Sustainable Energy Access Planning A Framework Sustainable energy access planning, unlike traditional energy planning, gives primary importance to the energy demand of both poor and nonpoor households, the need to make cleaner energy services more affordable to the poor, the costs of both supply-side and demand-side access options, and the sustainability of technology and resource options. As such, this type of energy planning contributes to low carbon development and achievement of Sustainable Energy for All objectives. This report presents a framework for sustainable energy access planning that planners and policy makers can use to design cost-effective clean energy supply systems that both poor and nonpoor can sustainably access to meet at least the minimum amount of energy for their basic needs. The report discusses the multidimensional assessments involved in this type of planning, as well as their interlinkages and implementation issues. About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to the majority of the world’s poor. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance SUSTAINABLE ENERGY ACCESS PLANNING A FRAMEWORK ASIAN DEVELOPMENT BANK 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines ASIAN DEVELOPMENT BANK www.adb.org SUSTAINABLE ENERGY ACCESS PLANNING A FRAMEWORK Ram M. Shrestha Jiwan S. Acharya ASIAN DEVELOPMENT BANK Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) © 201_ Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4444; Fax +63 2 636 2444 www.adb.org; openaccess.adb.org Some rights reserved. Published in 2015. Printed in the Philippines. ISBN 978-92-9254-965-7 (Print), 978-92-9254-966-4 (e-ISBN) Publication Stock No. RPT157062-2 Cataloging-In-Publication Data Asian Development Bank. Sustainable energy access planning —a framework. Mandaluyong City, Philippines: Asian Development Bank, 2015. 1. Sustainable energy access   2. Energy for all  3. Clean energy  I. Asian Development Bank. The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. 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All photos are from ADB. iiiiii Contents Tables and Figures v Foreword vii Acknowledgment viii Abbreviations ix Executive Summary xi 1 Introduction 1 Background 1 Objectives of this Study 2 Structure of the Report 3 2 Sustainable Energy Access Planning Framework 4 Introduction 4 Elements of Sustainable Energy Access Planning 4 Key Steps in Sustainable Energy Access Planning and Linkages between Assessments 6 3 Energy Poverty Assessment 8 Introduction 8 Energy Poverty Defined 8 Approaches to Energy Poverty Assessment 9 Energy Poverty Assessment Approaches for Use in Sustainable Energy Access Planning 13 Data Requirements 13 4 Demand Assessment 14 Introduction 14 Approaches to Assessing Energy Demand 14 Demand Assessment Methodology for Sustainable Energy Access Planning 15 Data Requirements 21 5 Resource Assessment 22 Introduction 22 Dimensions of Resource Assessment 22 Approaches to Resource Assessment 23 Data Requirements 25 iv Contents 6 Cost Assessment 26 Introduction 26 Review of Cost Assessment Models 26 Proposed Sustainable Energy Access Planning Methodology 28 Incremental Cost of Energy Access 30 Applications of the Incremental Energy Access Cost, with Case Studies 33 Data Requirements 38 7 Benefit Assessment 39 Introduction 39 Potential Benefits of an Energy Access Program 39 Approaches to Benefit Assessment 40 Data Requirements 44 8 Sustainability Assessment 45 Introduction 45 Approaches to Sustainability Assessment 45 Methodologies for Sustainability Assessment 47 Data Requirements 52 9 Affordability Assessment 54 Introduction 54 Different Forms of the Affordability Problem 54 Approaches to Affordability Assessment 55 Assessment of Support Programs to Make Energy Services Affordable 58 Data Requirements 59 10 Implementation Issues 60 Introduction 60 Implementation Issues Specific to Individual Assessments 60 Other Implementation Issues 62 Appendixes 1 Data Requirements 63 2 Multidimensional Energy Poverty Index Approach 65 3 Total Energy Access: Minimum Standards 67 4 Energy Access Index 68 5 Multitier Framework 69 6 Energy Inequality 71 References 73 vv Tables and Figures Tables 3 Dimensions of Energy Poverty: An Illustration from a Study in Africa 11 6.1 Cost Assessment Models for Energy System Planning and Analysis 27 6.2 Appliance Mix and Total Electricity Requirement under the Multitier Framework for Electricity Access 34 6.3 Electricity Demand under Various Cases for 2017 34 6.4 Power Plant Capacity Mix, Electricity Generation, and Costs in Different Cases 35 8 Sustainability Indicators and Measures 48 A5.1 Multitier Framework for Household Electricity Access 69 A5.2 Multitier Framework for Household Cooking Solutions 70 Figures 2.1 Elements of the Sustainable Energy Access Planning Framework 5 2.2 Sustainable Energy Access Planning Framework: Overall Flow Diagram 7 2.3 Links between Sustainability Assessment and Other Assessments 7 3.1 Steps in Calculating the Multidimensional Energy Poverty Index 11 3.2 Characteristics of Energy-Poor Households 12 4.1 Bottom-Up Approach to Demand Assessment 15 4.2 Total Service Demand of Households for Consumptive Use 16 4.3 Steps in Estimating the Energy Demand of Energy-Poor Households 16 4.4 Estimating the Energy Demand of Non-Energy-Poor Households 18 5.1 Dimensions of Resource Assessment 23 6.1 Overall Methodological Framework for Assessing the Cost of Electricity Assess 29 6.2 Incremental Electricity Access Cost with Increasing Tiers of Electricity Supply 31 6.3 Incremental Cost of Electricity Access with Increasing Size of Electricity Access Population 32 6.4 Incremental Cost of Access to Clean Energy for Cooking 33 6.5 Average Cost of Electricity Supply for Damri, 2017 34 6.6 Supply-Side-Related Incremental Energy Access Cost for Damri (Considering Increments in Demand Relative to the Base Case) 36 6.7 Supply-Side-Related Incremental Electricity Access Cost for Damri (Considering Successive Increments in Demand at the