Evaluation of the AfDB’s Assistance to the Energy Sector (1999-2018): Refocusing Support for Improved and Sustained Energy Access in Africa Summary Report Sector evaluations September 2020 SUMMARY REPORT February 2020 ACKNOWLEDGMENTS Task Managers Joseph Mouanda, Chief Evaluation Officer, IDEV.1 Hajime Onishi, Principal Evaluation Officer, IDEV.1 Team Members Clement Mensah, Consultant, IDEV.1; Samson Houetohossou, Evaluation Officer, IDEV.2; Michel Aka Tano, IDEV.1; Junior Consultant; and Rita Effah, Young Professional, IDEV.1. Consultants Stephen Nash; Nils Junge; Denzel Hankinson; Guido Mattei; Janet Laing; Eugenia Masvikeni; Kamu Karekaho; Mamadou Coulibaly; Laurent Senghi Kitoko; and Taoufik Laâbi. Internal Peer Reviewers Andrew Ajuang Anguko, Chief Quality and Methods Advisor, IDEV.0; Girma Kumbi, Chief Evaluation Officer, IDEV.2; and Svetlana Negroustoueva, Principal Evaluation Officer, IDEV.2. External Peer Reviewer Peter N. Freeman, Individual Consultant Reference Group Achraf Tarsim, Regional Sector Manager Energy, Infrastructure & Financial Sector, RDGN; Adama Moussa, Chief Renewable Energy Officer, PERN; Alex Ansah-Owusu, Chief Regional Energy Markets Expert, PESD; Callixte Kambanda, Division Manager, PESR; Carlos Mollinedo, Energy Economist / Policy Specialist, PESR; Daniel Schroth, Acting Director, PERN; Humphrey Ndwiga-Richard, Regional Sector Manager, RDGE; Ihcen Naceur, Portfolio Data Analyst, PEVP and Pal Monojet, Division Manager, PERN. Knowledge Jacqueline Nyagahima, Principal Knowledge Management Officer, IDEV.3; management and Magdaline Ncabira Nkando, Knowledge Management Consultant, IDEV.3; communications officers Dieter Gijsbrechts, Senior Knowledge Management, Communications and Events Officer, IDEV.3; and Tomas Zak, Junior Consultant, IDEV.3. Other assistance Myrtha Diop, Senior Administrative Assistant, IDEV.0; Henda Ayari, Team provided by: Assistant, IDEV.1; and Ruby Adzobu-Agyare, Secretary, IDEV.0. Special thanks to We are grateful for financial support from the Norad Evaluation Department. Division manager Rufael Fassil Foday Turay (OIC prior to 12/2019) Evaluator-General Roland Michelitsch Karen Rot-Münstermann (Acting prior to 9/2019) i ACRONYMS AND ABBREVIATIONS ADER Annual Development Effectiveness Review ADF African Development Fund AEMP Africa Energy Market Place AFD Agence Française de Développement AfDB African Development Bank Group CSP Country Strategy Paper CSPE Country Strategy and Programme Evaluation DBDM Development and Business Delivery Model EIRR Economic Internal Rate of Return ESMAP Energy Sector Management Assistance Program FIRR Financial Internal Rate of Return GCI General Capital Increase IDA International Development Association IDEV Independent Development Evaluation LIC Low Income Country LMIC Lower-middle-income Country MDB Multilateral Development Bank MIC Middle-Income Country NDEA New Deal on Energy for Africa NPV Net Present Value NSO Non-Sovereign Operation PAR Project Appraisal Report PBO Program-Based Operation PCR Project Completion Report PEVP Power, Energy, Climate and Green Growth PPP Public-Private Partnership QAE Quality at Entry RMC Regional Member Country RMF Results Measurement Framework SAP Systems, Applications, and Products SDG Sustainable Development Goal SEFA Sustainable Energy Fund for Africa SO Sovereign Operation SSA Sub-Saharan Africa TA Technical Assistance TOC Theory of Change TYS Ten-Year Strategy UA Unit of Account USAID United States Agency for International Development USD United States Dollar ii TABLE OF CONTENTS ACKNOWLEDGMENTS..................................................................................... i ACRONYMS AND ABBREVIATIONS .............................................................. ii EXECUTIVE SUMMARY .................................................................................. iii 1. INTRODUCTION ......................................................................................... 1 2. METHODOLOGY ........................................................................................ 2 3. BANK’S ENGAGEMENT IN THE DEVELOPMENT OF THE ENERGY SECTOR IN AFRICA ................................................................................... 4 3.1 Bank Policies and Strategies for the Energy Sector ............................................ 4 3.2 Overview of the Energy Sector Portfolio, 1999-2018 ............................................ 5 4. Relevance of the Bank’s Support to the Energy Sector ........................ 9 5. Performance of Evaluated Operations .................................................. 17 5.1 Effectiveness ........................................................................................................ 