Seven ways energy companies, donors, and governments alike can help ensure energy projects reach the people who need them most.
The Power Africa initiative is gathering steam in addressing energy poverty; but as the rubber begins to hit the road, and financiers convene to write checks for projects, it’s essential to ensure the needs of the poor are front and center.
At Oxfam we have been advocating for pro-poor solutions to such investment projects for decades, and yet challenges remain in getting them right, especially when addressing energy poverty for the poorest. Our new issue brief, outlines best practices that, while not exhaustive, cover a range of issues to help ensure investors, project implementers, and most importantly, the energy poor, all benefit from increased power generation. Here are the seven ways we think we can make that happen:
- The most important performance indicator: lifting people out of poverty
It’s shocking how quickly the needs of the poor get brushed aside in favor of profits, and this is nowhere more obvious than in the energy sector. Desired “development outcomes” should be defined and understood throughout the project with specific goals and performance indicators articulated. Examples include, increased household incomes, increased food intake, increased hours of electricity access (duration and magnitude) of specific poor households.
- Know your boundaries
Project boundaries can change rapidly beyond what was originally planned, especially in energy projects. In project-speak, this relates to accounting for associated facilities and infrastructure (e.g. transmission lines) outside of the initial project area, but within its area of influence. When thinking about additional facilities, it’s essential that the same level of environmental and social (E&S) rigor applied to the central project is applied to them as well. Ask the question: could the related facilities be viable or even exist without the main project? If not, they should be adequately linked to the main project making sure they’re held to the same environmental and social standards as the project overall.
- High risk categorization is a gold star
E&S standards are applied differently depending on the nature of the project and its level of risk. This makes sense as not all projects are identical. However, almost every instance where a project runs into environmental or social troubles is due to incorrect risk categorization, which led to an incorrect application of standards. Applying higher risk requirements forces a more thorough evaluation of the project, and tends to save money – and negative impacts on people and planet – in the long run.
- Talk to communities—and keep talking to them
While the issue of energy poverty in Africa is getting some international attention, the people whose voices matter the most, the energy poor themselves, have yet to be fully part of the conversation. Civil society and community engagement is the foundation of good development, as it helps ensure that key needs are met. This shouldn’t just be a one-off, box-ticking exercise, but instead a continual dialogue, especially if the scope of a project changes. As with applying stronger E&S safeguards, proper community engagement will also save money in the long run.
- Open (and translate) the books
If community engagement is the foundation of good development, then transparency is the cornerstone – without it, sustainable projects cannot happen. Communities can’t hold their governments and other relevant actors accountable without access to information on what the project intends to deliver, when, and how. And basic information, vital for proper accountability such as the size, nature, scope, geography, budget and timeline can all be made available without compromising sensitive corporate information. Of course, to ensure usability of information, disclosures should be made in the official language of the partner country and be readily accessible to all affected communities.
- Make everyone play by the same rules
The use of intermediaries for project implementation is an increasingly popular form of project lending; especially in situations where large tranches of financing are being channeled towards medium- and small-scale projects. Unfortunately, this arrangement can lead to a breakdown of E&S standards. Whatever the type of intermediary used – be it a commercial bank, equity firm or development finance institution – they must have adequate capacity and systems in place to apply E&S standards before they receive any financing. Everyone should be held to the same standards.
- Give all options a fair run
The decision on what type of project is employed should be made only once the viability of possible alternatives have been assessed. Alternatives assessments are a requirement of most international best practices in development lending, yet too often they fail to accurately account for the full costs and benefits of competing options. For example, when assessing the feasibility of renewable energy against conventional fossil fuel options. Not completing such assessments thoroughly and fairly could miss opportunities to more effectively and efficiently meet a project’s goals.
All of this guidance builds on what we know about effective development. The international donor community and civil society is now honing in on what works and what doesn’t when implementing projects with joint corporate and development goals. As Power Africa projects start to break ground, especially those with larger footprints, abiding by these basic tenants would be a good start in ensuring energy access for the poor is achieved.