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In 2007–2013 Norfund’s investments in renewable energy accounted for nearly half of Norwegian development assistance to clean energy. During the period, Norfund
attempted to increasingly direct its investments towards Africa and the least developed countries. However, only 2 per cent of the investments were made in the seven core
countries in this period. Meanwhile, nearly two-thirds of Norfund’s investments in renewable energy were made in upper middle-income countries. The audit shows that
the framework conditions for private investments in the core countries are so weak that it is very diicult to ind proitable renewable energy projects. Norfund’s existing
requirement for proitability makes the fund a poorly suited instrument for catalysing investments in countries with the weakest economic and legal framework conditions.
The Ministry of Foreign Afairs disbursed about NOK 2 billion in 2000–2013 to develop central and distribution grids in the seven partner countries. This accounts for
about 60 per cent of the energy aid to these countries. According to the embassies, the aid provided more than 100,000 households with access to electricity. The extension
of the central grid to rural areas has been given special priority by the embassies in Mozambique and Tanzania. In Mozambique, however, the development of the central
power grid caused major inancial losses for the national power company. The audit shows that there is a risk of the same efect for the national power company in
Tanzania. The reason for this is that the authorities in these countries set an electricity price that is far below the cost of delivering power. The national power companies do
not receive government transfers to compensate for the resulting inancial loss. The straitened inances of power companies lead in turn to a lack of maintenance of
power plants and power grids, and thus the risk of both frequent and lengthy power outages.
It is a prerequisite that the aid is based on the partner countries’ own priorities. The Ministry of Foreign Afairs, however, has a responsibility to ensure that
Norwegian aid is given to projects that are sustainable. Support for projects that have poor prospects for economic sustainability, weakens the possibility of long-term and
stable energy supplies.
6.2 Development assistance to clean energy has reached the poorest to a marginal degree
In its discussion of Report No. 13 2008–2009 to the Storting Climate, Conlict and Capital, a majority of the Standing Committee on Foreign Afairs expressed the
opinion that Norwegian development assistance must focus more on solar energy and wind power plants, particularly where the poor rural population does not have access
to other forms of renewable energy.
In the Ministry of Foreign Afairs’ opinion, the development of the power grid is the most suitable solution to also help poor rural households gain access to electricity.
Furthermore, the development of the power grid will lead to increased business activity and employment. However, the audit shows that the rural poor cannot aford
to connect to the power grid where it has been extended. Connection usually costs between NOK 300 and 1,500 in Sub-Saharan Africa, an unattainable sum for many
poor people who live on less than NOK 15 a day. This means that even if the power grid is rolled out to a village, large parts of the population will remain without access
to electricity in their own homes. Norway has supported rural electriication in Zanzibar for decades. Final evaluations of the projects show that less than 10 per cent
of residents in the villages that have been electriied, connect to the grid. This is less than the target for the projects, and it has resulted in a weaker development efect than
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expected. The poor households have primarily beneited from electriication through better quality education and health care.
In Nepal, however, support for local solutions, such as solar panels and micro power plants, has provided about half a million households with electricity. The Ministry of
Foreign Afairs, however, has supported few projects in the other six core countries that have beneited the poorest segment of the population.
The audit also shows that better availability of power as a result of Norwegian-funded projects has so far only led to a slight increase in business activity. Better access to
power has produced little in the way of new entrants. This shows that access to energy is a necessary but not suicient condition for more business activity. There is reason
to consider whether the aid has placed enough emphasis on prioritising development in areas with potential for commercial development.
6.3 Weaknesses in planning capacity development projects cause implementation problems
Capacity building and institutional cooperation are among the most important instru- ments for bilateral aid to clean energy. In Recommendation No. 269 2008–2009 to
the Storting, the Standing Committee on Foreign Afairs emphasised that it is impor- tant to ensure that aid for capacity development is appropriate for stimulating the
recipient’s ownership of its own development.
The audit shows that in 2000–2013, the core countries signed 27 capacity building agreements with, e.g., the partner countries’ ministries, power companies and regula-
tory authorities. The review of evaluations shows that several projects have seen poor progress and a lack of results.
Several evaluations of the Norwegian institutional cooperation in the energy sector show that the results framework that deines objectives and expected results has been
weak and unsuitable for following the progress of cooperation. The evaluations also show that recipient organisations do not give the capacity building projects the neces-
sary priority, either due to a lack of inancial resources and staing or lack of anchor- ing in the management.
Many of the embassies in the partner countries pointed out the importance of adapting cooperation to the needs of recipient organisations, which requires good background
knowledge. Anchoring and ownership require thorough analyses of the organisations’ needs and the constraints they work within. Strengthened dialogue in the planning
phase can help align the deined objectives and expected results with the recipients’ needs to a greater degree, thus increasing the possibilities for achieving lasting
results.
6.4 The Ministry of Foreign Affairs’ inadequate planning and decision making basis weakens its ability to manage aid effectively
In Recommendation No. 269 2008–2009 to the Storting, the Standing Committee on Foreign Afairs underlined that development in poor countries requires comprehensive
and coherent use of instruments, so that aid is more targeted and strategic.
