ACCESS TO ENERGY IN DEVELOPPING COUNTRIES. Washington MAY 24th 2012

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1 ACCESS TO ENERGY IN DEVELOPPING COUNTRIES Washington MAY 24th 2012

2 WHAT STRATEGY? EDF s strategy to promote energy access in rural areas of developing countries is based on : 5 Key elements financial viability, continuity, partnership Innovation Learning from experience and sharing of experience 6 Geographical criteria the country must be safe and politically stable; it must have the political will to promote energy access over the long term; it must have an appropriate regulatory and institutional framework; it must be eligible for international aid (development bank subsidies...); at least one local partner must participate; We need to be welcome (no competition with the local electricity company).

3 The Rural Electricity Service Company (RESCO model) In the late 1990s, EDF and ADEME created a model to guarantee both the viability of rural electrification projects over the long term and their large-scale reproducibility The RESCO concept: to offer a range of services supported by a company that is managed locally and governed under local law. The purpose of RESCOs is to sell decentralised energy services, improving the daily life of rural households: providing domestic and public lighting, preparing hot meals, accessing to the radio, television, telephone, They also supply energy to craftsmen, tradesmen, industries, and the health and social sectors (schools, health centres, etc.). ADEME: French Agency for the Environment and Energy

4 THE RESCOs STRENGTH they are integrated in the local socio-economic realities: they are companies governed by local law, employing local managers and personnel. The RESCOs install, operate, maintain and renew the electricity supply equipment and installations (small diesel generators and micronetwork, photovoltaic solar kits, hybrid solar-diesel or biofuel-diesel plants, connection to the national network, mini-grid etc.). Once the subsidy for setting up of the company (60 to 80% of the initial investment cost) has been awarded, the company is expected to operate as a commercial enterprise, balancing its own accounts and generating the profits needed to develop its business and pay shareholders. EDF is involved as a "start-up aide", providing the capital and skills required for the creation and operation of these companies. When the viability of a RESCO is guaranteed, EDF transfers its entire stake to its local partner, who will be responsible for the long-term running of the company.

5 THE RESCOs WEAKNESSES It s always more complicated, and gets delayed, : especially building the institutionnal framework, and financing the project the project often ends up being more expensive than expected : the delays often cause extra financial costs, A key success factor is our ability to collect the monthly fees from the customers : this is very much country dependent As a result Attractive profitability never met so far

6 More than 400,000 people benefitted from the RESCOs energy services at the end of This figure should exceed 1 million within 3 to 4 years Temasol Founded in 2002 End 2011 : 167,000 people Energie Rurale Africaine Founded in 2011 Morocco Target : 180, 000 people Mali Senegal Yéelen Kura Founded in 2001 End ,000 people Target: 100,000 people Korayé Kurumba Founded in 1999 End 2011 : 64,000 people Target : 100,000 people Botswana BPC Lesedi Founded in 2010 Presence of EDF in 2012 EDF shares transferred in Target: 400,000 people South Africa KES Founded in 2002

7 Conditions for success... Feedback from work performed over the last 15 years has highlighted key conditions for success, based on the following criteria: the establishment of a transparent and stable regulatory and institutional framework; the creation of an appropriate financing environment (which includes equity, grants, loans, guarantees); the optimisation of technological choices according to local conditions; the preparation and training of local players capable of taking full responsibility for the development of these projects; a mandatory financial contribution from customers, linked to their ability to pay. Energy efficiency (choice of equipment, training of users).

8 Complementary involvement Action? What will it achieve? How? Where? Rural electrification by Rural Electricity Service Companies (RESCOs). Operation/management of rural electricity concessions, each with more than 10,000 customers, offering energy services (lighting, TV outlets, gas, productive use, etc.). Creation of a Rural Electricity Service Company (RESCO) managed by EDF with its local partners. South Africa, Morocco, Mali, Senegal, Botswana Support the structuring of professional training activities. Introduce pilot projects on future technologies or innovative organisational methods. Support of local entities operating as part of a national or regional network (national electricity companies, national rural electrification agencies, engineering or technician colleges and training centres). Improve the economics of rural electrification projects (Jatropha, simplified networks, customer management methods, etc.). By bringing skills to electricity professions (not only technical skills). In cooperation with industrial partners (TOTAL), implication of our R&D and public or private entities such as ADEME, GERES, 2iE, etc. West Africa Sub-Saharan Africa ACCESS TO ENERGY IN DEVELOPPING COUNTRIES Washington May 24th2012