promotion will be carried out in the target districts as an ongoing activity. Table 4: Project Implementation Activity Country J/F Project KO Meeting Kenya Market Assessment in Target District Business Planning Assistance Technician and Sales Training International PV Company Visits ALL ALL ALL Uganda, Tanzania M/A Year 1 M/J J/A S/O N/D J/F M/A Year 2 M/J J/A S/O N/D Energy for Sustainable Development, Africa Inter-Country Visits & Information Exchange Awareness Raising Campaigns Policy Workshops Kenya, Sri Lanka, … ALL Finance Workshops Tanzania Demos ALL Uganda Monitoring and Evaluation Project Institutional Framework Project Institutional Framework TREDF Business Support Team Steering Committee ESDA Project Director ESDA Field Manager Solarnet Information Exchange Loans & Business Support Uganda Agent Uganda PV Companies Business Rural Outreach Uganda Stakeholders ERT & UPPPRE NGOs Government Promotion agents Finance groups Rakai/ Kalangala Target Region Technical Team Ethiopia Agent Ethiopia PV Companies Ethiopia Stakeholders Energy Access Prog NGOs Government Promotion Agents Finance groups Eritrea Agent Eritrea PV Companies Tanzania Agent Tanzania PV Companies Eritrea Stakeholders Projects NGOs Government Promotion Agents Finance groups Tanzania Stakeholders UNDP GEF SIDA NGOs Government Promotion Agents Finance groups UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page Jimma Mendifera Iringa47 Target Region Target Region Target Region Energy for Sustainable Development, Africa As shown below, the project will be managed by ESDA. The project actors are as follows: The ESDA project team will manage the project. The project director will ensure that activities occur on time; the position will also link with TREDF and the project steering committee. The field manager will manage the day-to-day tasking of the local country agents, the technical team and the Solarnet promotional team. Triodos Renewable Energy for Development Fund will be involved in its core business support and loan activities. It will provide business assistance as requested and work with companies as described in its corporate mission. As can be seen in the diagram, the TREDF support will be staged so that companies can use the project to gain access to the markets that are being identified in the target regions. Companies will be able to select which project resource they prefer to take advantage of. The local agents will have three primary roles in the project: First to meet with companies and help them develop relationships with TREDF and the project. Secondly, they will develop linkages with the “downstream” target district companies and consumers and manage the promotional events that build demand for solar products. Thirdly, they will coordinate with the local stakeholders and involve them in them in the activities such as training, promotion etc. Local agents in each country will be selected on the basis of suitability, and are likely to be independent consultants. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 48 Energy for Sustainable Development, Africa Public Involvement Plan For this project to succeed, there must be active involvement from a number of key stakeholders. During the PDF A activities, stakeholders were consulted in each of the participating countries to seek their input to the project, during full-day stakeholders meetings and during one-to-one discussions with players. Representatives from industry, government, civil society and NGOs attended the meetings. During stakeholder meetings, attendees agreed on the major barriers to growth of the market (some had been decided previously) and chose focus regions for the project to concentrate on. Participants addressed demand barriers, infrastructure barriers and technology barriers in focus group sessions. A variety of points were raised in meetings (see Annex 2 for stakeholder reports), and different countries had different issues. Examples of key issues included: Uganda: How would the project avoid duplication of the UPPPRE project? Tanzania: Selection of an area that is not “oversubscribed” with development assistance was an issue. Kenya: How could the Kenya private sector assist the development of other markets? Ethiopia: How can the project build awareness and lower prices for the rural market? Eritrea: