The Ministry of Foreign Affairs’ governance through letters of allocation

105 Document 3:12 2013–2014 Report 6 Assessments A key goal of Norwegian development work is to reduce absolute poverty and lift people permanently out of poverty. Development of the energy sector is a prerequisite for developing countries to achieve economic growth. Increased access to clean energy at an afordable price is important in the ight against poverty, and according to the Standing Committee on Foreign Afairs, Norway’s commitment to clean energy must include poverty-related measures and production of electricity from renewable energy sources. Through bilateral aid, the Ministry of Foreign Afairs has provided support to build hydropower plants, either as direct support or through the investment fund Norfund. This has helped increase power generation in recipient countries. However, the audit shows that little direct support has been given to hydropower development in the seven clean energy core countries since 2000. Nor has support to the investment fund Norfund resulted in power development in the core countries. The audit shows that Norwegian aid in the form of support for the development of central and distribution grids has helped to increase access to electricity. Meanwhile, the energy aid did not reach the poor to any great extent in 2000–2013. Few poor households connect to the power grid, and the Norwegian focus on increased produc- tion and distribution of energy has had a marginal impact on increasing business activity and employment. Only a small proportion of the energy aid directly funds measures for poor people in the core countries.

6.1 Norwegian development assistance has contributed little to increase access to clean energy

In Recommendation No. 269 2008–2009 to the Storting, the Standing Committee on Foreign Afairs pointed out that Norwegian aid shall prioritise the development of hydropower, wind farms and solar parks for the production of power for the grid. Development of power plants requires large investments. The audit shows that the embassies provide little direct support for development, but support preliminary analyses that map the feasibility of projects and facilitate private investment and the development of national legislation. This approach has resulted in few development projects in the core countries and has consequently done very little to increase power generation. The audit also shows that hydropower is still the main focus, although countries have ample opportunities to utilise solar and wind energy resources. Focusing solely on hydropower makes the recipient countries more vulnerable to failures in the energy supply than a broader focus on hydropower, wind and solar energy. In Proposition 1 S 2013–2014, the Ministry of Foreign Afairs underlines that the Norwegian Investment Fund for Developing Countries, Norfund has played a key role in recent years in the government’s commitment to renewable energy, and that it will be an even more important tool in this area. Norfund has a development policy mandate and is to contribute to the realisation of projects that private companies would not otherwise not have become involved in because of high risk. At the same time, individual investments must be proitable to enable the business that is established to be viable.