17 5.2 Efficiency .............................................................................................................. 23 5.3 Sustainability ........................................................................................................ 27 5.4 Factors Hindering or Enabling Project Results .................................................. 31 6. THE ROAD AHEAD – IMPLEMENTING THE NDEA STRATEGY .......... 33 6.1 Context and Rationale for the NDEA ................................................................... 33 6.2 The Bank’s Capacity to deliver the NDEA Strategy ........................................... 34 6.3 The early years of the NDEA Strategy implementation ...................................... 37 7. CONCLUSIONS AND RECOMMENDATIONS ......................................... 40 7.1 Conclusions .......................................................................................................... 40 7.2 Lessons ................................................................................................................. 41 7.3 Recommendations ............................................................................................... 42 Annex 1: AfDB’s Energy Sector Logic Model ........................................... 1 Annex 2: Methodological Note ................................................................... 2 Annex 3: Evaluation Matrix ......................................................................... 9 Annex 4: Project List ................................................................................. 14 Annex 5: Data Tables ................................................................................. 17 Annex 6: References ................................................................................. 22 i Boxes Box 1: The 510 MW Ouarzazate Solar Complex in Morocco ........................................... 6 Box 2: Desert to Power - Harnessing the Sun to Power the Sahel Region ...................... 7 Box 3: The Quest for a Holistic Approach to Maximize the Productive Use of Electricity and Improve Sustainable Economic Growth ....................................................... 15 Box 4: Key Enabling and Hindering Factors in Tanzania Linked to the Country Context .............................................................................................................. 20 Box 5: Trade-off Between Cost Recovery and Affordability ........................................... 22 Box 6: Multinational (Ethiopia-Djibouti) Power Interconnection Project .......................... 24 Box 7: High Ex-Post EIRR for Power Interconnection Projects and its Implications....... 26 Figures Figure 1: AfDB Corporate and Energy Policies, Strategies and Initiatives............................... 4 Figure 2: Trends in the Energy Sector Share of Total Bank Group Net Approvals (1999- 2018) ................................................................................................................... 5 Figure 3: Renewable Energy Resources Gaining Traction since the Approval of the 2012 Energy Policy ....................................................................................................... 7 Figure 4: Increased Bank-support to the Private Sector .......................................................... 8 Figure 5: Relevance of Energy Sector Projects .................................................................... 16 Figure 6: Summary of Outputs Achievement Analysis for Selected PBOs ............................ 19 Figure 7: Efficiency of Energy Sector Projects ...................................................................... 23 Figure 8: Sustainability of Energy Sector Projects ................................................................ 28 Figure 9: Factors Affecting Implementation of Energy Sector Operations ............................. 32 Figure 10: Annual Average Investment Required to Meet the NDEA targets ........................ 34 Figure 11: AfDB's Indicative Lending Target Compared with Actual Approvals in the Energy Sector (in UA Billion) .......................................................................................... 39 Tables Table 1: Bank Group Energy Sector Assistance (1999-2018): Infrastructure versus Enabling Environment Investments ..................................................................................... 6 Table 2: 2018 Progress Against Level 2 Indicators: Extract from the 2019 ADER ................ 14 Table 3: Summary of the Main Project Outputs Achievement ............................................... 19 Table 4: Summary of Main Project Outcomes ...................................................................... 21 Table 5: Key Informant Awareness of the NDEA before Case Study Interviews ................... 38 ii EXECUTIVE SUMMARY Background The African