Electrification through renewable energies

Project description

Title: Electrification through renewable energies (PERER)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Madagascar
Lead executing agency: Ministère de l’Energie et des Hydrocarbures (MEH)
Overall term: 2015 to 2018

Context

In Madagascar, only 15 per cent of the population has access to electricity. In rural regions, which are home to more than two thirds of the population, that figure drops to around just 5 per cent.

Most households use fuelwood, kerosene lamps, candles, batteries, coal and diesel generators to meet their daily energy needs. The limited availability of energy causes disruptions to the functioning of the social infrastructure, particularly in rural regions. Schools, health centres and administrative offices – town halls for instance – are not alone in feeling the impact. Without a reliable power supply the country’s economy is unable to develop sufficiently. Madagascar’s overall development is therefore significantly hampered by poor access to and inadequate quantities of electricity.

Objective

The conditions for public and private sector investment in electrification through renewable energies are improved.

Approach

Improving the general investment climate is an essential step in making Madagascar’s electricity sector more attractive to public and private sector investors and securing investments. The Ministry of Energy and Hydrocarbons (MEH) addresses this challenge in the new energy policy, which was adopted in 2015. GIZ works primarily with the Ministry, the Board of Electricity Regulation (ORE) and the Rural Electrification Agency (ADER), as well as with other public and private actors. Through the PERER programme it contributes to efficiency, effectiveness and, above all, to implementing the measures designed to bring about improvements in the sector:

  • Policy and regulation: GIZ assists the main actors in devising an action plan for the implementation of the new energy policy and the development of an appropriate and effective management structure. It is also involved in setting out the legal framework, in particular in ensuring that the recommendations of all stakeholders are incorporated in the draft for a new electricity law.
  • Development of the public sector: GIZ advises and supports the Ministry of Energy and Hydrocarbons, the Board of Electricity Regulation and the Rural Electrification Agency, with a focus on strategic and organisational development, the introduction of a new information system and monitoring of the sector. It is also assisting the Government in setting up a new financing mechanism to promote electrification through renewable energies, especially in restructuring the national electrification fund.
  • Development of the private sector: GIZ is supporting the launching of a public-private dialogue platform for the state and private sector. The idea is to expand and encourage private investment in renewable energies in addition to building the capacity of private sector actors, not least in terms of their ability to develop bankable projects and finance their implementation.
  • Tender procedures: In collaboration with the state partners, processes and mechanisms for the awarding of concessions and authorisations are to be optimised in order to ensure that public-private partnerships in the energy sector can function properly.
  • Grid feed-in processes: GIZ advises and supports the Ministry of Energy and Hydrocarbons, the Rural Electrification Agency and the state power utility JIRMA in drawing up and applying standardised procedures for awarding concessions to independent power producers. It also strengthens the Government’s ability to negotiate and conclude power purchase agreements.

Results

  • The Malagasy Government announced its new energy policy in 2015. It sets out to provide 70 per cent of the population with access to electricity by 2030, with 85 per cent of that power to be derived from renewable sources. GIZ assisted the Ministry of Energy and Hydrocarbons in drafting the policy. It is also supporting the introduction of structures designed to implement the policy.
  • In 2017 a new draft bill for the electricity sector is being submitted to the Malagasy national assembly. It is the product of collaboration between the sector’s key actors.
  • GIZ has supported the process for awarding concessions for 47 enlargement regions. On the basis of these agreements, 2.2 million people will obtain access to electricity. This will boost the power generation capacity by up to 880 megawatts.
  • In collaboration with ADER, hydrological and socio-economic studies were conducted for three concession areas in the Sava region and in 98 village districts (fokontany) in the Androy, Anosy, Atsimo-Andrefana and Ihorombe regions in the south-west of the country. Estimates of energy demand can help improve the data availability for concessions in the future.
  • GIZ’s support for the tender management process has enabled the Ministry of Energy and Hydrocarbons to fulfil its function as an evaluating body competently; this includes the assessment of applications for concession agreements.
  • Four project agreements for hydropower plants with an output of between 20 and 110 megawatts have been signed. 1.5 billion euros of private funding was mobilised. These projects save 2 million tonnes of CO2 per year when compared with the use of other fuels such as diesel, oil or coal.