Call for Application · The issuance of this Call for Application does not commit OPM to make an...

Call for Application

July 2018

The issuance of this Call for Application does not commit OPM to make an award to any prospective recipient responding to this solicitation. Prospective recipients will not be reimbursed for costs incurred in the preparation and submission of an application. OPM reserves the right to reject any and all applications, or to make an award without further discussion or negotiations.


© Energy and Economic Growth, July 2018 i

Table of contents

1 Summary 2

2 Background and scope 3 2.1 EEG 3 2.2 Call background and scope 4

3 Funding scope/time frame 5

4 Call details 6 4.1 Proposed research areas 6 4.2 Methodological specifications 8 4.3 Research uptake: Stakeholder engagement, meaningful partnerships, capacity

development, dissemination 9

5 How to apply 11 5.1 Dates 11 5.2 Templates 11

6 Review process 11 6.1 Dates 11 6.2 Process 11 6.3 Criteria 12

Annex A – Background and descriptions of proposed research areas 13


© Energy and Economic Growth, July 2018 2

1 Summary

Key information overview

• This call invites research proposals in response to policy issues prioritised by Ethiopia

energy sector stakeholders for further research.

• A total budget of 1,500,000 GBP has been allocated to this call and proposals should

last for a maximum of 2.5 years

• Letter of Interest needs to be submitted to [email protected] by the 31 July 2018

The Applied Research Programme on Energy and Economic Growth (EEG) aims to address pressing policy questions in low-income countries to help shift energy systems towards a more sustainable, efficient, reliable and equitable paradigm. EEG is a five-year programme, led by Oxford Policy Management (OPM) and funded by the UK Department for International Development. EEG’s objective is to build a body of evidence around how power sector reforms, innovative technologies and practicable actions can enhance the economic impacts of large-scale electricity infrastructure in Sub-Saharan Africa and South Asia. This call for research proposals focuses specifically on building a body of knowledge around large-scale electricity systems in Ethiopia. A series of research areas have been prioritised through scoping visits and engagement with electricity sector stakeholders in Ethiopia. The process for identifying these challenges is presented in more detail in section 2.2. The priority research areas are listed below and outlined further in section 4.1 and Annex A:

1) Enabling agro-linked productive uses of electricity

2) Linking commercial unit data to aid utility planning

3) On-grid and off-grid planning and coordination 4) Linking tariffs with user behaviour and strategies 5) Barriers and opportunities for private sector participation

6) Strategic planning: System rehabilitation & upgrade 7) Energy planning and modelling

8) Local renewable energy manufacturing opportunities

Across each of these priority research areas, EEG aims to deliver research that is relevant, accessible and actionable by decision makers and influencers, whether in the public or private sector domain. To this end, researchers will be required to demonstrate their ‘pathway to impact’ and how ‘research uptake’ is embedded in their project design. Our approach to research uptake is further explained in Section 4.3. The remainder of this Call for Applications is organised as follows:

• Section 2 summarises the background and scope of this call.

• Section 3 outlines the funding and time frame for the call.

• Section 4 provides the call details, including:

o Proposed research areas

o Methodological specifications

o Research uptake requirements: Stakeholder engagement, local partners, capacity

development and dissemination

• Section 5 details the process for applying

• Section 6 outlines the review process and selection criteria

• Annex A provides a more detailed description of the proposed research areas.

mailto:[email protected]



2 Background and scope

2.1 EEG

The Applied Research Programme on Energy and Economic Growth (EEG) aims to address pressing policy questions in low-income countries to help shift energy systems towards a more sustainable, efficient, reliable and equitable paradigm. EEG is a five-year programme, led by Oxford Policy Management (OPM) and funded by the UK Department for International Development. EEG’s objective is to build a body of evidence around how sector reforms, innovative technologies and practicable actions can enhance the economic impacts of large-scale electricity infrastructure in Sub-Saharan Africa and South Asia. By supporting cutting-edge research, harnessing best practice and strengthening institutional capacity in low-income countries, EEG aims to promote evidence-based programming, and ultimately, help bring the benefits of modern energy services to poorer people.

Figure 1: Elements of EEG Programme

EEG will focus on four priority research areas:

1. Energy reliability: Developing countries are plagued by chronic load shedding and blackouts that constrain economic productivity. EEG research will investigate the costs of poor reliability and unpick the challenge of keeping the lights on.

2. Efficient and productive use of electricity: Investments in electricity supply often fail to drive growth due to a lack of productive equipment and uses. Inefficient use exacerbates supply constraints, local pollution and global climate change. EEG research will go beyond questions pertaining only to supply; it will also explore options to improve the efficiency and productivity of electricity consumption.