How could the project help companies in awareness raising, promotion and coordination of sales? Issues raised by participants were recorded and assimilated into the project plan. They will also be re-visited during project initiation planning. Roles of the various stakeholders were discussed in the meetings. It was agreed that the primary focus of the project would be on the private sector and on raising awareness among consumers. A mature industry involves a number of players, ranging from commercial importers to secondary town-based sellers to NGO promoters to Government regulators to technology consumers. In the process of building a PV supply chain, these players all have a role to play. Table 5 lays out how the various players will be involved in the project. A key function of this project is to share information about PV and rural electrification with all of the players in the region. Intra-country visits, policy meetings and finance meetings will all play some role in this. As well, the Solarnet magazine will be used to disseminate information about the project, and about solar PV in general to stakeholders in the project. All stakeholders will be sent quarterly copies of the Solarnet magazine. Over the course of the project, the magazine will feature articles about each country, and about relevant topics. All stakeholders in the project will be provided with a 2-year subscription to the magazine. NB. A full list of stakeholders appears below. UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 49 Energy for Sustainable Development, Africa Table 5 Project Actors Stakeholder PV importing companies Smaller solar companies and independent technicians, especially those based in the target districts. Balance of systems and appliance suppliers. Government energy departments. Consumers Relevance to Project This is the key group of players, as the sustainability of the project will depend on their continued involvement in the business after the project close. These companies already exist and have been identified and short-listed. Such companies will not necessarily be involved exclusively in solar energy --- they may be consumer electronic shops, electrical spares shops, free lance electricians, etc. But they reach the rural markets. Groups such as battery companies, television/consumer electronics distributors and local electronic part manufacturers have a role to play in the PV SHS market. Energy officials have, in the past, tended to focus on “grid-based” approaches when considering rural energy. In many East African and Horn countries, Government departments have had little access to information about PV in rural electrification, and, hence have not incorporated PV into planning. The ultimate beneficiaries of PV systems are consumers that use them. Finance agencies Financiers can help consumers overcome high initial cost of PV systems Promotion agents, community development and energy NGOs. These groups can help reach rural target groups by enabling the project to use their existing networks How they will be involved Primary project beneficiaries. Will be involved in most activities. The success of the project will be largely dependent on its ability to entice such businesses to incorporate solar electricity into their existing portfolio of products and services. Many of these stakeholders will be identified during the course of the project. The project will show them how PV can help them develop sales of their products to the rural market. This project will select key government policy makers and planners, involve them in activities, and keep them up to date about regional PV developments. They will be involved in the policy workshops. This project, through promotion and awareness raising campaigns in rural areas, will seek to raise awareness among consumers of PV technologies at district levels and seek to help them better understand the technology. The project will seek to interest finance groups (at the national and district level) in supporting PV for rural development. Attempts will be made to link finance agencies with international financiers (i.e. TREDF). NGO and community-based development agencies will be engaged during promotional UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 50 Energy for Sustainable Development, Africa and methods