Intervention Summary
Title: Results-Based Financing for Low Carbon Energy Access
What support will the UK provide?
£30m of funding to create a Results-Based Financing (RBF) facility accelerating access to
sustainable energy services in low-income countries.
UK funding will generate and test different forms of RBF mechanism stimulating decentralised
energy markets which avoid or reduce carbon emissions, leveraging private investment to
increase sustainable energy access.
Why is UK support required?
More than 1.3 billion people do not have access to electricity, and 2.7 billion people are without
clean cooking facilities (IEA, 2011). This has a direct impact on achievement of the MDGs and
contributes to climate change and local pollution, with associated impacts on health and infant
mortality (UNDP/WHO, 2009). At the same time, developing countries seeking to expand energy
access risk high carbon lock-in if they are not able to exploit new low carbon technologies. A
series of market and policy failures has meant that progress on increasing low carbon energy
access has been slow, undermining achievement of interlinked climate and development goals
(AGECC, 2010)
The global gap for financing energy access is estimated at $48 billion per year - a sum which
cannot be met by public finance alone (IEA, 2011). What public and donor finance there is must
be used more effectively to leverage private investment and ongoing service provision. This
requires a shift towards new policy and financing approaches which move away from an overreliance on the provision of up-front capital support regardless of long-term viability, and stimulate
delivery sectors limiting the need for public finance over the long term.
While centralised infrastructure provision remains important in providing electricity access, in
practice people need a wider variety of energy services than are typically provided by grid power including cleaner cooking and mechanical services like agri-processing and water pumping.
These services can be provided by decentralised low-carbon technologies such as household
biogas, watermills and solar pumps. Decentralised technologies in the form of micro-hydro mini
grids or household solar PV can also meet electricity needs for those who will not be economically
served by the grid in the foreseeable future (IFC, forthcoming). While both grid and off-grid
approaches will be important in creating universal energy access, decentralised systems are
projected by the IEA to make up 60% of the estimated 952TWh of annual generation which would
be required for universal electricity access by 2030 (IEA, 2010).
Decentralised energy technologies are particularly amenable to private sector involvement and
enable a wider range of actors to deliver results, utilising latest developments in renewables. A
number of technologies are commercially viable or near-commercial, compared with conventional
fossil fuel alternatives such as commonly used kerosene or diesel generators. Enabling markets
for decentralised low carbon energy is therefore an important goal in low and middle income
countries if progress is to be made on energy access and climate mitigation. Critical
interconnected barriers to this transformation are as follows:

Weak and uncertain effective demand amongst consumer populations

Low current volumes and revenues for firms delivering decentralised energy

Inefficient production and distribution supply chains in use contributing to high product costs

Lack of sector experience on the part of suppliers and financiers

Low awareness on the part of consumers of the benefits of low carbon energy services
Results-Based Financing seeks to address these barriers by offering context-specific incentives
to suppliers within low carbon energy sub-sectors, providing elevated returns on serving these
markets for a fixed period. By boosting effective market demand (eg via voucher schemes or unit
price top-ups) RBF aims to jump-start market activity boosting market volumes and returns, which
will in turn attract private investment in more efficient production and distribution systems. This
will help move suppliers (and sector financiers) along the learning-experience curve and help
move products along the cost-reduction curve – whether via economies of scale and investment in
more efficient production, or bulk purchase and distribution. As quality products (meeting required
RBF participation standards) are increasingly available on the market, awareness and word of
mouth drive increased demand (IFC, forthcoming). These effects aim to enable ongoing supply at
lower cost levels after the RBF period expires. This application of Results-Based Financing will
build on and contribute to DFID experience with RBF more widely - such as in education and
healthcare sectors (e.g. the Health Results Innovation Trust Fund) - as well as multilateral efforts
in this area (eg. GAVI and GPOBA).
The Cabinet Office distinguishes four different categories of Payment by Results. The proposed
approach would be classified as payment for outputs since a) payment is based on outputs
(either a service or a product) and not on outcomes, and b) some or all of the risk is shared
outside DFID (Cabinet Office 2011). Through the proposed programme the UK has the
opportunity both to accelerate progress on energy access, as well as support reform of
international efforts on this issue towards more effective and efficient approaches. This is timely
as a new call for universal access to sustainable energy by 2030 has been launched by the UN
Secretary General, and a series of initiatives to address this amongst governments and
international agencies will be launched during 2012, which has been designated the UN Year of
Sustainable Energy for All.
What are the expected results?

At least 2.5 million people will have improved access to energy services via low carbon
technologies saving at least 900,000 TCO2e

Create or expand at least 50 enterprises providing energy products and services, as well as
employment, via 10-15 clustered RBFs in at least five developing countries. The ongoing and
expanded activities of these 50 enterprises and their respective market sub-sectors is also
targeted, and will be evaluated after programme completion.

RBF funds will be matched at least 1:1 by private sector investment, while UK money will also
be co-ordinated with other donors within an existing programme framework

Results-Based Financing will become recognised as an efficient and value for money
approach in promoting low carbon energy access, and will become integrated into relevant
international policy and financing structures
These headline results will be achieved through a basket of RBFs – rather than focusing on one
particular product or service. The programme will be managed so as to ensure a suitable mix is
achieved.
Business Case for: Results-Based Financing for Low Carbon Energy
Access
Strategic Case
A. Context and need for DFID intervention
The need for modern energy services
More than 1.3 billion people do not have access to electricity, and 2.7 billion people are without
clean cooking facilities (IEA, 2011). This has a direct impact on achievement of the MDGs by
limiting the provision of basic services, by directly affecting health and the time available for
education, and by constraining the potential for economic development and improved livelihoods.
Public services as fundamental as birthing rooms cannot operate safely at night without electric
lights, while many medicines cannot be stored without refrigeration. In the home unimproved use
of solid fuels for cooking is currently estimated to cause 1.6 million premature deaths a year
through respiratory illnesses (WHO, 2005), more than die each year of malaria. Within
enterprises, including farms, lack of energy services such as pumped irrigation, milling or
refrigeration of food products critically constrains efficiency and returns, locking poor people into a
cycle of poverty and vulnerability (UNDP/PAC, forthcoming).
Meanwhile, technological developments and rising fossil fuel prices mean that renewable energy
is increasingly the most cost-effective form of electricity generation in off-grid and mini-grid
applications (ESMAP, 2007). Cleaner cooking technologies are also increasingly available with a
range of fuels, appliances and accessories attempting to expand market share, but currently still
at a relatively low penetration. “Base-of-the-pyramid” thinking and successes in mobile phone
take-up has stimulated interest from non-traditional private actors in poor country rural energy
markets, particularly in applications of decentralised renewables.
This presents a major opportunity to encourage climate-compatible development. This
opportunity is also well suited to market-based approaches, since decentralised energy products
and services are tradable as well as amenable to competition, improvement and economies of
scale. However, many of the benefits of decentralised renewables, particularly the human
development, health and carbon reductions, are not currently internalised by the market.
Furthermore, pure market returns from poor consumers do not justify clearly enough the capital
investments involved, especially given the inherent risks of early stage sectors. This makes it
appropriate for public intervention in overcoming market failures limiting the initiation and
establishment of such sectors.
Women and children are particularly affected by the absence of modern energy services. The
health impacts of smoke inhalation are disproportionately suffered by women, who are usually the
main cooks, as well as the young children under 5 usually in their immediate care. Worldwide, an
estimated one-third of deaths from child pneumonia, Chronic Obstructive Pulmonary Disease
(COPD), and lung cancer are attributable to solid fuel use, compared with just over half of deaths
from these diseases in Least Developed Countries and sub-Saharan Africa (WHO/UNDP, 2009).
Women and children are often responsible for firewood collection and cleaning blackened pots, a
time commitment ranging up to 8 hours per day in fuel scarce areas (Practical Action, 2010) which
cuts into education and income generation opportunities. Conversely, they can gain significant
benefits from improved household lighting (creating opportunities for productive activities and
education), clean cooking technologies (e.g. biogas and liquid fuels), and new economic
opportunities (e.g. women’s participation in installing and maintaining distributed energy systems).
The strategic fit
By targeting low carbon energy access, this intervention is a direct response to HMG’s strategic
priority to combat climate change. Low carbon energy interventions reduce emissions (eg
where kerosene or unsustainable fuelwood is currently being used) or avoid emissions otherwise
associated with economic growth and improvements in development indicators. Energy access,
particularly via its impacts on income increases and diversification (Kooijman van Dijk, 2008), can
also contribute to reducing vulnerability to the impacts of climate change at both the community
and national levels (http://unfccc.int/adaptation/adverse_effects/items/5003.php).
With an emphasis on private sector delivery of modern energy services, the intervention will also
serve to boost growth, both through the use of energy in productive applications, as well as via
private sector activity in the supply of energy fuels, equipment and appliances (UNDP/PAC,
forthcoming).
By addressing the disproportionate burden of traditional energy use on women and children, the
intervention will also serve to meet DFID’s priority of improving the lives of girls and women.
Supported energy access products will for example reduce smoke in the kitchen, create new
opportunities for night time education and reduce the opportunity cost of time spent collecting
firewood.
Finally, by developing Results-Based Financing, this intervention will promote transparency in
aid - focusing on results and value for money. This will influence and support partner agencies
(particularly the Netherlands and Germany who will be connected with this intervention), as well
as wider financing initiatives in the low carbon energy space, including the Scaling-up Renewable
Energy Programme (SREP) to which HMG already contributes.
While this proposed RBF intervention is focused on the provision of modern energy services using
decentralised renewable energy technologies, it complements a number of other RBF initiatives
under development by DFID, including Green Africa Power (GAP) and prizes for environmental
technologies.
The need for DFID intervention
This intervention targets the creation of low carbon energy access markets, through new policy
and financing approaches. The need for DFID intervention in creating this outcome and improving
respective approaches to achieving it is as follows:
The financing gap for universal energy access by 2030 is estimated by the IEA at US$48 billion a
year (IEA, 2011). This cannot be met by public finance alone, however public finance will play a
keystone role in both leveraging the private finance that will fill the gap, and making sure that the
poor are served. In spite of this, donor and developing country government support for the
provision of modern energy services and renewable energy often tends to focus on capital support
for one-off projects and investments, rather than market development. Capital support
mechanisms (grants and loans) are highly appropriate in many cases, particularly in early stage
and weak sectors, but they tend to work against the grain of private sector business models going
to scale as sectors become more established – creating a culture of dependency rather than selfsustaining, long term, commercially viable markets.
DFID has a leading position amongst bilateral donors in terms of support for market-based
initiatives, and can build on this advantage to accelerate progress in this sector via private sector
action, particularly in the off-grid sector. The majority of government, donor and multi-lateral
investments relating to energy (IEA, 2011) are in centralised electricity generation and grid-based
energy access solutions serving towns and cities. There is however increasing evidence of the
potential commercial viability of decentralised energy systems (for examples see
www.ashdenawards.org) which can reach communities far from the grid, and the importance of
clean cooking as an energy service, rarely met by electricity. While centralised infrastructure is
important, it tends to benefit urban elites over the rural and peri-urban poor, and alone is not
delivering across the board improvements in observed rates of energy access. In fact, the
absolute number of people without access to electricity is actually increasing in sub-Saharan
Africa because new connections are failing to keep up with population growth (IEA, 2010;
Practical Action, 2012). Meanwhile, decentralised provision of modern energy services is more
amenable to private sector delivery using low carbon solutions – but only if market barriers and
incentive systems are addressed, something many developing country governments can struggle
to do without assistance. Supporting the creation of commercially viable business models, and
capable private sector enterprises and entrepreneurs, is crucial if we are to meet emerging global
targets for sustainable energy for all by 2030.
Such targets are the result of increasing international attention being paid to the problem of
energy access, as demonstrated by the publication of a high-profile report by the UN SecretaryGeneral’s Advisory Group on Energy and Climate Change in 2010 and an energy poverty chapter
in the IEA’s 2010 and 2011 World Energy Outlook. Since then the UN General Assembly voted
for 2012 to be the International Year for Sustainable Energy for All
(www.sustainableenergyforall.org). As a result there is growing interest in spending a proportion
of international climate finance to support improved access to clean energy services. This is
indicated by the emphasis put on this in the World Bank’s draft Energy Strategy, the work being
done by Norway on Energy+, and by the emerging plans of a number of DFID country offices.
However, a lack of fresh thinking in this area, and a lack of effective delivery vehicles (including for
DFID country offices), is a threat to the effectiveness of international climate finance over the
2011-15 period and beyond. New approaches to the delivery of low carbon modern energy
services that incentivise private sector delivery and focus on market opportunities, while limiting
the need for public finance over the long term, are necessary.
The Proposal
This intervention builds on over 18 months of work to explore the potential benefits of ResultsBased Financing (RBF) as a way of creating and expanding markets for the provision of low
carbon modern energy services – as opposed to more traditional approaches that provide capital
support (grants and loans). Drawing on work commissioned from Vivid Economics in 2009, RBF
in this context represents:
“…temporary interventions to make revenues from markets more lucrative and more certain in
order to accelerate investment.” Furthermore, "In the case of deploying existing technologies,
or encouraging incremental R&D, [RBF is] likely to be preferable to capital subsidies, and other
interventions that aim to reduce the cost of supplying outputs, in a wide range of
circumstances."
A key limitation recognised here is that RBF is expected to be most effective in “the case of
deploying existing technologies” and this starts to indicate the types of sub-sectors which may be
ready to respond to a demand-side incentive such as an RBF. Markets in very early stages, or
suffering from insurmountable policy, capacity or wider financing barriers are unlikely to fall into
this category. However, for markets with a degree of capacity in place in a few firms, using a
technology reasonably well developed elsewhere and no critical policy barriers, RBF is
considered to have important market acceleration potential.
RBF seeks to address market failures by reducing uncertainty over end-market viability,
thereby reducing risk and increasing returns for early movers and adopters, so supporting
products and services coming onto the market in volume. We expect this to lower prices
and improve market penetration, and so increase energy access, via a series of learning,
volume, investment, efficiency and awareness effects - described further in the appraisal
case.
RBF has not to date been applied to develop decentralised renewable energy markets in
developing countries in the ways proposed here, however one-off project-based interventions in
this sector (as opposed to sector stimulation approaches) have been successfully applied by the
Global Partnership for Output-Based Aid (www.gpoba.org). Strong evidence in support of this
approach also exists in the on-grid sector in the widespread use of feed-in tariffs for renewables,
which have now been enacted in over 50 countries worldwide. Outside the energy sector,
applications of RBF in education and health are increasingly widespread, including the case of
Advance Market Commitments for vaccine purchases.
RBF has the potential to act both as a market transformation instrument for (near commercial)
renewable technologies, as well as a more effective instrument for aid delivery where technologies
still require some degree of capital subsidy. Taking each in turn:

In the first ‘near-commercial’ case, an RBF may be used to overcome supply chain inertia to
support the sale of household level clean energy technologies (e.g. solar lanterns, clean
cookstoves) that are struggling to build out the requisite distribution infrastructure and achieve
lower costs associated with economies of scale. The lack of an efficient supply chain adds
100-150% to technology wholesale costs at the point of retail (interview with Andrew
Tanswell, Toughstuff). This has the effect of dampening demand, particularly among poorer
income groups where affordability is a key issue. In these cases, RBF targets market
stimulation and acceleration to the point where, once distribution infrastructure is in place,
further support is no longer required.