3. Grid access: Nearly one billion people in Sub-Saharan Africa and South Asia live without electricity in their homes, despite many living under or in close proximity to electricity grids. EEG research will examine the technological, economic and institutional challenges and opportunities in providing families and firms with electricity access for the first time.



4. Renewable energy: Sub-Saharan Africa and South Asia’s abundant river systems, bioenergy, sunshine and wind offer clean, domestic renewable and affordable sources of energy that, as of yet, remain largely untapped. EEG will explore options to use these resources across its focus countries.

Within each of these priority research areas are open research questions surrounding decision support, technology and policy, as well as impacts on productivity, gender, poverty and fragile and conflict-affected states (FCAS) resulting from interventions, or lack thereof (see figure 1).

2.2 Call background and scope

EEG expects to solicit two types of research calls: firstly, global calls focused on the broad themes outlined in section 2.1 above, and secondly calls focused on research supporting key questions within those themes of relevance to particular countries. This call falls in the latter category and is a request for research proposals focusing on the electricity sector in Ethiopia. Section 4 of this request for research proposals sets out a range of potential policy issues that policy makers, researchers and practitioners in Ethiopia and funders of the sector in that country have indicated they believe require further research. These research areas are described in more detail in Annex A. These policy issues were elicited via a 2-stage exercise in October/November 2017 and February 2018. Initially, interviews were carried out with key stakeholders in the energy sector in Ethiopia, including the leadership and senior civil servants of the Ministry of Water, Irrigation and Electricity (MoWIE). Some were conducted remotely by telephone / skype, but the majority were managed as face-to-face discussions in Addis Ababa. The purpose of each interview was to broadly introduce the aims and objectives of the EEG programme and then engage the respondent in an open discussion about the real opportunities and challenges Ethiopia faces as it is engaged in expanding the power infrastructure for trade with neighbouring countries and widen access to the unserved citizens. The interviews then moved to eliciting the interviewee’s view of the priority research areas for Ethiopia’s energy sector, and identify in-country research institutions that could play a role in the delivery of the identified research areas. Following the interviews, the draft questions were converted into researchable questions that would be the basis of the research packages to be supported by EEG. A long list of research questions emerged from this process. A second (2nd) round interview/discussion with MoWIE’s leadership and selected experts took place to refine further the research areas based on the needs of MoWIE and its implementing institutions, especially the Ethiopian Electric Utility (EEU) as well as other relevant institutions. As a way to consolidate this process, a research gap assessment workshop was held in Addis Ababa in May 2018, which was attended by about 60 experts from government, academia, private sector, civil society and development partners. From the interviews and the workshop, about nine (9) research areas have been identified. The EEG will launch a research call to support projects in these areas.

Table 1: Institutions engaged in scoping study and workshop

Government Scoping Workshop

Ministry of Water, Irrigation & Electricity (MoWIE)

X

X

Ethiopian Electric Utility X X

Ethiopian Electricity Agency (regulator) X X

Ministry of Finance & Economic Cooperation (PPP Office) X X

International finance / donors Scoping Workshop



DFID Ethiopia X X

World Bank X X

African Union Commission X

United Nations Economic Commission for Africa X X

Danish Energy Agency X X

Norwegian Embassy – Energy & Private Sector X

Research institutions Scoping Workshop

Addis Ababa Institute of Technology X X

Addis Ababa Science & Technology University X

Addis Ababa University X

Bahir Dar University X

Ethiopian Development Research Institute X X

Mekele University X

Ethiopia Civil Society / Private Sector Scoping Workshop

Ethio Resources Group (ERG) X X

Precise Consult X X

South-South-North X X

Table 1 lists the institutions that were interviewed and actively contributed to the Addis Ababa workshop. In addition, the following key sector documents were consulted to identify additional potential research questions:

• Growth and Transformation Plan II (GTP II) (2015/16-2019/20), Federal Democratic Republic of Ethiopia

• Light to All: National Electrification Program, Implementation Road Map and Financing Prospectus, Ministry of Water, Irrigation & Electricity (MoWIE), 2017.

• UN SE4ALL Rapid Gap Analysis 2013 (supported by the EU)

• Also numerous academic papers were consulted.

3 Funding scope/time frame

We are pleased to invite proposals for new research projects that qualify for DFID funding. This call aims to fund a portfolio of innovative research projects focusing on energy and economic growth. Funding is available for applications which are eligible to receive funding from DFID1.

