|Case for Solar Energy Investments (World Bank, 1996)|
The development of solar energy technologies so far has rested on the efforts of people and organizations in many countries - in the research communities in industry and the universities, in government laboratories, in the willingness of public and private industry to test approaches and implement demonstration projects, and in private investments undertaken in response to the tax and other incentives that several governments have provided for innovation and for reducing pollution. The outcome has been significant reductions in costs and steady improvements in the efficiencies and operating performance of the technologies. The chances are good that these applications will become suitable for commercial use where insolations are high (most of the developing world) and where opportunities for the use of wind and biomass energy are favorable.
The case for a solar initiative was made on two grounds - economics and the environment - and it was noted that the GEF presents an important new opportunity. However, the economic case is sufficiently strong for an initiative to be taken even if global environmental concerns turn out to be less serious than many people now think they are. This is why the paper was also concerned with ways of attracting non-GEF finance and R&D resources to the development and use of solar energy technologies.
Immediate priorities for organizations interested in the further development and use of the technologies in developing countries are as follows:
· Widening awareness of developments through education, training, and seminars, and sharing of the results of experience in existing projects.
· Providing financial assistance and grants for surveys of the solar resource base and for identifying investment opportunities. This low-budget item should require (a) a modicum of paperwork and processing and (b) the funders to take risks and work on the assumption that only a minority of activities supported will progress to the next phases of the investment cycle, namely:
· Preparing and appraising investments.
· Preparing longer-term strategies for developing and using solar energy given ongoing technical and economic progress and its long-term potential.
· Refocusing energy R&D efforts and fostering international collaboration as discussed above.
The World Bank Group has already financed some solar energy projects, most recently in association with the GEF, which is offering a major new opportunity for the finance of well-prepared projects responsive to concerns about the global environment. In the pilot phase of the GEF, each dollar of GEE: finance raised three dollars of conventional finance for solar projects, and this "gearing ratio" should increase as costs decline. With the developments discussed, opportunities should also emerge for the finance of some projects independently of the GEF. Aside from investment finance, Bank staff are willing to promote a dialogue between the industrial and developing countries on solar energy development and R&D priorities.