In the second (subsidy) case, RBF can used to guarantee the longer term operation of
subsidised capital infrastructure. This is achieved by staggering the payment on the basis of
successful infrastructure operation, rather than construction. Examples examined in this
business case include institutional biogas and mini-grid connections. These are examples of
higher service level technologies, where some level of capital support is still necessary, but
where traditional development aid models have often resulted in stranded assets, or assets
performing below optimal capacity. In these cases, RBF targets more effective aid delivery
(more similar to GPOBA) mitigating risks of public support without results delivery, or underuse of supported assets. RBF in such cases still develops market delivery channels and
seeks to drive down technology costs, moving sub-sectors towards more commercial levels.
The intention here is to create a facility to generate and apply different forms of RBF to low carbon
energy access markets within a learning framework (as described in the Management Case),
while delivering value for money results. This approach seeks to stimulate innovation in the
design of individual RBF instruments tailored to specific country and market sub-sector contexts.
The facility will also test RBFs as a clustered group in order to monitor both direct results in terms
of beneficiaries, but also the impacts of RBFs in terms of market creation. Although specific RBF
instrument designs will be generated in reaction to a call within the RBF facility, analysis has
already begun on potential design features which may be adapted to the technologies and subsectors in question. These include:

Innovative forms of Output-Based Aid, including reverse auction schemes, and hybrid
schemes where OBA is combined with other forms of RBF

Advance Market Commitments, where a commitment is made to procure a fixed quantity of a
product or service at a fixed price

Advance Market Incentives, where a commitment is made to provide a reward for each
delivered product or service, including via the use of voucher schemes targeting poor
consumers
Possible examples of RBF instruments (see Appraisal Case below for further discussion)
RBF Technology
RBF Description
Solar Lanterns
Annually tapering incentive payment per solar lantern for household
use.
Institutional Biogas
Mechanism to incentivise capital investment and effective operation
of biogas for heating and cooking in schools and other institutions.
RBF payments for connections and maintenance of connections.
Micro-hydro minigrids
Pico-hydro (>5kW)
Solar kiosks/battery
charging stations
Solar Home
Systems – Pico
PV(Bangladesh)
Productive Use
technology (e.g.
treadle pumps, solar
drier)
RBF might support providers per unit of energy delivered.
RBF might be provided in several forms, including a credit subsidy
or guarantee for purchasers of PV and charging systems, or a
payment based on service provided (lanterns sold, charging service
provided)
RBF could provide a capital subsidy for purchasers of pico-SHS,
accessible to the poorest households. A system of hire purchase
and guarantee would be developed by participating providers to
match SHS payments against current spend on kerosene lighting.
RBFcould support take up of ram pumps, PV pumps, or provision
of electricity from pico-hydro power plants which can be used for
irrigation, or to operate a mill and dehuskers. Potential for declining
per-unit capital investment support or interest rate subsidy as
banks become more familiar with technologies, or provide RBF
direct to distributors of equipment.
Since RBF payments are made on results, the risk of public money being spent without delivery of
direct results (numbers of connections, products delivered etc) is hugely reduced. However, the
real prize is the indirect result of accelerating technologies and sectors along the learning, costreduction, awareness and uptake curves, thereby enabling market expansion with reducing public
input. Initial indications from interviews with market participants internationally in preparing this
business case have shown strong interest in this approach (interviews in Rwanda and Uganda,
and in the UK with Toughstuff and GVEP by DFID staff).
Supporting a series of such projects within a common monitoring framework will also generate
important lessons for aid effectiveness and accelerating low carbon energy access. There is
strong interest among our bilateral and multilateral development partners (in particular, the
Netherlands, Norway, Germany and the World Bank Group) in integrating UK thinking on RBF into
existing and planned energy programmes, including the Scaling-up Renewable Energy Program
(SREP) and Energy+ partnership (focussing on energy access, renewables and energy efficiency
- launched in Oslo in November 2011 with UK representation from the DFID PUSS). The
proposed programme would also offer opportunities for top-up or extension funding from DFID
country offices or other donors.
B. Impact and Outcome
This intervention seeks to increase access to modern energy services in developing
countries through the use of low carbon decentralised renewable energy and energy efficiency
products, delivered via market-based approaches.
Success will be measured against a target of delivering improved low carbon energy access to at
least 2.5 m people, with qualitative valuation of improvements in energy access made using an
Energy Supply Index (ESI), as described in the Value for Money section. Through the use of
decentralised renewables, reduced and avoided carbon emissions will be at least 900,000 tCO2e.
Users of these products and services are expected as a result of this energy access to experience
fuel cost savings and welfare benefits as modelled in the appraisal case, depending on exactly
which technologies/services are used.
These headline results would be achieved through a basket of RBFs – rather than focusing on
one particular product or service. The programme will be managed so as to ensure a suitable mix
is achieved.
Evidence exists internationally illustrating the ways in which decentralised renewables have had
the multiple impacts above on energy access, carbon reduction/avoidance and health via private
sector activity - www.ashdenawards.org provides a database of examples and analysis of such
cases internationally. While both grid and off-grid approaches will be important in creating
universal energy access by 2030, mini-grids and isolated systems are projected to make up 60%
of the estimated 952TWh of generation which would be required annually, emphasising the
importance of the role of decentralised systems (IEA, 2010).
The primary mechanism for achievement of these impacts is the creation of decentralised
renewable energy and energy efficiency markets and the primary outcome of the project will
be in the strengthened activity of markets for decentralised renewable energies serving poor
consumers. Outcome targets are to support the creation or expansion of at least 50 energy
service entrepreneurs/enterprises, to leverage private investment into decentralised renewables at
a ratio of 1:1, and to enable a reduction in the cost of sector products over the course of the
intervention via learning effects, volume factors, lower cost financing and investments in
production and distribution. Ex-post evaluation (see Management Case) is also proposed in order
to assess the transformational impact of RBF on targeted markets after programme end.
Evidence supporting the conclusion that the best way of reaching poor consumers with energy
services is via the private sector is mixed. Most developed countries have electrified their
countries via public action, however www.ashdenawards.org also illustrates successful private
sector activity in the decentralised renewables area, although many winners have also had
substantial public funding support alongside commercial business models. The mobile phone
sector is however a strong demonstrator of the potential of private sector action to reach poor
people with decentralised services in least developed countries. This sector also provided
valuable lessons in terms of creating new economic opportunities for women, and their success in
brokering access to this technology. In general, the state of evolution of a technology and the
capacity and enabling conditions for private sector action are critical conditions to the success of
such approaches, and such factors will be important in selection of sub-sectors.
The output which will create this outcome is 10-15 clustered RBF instruments in at least five
developing countries which will be the result of creation of a financing facility stimulating design
and financing implementation of these RBFs over the period of the project. These RBFs will be
expected to deliver the results specified above solely through the deployment of renewable energy
and improved energy efficiency technologies.
Evidence regarding the application of RBFs is still relatively sparse in that the full range of
potential RBF approaches have not been widely applied to date in development contexts and so
RBF is at the innovative end of aid practice in the low carbon energy access sector. However,
policy and financing instruments reducing risk for investors, such as feed-in tariffs, are well known
and recognised as effective market stimulation mechanisms in many developed country and
emerging economy renewables sectors. Output-based instruments eg. paying capital subsidies
on completed installations is also relatively established (by the Global Partnership for OutputBased aid (GPOBA)) at scale in Bangladesh on Solar Home Systems for example. Direct nonperformance risks are limited by the way that a results-based instrument only pays out on delivery
of a product or service. In terms of the wider market creation outcome, this intervention will track
markets carefully to capture learning on this novel aspect.
A secondary output will therefore be the production and dissemination of guidance and
knowledge products, and a comprehensive mid-term and end-of-term evaluation. This
seeks to improve the way in which support to the energy sector is provided, and the impact on
access to energy by the poor. It is therefore crucial that this intervention regularly and
systematically engages with the wider energy and development sector to support lesson-learning
and improved results and value for money.
The likely consequences of not DFID not making this intervention would be slower progress in the
expansion and reach (particularly to poor households) of the off-grid renewable energy sectors
targeted. The programme is also expected to provide valuable information to other agencies
supporting low carbon energy access, promoting improved value for money in the international aid
architecture via a reduced reliance on supply push approaches.
Appraisal Case
A. Determining Critical Success Criteria (CSC)
Each CSC is weighted 1 to 5, where 1 is least important and 5 is most important based on the
relative importance of each criterion to the success of the intervention. Given that this proposal
creates a facility for RBF designs which will be completed as part of the programme, it is possible
that not all critical success factors specific to country contexts have been identified at this stage.
However, factors linked to the theory of change for RBF success in low carbon energy
product/service uptake and market creation can be summarised as follows.
CSC
1
2
3
4
Description
RBF action ensures market acceleration and increase in
product volumes coming onto the market – that market actors are
able to viably respond to the RBF, creating immediate beneficiaries
and also the potential for the learning/improvement, cost reduction
and awareness spreading results expected
Decentralised energy product and service acceptance and
uptake by target consumer populations – including poor and rural
populations, with benefits realised by women and children in
particular. Quality performance enabling market expansion via word
of mouth as well as economies of scale.
Investment in target sectors by private sector – including via
more affordable loans (enabled by RBF incentives) leveraging public
finance and targeting product/service efficiency/quality
improvements, cost reductions and wider distribution.
Costs of providing products are reduced by the action of the
RBF – via efficiency improvements from investments in production or
distribution, reduced costs of loans/doing business, economies of
scale or customer awareness - enabling market viability after the
withdrawal of the RBF.
Weighting (1-5)
5
5
4
4
B. Feasible options
In order to produce the desired outcome of low-carbon market sectors delivering access to
improved energy products and services in least developed countries (the impact), three primary
options are considered (each with some sub-option dimensions which can to some extent be
interchanged):
1. DFID provide conventional grants to one or more decentralised renewable energy/energy
efficiency sectors or firms
2. DFID designs and runs a series of RBF instruments targeting clean energy sectors in a
number of countries
3. DFID funds creation of a facility for design and implementation of clustered RBF
instruments within an existing programme framework
Option 1 – Grant-based approach
DFID has had modest bilateral activity in the energy sector for some years, and centrally-funded
programmes have been small and focused on grants to multilateral and civil society delivery
mechanisms (e.g. the Energy Sector Management Assistance Program and GVEP-International).
However, since 2008, the UK’s contribution to the Climate Investment Funds (CIFs) has
substantially increased our multilateral support to the energy sector through the Clean Technology
Fund (CTF) and the Scaling-up Renewable Energy Program (SREP), while bilateral activity
especially in India and South Africa is growing.
Grants (and loans) have been, and will continue to be, important instruments in supporting
improvement of sector conditions including in the areas of market information, analysis and
learning, capacity building, standards etc. They can also be critical in supporting R&D in precommercial sectors, creating or protecting public goods not valued in markets, and supporting noncommercial processes such as awareness creation of health risks.
However, with respect to moving a close-to-market technology or sector onto a more commercial
and scalable footing, grants have been recognised as an incomplete and imperfect instrument
(Martinot et al, 2002).
Limitations include:

Grants in the form of capital support incentivise building capital investments, rather than
necessarily the outcome, for example people achieving sustainable energy access. In this way
grant funding can lead to the construction of unnecessary and sometimes unused
infrastructure.

Grants for support services to potential market actors, such as capacity building, can in some
cases lack connection with drive and commitment on the part of market actors to succeed, and
create an incentive for providing training without real market pull/demand.

Grants alone are limited by the extent of public funds and in order to close the overall financing
gap for energy access private sector funding must also be leveraged explicitly. However,
transfer of public funds to private sector individuals in up front grants, not directly tied to
delivery of societal/development outputs, carries risks in terms of achieving value for money.