of outreach. International PV companies PV products come from international companies PV and Rural Energy Projects. Major Projects involved in PV extension work. I.e. Uganda UPPPRE, Uganda ERT, PSOM Tanzania, UNDP Tanzania, Energy Access Program Ethiopia and awareness-raising activities. The project will help them gain a better understanding of regional markets and enable them to plan better regional sales campaigns The project will build on the activities of these projects by helping them reach into target districts and by helping them learn from experiences of neighboring countries. MONITORING AND EVALUATION PLAN Monitoring and evaluation of the project will be carried out as an integral part of the project. The project management team at ESDA will prepare monthly progress reports that will be assembled into semi-annual progress reports. The project steering committee will meet 5 times over the course of the project (i.e. at project commencement again after six months, at the project midterm, after 6 months, and again at the end of the project). During steering committee meetings, progress reports will be carefully evaluated. They will then be forwarded to UNEP. At the end of the project a final report will be compiled, and submitted to the project steering committee for final review. All GEF and co-financing disbursements will be contingent on the project team meeting minimum outputs and documenting these outputs in progress reports. It is expected that UNEP would conduct their own review of the project some time after the interim report is prepared. The project management will unit will follow the established GEF/UNEP reporting and monitoring procedure (see M&E Annex). Project success will gauged against the targeted output indicators already described (see Project Outcomes and M&E Annex). Indicators can be categorized into three general types. The first includes reports of activities carried out including workshop reports, market assessments, training activity reports, documentation of exchange visits, etc. These reports will be compiled as annexes into interim reports. The second type of indicator includes variables such as numbers of actors (i.e. importers, dealers, etc.) and volumes or numbers of systems sold or disseminated. This data will be monitored by local consultants and the project management and compared to baseline figures. These data will be included in each interim report. Finally, the third type of indicator will be the amount of financing support provided by TREDF to identified companies. This information will be provided (on a confidential basis) to the steering committee of the project. (TREDF prefers that its loan portfolio information be kept confidential). These will be evaluated against project, national, regional, and GEF operational program objectives relevant to the project. Altogether, four interim reports and one final report will be prepared for the project. These will be prepared by the ESDA management team with the assistance of the country consultants. As mentioned above, meetings of the steering committee will regularly assess progress of the project. Should there be a need to modify planned activities, such modifications will be proposed to UNEP's GEF office. In steering committee meetings, a record will be made of the next 6month planned activities. Reports, indicators (as described above, without TREDF loan information) and management plans will be shared with and reviewed by national project teams (consultants, Government UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 51 Energy for Sustainable Development, Africa energy offices and companies), and by the steering committee at project mid-term and upon project completion. Table 6. Project Monitoring and Evaluation/ Project components Project components 1. 2. 3. Monitoring and evaluation Meeting: PV and the Rural East African Energy Sector Market Assessment in Target Regions of each Country. Business Opportunity Awareness Raising and Business Assistance Meeting Reports/Paper Documents Workshop reports Training session reports Inter-country visit reports Data bases of companies and individuals involved in PV business in national and target regions Estimated PV sales records in target regions Records of awareness raising activities Project records of installed systems Market assessment reports Attendance records at meetings 4. Technician and Sales Training 5. International PV Company Visits & Product Official project reports Awareness Seminars Semi-annual project Inter-Country Exchange implementation reports Visits & International Documentation of GEF/UNEP Visits and Project coordination supervision missions inspecting Awareness Raising field work Campaigns 6. 