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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.
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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