Grants awarded to one or two players can be distorting of actual markets, where for example
grant-subsidised products can undermine other nascent suppliers operating on a commercial
footing. When the grant is withdrawn then no organisations on a sustainable financial footing
are left.
In this case, although grants could potentially be used to deliver a similar number of direct outputs
(number of beneficiaries of particular products), and they will be analysed for this reason, it is not
believed that this approach would have the market stimulation outcome targeted by the theory of
change (see below). For this reason DFID, along with other donors, have been looking at other
options for other uses of public funds more as “keystone” financing in market systems, enabling
and stimulating entrepreneurial investment and action, but not seeking to replace it.
Option 2 – DFID designs and runs a series of RBFs
In part in response to the issues with grants above, DFID initiated a workstream looking at whether
Advance Market Commitments (AMCs), as piloted successfully in vaccine delivery initiatives, could
be used to incentivise low carbon energy access in late 2009. This involved conceptual
development work contracted by Vivid Economics which found that "In the case of deploying
existing technologies, or encouraging incremental R&D, [AMCs are] likely to be preferable to capital
subsidies, and other interventions that aim to reduce the cost of supplying outputs, in a wide range
of circumstances." An international conference was held on the topic in London in January 2010
which attracted widespread international attention and interest in the concept from a range of
stakeholders, including the private sector and the donor community. This work has continued and
the Theory of Change model below illustrates the mechanisms through which RBF is expected to
have its market creation effect:
KEY:
By guaranteeing a favourable price or quantity on a particular market outcome (e.g. a connection,
units of electricity generated, lanterns sold etc) an RBF reduces risk and elevates returns in a
market for early movers. This should enable them to make profits early in the product uptake cycle
(where returns are often low or negative – the so-called “valley of death”) encouraging them to
expand their presence and investment in the market. The presence of an RBF should also make
acquiring loans for investments in volume orders or production infrastructure cheaper, as the risk to
the business and lenders is reduced, if deals are appropriately structured. These mechanisms are
expected to help get low carbon energy access products onto the market in greater volumes and at
better prices, and ensure continued interest and returns to enterprises and lenders in doing so.
With products on the market, it is expected that other critical market development processes will
accelerate. These include energy product/service improvements and cost reductions via learning
curve effects (including from consumer purchasing feedback) and the more efficient production
and distribution infrastructure invested in to meet the initial RBF-supported demand. These
effects will be complemented by increased market awareness of the product created by
examples being in the market, and volume discounts or economies of scale created by the
initial guaranteed amount. Such effects would be expected to expand the existing market and
ultimately draw in new players and products, further increasing volumes and competition, further
driving down prices, filling niches and expanding access with the impacts indicated in previous
sections on energy access, carbon reductions and jobs.
The above has some evidence in practical examples in tools such as feed-in tariffs for renewables
in Europe, however evidence in developing countries in weaker markets is less strong, with OutputBased Aid (OBA) and the vaccine market AMC the most relevant precedents to date. The overall
functioning of this theory of change is likely to be critically dependent on the targeting of the RBF in
terms of the market (and in terms of the beneficiaries), and conditions external to the RBF including
regarding sector capacity and regulatory barriers, as DFID research on a feed-in tariff in Sri Lanka
illustrated (PISCES/PAC, 2010).
Based on this promising analytical basis and feedback, several scoping studies were undertaken to
establish potential forms and targeting for RBF, enabling the design of this business case.
However, through this process it was also recognised that - given the complexity of local off-grid
energy market conditions, players, status and potentials - generation of specific RBF designs and
technology/sector selections would best be undertaken by one or more implementing institutions
with specific experience, capacity and presence in these sub-sectors in ICF priority countries –
which DFID does not have.
Option 3 - DFID funds creation of a facility for design and implementation of RBFs within an
existing programme framework
Although sub-options of conducting a tender for the fund management function, and a consolidated
tender for running the whole programme, were considered - these were rejected as excessively
complex and not providing value for money (for more detail see section A of the Commercial Case).
In order to build on existing programme design, management and monitoring structures - and to
realise benefits in donor co-ordination/influencing - it is proposed that the RBF facility be
implemented through an existing energy access programme framework.
In practice, it is considered that the only existing programme with the scale, reach and capacity to
deliver the RBF facility is the Energising Development (EnDev) programme managed by the
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), with funding from Germany and
the Netherlands. As described below, the EnDev programme is a large multi-donor programme
targeting improved energy access, primarily through decentralised low carbon approaches, with
operations in 18 countries. GIZ’s experience in the energy sector is extensive, with skilled energy
sector professionals operating in at least 9 ICF priority countries for Low Carbon Development.
EnDev would provide the framework within which RBF instruments could be generated,
implemented and monitored, while the introduction of RBF to EnDev itself would be expected to
enhance the market-based delivery orientation of the overall programme. Working with the
Netherlands and Germany (with Norway currently in final negotiations regarding joining also)
provides substantial opportunities for donor co-ordination and influencing (see the Management
Case for more details).
A disadvantage of working through EnDev is the potential for lack of competition, driving
innovation, in the design of the RBFs. However, this is mitigated by using a Challenge Fund type
call to EnDev country offices to propose RBF designs (see the RBF Facility Design section below)
and incentivising EnDev offices to work at country levels with other relevant institutions and sector
players in developing RBF designs.
The EnDev programme
In September 2008 the Germany Federal Ministry for Economic Cooperation and Development
(BMZ) and the directorate responsible for development within the Netherlands Ministry of Foreign
Affairs (DGIS) agreed to implement a second phase of the Dutch-German Energising Development
(EnDev) programme with a budget of €78m over four years. This followed on from a successful first
phase (2005-2009) that delivered modern energy services in a sustainable manner to over 5 million
people against a target of 3.1 million people at the start of the programme (detailed information is in
the EnDev report on impacts at https://energypedia.info/index.php/EnDev_Report_on_Impacts
which is compiled from a large number of both external/independent monitoring and evaluation,
and internal studies which are also available on the Energypedia website). BMZ have recently
announced their intention to put a further €30m into the programme and the Norwegian
government also intends to join under their Energy+ programme with a smaller contribution.
The EnDev partnership currently comprises 19 activities in 18 different countries (see figure 1). It
covers a broad range of sustainable energy technologies, including mini-grids, improved
cookstoves, biogas plants and solar systems, and the focus is on providing access to modern and
clean energy services to poor households, small entrepreneurs and social institutions in rural
areas. There is a particular emphasis on supporting private sector delivery. EnDev country
programmes have strong relationships with relevant ministries on energy access issues, and are
able to provide co-ordination as required at country level.
Figure 1: EnDev country programmes
EnDev is managed by a small team in GIZ’s offices near Frankfurt, Germany, in close cooperation
with a team of the dutch NL Agency. However all programming decisions are taken at the country
level in dialogue with the respective governments. EnDev is governed by a Board comprising BMZ
and DGIS, who generally meet bi-annually at small, half-day meetings held in Brussels, Bonn,
Frankfurt or The Hague.
The Proposal
The UK would join EnDev, becoming a third member of the Governing Board. UK funding would
be earmarked for use only in the design and implementation of 10-15 clustered RBFs in at least
five low income developing countries, with guidance given to GIZ on which countries we would like
to prioritise based on ICF priority countries. ICF Low Carbon Development priority countries which
correspond with EnDev are currently: Bangladesh, Ethiopia, Indonesia, Kenya, Mozambique, Peru
and Rwanda. ICF priorities Tanzania and Malawi are also GIZ countries which could participate,
although not EnDev targets. Ghana, Uganda and Nepal are also EnDev countries and non-LCD
ICF priority countries.
The RBF funding would be allocated through a challenge fund process aimed at EnDev country
offices (and other GIZ offices with a substantial energy programmes), but with a requirement to
engage private sector, government and other relevant agencies/NGOs, as well as
communities/potential users, in the design and implementation process of each RBF. Proposals
would be encouraged for new and innovative RBF instruments for implementation through two calls
in years 1 and 2 of the proposed intervention. It would be expected that these would build on and
benefit from existing in-country activities under EnDev (and other actors in each country)
addressing supply-side constraints such as capacity, policy issues, standards and loan availability
etc – all of which would be expected to complement the success of an RBF. The central EnDev
team would be responsible for quality assuring the proposals, with the final decision on RBF
selection done by the EnDev Board. Priority would be given to clustering effects achievable with
RBFs on the same sector in adjacent countries, or on related sectors in the same country. These
would be expected to enable cumulative market effects on volumes and cross-fertilisation, as well
as improved economies in programme administration (eg verification and disbursement). A
portfolio analysis approach would be taken to maximise combined impacts at regional scale.
Recognising the moderate evidence base available in this area, monitoring and evaluation would
be central to implementation, and would be carried out at the level of individual RBFs and across
the portfolio. EnDev is already structured and staffed to conduct such M&E and such activities
would be built into the management contract with EnDev to run the RBF facility within the
programme. This would also involve ensuring EnDev had sufficient capacity in place to track
poverty and gendered impacts. The structure of the programme is described in more detail in the
Management Case
It is likely that the UK would need to devote some human resources initially to ensuring that EnDev
staff and other members of the EnDev Board have a good understanding of our vision for RBF –
including what should and should not ‘count’ as an RBF. This might include a presentation to the
governing board, development of a short guidance note on RBF, and close liaison with other
energy-related RBF initiatives (including work by ESMAP within the World Bank, and Norway’s
Energy+ proposal). This is estimated to require 0.40 FTE to support startup of the programme,
particularly in the first two years, and then to maintain ongoing engagement and support to review,
course corrections and extraction of learning. This staff time would also be targeted at ensuring
that DFID country offices are aware and supported regarding integration of RBF activities in their
respective countries or regions.
In the longer term it is possible that DFID country offices may want to ‘buy in’ to the partnership
with additional, country-specific funding taken from their ICF-approved climate change
programmes. A partnership with EnDev would provide a potentially efficient delivery vehicle for
country offices that want to expand their support for low carbon development in a way that matches
DFID policy priorities. Feedback received so far from DFID-Ethiopia, DFID-Rwanda and DFIDUganda suggests strong interest in this approach if the initial round of RBFs prove to be successful
on the ground.
RBF Facility design
The RBF facility would involve the following elements:
1. Publication of a call for RBF proposals within EnDev
A call would be developed with EnDev Frankfurt and in consultation with EnDev staff worldwide (an
initial consultation has already been held at the EnDev world meeting 25th August 2011 at which
DFID was represented) which would request initially concept notes, and then full proposals for
designs of RBF instruments responding to country and technology sector specific contexts.
Key considerations in concept notes and then proposals in order to justify why an RBF is the right
instrument would include:
o A market and full financial analysis of technology and sector demonstrates they are
close to financial viability – indicating that there is a market and technology which is at a
stage close to being able to provide commercial returns, which could be accelerated by an RBF.
o Analysis of the enabling environment of sector capacity, knowledge, acceptable policy
gaps/barriers – indicating either that there are no significant structural barriers to market
creation, or that another programme (eg other elements of EnDev or Lighting Africa) addressing
these barriers will compliment an RBF (i.e. in this case the RBF will be necessary but not
sufficient)
o Analysis of economic benefit of technologies to people, society and environment -
justifying the use of public funds to support such a sector, and the likely change which can be
expected in the RBF support period (eg in terms of access to energy by poor people, labour
saved, or empowerment through economic and entrepreneurship opportunities available to
women). This analysis would also assess willingness to pay and support the level setting and
targeting of the RBF.
o Identifying a capital barrier to creating supply that can be financed if market is more
secure/lucrative initially – thereby creating a reduced long run cost post-RBF making the
sector more viable as a result, a key RBF goal. Raising of private finance in response to the
RBF is also a critical success factor and key aspect in achieving value for money in DFID’s
involvement. The potential for private investment will be assessed for each RBF design
proposed - our analysis suggests that a 1:1 leverage ratio should be achieved on average.
This will be will be assessed after the case by the two yearly evaluations (see section D of
Management Case).
o Highlighting linked productive use impacts of energy services supported - helping men
and women work their way out of poverty and multiplying the impacts of the intervention. The
gendered benefits also need to be valued (in terms of employment, health and time saved)
rather than just the use of energy for production, the benefits of which usually accrue to men.
o Identification of the implementation strategy and preliminary agreements in place –
indicating how the RBF will be managed and monitored, how a financial institution will be
selected to administer the RBF financing, how government and the private sector has been
consulted and their degree of support, and how other complementary NGO and development
activities such as sector support and capacity building are collaborating.
The above approach means that we would only pursue an RBF in countries and sectors where the
policy environment does not form a critical barrier. Of course, should policy concerns subsequently
arise then EnDev’s link to GIZ and DFID’s own country office network give us some limited capacity
to provide policy support.
The call for RBF proposals would be issued in a 2 stage process with an initial call in the first year,
and a second call in year 2. This staged process will enable learning and experience to be built up
over time with designing and implementing RBFs.
2. Establishment and management of the RBF portfolio
Proposals produced would be assessed and if necessary developed further with country
proponents such that by the end of year 2 the RBF facility will have a portfolio of 10-15 RBF
instruments in at least 5 countries with values of £1m-3m each over 4 years. A minimum of £1m is
intended to ensure that each RBF is of a minimum scale such that it can have a transformative
impact on a market segment, unlikely with smaller support volumes. A 4 year period reflects the
assessment that to respond to an RBF, a market should already be at a near-commercial stage. In
addition to review of individual RBFs against the criteria above, the portfolio as a whole will be
structured in order to ensure that potentials to leverage scale and clustering benefits of similar
RBFs across adjacent countries, or in linked sectors within countries are captured – potentially
amplifying market impacts and delivery of results.
Each RBF will be financed by the DFID-funded facility through EnDev up to agreed annual planning
limits in terms of the volume or cost of support to a sector-specific set of results eg. household
connections from a mini-grid, cubic metres of biogas produced, set top-up on LED lanterns sold,
etc. Each country may have more than one RBF, which will each be specific to a technology subsector, and potentially geographical area within the country. ICF priority countries will be
prioritised in RBF selections (see earlier section on The Proposal for country overlap), but a
premium will also be placed on innovation, impact and potential for learning, such that other
countries will still be eligible.
Although each RBF will have annual ceiling commitments, there will also be an internationally run
review process managed from GIZ Frankfurt which will review the portfolio as a whole (see
Management Case section on M&E), and may propose modifications in allocations to the Board
from the 3rd year onwards. There would therefore be a degree of flexibility in terms of movement of
funds to RBFs which are showing the best impact and market acceleration results, rather than
“locking up” money unclaimed in less successful RBFs waiting for results which are not being
achieved. More successful RBFs may then have their results-based ceilings raised by contrast.
Such decisions would be proposed to the EnDev board by GIZ and modified and agreed as
appropriate by the board.
Although EnDev would be responsible for management of the RBF programme, they would also be
encouraged to partner as appropriate at the country level in establishing and running the RBFs.
For example tendering for the services of a national/regional financial institution to conduct RBF
transactions would be a requirement of the programme. Advertising of the RBF opportunity to firms
will also be a key early activity in establishing the RBF, and partnering if necessary with relevant
marketing or outreach organisations would be encouraged. The specific structure and partnerships
proposed by each EnDev country programme will form part of the evaluation on costs and quality.
3. Monitoring, lesson extraction and communication from the RBF portfolio
EnDev country staff would be responsible for data collection and monitoring of the performance of
each RBF via clear reporting links to the financial institution disbursing the incentives. EnDev
Frankfurt would be responsible for compiling and reporting these results to the Board. In addition
however, a budget would be set aside for mid-term (2 years), end of project (4 years) and postproject (6 years) evaluations involving a team of DFID and external evaluators. This would be a
substantial exercise involving in-country evaluation of RBF performance both through the
implementation, but also crucially post-implementation. This post-implementation evaluation will
reveal the extent to which sustainable markets have really developed in the technology sub-sectors
in those countries, and the extent to which the RBF was responsible where possible, as well as the
developmental benefits that have been achieved. Results will be published and disseminated via
multiple fora and media, and a communications strategy will be integrated into this activity. EnDev
will lead on this, including establishment and maintenance of an informational mini-site on the RBF
programme, and publication of reports and learnings etc.
Targeting and Results
The challenge fund design of the proposed RBF facility means that the countries or technologies of
intervention will not be defined at the outset, but will come from the responses to the call for RBF
designs from EnDev countries. This approach is intended to incentivise innovation and drive value
for money within the programme, with the technologies, sectors and RBF designs linked with
existing activities, country-level capacity and underlying commercial viability. Initial analysis and
design work in Rwanda on pilot designs also provides confidence that such approaches can be
formulated in response to circumstances, and that local market, financial and government actors
are interested.
There is however a high risk that with a simple ‘number of households’ target, EnDev would have a
strong incentive to prioritise low cost, lower service level outcomes (such as access to improved
cookstoves or LED lanterns) rather than high cost, higher service level outcomes (such as a
connection to a mini-grid). This will be addressed by developing an Energy Service Index (ESI) that
measures both the quality and sustainability of different energy service outcomes, and measuring
progress in ESI units rather than households. Conversely, we also need to ensure that incentives
are not skewed towards high cost, high service outcomes which are less accessible by the poor.
Further details are provided in the section on value for money. This will be developed with EnDev
and other partners (ESMAP in particular has an ongoing work programme looking into this) such
that it can be used in the access impact valuation and selection of RBF proposals submitted.
Assumptions and evidence
This intervention is categorised innovative, in that the full menu of RBF options has not been
targeted at decentralised renewables markets in developing countries before. However, outside of
the aid world, RBF is really quite well known in northern markets with the feed-in-tariff being a
particularly widespread example, others include incentives on energy products such as the subsidy
on loft insulation in the UK. Moreover, Output-Based Aid (OBA) has used subsidies based on
delivery previously at project levels for energy (see www.gpoba.com), which is one type of possible
RBF instrument. In addition, Advance Market Commitments (AMCs) have been used in health and
education sectors in several low income countries. There is also international experience with
feed-in tariffs (FiT) at grid-connected scales, including some in developing countries. Some of the
RBFs closer to OBA or FiT type interventions therefore have stronger evidence bases, while others
using more innovative RBF variants like reverse auctions will have less. Such a mix in the portfolio
is desirable in order to balance innovation risk with learning potential.
Evidence base (and market data particularly) in RBF countries will be particularly important in
targeting sectors, designing RBFs and setting incentive levels correctly. This evidence will be a
requirement of the call documents, and EnDev offices have generally strong sector knowledge and
experience on which to base this, if drawing also on private, government and NGO contacts. The
technological evidence base for technologies being supported, given that few early stage
technologies would be appropriate for an RBF in any case, is also relatively high.
The overall portfolio would therefore be considered as having a medium risk and evidence base, in
terms of previous experience of this category of intervention and in countries/sectors of
intervention. However, the degree of innovation in more cutting-edge RBF types is one of the
primary justifications for going ahead with this intervention, and is reflected in the emphasis placed
on monitoring and evaluation. Success or failure of different RBF forms, will provide valuable
information on the viability of different approaches, and on the design of future RBF schemes if the
approach is more widely adopted. The risk to public funds is inherently limited by the results-based
nature of RBF, where incentives are paid against specified outputs (e.g. mini-grid connections, or
functioning biogas units) – however an opportunity cost risk is recognised if markets do not
respond.
Social Appraisal
Considerations
Does the
intervention
sufficiently
target poor
people?
Does the
intervention take
into
consideration
gender and
social inclusion
elements?
Assessment
Decentralised renewables in low income countries is a sector which is to a large extent
inherently targeted at poor people, since it targets those without grid connections and
is particularly suited to rural and peri-urban areas. For example, in sub-Saharan Africa
just under 80% of people had no access to electricity in 2008, with the number without
access to modern fuels slightly over 80%. However, within the off-grid sector there is
still a difference between a solar home or mini-grid connection for example which has
relatively high price (in the hundreds of dollars), compared with improved cookstoves
or solar lanterns say (in the tens of dollars or below). The RBFs will be targeted at
expanding the availability of the low-cost products at even lower prices, as well as
bringing down the cost of the higher cost interventions – thereby improving energy
access for poor people. This outcome will be tracked by M&E built into the programme
structure, with an Energy Supply Index (see Appraisal Case) used to track and value
the different levels of access created. The focus on the use of markets to deliver
services may not inherently target poor people, however we would look to the
integration of voucher schemes or measures such as lifeline tariffs
(http://www.regulationbodyofknowledge.org/faq/socLifelineRates/) for mini-grids in the
RBF designs to maximise the distribution of benefits, including via a degree of crosssubsidy between consumer segments.
The impacts of use of decentralised renewables in the home - such as improved
lighting, cleaner cooking and mechanical services such as milling – tend to
disproportionately benefit women who are typically responsible for household tasks
such as cooking and fuelwood collection, and also suffer most (with their children) from
the impacts of indoor air pollution. Cost reductions stimulated by the RBFs should
enable more women to access these products and services. Additionally, in the RBF
designs, we would look to maximise the participation of women in the supply and
maintenance elements of energy provision, as has successfully been done already in
several South Asian cases (e.g. the Barefoot Solar Engineers case).
Does the
intervention give
adequate voice
and
accountability to
poor people?
EnDev will be required to run a consultation in the preparation of the RBF designs in
each country, where they would consult with private sector, NGO and government
participants - but also with communities directly. This would enable preferences for
energy services and modes of access (vouchers, shops etc) to be taken into
consideration in the design of the RBFs. EnDev regular monitoring and verification of
RBF claims will include a component of soliciting feedback from
customer/beneficiaries, which will include a survey form including questions on how
energy access has contributed to incomes for example. The mid-term, final and expost evaluations will also include a component of inputs and feedback from beneficiary
populations, thereby enabling a feedback and improvement cycle (see Management
Case). This will require sufficient capacity on social and gender issues within EnDev,
as well as external evaluator teams.
Climate and environment assessment
Considerations
Will the success of the
intervention be affected
by climate change or the
environment?
Assessment
Some renewable energy technologies, such as hydropower or biomass, are
vulnerable to climate impacts such as reduced rainfall or changes in
agricultural productivity. As this intervention targets private sector delivery, it is
important to ensure that RBFs target opportunities that have been screened
against possible climate impacts (eg. as DFID Rwanda have done for
proposed RBF designs there). Where possible, guidance should be provided
to private sector participants to enable them to factor such risks into project
appraisal decisions. Overall the impact under this consideration is deemed as
medium/manageable (B).
Will the intervention
contribute to climate
change or environmental
degradation?
This intervention is not expected to contribute to climate change or
environmental degradation as the technologies supported are low carbon and
renewable. With respect to hydro, RBF would only support micro- and picohydro which are run-of-river, so flooding of land will not be an issue. There
would be a requirement on any micro-hydro plant supported that river
diversions would be limited to recommended minimum flows maintaining the
river ecosystem. RBFs relating to biomass use (improved stoves, briquettes
etc) can all be expected to have positive net impacts on forests, however
consideration of biodiversity and ecosystem services implications will
be included in the criteria for analysis of individual RBF proposals. Some risks
relating to waste electrical equipment exist, but will be mitigated by
requirements on planning for this issue in the RBF designs (see the Risk
Assessment section for more details). Overall, the intervention is categorised
as representing low/no risk (C).
Could the intervention
help tackle climate
change or build
resilience to it; could it
help improve the
environment or its
management?
The emphasis on low carbon energy means that this intervention is intended to
make a positive contribution to efforts to tackle climate change by avoiding or
reducing emissions. Decentralised provision of modern energy services also
has the potential to reduce the vulnerability of households and communities to
the impacts of climate change – for example, by enabling
diversification/improvement of livelihoods returns via application of energy
services such as pumped irrigation, and earning opportunities in decentralised
energy supply. Use of decentralised renewables can also protect people from
systemic failures (drought or natural disasters disrupting centralised grid
systems) and insulate people from fossil fuel price volatility. Furthermore, the
use of renewable energy and improved energy efficiency can, in many cases,
reduce pressure on local environmental assets such as forests. This
intervention is therefore categorised as having a high potential opportunity (A).
As indicated in the table above, there are a range of climate and environment implications from this