7. 8. Policy Workshops 9. Finance Workshops Critical Assumptions and Risks The economic climate in each of the countries will remain healthy International PV companies remain interested in the East African market The climate is favorable for TREDF to invest in companies Companies will be interested in taking equity loans from TREDF Prices for PV equipment continue to remain stable Companies in the participating countries and target regions will accept the project’s view that there is a large SHS market in the target district The various players (international, national, district) will be willing to work with the project and each other to develop business linkages The major projects (ERT Uganda, EAP Ethiopia, UPPPRE, etc) will be willing to work with the project 10. Awareness raising and promotion UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 52 Energy for Sustainable Development, Africa BIBLIOGRAPHY 1. Acker, H. Richard, &Kammen, M. Daniel, The Quiet (Energy) Revolution: Analyzing the dissemination of Photovoltaic Power Systems in Kenya. Draft, New Jersey, October 1994 2. Bess, Mike and Hankins Mark, Photovoltaic Power to the People: The Kenya Case. UNDP/ESMAP, Washington DC, January 1994. 3. Cabraal, Anil/Cosgrove-Davies, Mac/Schaeffer, Loretta, World Bank Best Practices of Photovoltaic Household Electrification Program, Lessons from Experiences in Selected Countries, Washington DC August 1996 4. IGAD Regional Household Project No 7 ACP RPR 527: IGAD Eritrea PV Solar Home System Market Study: The Potential for Commercial PV as a Complementary Tool for Off-Grid Rural Electrification, Energy Alternative Africa Nairobi 2001 5. IGAD Regional Household Project No 7 ACP RPR 527: IGAD Ethiopia PV Solar Home System Market Study: The Potential for Commercial PV as a Complementary Tool for Off-Grid Rural Electrification, Energy Alternative Africa Nairobi 2001 6. IGAD Regional Household Project No 7 ACP RPR 527: Solar Photovoltaic Business Opportunity Awareness workshop for Eritrea. Workshop Proceedings, Energy Alternative Africa Nairobi 2001 7. Mbise H.(2002) Draft Report on Background Information on PV Technology in Tanzania. Dar es Salaam 2002. 8. Musinga, Muli; Hankins, Mark; Hirsch, Danielle and de Schutter, Joop, Kenya PhotoVoltaic Rural Energy Project (KENPREP), Results of the 1997 Market Survey, Energy Alternatives AFRICA, Kenya Rural Enterprise Program, Ecotec Resources BV, 1997 9. Samere H, Zemenfes T. (2001) Current Energy Utilization and Future Options in Rural Areas. African Energy Policy Research Network, Eritrea. 10. World Bank UGANDA Energy for Rural Transformation Project: Project Appraisal Document. Africa Regional Office, AFTEG. 2002 11. World Bank ESMAP, PV Electrification in Rural Kenya, A Survey of 410 Solar Home Systems in 12 Districts: Final report. Washington, November 1997. 12. World Bank ESMAP: Uganda Rural Electrification Strategy Study, Washington. 1999 UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 53 Energy for Sustainable Development, Africa Annexes Annex 1: Annex 2: Annex 3: Annex 4: Annex 5: Annex 6: Annex 7: Annex 8: Stakeholder Contact List Project Budget (see attached Excel file) Country Summaries (see attached file) Country Meeting Notes Tanzania Country Meeting Notes Uganda Country Meeting Notes Eritrea Country Meeting Notes Ethiopia SDG Brochure UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 54 Energy for Sustainable Development, Africa Annex 1: Stakeholder Contact List Tanzania Name and Designation Private Companies Mr. F. Kibhisa Managing Director Organization Address Rex Investment Ltd. Mr. E. D. Haule Technician Likungu Investments (T) Ltd. Mr. J. W. J. van der Linden Managing Director Mr. B. Hanga Electrical Engineer Umeme Jua LTD, Eng. W. Kipondya Director Fredka International LTD. F. N. Simfukwe Dynamic Control Systems Ltd. P. O. Box4836 DSM. Tel. 022-2180 109 fkibhisa@yahoo.com P. O. Box 972, DSM, Tel:22-2864443 