1. REDUCING POVERTY AND ENHANCING ACCESS TO RESOURCES MAY 24, 2010 Best Practices for World Bank Energy Investment in Central Asia

2. Current and Projected World Bank Energy Portfolio in Central Asia

3. Successes and limitations of current WB Investment Strategy Successes Kazakhstan successfully restructured energy sector Flexible responses in emergency situations for Kyrgyzstan and Tajikistan Innovative approach in Pamir 1 Limitations Energy sector restructure is limited in Kyrgyzstan, Tajikistan Rural areas receive limited electricity and energy resources Little new generating capacity has been added Overall: WB trend seems to favor energy trade - but should also address distributive aspect, particularly needs of the rural poor

4. Poverty and Energy Access in Kyrgyzstan An estimated 31.7 % of the population lives below the poverty line and 6 % in extreme poverty.* * UNDP/UNEP Poverty-Environment Initiative 98% of the population has access to the electrical grid; but there are forced blackouts and rationing when hydropower gets low during the winter *The Electricity Governance Initiative

5. Poverty and Energy Access In Tajikistan Tajikistan is the poorest country in Central Asia with 53% of the population living below the poverty line and 17.1 % in absolute poverty.* *UNDP/UNEP Poverty-Environment Initiative Over 1 million people in Tajikistan, of a population of less than 7 million, have little or no access to an adequate energy supply, particularly during the winter.* *UNDP/UNEP Poverty-Environment Initiative

6. Small Investments=Large Results Large Renewable Energy (RE) Projects in Central Asia Provide cheap, reliable energy Justified for export or to power industry Take years to develop and build due to risk factors Can be environmentally risky Low local input Micro energy projects Target poor & marginalized first Faster implementation Create services & expertise for future SMEs Empower local people Environmentally friendly Tap local capital and entrepreneurship

7. Examples of Effective Micro-Energy Projects Small wind turbines to support shepherds in Kazakhstan Solar drier units for fruit growers in Kazakhstan Two micro hydro power stations in Tajikistan: one for private enterprises, another supporting a school and 85 families Biogas reactor for energy in Kyrgyzstan

8. Success factors for Micro Energy Projects Grants fund portion of capital costs Co-investments from community, local government Reasonable cost recovery + social benefits Support from local governments Emerging local expertise/specialization in small RE Emerging favorable fiscal regime

9. Renewable Energy Best Practice Attributes Assisted project financing Designed around revenue-generating activity Jointly implemented with community and governments Established owner & energy rules Strategy to popularize success factors

10. Recommendations 1. WB creates trust fund to support RE in Central Asia a) Low interest rates and long term capital b) Innovative guarantee, insurance, collateral services 2. Removes barriers a) Helps decentralize & streamline energy production through incentives b) Supports common goods: hydromet service, feasibility studies etc. 3. Invests in developing local technical capacity a) Manufacturing and service capacity b) Research and development 4. Raise awareness of RE potential