intervention. Although identified risks are medium/low, the existence of potential mitigation and
adaptation opportunities means that overall this intervention should be classed as B.
Summary of evidence and climate & environment assessment
Option
Evidence rating
1
2
3
Strong (existing approach)
Medium (RBF approach)
Medium (RBF approach)
Climate
change
and
environment
category (A, B, C, D)
B (common goals/risks between options)
B (as above)
B (as above)
C. Appraisal of options
All options would seek to generate a portfolio of projects delivering energy access via
decentralised renewable energy technologies. The type of project that might be supported by
RBF is likely to be one that is commercially viable but not yet at scale or reaching poorer
consumers (the technology is competitive against alternatives from a levelised cost perspective,
market demand exists, there is consumer willingness and some ability to pay, and a return on
investment is possible), or one that is near-commercial (economies of scale might be achieved
through market development, sufficient to reduce costs and make a return on investment
possible). RBF should be targeted at stimulating markets and overcoming barriers to entry,
including the cost of connecting to the grid for poor households, for example. Mechanisms will
be made available for a period of 4 years, after which (in near-commercial markets) it is
assumed that prices will have reduced and distribution channels improved such that the sectors
will continue without RBF support at an elevated level of activity (see section B). It is not
envisaged that the RBF mechanism will act as a long term subsidy to make certain low carbon
technologies competitive against lower cost alternatives. Where long term subsidies are
required, and likely to be available (e.g. in the form of government RE feed in tariffs or carbon
finance), then the RBF programme might seek to take advantage of these by encouraging their
take up and use by private sector developers.
The identification and development of RBFs will therefore be highly selective. As part of
programme design, a number of potential projects have been identified that may meet these
commercial or near-commercial criteria. These are set out in the below table:
RBF
Technology
Country
(Data Source)
RBF Description and Benefits
1
Solar Lanterns
Rwanda
(ECA)
Annually tapering incentive payment for distribution of solar
lanterns for household use. Lanterns are already cost effective
against alternatives (kerosene lamps) from a levelised
perspective, but have a higher capital cost and are not widely
used (little word of mouth effect). Micro-credit can assist with
uptake, but even moderate reductions in retail price (currently
around $17 in Kenya for example) at the current stage of sector
scale-up would substantially expand accessibility to the $1-2/day
income bracket and so increase volumes, further driving down
prices and increasing awareness/word of mouth (interview with
Andrew Tanswell, Toughstuff). Co-benefits include extended
education and other productive activities, reduced air pollution,
long term fuel cost reductions, lower household outgoings.
2
Institutional
Biogas
Rwanda
(ECA)
Mechanism to incentivise capital investment and effective
operation of biogas for heating and cooking in schools and other
institutions. Such projects are currently near-commercial, but
would benefit from more effective service and improved
operating efficiency. Co-benefits include reduced firewood
consumption and other running costs, and improved air quality
and sanitation.
3
Micro-hydro
mini-grids
Rwanda
(ECA)
RBF to encourage the maintenance and extension of existing
micro-hydro mini-grids through payments for connections and
maintenance of connections. Although mini-grid development
itself is not commercial without some form of capital subsidy, the
improved use of existing infrastructure does provide an
opportunity for private sector developers. Co-benefits include
improved lighting, reduced air pollution and extended productive
activities in the household.
4
Pico-hydro
Mozambique
RBF to support installation and delivery of pico-hydro systems in
smaller communities (>5kW). RBF might support providers per
(>5kW)
(ENDEV)
unit of energy delivered. Systems are near cost competitive. Cobenefits include improved lighting and reduced air pollution.
5
Solar
kiosks/battery
charging
stations
Ethiopia
(ENDEV)
RBF to encourage the development and operation of solar
kiosks and battery charging stations, to include the distribution of
Pico PV lamps, solar lanterns and off-grid solar home systems
(SHS) and solar cooking stoves. RBF might be provided in
several forms, including a credit subsidy or guarantee for
purchasers of PV and charging systems, or a payment based on
service provided (lanterns sold, charging service provided),
allowing scope for greater capital investment by private
entrepreneurs. Co-benefits include improved air pollution, safer
batteries, better light and productive activities, communication
and entertainment.
6
Solar Home
Systems – Pico
PV(Bangladesh)
Bangladesh
(ENDEV)
RBF provides a capital subsidy for purchasers of pico-SHS,
accessible to the poorest households. This incentivises
developers to invest in import and distribution of higher quality
systems. A system of hire purchase and guarantee would be
developed to match SHS payments against current spend on
kerosene lighting making the technology cost competitive in poor
households. Co-benefits to include improved health outcomes,
more productive household activities, improved lighting,
communication and entertainment.
7
Productive Use
technology (e.g.
treadle pumps,
solar drier)
Mozambique
(ENDEV)
RBF to support take up of ram pumps, PV pumps, or provision of
electricity from pico-hydro power plants which can be used for
irrigation or to operate a mill and dehuskers. Investments are
commercial (<2 yr payback), but are capital intensive and banks
lack experience of financing. Potential for declining capital
investment support or interest rate subsidy as banks become
more familiar with technologies, or provide RBF direct to
distributors of equipment. Benefits are primarily improved
agricultural output. Different technologies can also be targeted
to ensure both men and women are able to access the benefits,
as responsibility for production usually has strong gender
divisions.
Of these potential areas of application for RBF, detailed work has been undertaken on a
potential RBF structure for technologies 1-3 to the extent that an economic appraisal on the
costs and benefits of the RBF might be assessed. Technologies 1-3 offer a good spread of
CO2e, avoided fuel cost and energy access welfare benefits on which the economic appraisal is
based. Scoping reports have been prepared for technologies 4-7, but further work would be
required at the RBF detailed design stage in order to assess the specific type, level and
effectiveness of RBF that might be most suited for application in the given market. From a pure
CO2 abatement perspective, consideration might be given to technologies that appear below the
line on a marginal abatement cost curve (MAC curve).
Assumptions
Each of the appraisal options has been reviewed in terms of its ability to deliver capacity into the
market at scale producing socio-economic and environmental benefits. The options all assume
a similar % split in the project portfolio by technology (33%-Solar Lanterns, 33%-Institutional
Biogas, 33%-Mini-grid management). The following assumptions have been used as the basis
for individual options:
Option 1: Do Nothing. Reflecting the growth of the solar lantern market, and its near
commercialisation, our business-as-usual (BAU) baseline assumes that 25% of the solar lantern
capacity supported may have occurred under normal market development, albeit under slower
timescales. Benefits under options 2-4 are therefore calculated on the basis of the remaining
75% of units enabled. For institutional biomass and mini-grid connections, it is considered that
95% of installations under options 2-4 would be additional due to the limited commercial market
for such activities outside traditional donor funded capital grant programmes.
Option 2: Capital Grants and Capacity Building Programme: This assumes a traditional
programme of capital grants and capacity building, to be delivered by a partner such as ENDEV.
Total programme and delivery costs are assumed to be 30% while capital grants are 70% of total
spend, in line with common practice. The additional 10% programme and delivery costs by
comparison with Option 4 can be considered as the upfront costs of engaging with beneficiaries,
and building capacity in the supply chain, the costs of which are likely to fall more heavily on the
programme rather than on the commercial intermediaries participating in an RBF.. For the
purposes of analysis, the capital grant is assumed to be similar to the RBF in size, with
technology users meeting additional capital and operating costs.
Option 3 – DFID RBF: This assumes an RBF programme managed directly by DFID. Set up and
management costs are estimated to be higher than operating through a partner with an existing
in-country presence (25%) – Option 4 below. This 25% can either be considered by starting
with Option 4 and then adding on the extra costs of developing contacts and building an effective
in-country network, or by estimating the actual DFID staff costs involved (say one UK based A2
plus five in-country programme managers) and adding this to the fixed costs that would have to
be paid. The need to create DFID institutional capacity, and the associated learning curve would
result in slower programme implementation, and potentially less effective identification of
opportunities (estimated at 90% of benefits delivered under option 4).
Option 4 – 3rd Party RBF: This assumes a range of programme management, technical
assessment and delivery costs totalling 20% (based on discussion with EnDev). These costs
include: i) detailed project design and development so as to be able to set RBF finance levels, ii)
management of RBF in country – including advertising, running the competition if appropriate,
etc., iii) administration of payments through local banks and bank charges, and iv) evaluation at
mid-, end- and post programme (£2m out of the £30m has been allowed for evaluation/
knowledge products – which is 6.5% of the overall programme). This is the preferred option,
providing in-depth partner knowledge of markets and potential areas of RBF application, and the
opportunity for rapid implementation and scale up.
On the basis of the above options, a representative project portfolio was developed, to include
RBF payment structures, capital and operating cost data. On the basis of funds available under
the RBF facility, the likely reach in terms of technologies deployed was assessed.
The costs of programme delivery were assessed against potential benefits arising from CO2
abatement, energy and other resource cost savings, and benefits to the poor from improved
access to energy. A classic cost benefit analysis was undertaken. The Net Present Value
(NPV), Internal Rate of Return (IRR) and Benefit Cost Ratio (BCR) were calculated for the
various options.
CO2 benefits were valued on the basis of Green Book HMT Guidance using a 3.5% discount
rate and the DECC Central Traded Price Series. Other costs and benefits were discounted at a
10% rate. Resource cost savings (i.e. the lower fuel bills attributable to energy users as a result
of switch from kerosene or fuel wood to more cheaper renewable alternatives) were valued at
the local cost of energy and other inputs. Welfare benefits are valued on the basis of World
Bank evidence relating to the household benefits of energy connections - between $30-$70 pa
for rural electrification and at $1 pa per solar lantern. (World Bank/IEG,2008). No additional
welfare benefits are assumed for institutional biogas on the basis that this is primarily a fuel
switch process.
The assessment of benefits is derived from conservative assumptions of what would be
additional to expected market activity, with 75% of lanterns and 95% of institutional biogas and
minigrid connections considered to be beyond BAU assumptions. While options 2 (Grant
Programme) and 3 (DFID RBF) both offered positive economic returns even on this basis,
Option 4 (EnDev RBF) was the most attractive, with an NPV of £43m and benefits higher than
costs by a ratio of 2.8:1. It is expected that the programme will avoid over 900,000 tCO2e,
primarily through the switch from kerosene and biomass use for lighting and cooking to
renewable electricity sources. We expect option 4 to mobilise in excess of £50m in private
sector and consumer capital investment, which by programme end will have been offset by
£24m in direct RBF payments – thereby leveraging an amount in excess of the cost of the
programme. This relatively modest assessment of the level of private sector leverage is based
on the fact that the target “Base of the Pyramid” energy access markets in poor countries are
relatively weak and nascent, compared with centralised renewables sectors in middle-income
countries for example where leverage might be higher.
Table: Economic Appraisal of Business Case Options (Final numbers subject to change
based on final portfolio definition)
Option 1.
Do
Nothing
Option 2.
Capital
Grants
Option 3.
DFID RBF
Option 4.
EnDev
RBF
NPV
IRR
Benefit
Cost
Ratio
tCO2e
Private Sector
Capital Invest.
(undiscounted)
Net Private
Sector Contrib.
(discounted)
NA
NA
£34,654,597
23%
2.5
800,425
£44,780,030
£18,843,592
£33,756,562
23%
2.4
771,838
£43,930,743
£16,981,769
£43,001,539
26%
2.8
914,771
£51,177,177
£21,535,533
Option 4 is therefore preferred - The result would, however, have been even more positive if
other factors such as jobs for men and women, health and levelised cost improvement benefits
could be modelled as part of the appraisal. It is recommended that these aspects are included in
the M&E framework, for analysis during programme implementation and that the programme
serves to build the evidence base for these co-benefits. Additional qualitative benefits of this
option include participation in the EnDev board with its associated influence on the reform
agenda for the multi-donor effort on energy access, and integration with existing/future EnDev
“pump-priming” support to sector policy and capacity.
Sensitivity and Break Even Analysis
The benefits of option 4 are spread between CO2e abatement benefits, financial savings from
reduced fossil fuel use and welfare benefits to users of new energy technologies. Of these, the
economic benefits of lower fuel costs of £46m are the most substantial, themselves exceeding
both the DFID RBF programme costs (£23.7m NPV) and the total RBF investment including
leverage (£43m NPV). This is an indicator of the commercial viability of the RBF, in that the
programme can be justified in terms of the direct financial return to end users. Excluding these
fuel cost savings, the programme still remains close to break-even based solely on the socioeconomic benefits of carbon abatement and welfare improvement. The below table sets out the
benefit cost ratios excluding a given set of benefits.
NPV Benefits
Benefit Cost Ratio
CO2 benefits excluded
£42,454,289
1.8
Fuel Saving benefits excluded
£20,667,049
0.9
Welfare benefits excluded
£45,980,641
1.9
Use of the lower DECC carbon price series does not significantly impact the analysis, reducing
the BCR from 2.8 to 2.5. Nor is it feasible to perform a sensitivity analysis on fuel costs, which
are derived from market prices rather than assumptions. From a break even perspective, we
therefore assess what level of programme failure would be required for the benefits to be less
than the overall costs (defined as the percentage of energy technologies that would have not to
be installed or operate effectively). We estimate that the RBF will only need to achieve a 36%
implementation success rate for the overall programme to break even in socio-economic terms.
Handling non-monetised costs, uncertainty and risk
There are also large potential non-monetised costs and benefits arising from such a programme.
Some of these (health, education) have been captured in our estimate of welfare benefits, but
these are by their very nature uncertain. Were the programme to engage in RBFs for larger
scale technologies (e.g. mechanical power for agriculture), there is the potential for significant
economic diversification and value added within the agricultural sector. We have not attempted
to model these or other economic productivity gains for end users, particularly where commercial
activity is enabled as a result. Where benefits are least certain therefore we have made
conservative assumptions, as a complement to the sensitivity analyses above.
Successful RBFs might be expected to result in the establishment of more sustainable energy
technology markets and supply chains. The business case does not claim attribution for the
potential transformative impact of the programme, such as the benefits accruing to any new
market entrants. Nor does it claim benefits for any technologies implemented by the RBF
programme partners for which an RBF is not directly received (whether within the RBF payment
period or beyond).
The economic analysis derives from a basket of potential technologies that might be suitable for
an RBF type approach, and where in-country research has been undertaken to assess
feasibility. The costs used in this business case however are only indicative, and the actual
costs of a given RBF will be dependent upon a range of factors, including the geographical
scope, perceived political and economic risks, existing supply chain and distribution options, and
taxation considerations. These may be marginally higher or lower than those used in the
scenarios presented here, but are not likely to be material from an economic analysis
perspective as energy technology costs are broadly similar across markets.
E. Measures to be used or developed to assess value for money
The proposed programme aims to deliver value for money by incentivising private investment in
extending the reach of near-commercial off-grid renewable energy sectors. The programme’s
primary measure of vfm will be the cost of reaching a beneficiary for each technology class (we
currently estimate £12/beneficiary on average). The results-based nature of payments mean that
public money is only paid out on achievement of results, and only as a portion of the costs of
delivery – with the end consumer and the delivery agent picking up the rest of the costs.
The previous section set out the economic appraisal of the identified options. The preferred
option (RBF through EnDev) has a NPV of £43m, an IRR of 26% and BCR of 2.8:1, indicating that
the option is economically attractive on the basis of avoided carbon, fuel cost savings and welfare
benefits of energy access alone. It is likely to have higher non-quantified developmental impact
deriving from growth, innovation and health co-benefits. These will be monitored as part of the
M&E process, and a framework will be agreed with EnDev to establish baselines and agree
reporting frameworks prior to programme implementation (see management case). Also to be
monitored are the levelised costs of energy service provision (for example the provision of minigrid connection costs at c. £600 per household) and the poverty profile of potential customer
segments. Also to be monitored is the abatement cost per tCO2e, which is expected to be
relatively high, reflecting the focus on bottom of pyramid energy access rather than on GHG
abatement.
The choice of EnDev as the potential delivery partner for RBF mechanisms has itself been made
on the basis of value for money (VFM) considerations. In selecting EnDev, consideration has
been given to its well-established country network, particularly in ICF priority countries, and its
links with GIZ as a co-implementation partner in other territories. EnDev has proven knowledge of
energy access technologies and markets and is well placed to deliver rapid implementation and
project scale up, as well as reliable M&E. This will increase the likelihood of achieving impacts
within the allotted programme timescales. EnDev’s approach to value for money in procurement
systems is discussed in the commercial case.
Care will be taken in the evaluation of RBF proposals to ensure that each individual RBF
developed under the programme will represent value for money, and will contribute to the VFM of
the wider programme. A basic cost benefit analysis (CBA) will be requested for each RBF
element, setting out the cost structure, and expected benefits. RBFs that do not show a strong
prospect of ultimate financial and commercial viability (with or without other ongoing carbon or
government support) will not be pursued.
The RBF structure itself encourages a VFM approach as payments are only made on the basis of
pre-defined outputs and targets being achieved. Innovative mechanisms will be used to ensure
that the size of the cash incentive is proportionate. One way of doing this is to adopt a reverse
auction approach with entrepreneurs bidding against one another on the basis of what quantity of
service they could deliver for a given amount of financial support, or conversely the lowest price
for a given quantity. This would support a process of price discovery, and establish parameters of
expected demand and service quality. This information (which would be published in reporting
from the programme) is crucial in moving towards full private sector sustainability once
programme support is tapered and finally withdrawn. It is expected that local financial institutions
would then engage to support those business models that had been demonstrated to be
commercially viable.
As entrepreneurs are only rewarded for the successful provision of services over time, they in
effect carry the economic and performance risk. While this limits DFID’s exposure (in that monies
will not be disbursed without delivery), it is nonetheless vital to ensure that the RBF funds are
deployed to fully maximise outcomes. To this end, the M&E system will monitor progress of
individual projects against milestones. Where businesses are discovered to be under-performing
or their models found to be non-viable, financing will be redirected to expand those activities that
are more successful. The programme will therefore promote a culture of ‘backing winners’.
The programme aims to deliver VFM through targeting a market transformation impact. Individual
entrepreneurs are likely to see the range of individual support mechanisms offered under RBF as
an opportunity to scale up their businesses in an integrated manner. Single entrepreneurs may
choose to participate across multiple RBF facilities, potentially to develop a range of integrated
energy solutions covering electricity, cooking and lighting services for example. Through the
incentive structure, the programme will encourage larger scale energy services (at community or
institution level) that might support more productive uses and encourage economic development.
By focusing on countries in close proximity, (e.g. Kenya, Tanzania, Uganda, Rwanda) we may
encourage entrepreneurs to operate across borders and benefit from regional integration efforts
such as TradeMark East Africa.
RBF will also pursue an innovative and enhanced M&E framework to assess not only the quantity,
but also the quality of energy services provided. This valuation framework is in development with
participation by ESMAP, EnDev, UNDP, IEA, Practical Action and others. More details are
provided below:
Valuation of energy access impacts
Providing access to modern energy services is not a binary outcome, where a household or
community either have access or do not. The reality is that there are a several levels of energy
service ranging from the very basic (reliance on biomass for cooking and candles for lighting at
night) to what might be comparable to expectations in developed countries (cooking with modern
fuels and a constant and high quality electricity supply). For economic development the availability
of mechanical power is also crucial for men and women (eg agricultural-processing, water
pumping etc). And finally, the availability of electricity and modern fuels for clinics, schools and
water pumps is crucial for community-level service provision.
In order to address this, it is proposed that a core component of this intervention will be work to
develop and agree with our development partners an Energy Supply Index (ESI) that can be used
to measure outcomes from interventions targeting improved access to modern energy services.
The intention would be to allow the comparison of interventions that target different technologies
and business models – and therefore different outputs. By monitoring and reporting all
interventions using a single unit of measurement, the value for money of different approaches can
be more easily compared.
Although more work is required, the ESI might involve an assessment of the quality of energy
supply provided combined with an assessment of sustainability – i.e. a measure of the physical
and/or commercial durability of the product or service provided, as well as the impact on access
for poor households/the developmental benefits. So, for a product with a short lifespan (e.g. a LED
lantern), and where it is likely that further public funding will be required to incentivise a repeat
purchase, a discount would be applied to the level of energy service provided to reflect the low
sustainability of the intervention. Conversely, for an investment in infrastructure with a long lifetime
(e.g. a hydro-powered mini-grid system), and where there is reasonable confidence of operating
the asset without repeat funding, no discount would be applied.
It should be noted that the level of granularity possible in defining improvements in energy access
proposed by the ESI is in excess of that likely to be required by the overall ICF logframe under its
energy access indicator(s) currently in development. This means that the information collected in
M&E on the RBF programme can easily be aggregated up as required into a single number for
“improved energy access”, or two numbers if one is required for electricity and another for cooking
for example. This has already been done already in order to arrive at the proposed headline
figure of 2.5m energy access beneficiaries for this intervention.
An illustrative example
This example is for interventions targeting households – a separate ESI calculation is
needed for community-level interventions (e.g. electricity for schools or businesses). Here
the ESI is based on the Energy Supply Index (ESI) developed by Practical Action in 2010 (to
be updated based on consultations in the PPEO 2012 edition), and a workstream on this is
underway now at ESMAP, including a workshop which was held at the Oslo conference on
financing energy access in October 2011. The latest version available will be used as part
of the evaluation of proposals in the first and second rounds of RBF instrument design and
approvals.
ESI = (Final ESI – baseline ESI) x (n / 20), where n = average number of years
proposed intervention is likely to last without further public funding (i.e. measure of
sustainability)
Energy Supply Index (ESI)
Type
Level
0
1
2
Household
fuels
3
4
5
0
1
2
Electricity
Mechanical
power
3
4
5
0
1
2
3
4
5
Quality
Using non-standard solid fuels such as plastics
Using solid fuel in an open/three-stone fire
Using solid fuel in an improved stove
Using solid fuel in an improved stove with smoke extraction/chimney
Mainly using a liquid or gas fuel or electricity, and associated stove
Using only a liquid or gas fuel or electricity, and associated stove
No access to electricity at all
Access to third party battery charging only
Access to stand-alone electrical appliance (e.g. solar lantern, solar phone
charger)
Own limited power access for multiple home applications (e.g. solar home
systems or power-limited off-grid)
Poor quality and/or intermittent AC connection
Reliable AC connection available for all uses
No household access to tools or mechanical advantages
Hand Tools available for household tasks
Mechanical advantage devices available to magnify human/animal effort
Powered mechanical devices available for some tasks
Powered mechanical devices available for most tasks
Mainly purchasing mechanically processed services.
Scenario 1 – high value intervention
If all of the RBF funding were dedicated to mini-grids, then one could expect an average
uplift in the ESI of 6-10 per household, depending on the extent to which electricity became
used for cooking and mechanical power. Taking 8 as the benchmark, with an assumption
that the benefiting community is at level 1 on Electricity and Mechanical Power, and the
mini-grid will be self-sustaining for over 20 years, the ESI would be as follows:
ESI = (8 – 2) x (20 / 20) = 6
So for example, to achieve 1m units of improvement on the ESI, 167,000 households would need
to be connected to a mini-grid.
Scenario 2 – low value intervention
If all of the RBF funding were dedicated to LED lanterns, then one could expect an average
uplift in the ESI of 1 per household (assuming that previously most people were using 3rd
party battery charging - level 1). Assuming that the LED lantern would be useable for
around 2.5 years, the ESI would be as follows:
ESI = (1 – 0) x (2.5 / 20) = 0.125
So, to achieve the same 1m units of improvement on the ESI, 8m households would need to be
provided with a LED lantern.
As part of this process VfM tools would be developed that can attribute value to the differing
developmental impacts of supplying 167,000 households with high value interventions, over
supplying 8m households with low value interventions.
Commercial Case
A. Why is the proposed funding mechanism / form of arrangement the right one for
this intervention, with this development partner?
This intervention will be delivered through a Partnership Agreement with the German
Government (BMZ), who will in turn commission GIZ, which classifies it as an arrangement with
a partner government (Germany). The associated costs and procurement procedures are
therefore indirect.
The Partnership Agreement will be modelled after the one currently in place between the
Netherlands (DGIS) and BMZ with respect to the EnDev Programme, with possible modifications
specific to the use of UK money within the RBF facility and the reporting/accountability which
DFID requires. It will describe the results we want the programme to achieve, administration of
funds, procurement rules, annual reporting cycle, and disbursement schedule. The reason for the
agreement being with BMZ rather than GIZ direct is that this is the current structure used for
EnDev, and this maintains the EnDev board (which DFID would sit on) as the overall governing
body for the programme. Under this arrangement, GIZ Frankfurt costs for international
programme co-ordination are also covered by BMZ, which means that UK funds are targeted at
the country RBF implementations only.
This arrangement was proposed after due consideration of alternatives. DFID is not able to
directly manage this programme, as analysed in the appraisal case. Consideration was also
given to breaking up the programme into a fund management role which would be tendered out,
and then in turn the winning bidder would run a call for 10-15 separate implementing agents. This
was ruled out since this would mean that clusters of 2-3 RBFs per country would be run by
different institutions, making co-ordination and efficiency benefits from clustering very difficult to
achieve. At country levels this would imply parallel systems for tendering (potentially multiple)
financial institutions, contracting, advertising, management and monitoring - which would reduce
value for money. A tender for a single contractor (or consortium) to manage the whole
programme was also considered, however direct commissioning of the EnDev programme
managed by GIZ was preferred for the following key reasons:

The lack of other potential integrated delivery agents with the requisite reach and
experience – the German government has supported GIZ (formerly GTZ) in its work on
energy access for many years - building its global capacity on energy in particular. GIZ also
manages work for the EU (eg the Partnership Dialogue Facility) and the Netherlands (EnDev
as mentioned). The UK and other countries have not built this capacity in the same way, and
it is more dispersed in a handful of international NGOs and consulting firms. Creation of
consortia of consulting firms and NGOs in response to this call would be possible, however
such capacity would have to be pieced together, with likely implications on build-up of nontransparent margins and inefficiencies. Creating another management vehicle is also likely to
lead to duplication, when in fact RBF funds are flowing through the managing institution
rather than to them in any case.

The value-added of engaging with an existing energy programme with extensive incountry operations – As illustrated in figure 1, EnDev/GIZ has energy operations in 18
countries worldwide, around half of which are ICF priority countries. Their existing contacts
with relevance to the decentralised energy access sector with governments, local firms,
banks and NGOs will be important in getting RBFs off the ground quickly at country levels.
Their established M&E systems will help measure the impact of the RBF and any difference
between it and more conventional practices. EnDev have transparent fee and overhead
prices and do not charge profit when directly commissioned.

The leverage that can be obtained through working with Germany and the Netherlands.
By supporting EnDev, DFID would take a seat on the EnDev board, working together with the
Netherlands and Germany (with Norway expecting to enter via Energy+). Membership of the
Governing Board (see Management Case) will imply a degree of influence over EnDev’s
reform approach and project cost structure, as well as gaining donor co-ordination benefits
and leverage of the UK funds which will be earmarked specifically for the 10-15 RBFs, as
described in the Appraisal Case. The relative focus on capacity building in the use of Dutch
and German funds for example would also complement results-based UK funding where
capacity building of local energy enterprises targeting poor consumers will help enable those
firms to respond to RBF incentives at greater scale. The introduction of RBF into EnDev will
also offer the opportunity to enhance the focus of the programme further on results and
market creation.
B. Value for money through procurement
The following are the key measures which will be undertaken as part of this programme to ensure
value for money through procurement:

Design of the RBFs – The nature of RBFs is such that there is competition between
participating firms and social entrepreneurs. Where appropriate, reverse auction or
competitive tendering for RBF incentives will be used in order to ensure that incentives are
set at levels which have the desired market stimulation effect, without rent taking. Where
such processes are not appropriate and incentives are set in advance, they must be
determined according to a thorough assessment of the internal rate of return required to
achieve commercial viability (in a particular market or sub-sector) – taking account of
barriers such as real and perceived risks, existing capacity to deliver, and access to credit.
Where appropriate, caps will be set and flexibility introduced into the design of each RBF
to maximise uptake whilst limiting rent-taking behaviour. For example, we would expect
incentives to taper off over the 4 year period of each RBF. EnDev country offices would
also have to consider how the RBF designs target poor households and economic
opportunities for women.