liku-haule@yahoo.com P. O. Box 26, DSM Tel. 0741-455271 j.vanderlinden@umemejua.com P. O. Box 9043, DSM Tel: 22-2 111269-72 hangabg@ar1.bp.com P. O; Box 8080, DSM, Tel. 022-2118438 fredka@fredka-tz.com P.O. Box 63114, DSM Tel: 022-2138398 P. O. Box 71358, DSM. Tel. 2421104 Gesco137@hotmail.com P. O. box 32597, DSM Tel. 0744-307440 or 0744 282563 allyilanga@yahoo.com BP Tanzania LTD., GESCO LTD., David Tubet Marketing Manager Mr. A. H. R. Ilanga Solar and radio Communication Engineer Dr. S. Kawambwa Senior Lecturer Solar Energy (T) LTD., Mr. E. Indeche Choride Exide Tanzania, P. O. Box 35078 DSM Tel. 2410376/0741-331995 ipi.udsm@ac.tz Dar es Salaam Representative Tunakopesha LTD., DSM World Bank ERT Program (GEF PV component) United Nations Industrial Development Office shs@idola.net.id Tanzania Solar Energy Association (TASEA) P. O. Box 35046, DSM Tel. 2410410. mchijo@yahoo.com International Jim Finucane (consultant) Mr. V. Akim National Program Officer (Industrial Development) NGO Dr. Cuthbert Kimambo Chairman University Consultancy Bureau P. O. Box 9182, DSM. Tel: 22-2112527 Victor.akim@undp.org UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 55 Energy for Sustainable Development, Africa Dr. M. Chijoriga Senior Lecturer University Consultancy Bureau Prof. R.T. Kivaisi Professor University Consultancy Bureau Eng. Exaud Mushi Nordplan Mr. E. Sawe Executive Director TaTEDO, P.O. Box 32794,DSM Tel. 2700771 tatedo@raha.com Ministry of Energy & Minerals, P. O. Box 2000, DSM mwihava-mem@raha.com. Ministry of Energy & Minerals, P. O.Box 2000, DSM TANESCO DSM P. O. Box DSM katrin.lervik@undp.org Government Eng. N. C. Mwihava Ag. Asst. Commissioner for Energy (Renewable Energy) Eng.Hosea Mbise Engineer Eng. Flora Engineer Katrin Lervik Program Officer Mr. A. R. Rajabu Permanent secretary Finance Mr. N.T. J. Sigweto Banker Tanzania Electricity Supply Company (TANESCO) UNDP Solar Project Dept. of Environment Vice Presidents Office P. O. Box 35046, DSM Tel. 2410410. mchijo@yahoo.com P. O. Box 35063, DSM Tel. 2410410 kivaisi@hotmail.com DSM DSM National Microfinance Bank (NMB) LTD., P.O. Box 9213 DSM. Tel: 22-2128146 ntjsigwejo@nmb.co.tz Name and Designation Private Companies Dawit Maharay Proprietor Organisation Address DM Electrical Engineering Tekhle Ghebre-Medhin / Dieter Hoppe Asmara Solar Samuel Berhane Hydro Construction PLC Hailu Negusse Import Export, Commission Agent & Business Consultant Meda Bahti Meskerem PO BOX 5783. Asmara, Eritrea Tel: 291 1 126737 Fax: 291 1 201534 or 122233 Asmara Tel: 291 122616 siemans@eol.com.er hannelore.hoppe@t-online.de Asmara Tel: 291 121818 hydro@gemel.com.er Tel: 291 201334 Walta@gemel.com.er Italian Cooperation Tel: 291 124563 Eritrea International Sergio Paladini UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 56 Energy for Sustainable Development, Africa Damian Borendorf/Marc Stalmans Emmanuel Ablo, Resident Representative Vibeke Mortensen European Union Tel: 291 126566 World Bank Tel: 291 124302 eablo@worldbank.org Royal Danish Embassy Lis Truelson, Honorary Consul & SIDA liaison Consulate of Sweden Asmara Tel: 291 asmamb@asmamb.um.dk Tel: 291 122302 swedcons@eol.com.er Government Samuel Baire Director General Energy Dept Semere Habtetsin Director Energy Mgmt and Dev Ministry of Energy & Mines Ministry of Energy & Mines P.O.Box 5285, Asmara Tel: 291 121541 samuel@ec1.doe.gov.er P.O.Box 5285, Asmara Tel: 291 121541 Fax: 291 1 127652 samere@ec1.doe.gov.er Asmara Tel: 291 117634 Asmara Tel: 291 121301 Kidane Tseggai Director General Mr. Zemerit Ministry of Local Government Tadesse Beraki Economist, Energy Dept Finance Mr. Kifle Ministry of Energy & Mines Rural Enterprise Unit Asmara Tel: 291 202550/48/49 The Manager Investment Bank of Eritrea Asmara The Manager Commercial Bank of Eritrea Asmara The Manager Housing and Commerce Bank Asmara The Manager ECDF (Min Loc Gov) 85 rural banks Asmara Uganda. Name and Designation Private Companies Henry Nganwa Managing Director Johnson Irumba Sales Manager Ministry of Information 124336/47/48 Organisation Address Incafex Solar Stystems Plot 9 Bombo Rd. Kampala Magric (U) Ltd. 103 Jinja Rd. PO Box 3218 Kampala Tel: 041 232100/ 259646/ 342513/ 256220 Fax: 041 344606 magric@imul.com UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 57 Energy for Sustainable