Different Levels of Access) 36 6.8 Average Cost of Electricity Generation, 2017 36 6.9 Incremental Cost of Electricity Generation (Considering Increments in Demand Relative to the Base Case) 37 6.10 Incremental Cost of Electricity Generation (Considering Successive Increments in Demand at the Different Levels of Access) 37 vi Tables and Figures 6.11 Incremental Cooking Energy Access Cost Curve for Liwang with Only Cleaner Biomass Options, 2017 38 6.12 Incremental Cooking Energy Access Cost Curve for Liwang with Biomass and Nonbiomass Cleaner Options, 2017 38 7 Potential Benefits of Providing Energy Access 40 8.1 Dimensions of Sustainability Assessment 47 8.2 Overall Methodological Flowchart for Sustainability Analysis 47 9.1 Measuring Affordability Using the Energy Burden Approach 56 9.2 Measurement of Affordability through the Residual Income Approach 57 A6.1 A Lorenz Curve for Residential Energy Consumption 71 A6.2 Lorenz Curve with and without Energy Access Programs 72 vviiii Foreword The developing countries of Asia and the Pacific region face a number of stark challenges in their energy sectors: energy security, the interlinked issue of energy generation and climate change, and widespread energy poverty, with hundreds of millions having no access to electricity and billions more having no access to modern fuels for cooking or heating. The Asian Development Bank (ADB) is guided by an energy policy that was shaped to respond to these challenges, and help developing Asian countries achieve a supply of energy that is secure, reliable, accessible to all, and clean to support the region’s continued transition toward low-carbon, sustainable development. Sustainable energy access planning (SEAP) provides a new framework with which to achieve that goal. SEAP considers new options which traditional planning was unable to properly assess. SEAP allows for a direct and comprehensive response to the energy demands of the poor and the nonpoor alike, and links the issues of access and affordability together, to address those cases where poor families living within the range of the grid are nevertheless “priced out” of access to modern energy services. SEAP researches and weighs a number of closely linked factors: resources, cost, benefit, sustainability, and affordability, to plan out the ideal solution for an energy access program of high quality, wide reach, and positive effects. It is flexible enough to cover the major concerns of access to electricity and modern fuels as well as energy for productive activities and mechanical energy applications, which include pumping water and milling grain. ADB’s commitment to energy access is expressed through our Energy for All Initiative, which has guided our investments in energy access, and through our role as a lead organization and host of the Sustainable Energy for All Initiative’s (SE4ALL) Regional Hub for Asia and the Pacific. ADB, as part of SE4ALL’s global partnership, is contributing to the achievement of its 2030 goals, most notably the goal to provide universal energy access. This publication hopes to contribute to that work being done by ADB, and by all organizations seeking to maximize access to energy by providing an improved framework and assessment basis to shape responses and build better solutions. This publication was made possible with the support of the Government of Japan, and guided by the expertise of ADB’s Energy Sector Group. I extend my thanks to them and to the authors, Ram M. Shrestha and Jiwan S. Acharya, for adding to our knowledge of sustainable development planning. Bindu Lohani Vice-President (Knowledge Management and Sustainable Development) Asian Development Bank viii Acknowledgment This report was prepared by Ram M. Shrestha, Consultant, and Professor Emeritus of Asian Institute of Technology, Thailand, and Jiwan Acharya, Senior Climate Change Specialist (Clean Energy), ADB, with research support from Salony Rajbhandari and Niraj Acharya. Guidance and support was provided by Gil Hong Kim, Senior Director, and Yongping Zhai, Technical Advisor (Energy), Sector Advisory Services Division; and Preety Bhandari, Advisor and Head, Climate Change Coordination and Disaster Risk Management Unit of the Regional and Sustainable Development Department, ADB. Extensive inputs and guidance during conceptualization and preparation of this report were also given by Priyantha Wijayatunga, Principal Energy Specialist, and Anthony Jude, Senior Advisor, ADB. The authors acknowledge the members of the Pilot Asia-Pacific Climate Technology Finance Center and ADB’s operations departments for their invaluable inputs. The authors thank Hans Olave Ibrekk of the Ministry of Foreign Affairs, Norway; Christine Eibs Singer of SE4ALL; Richenda Van Leeuwen and Yasemin Erboy Ruff of the United Nations Foundation; and Bikash Pandey of Winrock International for their comments and suggestions on the draft report. Thanks also to Suman Basnet, Binod Prasad Shrestha and Anantaa Pande in Nepal, as well as Esmyra Javier and Remife de Guzman in ADB for their continuous support and inputs while preparing this report. The authors also like to express their appreciation to Dr. Govind Pokharel, Vice Chairman, National Planning Commission, and Ram P. Dhital, Executive Director and other staff of Alternative Energy Promotion Center, Nepal for their support and feedback in the report. ix Abbreviations BAU business as usual CFL compact fluorescent lamp EAP energy access program Eq equation ESMAP Energy Sector Management Assistance Program GHG greenhouse gas GIS geographic information system GTF Global Tracking Framework HICS highly efficient biomass cookstoves IEA International Energy Agency IEAC incremental energy access cost IEACC incremental energy access cost curve kg kilogram kgoe kilogram of oil equivalent kW kilowatt kWh kilowatt-hour LPG liquefied petroleum gas MEPI Multidimensional Energy Poverty Index MICS moderately efficient biomass cookstoves NREL National Renewable Energy Laboratory