Challenge fund for design and selection of RBFs – EnDev countries will design the
RBF instruments in response to a competitive internal call. Using an Energy Supply Index
to compare different proposals will enable the selection of RBFs which offer the best costbenefit ratio, as well as enable selection of those which are most innovative in controlling
costs. The importance of affordable improvements for poor households at low ESI levels
(like a solar lantern or improved stove) will also be recognised in RBF selection.

Clustering in RBF country and technology selections – Although in a few cases a
country may be awarded only 1 RBF, more often each will be running 2-3 with
corresponding savings to maximise clustering efficiencies in management, as well as
market complementarities between sub-sectors. Where regional clustering is possible this
will also be maximised.

Collaboration with other programmes – The RBF is a specific instrument which does
not include capacity building or policy development activities for example at significant
levels. Such activities are however highly complementary and leverage will be gained by
collaboration with sector support programmes such as Lighting Africa, dealing with issues
such as quality standards.

Competition on RBF running costs – As indicated in the management case, GIZ/EnDev
Frankfurt will disburse DFID funding through EnDev/GIZ country programmes, who will in
turn contract a financial institution to administer RBFs to participating private firms on the
basis of the terms of the RBF. Management and co-ordination cost will be integrated in
RBF proposals and EnDev/GIZ countries proposing higher impacts compared with costs
will be in an improved competitive situation in evaluation of their proposals. Management
costs/presence in rural areas/bank charges of financial institutions at country levels will be
a factor in selection in response to the tender for that role run by the GIZ/EnDev offices
(see below). Management costs at the EnDev Frankfurt level will be taken by BMZ as part
of the EnDev commissioning agreement.

Tender for role of financial institution – EnDev country offices which are successfully
selected to run one or more RBF will tender out the role of financial institution at the local
level with the bank meeting the criteria at most value for money being selected. Where
only one viable institution exists, this must be justified. Where national laws require
financing to go through a state body, this will be clearly stated and compared in analysis to
other countries applying for support. Although costs are not known at this stage, the target
is for these to be included in the 20% of overall RBF costs going to management/admin.
Estimations of these costs will be a competitive factor in the selection of individual RBFs.
Procurement of supplies and services (including the financial institution) associated with the
management of the programme shall be done in accordance with GIZ’s internal, rules and
regulations for procurement and contracts – which is well established. Written documentation
shall be kept of all decisions regarding invitations to tenders and placing of orders.
GIZ/EnDev shall ensure, upon entering into contracts for supplies and services to be financed
from the RBF facility’s funds, that:
a. the terms of payment of these contracts conform to customary trade practices
b. any supplies to be financed are insured against transportation risks to an adequate and
customary extent in order to provide for the goods to be replaced or restored to their
original state, imported goods being insured in freely convertible currencies, as far as
possible
c. reimbursement, insurance, security, warranty or similar payments which may be claimed
on the basis of those contracts, shall be recorded in the relevant Partnership Project
Journal and shall be reemployed for that Partnership Project.
GIZ shall document the transfer of ownership of any supplied goods, which are destined for third
parties and shall support its financial statements with copies of such documents.
Financial Case
A. How much it will cost
The proposed budget for this intervention is £30 million over four years. These resources will
come from the International Climate Fund (ICF) of £2.9bn. The cross-departmental ICF Board
gave its endorsement of this concept at its meeting on 22nd March 2011, with Ministerial approval
granted on 1st July 2011. DECC and HMT have been consulted in the process of preparing this
business case, as have relevant departments within DFID, including QA, Financial Accounting and
Management Accounting.
Although the ultimate disbursement schedule to participating firms will depend on the level and
rate of uptake from private sector participants, the disbursement of funds from DFID to EnDev will
be scheduled as illustrated in the table below on the basis of need. Need is considered to have
arisen when EnDev have committed, with the approval of the EnDev board, to fund a particular set
of RBFs and must enter into corresponding contracts at national levels.
Date
1 May 2012
Amount (£m)
0.35
Milestones
Agreement signed, call developed and issued, RBF
proposals are under development in response.
2 December 2012
3 May 2013
14.65
0.35
4 December 2013
14.65
First round of RBFs approved and started
First annual report published, second call for proposals
launched and proposals and portfolio developed.
Second round proposals approved and started
TOTAL
30
In order to conduct the process of establishing the RBF portfolio EnDev will require resources in
advance at country levels for market research, consultations and economic analysis in building up
the RBF design proposals. This is recognised in payments 1 and 3 above which would be made
covering the 6 month inception periods in the run up to establishment of each round of RBFs.
Financing for the RBF contracts themselves (payments 2 and 4) will be transferred to EnDev at
the time of approval in the form of a Promissory Note with the Bank of England. EnDev require
payment in this way so as to be sure they can meet the liabilities they will incur when launching
the RBF instruments. EnDev will then draw down the funds according to the terms of each RBF
design and budget in terms of annual expenditure ceilings. These drawdowns would be the
quarterly sum of claims from EnDev/GIZ country offices in line with agreed activities at the country
level, primarily disbursements to national financial institutions which are in turn making contracted
payments to private sector participants in the RBF scheme in that quarter (see section C on how
funds are paid out).
EnDev will be authorised to act as fund managers of this RBF fund and make recommendations to
the Board on reallocations of funds in years 3-4 of any given RBF. This will ensure that there are
no unused funds (for example, due to lack of uptake on particular RBFs) and all funds can be
channelled to scale up of successful RBFs or, in exceptional circumstances, used to implement
additional RBFs. EnDev will also be authorised to not commit the entire fund to individual RBFs at
the outset, but to maintain a reserve fund for scaling up high performing RBFs.
Another possibility is that the RBFs turn out to be more successful than anticipated. EnDev will be
required to monitor this and manage the individual instruments so that an unfunded liability is not
incurred (as discussed in the Risk Assessment section of the Management Case).
Since EnDev requires DFID to meet the cost of the RBF payments up front through the use of
Promissory Notes in this way, DFID will not be in the position of needing to disclose the
anticipated future RBF payments in the accounts as a contingent liability. The full costs will be
covered by expenditure during this Spending Review.
Management costs associated with running each RBF including local advertisements, negotiation
and contracting, calls for financial institutions, audits, M&E, ongoing review/analysis, national coordination and evaluation activities will be built into individual RBF proposals and budgets.
Programme management costs will be a hybrid of costs for programme management and
monitoring agreed on the basis of a transparent budget for staff time and costs, plus a percentage
of 1% on RBF transactions. This will ensure the necessary management capacity and systems
are in place at country and international levels, but retain an incentive to fully utilise resources in
the most efficient way, via the most successful RBF projects.
There will also be bank charges at the level of the financial institution disbursing funds, and this
will be set as a result of negotiation linked with a tendering process run by EnDev at the country
level. This indicative cost will be built into the budget proposed for each RBF at country level, and
will form an element of the competitiveness of each RBF proposal (see previous section on Value
for Money through Procurement).
B. How it will be funded: capital/programme/admin
The core funding of £30m will be programme-funded from the International Climate Fund (ICF).
The disbursement schedule is listed in the section above and is programmed into the ICF central
planning spreadsheet.
RBF funds are for results which take physical form in terms of access to low carbon energy
products or services. Although the final portfolio of products and services cannot be known in
advance, these will include equipment/appliances such as lanterns and cookstoves, as well as
infrastructure installations such as hydro plants and biogas digesters. RBF financing does not
target capacity building or policy activities, although programme management will involve a
degree of negotiation and dialogue with sector stakeholders regarding design and setting of the
RBFs, including for example negotiating tax exemptions on incentives where appropriate.
It is therefore considered, on advice from FCPD, that the RBF expenditure will be a mix of RDEL
and CDEL, while programme management costs and financial institution charges (plus a possible
small proportion of capacity and policy related work) will be considered RDEL. A reasonable
assessment of the CDEL and RDEL solit for the RBF payments will be able to be determined at
completion of the design of each instrument, although an exact assessment will only be able to be
made on completion. If the mix of RBFs turns out to be consistent with that considered in the
Appraisal Case then two thirds would be CDEL (biogas digesters and micro-hydro mini-grids) and
one third RDEL (the solar lanterns). RDEL overall is therefore expected to be just under 50% (6 +
8m) and CDEL just over 50% (£16m), although this split will be reviewed and approved at the
point of commitment to the first and second tranche of RBFs, which will also be hold points in the
funding, as described in the section below and the management case.
This review is necessary in view of CDEL classifications and the potential issues as follows:
i)
RBFs will not necessarily specify that capital assets must be procured by the benefiting
entity, whereas DFID guidance on CDEL scoring specifies that a “direct link” must exist.
ii) Some decentralised energy technologies, such as LED lanterns and improved cookstoves,
may not be considered as capital assets due to their likely lifespan – they might be more
appropriately termed ‘consumer goods’.
All expenditure will be considered made at the point of deposit of the final Promissory Note
payment 4. Subsequent encashments will be as per the contract agreement with EnDev and the
constituent RBFs approved by the EnDev board, which will include DFID.
Expenditure with EnDev is considered ODA. Since the final recipients are likely to be private firms
however, in the call documentation and reporting it will be a requirement for EnDev to maintain the
conditions for ODA in the terms of the RBF incentives offered, and the eligibility of participating
firms.
Combining the above two points, all expenditure under this programme can be classified as ODA
and will be completed during the current spending round.
C. How funds will be paid out
DFID’s Partnership agreement will be with BMZ with transactions, reporting and payments
managed by GIZ Frankfurt as the implementing agency for EnDev. GIZ Frankfurt will also be
responsible for management and transactions with respective country offices in line with RBF
agreements. GIZ country offices will in turn be responsible for transactions with local financial
institutions who will in turn be responsible for payments to firms participating in the RBF. GIZ
country offices may also make other agreed expenditures with local firms or NGOs as part of
advertising or managing the RBF call, as well as auditing.
In more detail, the process of claiming and disbursing RBF funds (from the Promissory Notes
payments 2 and 4 in the table above) will be as follows:
1. Claim by firm on contract with financial institution
Although the details will depend on the design of the RBF offer, ultimately firms (whether at the
level of producers, distributors or wholesalers, less likely retailers unless at larger scale) will enter
into a contract with the financial institution regarding the incentive which they are able to claim for
an agreed result – eg creation of connections to a mini-grid, sale of a lantern or stove, delivery of
units of power etc. The required verification for the agreed result will depend on the result, but
may involve VAT receipts, warranty cards or verified readings from meters for example.
2. Claim by financial institution to EnDev Country office
On receipt of the evidence that a payment is due, the financial institution will conduct agreed
verification processes and then log the payment as due. Verified and due payments will be
consolidated by the financial institution at the end of the quarter and submitted to the GIZ country
office. This claim may be for more than one RBF if the country is running multiple, through the
same financial institution (to reduce administration and increase efficiency, it is expected that only
one financial institution would run all RBF payments in a given country, or even region). This
claim will include agreed bank charges, as a proportion of the claims by firms.
3. Claim by EnDev Country office to GIZ Frankfurt
GIZ/EnDev country offices would check these submissions and then once approved, the claims
from the financial institution will be sent on to the GIZ Frankfurt office. To the claim from the
financial institution should be added agreed programme management costs and expenses
incurred in the preceeding quarter by the GIZ/EnDev country office.
4. Claim by GIZ/EnDev Frankfurt on DFID Promissory Note
GIZ Frankfurt will check and consolidate all claims from participating countries (at least 5) and add
the agreed 1% on RBF payments made as the management incentive on transaction volume. GIZ
would then make a single quarterly claim on the Promissory Note held by the Bank of England for
the consolidated total of the above. This value would then be encashed after checking by DFID
Accounting staff and paid to GIZ Frankfurt.
5. Payment by GIZ/EnDev Frankfurt to country offices
This would be made immediately on receipt of monies from the Bank of England, via existing intercountry transfer systems.
6. Payment by GIZ/EnDev country offices to financial institutions
This would be made directly by bank transfer on receipt of the money from GIZ/EnDev Frankfurt in
response to the original claim for the preceeding quarter.
7. Payment by financial institutions to participating firms
In most cases, firms would be required to have bank accounts, to which corresponding payments
will be made relating to the original claim by bank transfer. In exceptional circumstances firms
without bank accounts could receive a cheque or bankers draft to the value of the claim.
Although there are a number of steps in this process, this structure means that there is a
standardised quarterly cascade process of claims and checking. Firms are incentivised to
consolidate and submit claims by an agreed date at the end of the quarter to minimise wait time
between claim submission and payment. For compliant claims submitted at quarter end, it should
be possible for payments to be received within 30 days of submission by the firms – and this
figure will be reported on by EnDev as a performance indicator. Payments under the RBFs will
therefore effectively be in arrears and on the basis of need.
Funds for payments 1 and 3 in the table above for programme management will be paid out by
direct transfer to GIZ Frankfurt on the agreed dates. This advance funding will be required to help
pay for setup and scoping costs over a six month portfolio preparation period.
D. How expenditure will be monitored, reported, and accounted for
A strength of working with GIZ/EnDev is their well established financial monitoring, reporting and
accounting structures at country levels which helps to mitigate financial risks. GIZ Frankfurt and
GIZ Country offices will be primarily responsible for the monitoring and reporting of the
expenditures above. They will supervise transactions and accounting at the level of the financial
institution and the firm, while DFID will supervise transactions overall as submitted for encashment
against the Promissory Note.
In more detail, the roles and actions with regard to monitoring, reporting and accounting of spend
are as follows:

Financial Institutions – Typically national or regional banks, these institutions will receive
and validate claims from participating firms for RBF payments on the terms of the RBF
contracts they will establish with the firms. They will be responsible for checking the
authenticity and accounting practices of participating firms, as well as screening claims to
avoid double counting or invalid claims, before submitting quarterly consolidated claims to
GIZ/EnDev country offices. Financial institutions will be required to maintain accurate
accounts of claims and payments, as well as have this facility included in their normal audit.
Audit accounts should be submitted annually to EnDev/GIZ country offices.

EnDev/GIZ Country offices – Will have oversight of national financial institutions and will
randomly check an agreed proportion of claims back to the original recipient of the energy
product and service to ensure that the product or service was indeed received. Country
offices will be responsible for checking of the annual independent audit of the financial
institution. Standard EnDev/GIZ annual audit requirements on the office will also be
undertaken and include this programme. Any discrepancies or abnormalities will be reported
through normal channels to the EnDev/GIZ Frankfurt office.

EnDev/GIZ Frankfurt – Will have oversight of the country office activities of expenditure,
checking of annual country audits and management of budgets overall. They will be
responsible for the consolidated expenditure claims against the Promissory Notes. They are
also responsible for producing the annual report on the EnDev programme including annual
audit accounts to the EnDev Board for sign off. Additional regular updates are delivered at
EnDev Board meetings, including on financial disbursements against budget, and regularity
of claims and payments. Funding under the RBF facility will be separately accounted for
within the EnDev reporting framework, providing DFID with a real-time picture of RBF
commitments and spend.

EnDev Board – which currently includes the Government of the Netherlands (DGIS) and the
Government of Germany (BMZ), and which will involve DFID on establishment of this
agreement, has ultimate oversight of programme finances. The board will have the right to
request additional audits or review of finances by EnDev/GIZ as they consider necessary.
The DFID seat on the board will be taken by the head of the Low Carbon Development Team
within the Climate and Environment Department, Policy Division.