Development, Africa Herbert Winyi, Marketing Manager Solar Energy for Africa, Ltd. Richard Kanyike, General Manager Solar Energy Uganda Emmy Kimbowa Chairman/CEO Energy Systems Ltd. Kithinji Musyoka General Manager Sollatek (U) Ltd. Kamya Ezekiel, Operations Mgr UGA Solar Suppliers Ltd. International Jim Finucane (Consultant) World Bank Paul Nteza Program Assistant Mukasa Joseph Chairman PROJECTS UPPPRE Private Sector Foundation (Handling Financial Part of ERT) Energy for Rural Transformation (World Bank Project) Nitco House PO Box 41544 Kampala Tel: 041 250131 Fax: 041 250131 solar-sgu@africaonline.co.ug Plot 14 Wilson St., Twese Building P.O. Box 27392 Kampala Tel: 041 250920 Fax: 041 232114 soenergy@africaonline.co.ug Get-In House, 3 William St PO Box 25928 Kampala Tel/ Fax: 041 349055 kim_emmy2001@yahoo.co.uk 12 Wampewo Ave PO Box 7742 Kampala Tel: 041 349800 Fax: 041 342778 sollatek@swiftuganda.com Chambers of Commerce Building Rm 9 Plot 12 Johnstone St. PO Box 8535 Kampala Tel: 041-344809 ugasolar@africaonline.co.ug shs@idola.net.id UNDP GEF/SGP Uganda Renewable Energy Assn.(UREA) PO Box 7184 Kampala Tel: 041 344801 Fax: 041 346454 gefsgp@infocom.co.ug Amber House 2nd Floor Room B 201 PO Box 24577 Kampala Tel: 041-349276, 344809 Fax: 041 349342 joshua-urea@utlonline.co.ug Ministry of Energy Mineral Development and Amber Hse. P.O.Box 7270, Kampala Tel: 256 41 257863 Fax: 256 41 230220 evelyn.upppre@infocom.co.ug Ministry of Energy Mineral Development and Amber Hse. P.O.Box 7270, Kampala Tel: 256 41 257863 Fax: 256 41 230220 Government UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 58 Energy for Sustainable Development, Africa Alessandra Sgobbi Environmental Economist Ministry of Finance, Planning and Economic Development Godfrey Turyahikayo Commissioner of Energy Ministry of Energy Mineral Development Philippe Simonis GTZ Energy Advisor GTZ/Ministry of Energy and Mineral Development and Finance Building, Nile Ave. PO Box 8147, Kampala Tel:041 234700/2/3 ext 216 Fax: 041 251793 socserve@africaonline.co.ug Amber Hse. P.O.Box 7270, Kampala Tel: 256 41 257863 Fax: 256 41 230220 evelyn.upppre@infocom.co.ug Amber House Rm A205 PO Box 10346 Kampala Tel: 041 234165 Fax : 041 234165 simonis@africaonline.co.ug Ethiopia Name and Designation Private Companies Mulugeta Girma Director Organisation Address Direct Solar Energy Dr. Tesfaye Bayou General Manager Solatec Trading Solomon Degefu Manager, RE Lydetco P.L.C Tadesse Tilahun Chairman Kassa W/senbet General Manager Shell Ethiopia LTD. Carlo Pironti Manager Nigist Solomon Mekuria /CERD Box 19244 Addis Ababa Tel: 251-1-769476 Fax: 251-1-505302 Box 30792 Addis Ababa Tel: 251-1-631467 Fax: 251-1-512219 tesfa_bayu@hotmail.com Box 3593 Addis Ababa Tel: 251-1-660267, 663189 Fax: 251-1-650767 lydet@telecom.net.et Tel:251 1 653351 Fax:251 1 653321 Box 18134 Addis Ababa Tel: 251 1 50382; 525490 Fax:251 1 525490 route@telecom.net.et P.O Box 100692 Addis Ababa Tel: 251 1 66826 cpironti@mind International World Bank African Development Bank Pancrase Niyimbona Energy affairs Officer Hiwote Teshome / Trudy Kdnemunde HE Advisor Government Beta Electrical Control UNECA GTZ Mekanisa Box 3005 Addis Ababa Tel: 251 1 443544; 513038 pniyimbo@uneca.org P.O Box 5329 Addis Ababa Tel: 251 1 516558 UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 59 Energy for Sustainable Development, Africa Dr. Teketel Abebe Lecturer Alemayehu Negash Addis Ababa University Ato Aseres Ethiopian Rural Energy Development and promotion Center Environmental Protection Authority Ethiopian Society Mechanical Engineers Dr. Tewolde NGO G/medhin Head Renewable Division Johannes Abera Finance Woldoye Amehe Director Ato. Mendaye PROJECTS Hiwote Teshome Energy Selam Technical Vocational Center Tel : 251 1 291673 of and SCES Association of Ethiopian Microfinance Institute Sidamo Corporation Development GTZ HHE/protection Natural Resources of Box 27613 Addis Ababa Tel: 251 09-200968 ats@telecom.net.et Tel: 251 1 510160 Tel: 251 1 627728 epa@telecom.net.et P.O Box 8075 Addis Ababa Tel: 251 1 462807 davidr@telecom.net.et Box 437 Awassa Tel: 6200471 Box 30019 Addis Ababa Tel:251 1 503830 aemfi@telecom.net.et Awassa Tel: 251 1 516558 Fax: 251 1 516558 biomass@telecom.net.et UNEP-GEF Medium Grant Proposal Commercial Dissemination Networks for Household PV Systems Page 60