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IAEEL newsletter 2/98

Lighting Initiative For Poor Countries


The Global Environmental Fundıs Efficient Lighting Initiative (ELI) will help focus industry and consumer attention on energy-efficient lighting in seven developing countries. The project has US$15 Million of funding, which should generate a much larger amount of commercial-sector investments in the supported countries.

Many developing countries can take advantage of recent advances in lighting technology to improve the energy efficiency of their lighting services. In the developed world, the lighting-product manufacturing and distribution infrastructure, as well as the manufacturing infrastructure of associated technologies (such as lighting fixtures and control electronics) that support lighting markets, grew up around earlier generations of less efficient technologies. In developing countries, where the lighting industry infrastructure is less mature, energy efficiency can be instilled at a basic level and, if proper support is available, energy-efficient lighting could become common practice.

Recently, the prospects for improving energy-efficient lighting in developing countries started looking brighter: In August 1998, the International Finance Corporation (IFC), the private sector affiliate of the World Bank, received preliminary approval from the World Bank-administered Global Environment Facility (GEF) for the Efficient Lighting Initiative (ELI). The aim of this project will be to launch efficient lighting programs in Argentina, the Czech Republic, Hungary, Latvia, Peru, the Philippines, and the Republic of South Africa. ELI will use $15 million in GEF funding to leverage a potentially much larger amount of commercial funding for private-sector-led initiatives designed to stimulate markets for energy-efficient lighting.

POLAND SHOWED THE WAY

These initiatives will build upon the success of the IFC/GEF Poland Efficient Lighting Project (PELP) (See IAEEL newsletter 3-4/95). Although compact fluorescent lamps (CFLs) were available in Poland before the PELP was initiated, significant barriers prevented their widespread acceptance: Prices were high, there was a lack of competition between manufacturers, and consumers were often unaware of the economic benefits of efficient lighting. PELP successfully used market-based program approaches to reduce these barriers and to increase consumer demand for CFLs in Poland. In Poland today, levels of CFL penetration are substantially higher, and the CFL market is much stronger compared with the situation back when PELP began in 1995.

Like PELP, ELI will use competitive, market-based program mechanisms to make a variety of high-quality energy-efficient lighting products (not just CFLs) available and affordable. ELI will work to provide consumers with the education and financial resources that will encourage and allow them to purchase the best product for a given lighting application.

REMOVING MARKET BARRIERS

ELI will not attempt to exactly duplicate PELP, but will allow individual and country programs to be tailored to local conditions through significant local consultation and NGO input in each of the seven countries. Some examples of generic types of programs that may be developed in each country include:

  • Public Education ­ Public information campaigns that educate consumers and lighting professionals about the economic and environmental benefits of energy-efficient lighting.
  • Technical Quality Programs ­ Establishment of quality specifications for efficient and reliable product performance.
  • Product Labeling and Advertising ­ An independent quality labeling program helps consumers to recognize high-quality products, which is important in preventing efficient technologies from being associated with poor performance. The logo would only be applied to products that met the quality specification.
  • Manufacturer Initiatives ­ Cooperative market-building activities, such as promotional price discounts and joint marketing efforts.
  • Financing Programs ­ Financing or leasing programs to help consumers overcome the initial high cost of purchasing energy-efficient technology instead of less expensive conventional, lighting products. Various innovative financing tools are available that allow the capital costs of lighting efficiency improvements to be paid for out of energy savings. As a development-financing institution, IFC has extensive experience in working with private investment advisory firms and financial intermediaries to structure profitable transactions in efficient lighting.
  • Market Aggregation ­ Coordinating bulk purchases of energy-efficient lighting as a way to reduce unit costs and create new markets.
  • Regulatory Reforms ­ In some countries high sales taxes or import tariffs make it difficult for manufacturers of energy-efficient lighting equipment to compete. ELI will help identify regulatory barriers and work with organizations in each country to help develop strategies for gradually removing them.
  • Electric Utility Programs ­ Several generation and distribution utilities in ELI host countries have already expressed interest in pursuing efficient-lighting programs to reduce peak loads or reduce the burden from non-paying customers in addition to the environmental benefits.

    ELIıs SCHEDULE

    All GEF-funded projects go through an appraisal phase prior to implementation. In the case of ELI, detailed information about country lighting markets is being gathered, and specific programs are being designed. Once the plans developed during the appraisal phase have been reviewed and approved, implementation can begin. The seven ELI countries have been divided into two groups for both appraisal and implementation. This staging of ELIıs development allows both the appraisal and implementation phases in all countries to proceed in an orderly fashion. Argentina, Peru, and South Africa are currently in the appraisal phase, with implementation scheduled to begin around April of 1999. The Czech Republic, Hungary, Latvia, and the Philippines will begin appraisal during the first quarter of 1999, with implementation to begin around October.

    As part of the project proposal process, IFC drafted a formal project-concept document that was submitted to the GEF Secretariat. This document discusses ELIıs budget and schedule in more detail and includes a preliminary discussion of potential program activities in all seven countries. A copy of the project-concept document is available upon request from the IFC or can be downloaded from the World Bank or GEF Secretariat websites. IFC invites utilities, non-governmental organizations, lighting manufacturers, and organizations with expertise in lighting, energy efficiency, consumer behavior, marketing, or structuring financial transactions for lighting upgrades to participate in work to develop the ELI.

    Dana R. Younger
    Christopher A. Granda

    Dana R. Younger, IFC GEF Coordinator
    Environmental Projects Unit, IFC
    Tel: +1 202 473 4779, Fax: +1 202 974 4349
    E-mail: dyounger@ifc.org

    Christopher A. Granda, IFC Consultant
    Ecos Consulting
    Tel: +1 781 643 1144, Fax: +1 781 643 1155
    E-mail: granda@ecosconsulting.com


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