DFID – Will sit on the EnDev board, but also receive and check quarterly claims on the
Promissory Notes from GIZ Frankfurt. This will involve the Financial Accounting Department
and the Energy Advisor within the Low Carbon Development Team (part of the 0.4FTE)
overseeing DFID’s contribution to the project.
The cascade nature of the project and the multiple countries involved means that there are
several levels to the administrative burden of this programme. However all institutions involved
are already institutions which are currently annually audited, and as such this programme does
not impose any new requirements.
Costs of monitoring and evaluation, as well as any additional auditing will be budgeted in at the
level of the RBF proposals.
There is a risk that residual funds may be left over in the Promissory Notes if EnDev/GIZ are
unable to manage the programme to the point that all incentives are taken up. At the end of the
contracted durations of the Promissory Notes (4 years from date of deposit), the contract between
DFID and EnDev will stipulate that unused funds may be reclaimed or reallocated by DFID unless
DFID approve an extension of these funds on the basis of an application by GIZ/EnDev for that
extension. This decision would be taken in conjunction with the EnDev Board, but would be
ultimately held by DFID.
Management Case
A. Oversight
The diagram below illustrates the key stakeholders in this intervention. DFID would take a place
on the EnDev Governing Board alongside BMZ (Germany), DGIS (Netherlands) – with the likely
addition of Norway in 2012. The Governing Board meets at least twice a year and is presented
with regular updates from GIZ as the managers of the EnDev programme. The Governing Board
meetings are an opportunity for the donor organisations to scrutinise progress, debate priorities,
and take decisions on the allocation of funds. Additional communication takes place between
board meetings by email.
In-country programming, management and M&E is conducted by GIZ/EnDev country offices. This
includes stakeholder liaison and oversight, with quarterly M&E updates provided by each country
programme collated by the central EnDev team for presentation to the Governing Board.
EnDev in-country programmes are developed in consultation with the client country government
and other donors, often mediated through an Energy Sector Working Group or other similar body.
Private sector and civil society engagement would take place in the design and implementation of
RBFs through this working group, as well as in monitoring and evaluating programme/project
success.
The general structure of the programme would be as illustrated in the diagram below:
DFID
BMZ
Funds earmarked
for RBF Facility
RBF support
(0.4 FTE)
funds
DGIS
Overall
commission
EnDev
Board
funds
GIZ – EnDev International Management Unit
Administering call for RBF proposals, programme M&E
and co-ordination, reporting to board, overall fund
management.
funds + delegated management
Funds &
contract
RBF unit within EnDev/GIZ country
programmes
MOU
Management of sub-contracts, M&E of
programme, reporting, liaison with players,
review of business plans, contract audits.
MOU
National
Government/
relevant ministry
Agreement on
regulatory issues, tax
exemptions
RBF design
Local Financial
Institution
Administration of RBF
incentives, checking
firms/claims, providing loans
Funds &
contract
Private Firms
Other energy NGOs/agencies
Business plan, Investment,
delivery of products/services
according to RBF terms
Link to capacity building, sector support,
connect energy with social
programmes/productive uses
Figure 2: Management and Implementation structure of the RBF Facility
B. Management
Management of the EnDev programme, and the proposed RBF facility within it, will be the
responsibility of GIZ. DFID’s role is as a member of the Governing Board. UK funds, earmarked
for the 10-15 RBF instruments only, will be released at the 2 hold points (as described below and
in the Financial Case) with the agreement of the EnDev Governing Board as a whole, but at the
UK’s final discretion. Dutch and German funds within EnDev may also support the same subsectors as RBF funds (e.g. for complementary capacity building or policy work) and other funders
may join with board agreement to extend the volume of support available within the RBF facility.
UK RBF funds may however only be used for the 10-15 RBF instruments agreed. UK
membership of the Governing Board will give the UK a voice in the overall direction and approach
of EnDev, including the application of the other approximately €60m in funds available to EnDev
from 2012 onwards.
Selection of the individual RBFs to be supported will take place according to an agreed definition
and criteria set, and there is likely to be a continued DFID role in fleshing out how this will work in
practice. Support may include engagement with other organisations working on RBF, including
the Energy Sector Management Assistance Program (ESMAP) at the World Bank, the Center for
Global Development, and the EU Energy Initiative Partnership Dialogue Facility (EUEI-PDF).
Responsibility for this intervention within DFID will lie with the Energy Adviser in the Low Carbon
Development Team, Climate & Environment Department, Policy Division. The Energy Adviser
may need to engage with GIZ country offices directly in some cases to help explain the RBF
approach and encourage ambitious proposals. It is estimated that engagement with the EnDev
programme is likely to require an average of 0.40 FTE over the life of the programme, with a
stronger engagement up front in the first 18-24 months as the portfolio is established.
Further oversight is provided by the Team Leader of the Low Carbon Development Team, who
would take DFID’s seat on the EnDev Board. The authorising officer under delegated authority
limits is the Director of Policy.
The annual review and 6 monthly board meetings will allow DFID to take regular stock of progress
on the RBF facility and respond to GIZ proposals on reallocations or course corrections. Hold
points in funding allocations would be placed prior to the deposit of the Promissory Notes
payments 2 and 4. At these points DFID would have final discretion on whether to go ahead with
the respective promissory note or not.
However, once each tranche is signed off and deposited it will not be possible to claim back funds
that have been allocated to active RBFs since contingent liability arising from RBF schemes mean
that GIZ will need to keep hold of all funding associated with active RBFs until such liabilities
expire. These liabilities will expire after the 4 year term of each tranche of RBFs and at this point
DFID, in consultation with the EnDev board but at its own final discretion, may reclaim the money
or issue an extension or reallocation to the RBF instruments supported.
C. Conditionality
This proposal does not involve financial aid to developing country governments, so there are no
conditionality issues.
D. Monitoring and Evaluation
Monitoring of the programme will be primarily the responsibility of GIZ/EnDev country offices at
the national levels, GIZ/EnDev Frankfurt at the consolidated international level (including scrutiny
of country monitoring practices and outputs) and the EnDev board to review consolidated outputs
on a 6 monthly basis. The cost of monitoring and evaluation, as well as the generation of
knowledge products to communicate lessons learned more widely has been included in the 20%
programme management costs and comes to £2m of the £30m programme (ie. 6.5%).
In more detail the monitoring responsibilities of each management level will be as follows:

GIZ/EnDev country offices – responsibility for monitoring of RBF activities, outputs and
outcomes at the country level in line with the respective RBF designs and logframes.
Quarterly reporting against these logframes to GIZ/Endev Frankfurt will be made along
with financial claims as described in the previous financial case. Monitoring data will be
collected from claims and reporting from the financial institutions administering incentives,
but there would also be a requirement on GIZ/EnDev staff to also verify an agreed
percentage of firms and final recipients to ensure that firms and individual claims are valid.
Quarterly monitoring reports would be consolidated into an annual report submission also
sent to EnDev/GIZ Frankfurt. Requirements for baselines will depend on the design of the
RBF, but in general a monitoring baseline will be required in target geographical areas or
sectors, to enable tracking of impacts, disaggregated by gender and income categories.
Quarterly verification of recipients will include a degree of checking of earlier recipients,
checking longevity of supplied products and maintenance follow-up.

GIZ/EnDev Frankfurt – Will be responsible for providing guidance as required on the
monitoring requirements of the programme to GIZ/EnDev country offices, collecting
quarterly submissions and consolidating them into a biannual update for review by the
board at subsequent board meetings. The annual report will be prepared in the same way
and will require sign off by the EnDev Board along with the audited accounts (see financial
case). GIZ/EnDev Frankfurt will also be responsible for a degree of checking and
oversight of the country office programmes, including a minimum two-yearly monitoring
and support visit to each country undertaking RBFs within the 4 year term of the RBFs.

DFID – The DFID Energy Advisor with 0.4FTE on this project will be responsible for
reviewing and feeding back to the GIZ/EnDev management team on the quarterly
monitoring reports and review of the annual report before submission to the EnDev Board.
The Energy Advisor would also be invited on the bi-annual country monitoring and support
visits.
The evaluation schedule for the project would be as follows:

Year 2 review – A review would be undertaken at the end of year two. This review would
be led by the GIZ/EnDev Frankfurt team, the DFID Energy Advisor and would be
supported by external consulting support – although not be a full independent evaluation.
The review would be based on follow-up and verification of the second annual report. The
review would be targeted at ensuring that the full budget of the RBF facility had been
committed, that all RBFs were appropriately set and targeted, management systems were
in place, monitoring of benefit flows to poor people and carbon emission reductions clear,
financial plans in line with expectations (including RDEL/CDEL splits) and risks were being
managed.

Year 4 evaluation – An independent evaluation would be contracted for the programme at
the end of the implementation of the first tranche of RBFs (this will actually be from around
4.5 years since it will take 6 months to set each up). This evaluation will look at the
success of the first tranche against its stated outcomes on energy access in the 4 year
term, as well as in terms of the market transformation effects on unit prices, firms in the
market, investment levels etc. It will also review the status of the second tranche at midterm to ensure that any course corrections learning from the first tranche can also be
incorporated.

Year 6 evaluation – A final independent evaluation will be contracted for the programme
after the end of the second tranche of RBFs has completed. In addition to reviewing
energy access and market transformation impacts in the second tranche over its 4 year
period, this evaluation will also look at the status of RBF sectors from the first tranche and
consider the extent to which transformative impacts on these segments has outlived the
term of the RBF. The individual market transformation mechanisms expected will each be
assessed for their contributions and interactions: learning effects, efficiency improvements
from investments in production or distribution infrastructure, volume production/ordering
effects, reduced costs of loans/doing business and increased market awareness.
Contracting and managing these evaluations would be built into the management services
contract held by GIZ/EnDev to manage the programme.
E. Risk Assessment
The primary risks threatening the successful delivery of the intervention, and the associated
mitigating actions proposed and residual risks are discussed in this section.
The results-based nature of the payments means that overall, in the case of non-achievement of
programme objectives, £6m of public funds would have been spent on management costs, while
up to £24m of DFID investment finance would be tied up (but not lost) for 4 years without being
claimed on the results not achieved. This approach therefore eliminates the risk of payment for
non-delivery and shifts the risks associated with providing the service/ product onto the suppliers
who are closest to the risk and best able to manage it. The only case in which this would not be
true is in the case that corruption or fraud occurred (see next paragraph and bullets). The
constituent risks associated with non-achievement relate mainly to the effectiveness of the RBF
instruments and are discussed in the remainder of this section, along with climate and
environment risks.
An important area of risk in a programme which involves the payment of incentives to private firms
via a tiered structure including national financial institutions, is that of corruption/fraud. The
nature of RBFs is that they are paid on the basis of results achieved and so it is critical to the
success of the projects that results which are claimed and paid for are real and verified. At the
same time, the distributed nature of the markets being targeted and the “consumer good” type
nature of some of the products supported (lanterns or stoves) for example to large numbers of
people makes it costly and impractical to check every single transaction and household
benefitting. The way this will be addressed regarding specific risk points in the transaction chain
are as follows:

False/double claims by firms to financial institutions: the terms of each RBF will clearly
stipulate the evidence required for a firm to make a claim on an RBF incentive. The financial
institution will be required to check this evidence in a 2-stage process. The first stage will be
checking of the credentials of the firm in terms of legal establishment, tax registration and
accounting practices at the time of a firm’s registration for the RBF. The second stage will be
in the checking of each quarterly claim itself and, although this will vary with the nature of the
RBF, it will involve VAT receipts, warranty cards signatures and/or stamps from customers as
well as individual identity numbers and/or addresses where available. The financial institution
will be responsible for checking claims against previous claims to ensure that no double
counting is made, and that accounting records held by the firm are complete. In terms of
verifying the actual receipt and use of the energy product or service, the EnDev/GIZ country
office will be responsible for a quarterly random site verification of an agreed percentage of
claims. This will also be an important feedback mechanism on customer satisfaction and
ongoing use of energy services. Verification will include sight and testing of any devices in
place to avoid possible collusion between people who could be paid a small incentive to sign
up as “consumers” by firms in order to make false claims. Verification rates will be included
in quarterly monitoring reports and any issues taken up with claimant firms. Additional
checks may be undertaken and contracts rescinded if further errors/false claims are detected.

False/double claims by financial institutions to GIZ/EnDev country offices: Under the
terms of the contract to be national RBF financial institution, a full paper trail will be required
to be held by the financial institution from each quarterly claim submitted by each firm,
through to the consolidated quarterly claim made by the institution to EnDev/GIZ country
offices. These claims will be randomly checked by GIZ/EnDev country offices in reviewing
quarterly claims and will also be annually audited by the appointed independent auditor of
each financial institution.

Monitoring of transactions within GIZ/EnDev: Independent audits of the GIZ/EnDev
country offices and the organisation as a whole according to the standards agreed between
BMZ and GIZ will also include the review of submissions on accounts going through
GIZ/EnDev’s accounts – which will be the case for the RBF funds.
The above measures address and limit the risk on misuse of funds to the extent possible, without
imposing an excessive burden on the programme in terms of transaction costs. Residual risks are
those which cannot be picked up in the annual audits, and ensuring the independence and
diligence of these will be the responsibility of the management team.
The second main area of risk is around the effectiveness of the RBF in delivering energy access
via market stimulation. Within this, the first risk area is that advertised RBFs are not taken up by
firms, and so the outputs, including market acceleration, are not achieved. Risks will vary with
country and technology/sector specific contexts but include policy, capacity, financing and
demand risks not directly addressed by the RBF itself. These risks may also overlap and mutually
reinforce. The key dimensions of these risks and the mitigation measures proposed are as
follows:

Policy - takeup and success of RBFs may be inhibited by a whole series of adverse policy
conditions including bureaucratic hurdles in establishment and running of firms, regulatory
issues in obtaining permissions, state monopoly conditions, import duties and restrictions,
corruption in permit offices/processes and more. As RBFs do not include policy development
activities, RBFs should not be targeted at market segments or countries with insurmountable
direct policy barriers to decentralised energy products and services. In general the
decentralised nature of the products and services supported by RBFs make them less
susceptible to national policy conditions, however issues around taxation of the RBF
incentives would have to be agreed with respective governments before signing of RBF
agreements (essentially no specific taxation on incentives before normal taxation of overall
profits by a firm). Any policy changes actually required for an RBF to be effective should be
incremental (e.g. improving standards or lowering import duties), achievable via existing
dialogues, and generally in partnership with other initiatives in the policy space, rather than
as a discrete RBF activity.

Capacity is also a critical factor in successful takeup of RBF incentives. Capacity
requirements are primarily on firms delivering products and services, but also with financial
institutions managing transactions. There are several risk areas regarding capacity to deliver
energy products and services of adequate quality, as well as to market and support these
after sale to the degree required for products to stay in sustainable use. In general, as with
policy, an RBF should not be targeted at sectors in which no capacity or firms already exist
as it is likely that grant-based or capacity-building interventions would be more relevant and
address barriers more directly. Where capacity is still also a requirement, then RBF money
should be partnered with other funds and programmes (including EnDev activities) focussing
more on sector capacity building, in order to address this risk. GPOBA may provide
benchmarks regarding the extent of accompanying support provided in their OBA projects.

Financing risks are addressed by the RBF in terms of guaranteeing a degree of profitability
and viability in the end market. However, there are a series of other financing risks not
directly addressed by the RBF, including the ability to access affordable up-front loans and
investments in order to create the infrastructure and products to serve that final market.
Although the RBF should reduce risk overall, risks of failure in delivery of the services and
risks on the part of financiers providing loans to firms pursuing the market/RBF etc are not
addressed. This is to some extent a strength of the RBF in that the “normal channels” for
financing projects must be used, just with a strengthened effective demand, thereby building
real transaction experience and success in national enterprise financing systems. However,
a residual risk remains that firms will not be able to finance investments in production and
distribution in order to respond to the RBF. As above for capacity, partnering the RBF with
other donor programmes providing loan guarantee mechanisms, or impact investors
providing low cost patient capital or similar, would help address this risk.

Market demand/uptake – although the RBF will provide a degree of guarantees on the size
or value of market demand within the RBF period (with incentives/volumes announced
annually) there will still be a requirement on the part of participating firms to sell connections,
energy products and services etc to people. Issues with translating demand (for a cleaner
cookstove for example) into effective purchasing demand can in some cases also be
mediated by gender disparities in roles and control of finances for example. Reduced costs
to consumers as a result of the RBF should maximise access, but choice and preference will
still play a strong role as a proportion of consumer payment will be required in every case.
This is again a strength of the RBF in that consumer choice will influence which firms are
more successful in taking up RBFs, but if all firms are putting up products which are not
widely accepted, then the RBF as a whole would fail. In this respect, partnering RBF
incentives with ongoing awareness raising about the general risks and issues associated with
not using improved energy products (eg smoke inhalation, or kerosene burns) by NGO/CSOs
will be important, as will links to micro-finance institutions (MFIs) providing end-user finance
to women for example or supporting micro-business development - alongside promotion of
particular products by participating firms. The forthcoming update to the CBA (WHO, 2006)
on uptake of clean and improved stoves, being undertaken by WHO, will yield useful
guidance in how to improve demand and use of these products, and strategies for delivering
programmes.
In general the main mitigation approach to the above risks to RBF takeup are in the background
research informing the design of the RBF, in which a market analysis would be undertaken
including inputs from potentially participating firms as well as consumer groups, CSO/NGOs,
government departments and interested stakeholders (including both male and female users, and
potential entrepreneurs). On this basis RBFs should be targeted at sectors able to respond, with
partnerships to complementary capacity, policy or financing initiatives if necessary. Emphasis will
also be placed on the role of communities, and female entrepreneurs who can be harnessed to
‘sell’ and raise awareness of products within their communities, as seen in the mobile phone
industry for example.
If uptake is still slow, then monitoring should pick up and identify issues constraining uptake and
recommend changes in approach to the EnDev Board, which may include raising of the next
year’s incentive level, retargeting to some extent, or expanding partnerships with complementary
initiatives addressing risk areas.
In the event that RBFs are not fully taken up, then unused monies may be moved to higher
performing RBFs, or ultimately returned to DFID as discussed in the financial case. In this respect
ultimate residual risk on lack of RBF uptake is on variation between planned versus actual
expenditure, rather than loss or misuse of funds.
In addition to the risks around lack of takeup of RBFs, other risks relating to the effectiveness of
the RBF are as below:

Lack of impact on market fundamentals – if at the end of the RBF the marginal cost of
providing a given energy product or service to consumers has not reduced from that before
the beginning of the RBF, then it is likely that the market will revert to a similar state of activity
and will not continue to thrive and expand to serve more customers. The key cost reduction
mechanisms of the RBF namely: learning effects, efficiency improvements from investments
in production or distribution infrastructure, volume production/ordering effects, reduced costs
of loans/doing business and increased market awareness - may not be successful in all
situations. In this case then the RBF may have delivered on its objective in 4 years, but not
the ongoing and sustained market transformation hoped for. To some extent this depends on
the scope for cost reduction in a given technology or sector, which will be addressed in the
RBF designs.

Rent-taking/distortion from RBFs set too high – it is possible that even with good market
analysis in the setting of RBFs, that takeup will not be too low, but too high - potentially
indicating that the incentive is too attractive and rent-taking is occurring. This risk is reduced
in reverse-auction type RBFs where firms bid lowest price to deliver the result. However, in
situations where RBF levels must be set in advance, and where rapid takeup indicates it is
potentially too high, a review of the level of the incentive should be undertaken with a view to
reducing the RBF in the following year. Incentives announced for a given year should not be
changed or withdrawn however, as this would send a variable and uncertain signal to
markets, increasing risk premiums. There will always be limits on the amount of incentive
claimable in a given year in line with the RBF design and so there is no risk of overdrawing
funds, although countries may apply for an extension in the case of fast takeup which is
shown to be delivering the desired results. However, possible over-incentivising should be
carefully monitored, not only for its rent-taking impacts, but also for its potentially distorting
effects on markets which may then collapse on withdrawal of the RBF after 4 years. For
this reason, tapering off of incentives before removal is a preferred RBF design feature.
However, the primary mechanism for addressing this risk is the degree of flexibility in
modifying RBF incentives year on year, alongside ongoing stakeholder dialogue. An integral
part of this assessment will be the potential or actual role of carbon finance in this market,
which may in some cases overlap (see section below) – recognising that bringing this in after
the 4 year term of the RBF is over is also a potential approach to longer term market
internalisation of environmental benefits.

Insufficient benefit flow to poor people - Although the RBF will lower prices of energy
products and services thereby making them more accessible to poor people, the easiest
immediate market may still be people on higher incomes, even those who may already have
a degree of energy access and just wish to improve their service. Although this is not in and
of itself a negative outcome as a proportion of the market, the rationale for the RBF
programme and use of ODA is to expand markets serving poor people with linked
development benefits, and this impact must be maximised in RBF design and monitored
specifically. RBF designs will be asked to indicate how they specifically address the issue of
getting energy products and services into the hands of those with none, and measures
incorporated in the RBF design may include incentives linked to validated sales in particular
regions or low income communities, or integration of measures such as lifeline tariffs in
connections eligible for RBFs for example.
Each of these risks will be addressed in RBF instrument design and the market analysis work
required in order to justify a design. The logframe and monitoring processes will also explicitly
track these aspects, and reviews will recommend course corrections to the EnDev board as
required in the case that any arise to unacceptable degrees.
The final risk category to be addressed is with relation to climate and environmental risks. This
intervention is graded as B in terms of climate and environment risks overall as described in the
Appraisal Case. Generally risks are considered low and opportunities high as all technologies
supported are low carbon and decentralised, with potential also to support resilience and mitigate
carbon emissions. However, building on the risk assessment provided in that section, the
following are the specific risk areas which will be considered in RBF instrument designs:

Waste electrical equipment – although supported technologies do not rely on fossil fuels or
emit carbon dioxide they are often electrical equipment often involving batteries and in some
cases poisonous metals (eg lead or mercury) which require safe disposal at end of life. Key
considerations here are quality of the products provided enabling long lifetime as well as a
strategy for collection/replacement of consumables like batteries or bulbs (e.g. leasing
arrangements are particularly good for this). Each RBF instrument would be required to have
an approach to the issue of electrical waste, and if necessary build in mitigation measures to
avoid local environmental issues.

Weather/climate variability affecting renewable resources – although renewable energy
resources supported under this project can support the mitigation of climate change, they are
also in many cases more vulnerable to shifts in weather than fossil fuel resources. For
example hydro may be affected by shifting rainfall patterns or melting glaciers, while
bioenergy is also affected by drought. Solar tends to be more consistent around the equator,
although wind is also susceptible to larger shifts in air currents which may occur in the future.
Biogas requires water supply, which again may be affected by climate. In the selection of
sub-sectors in RBF designs an assessment of climate sensitivity will be required to ensure
that sectors being supported are as climate-proofed as possible with respect to the energy
resources being used.

Realising vulnerability reduction outcomes – although increasing energy access has the
potential to reduce vulnerability via supporting diversification and improvement of livelihoods
(eg via better returns on agriculture via pumped irrigation, or later opening of shops and stalls
with electric lights) these benefits are also contingent on other factors. These include market
access for improved products and in some cases addressing of other barriers such as lack of
business skills or social networks. It should not be assumed that where energy access, in
one or more dimension, is achieved that vulnerability is reduced automatically. For this
reason partnering RBF incentives with other funds and initiatives supporting poor people in
productive use of energy for example would assist in multiplying and extending benefits.

Managing integration of RBFs with carbon financing – in supporting low carbon
technologies towards commercial viability internalising environmental benefits, there is a
potential overlap with the expected role of carbon finance in closing the viability gap for
renewables. In practice the majority of carbon finance goes to large installations and has
less focus on development/energy access benefits than RBFs. However, at the voluntary
end of the market, carbon finance companies may support technologies in similar sectors.
Generally, RBF designs would have to show how RBFs would not contribute to double claims
(see section above on rent-taking) where these were not warranted by the benefits accrued
and that such funding was complementary to market stimulation, or ongoing internalisation of
environmental benefits.
F. Results and Benefits Management
The logframe for the RBF facility is provided below. The milestones and targets will be reviewed
and updated during review and sign-off of each of the two tranches of RBF instruments in year 1
and year 2.
EnDev will be tasked with managing the programme to achieve the results in the logframe, while
maintaining a mix of technologies. Over achievement of planned performance would mean
achieving the targets more quickly rather than delivering more of them (for example, delivering
more rbfs). Under achievement will be difficult to tell until the end of the programme when it would
mean fewer rbfs, fewer people reached etc., although a slower than planned take up rate would
be an early indicator that there may be an issue.
PROJECT
NAME
IMPACT
Demonstration
of the
contribution of
low carbon
energy access
to inclusive
economic
growth in at
least 5 countries
Results Based Financing for Low Carbon Energy Access
Impact Indicator 1
RBF country
governments
increase support to
low carbon energy
access during or
after RBF periods
Baseline
Planned 0
(2011)
Milestone
1
Milestone
2
Target
(date)
1 Govt
(2013)
3 Govts
(2015)
5 Govts
(2017)
Achieved
Source
EnDev reporting on national government policy and
budget
Impact Indicator 2
The international
climate and energy
architecture
integrates resultsbased financing into
programmes
promoting low
carbon development
Baseline
Planned 1 Prog.
(EnDev)
(2011)
Milestone
1
Milestone
2
Target
(date)
2 Progs.
(2013)
3 Progs.
(2015)
4 Progs.
(2017)
Achieved
Source
Review of Energy+, SREP/CIFs, SE4ALL, and
other programme design and reporting documents
OUTCOME
Outcome Indicator
1
Baseline
Milestone
1
Effective
demonstration
of results-based
financing as a
tool to
accelerate low
carbon energy
access via
decentralised
technologies
Headline number of
poor people with
improved access to
energy services
(mixture of ESI
levels assumed)
Planned 0m (2011) 0.5m
(2013)
Milestone
2
Target
(date)
Assumptions
1.5m
(2015)
2.5m
(2017)
1. That there is
sufficient private
sector capacity to
respond to the
incentives on offer.
2. That there is
sufficient interest
and capacity
among energy and
development
professionals, and
host governments,
in breaking out
from traditional
approaches to
design RBF
approaches.
3. That business
models exist for
the provision of
modern energy
services on a
commercial basis.
4. That poor
people are willing
to pay costreflective prices for
modern energy
services.
Achieved
Source
EnDev annual reports
Outcome Indicator
2
Baseline
Milestone
1
Milestone
2
Target
(date)
Planned Current
Average cost of
5% (2013) 10% (2015) 15% (2017)
delivering low carbon
costs (as in
baseline)
energy services to
Achieved
consumers via
supported sectors is
Source
reduced
EnDev annual reports. Indicator to be monitored
during programme implementation
Outcome Indicator
Baseline Milestone Milestone Target
3
1
2
(date)
Planned 0 (2011)
Number of
10 (2013) 40 (2015)
sustainable energy
Achieved
enterprises/ male
and female
Source
entrepreneurs
created or expanded
EnDev annual reports
50 (2017)
Outcome Indicator
4
Tonnes of CO2
equivalent reduced
or avoided
Baseline
Planned 0 (2011)
Milestone
1
Milestone
2
Target
(date)
-
-
914,000
tCO2e
(lifetime
emissions)
Achieved
Source
EnDev annual reports
Outcome Indicator
5
Baseline
Milestone
1
Milestone
2
Target
(date)
Planned To be confirmed in project designs dependent on
Reduction in
disability affected life
how many cookstove projects are taken up.
years directly
Achieved
attributable to the
Source
project for women
and children under 5
EnDev annual reports
Outcome Indicator
6
Amount of financing
leveraged for private
enterprises by RBF
programme
INPUTS (£)
INPUTS (HR)
Baseline
Planned 0 (2011)
Milestone
1
Milestone
2
Target
(date)
-
-
£21.5m
(2017)
Achieved
Source
DFID (£)
EnDev annual reports. Finance leveraged from
private equity and debt.
Govt (£)
Other (£)
Total (£)
DFID SHARE (%)
30m
0
28m
30m
52%
Baseline
Milestone
1
Milestone
2
Target
(date)
0 (2011)
5 initiated
(2012)
10 initiated
(2013)
10 complete 1. Sufficient
interest from
(2017)
Milestone
1
Milestone
2
Target
(date)
3 initiated
(2012)
5 initiated
(2013)
5 complete
(2017)
DFID (FTEs)
0.4
OUTPUT 1
Output Indicator
1.1
Design and
implementation
of at least 10
results-based
financing RBFs
in at least five
developing
countries
Number of RBFs
implemented
Planned
Achieved
Source
EnDev annual reports
Output Indicator
1.2
Baseline
Number of countries Planned 0
with RBFs
implemented
Achieved
IMPACT
WEIGHT (%)
50
INPUTS (£)
INPUTS (HR)
Assumption
EnDev country
offices in taking up
the RBF approach.
2. Scoping and
design work can
be completed in a
6 month period.
3. Private sector,
govt and CSO
participation in
design process is
adequate.
Source
RISK RATING
EnDev annual reports
M
DFID (£)
Govt (£)
Other (£)
Total (£)
DFID SHARE (%)
24m
0
0
24m
100
Baseline
Milestone
1
Milestone
2
Target
(date)
Assumption
0 (2011)
£4m
(2013)
£12m
(2015)
£24m
(2017)
Well managed
portfolio
development and
contracting
process by
GIZ/EnDev
Milestone
2
Target
(date)
DFID (FTEs)
0.2
OUTPUT 2
Output Indicator
2.1
Disbursement of
public funds to
successful
private
enterprises on
achievement of
results
Amount of UK
funding disbursed
through outputbased payments
into target low
carbon
decentralised
energy markets
Output Indicator
2.1
Planned
Achieved
Source
EnDev annual reports
Baseline
Milestone
1
IMPACT
WEIGHT (%)
40
INPUTS (£)
INPUTS (HR)
Expenditure on
background
research, risk
assessment and
setup of RBF
portfolio
Planned
£0.5m
(2012)
£1m
(2013)
-
-
Achieved
Source
RISK RATING
EnDev annual reports
M
DFID (£)
Govt (£)
Other (£)
Total (£)
DFID SHARE (%)
4m
0
0
4m
100
Baseline
Milestone
1
Milestone
2
Target
(date)
Assumptions
0 (2011)
2 (2013)
4 (2015)
6 (2017)
Monitoring system
set in place is
maintained prior to
contracting of
independent
evaluations
producing internal,
as well as
externally relevant
knowledge
products
DFID (FTEs)
0.1
OUTPUT 3
Output Indicator
3.1
Regularly
produce and
disseminate
guidance and
knowledge
products for the
wider
development
community
IMPACT
WEIGHT (%)
Amount of
knowledge and
guidance products
produced from
monitoring and
independent
evaluations for use
by others outside
official RBF
programme (i.e.
DFID country
offices, regional
development banks,
etc.)
DFID (£)
10
INPUTS (£)
2m
INPUTS (HR)
DFID (FTEs)
0.1
Planned
Achieved
Source
EnDev reports, independent evaluations (x2) and
review documents
Govt (£)
Other (£)
Total (£)
DFID SHARE (%)
0
0
2m
100
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