1 OPML has a formal Due Diligence (DD) process in place which must be satisfactorily completed prior to engaging any subcontractor. This process is an integral and fundamental element of our business relationships and is critical in ensuring the suitability of a supplier to operate on OPML’s behalf. The due diligence process covers subcontractors’ legal and financial standing, conflicts of interest, counter terrorism checks, insurance levels, and confirmation of subcontractors’ compliance with OPML’s policies and procedures, or their own equivalent (e.g. anti-bribery, code of conduct, data security, equality). OPML’s approach is rigorous in examining the suitability of our suppliers, however, we also believe in the importance of an enabling, supportive approach to allow us to work with the many small and informal partners based in the countries in which we work, and with whom we have built relationships over many years. Where necessary, we therefore provide administrative support and capacity building to ensure that the correct procedures are followed. Additionally, graduate students cannot be Principle Investigators.



A total budget of £1,500,000 has been allocated for this call, although EEG reserve the right to adjust this figure up or down depending on the quality and quantity of proposals received. We anticipate making between 6 and 8 grants. Two of these may be for a maximum amount of £400,000, the remainder are expected to be in the £100,000 - £200,000 range. Successful proposals will demonstrate strong value for money; selection committee members will evaluate each proposal based on this guiding principle. Other evaluation criteria are outlined in section 6.3 of this document. Proposals are invited for research funds of durations up to a maximum of 2.5 years with an end date of December 2020. Proposals must be led by a researcher at an eligible research organization and should be submitted through the email address [email protected] .

4 Call details

4.1 Proposed research areas

The purpose of research under this element of the EEG programme is to explore issues that energy sector policy makers are grappling with at the moment in Ethiopia, and issues they may face as economic and social development in the country progresses, to provide insights that may be of use in future policy development. The list of the proposed areas can be found in Table 2. Please refer to Annex A for a more detailed description and background to each proposed research area. Proposals are welcome that address an entire research area, a sub-set of research questions in one area, or research questions spanning multiple research areas. Table 2: Proposed research areas for EEG in Ethiopia

1) Enabling agro-linked productive uses of electricity

a) Develop indicators of future growth in productive uses, along with tools, methods and data to

enable prudent decisions around grid expansion. Such tools must also be able to work at scale.

b) Strengthen the internal data-collection, research and analytic capability of the utility and the

ministry (MoWIE) for decision making around infrastructure investments to power irrigation and

other productive uses.

c) Map the demand for new irrigation and agro-processing, and assess the least cost options to meet

the energy needs of different value chains in different areas.

2) Linking commercial unit data to aid utility planning

a) Provide a diagnosis of the level of digitization within the commercial department, the level of

administrative units where such commercial data are processed, and how far back such data is

available in digital format, will be an early first deliverable.

b) Support the utility to build the develop systems and skills required to gather and maintain the

appropriate meta-data – for example the administrative unit, feeder, and transformer associated

with the customer commercial bill.

3) On-grid and off-grid planning and coordination

a) Assess the possible future electrification pathways for Ethiopia beyond 2025.

b) How can planning integrate both off-grid and on-grid systems for long term?




c) What studies have been done or should be done on the demand side for planning that have

relevance to Ethiopia?

d) What rules and regulations (for mini-grids, technology standards, interface, etc.) are required for

off-grid and on-grid system planning?

4) Linking tariffs with user behaviour and strategies

a) What is the impact of electricity tariffs on behaviour? In what way does tariff increase influence

consumption of different social groups in the household sector? From one type of industry to

another? What is the willingness to pay and ability to pay of different social groups and different

sectors?

b) How viable are the different forms of tariff setting and structures in the context of Ethiopia? What

lessons can be drawn from tariff setting and structures elsewhere? Evaluate them in accordance

to Ethiopia political and economic reality? How much scope is there for dynamic electricity pricing

to be implemented in Ethiopia? What is the right balance between cost-reflective tariff and

developmentally appropriate tariff?

5) Barriers and opportunities for private sector participation

a) What is the history and performance of IPPs in energy and other sectors? Why was there a

decline in the 1990s, and what has changed today to expect different results? What are the

principal factors that explain the wide variation in outcomes for IPP investors and hosts?

b) Are there transferrable lessons from other countries in incorporating private sector participation?

How can these lessons be adapted to the Ethiopian context?

c) What barriers and constraints are faced during planning, engineering, procurement, construction

and decommissioning of energy projects?

d) Are there adequate skills available in Ethiopia to design, build and operate energy projects? How

does the capacity gap get addressed?

e) What are the key agenda of the private sector actors involved in IPPs in Ethiopia, and what levels

of risk are acceptable for them generally?

6) Strategic planning: System rehabilitation & upgrade

a) What is the extent of poor quality power in Ethiopia? Map and locate where in the electricity chain

losses are being experienced

b) Explore plans and interventions to alleviate the problem

c) Explore the cost/benefit of rehabilitation and upgrading of distribution facilities and other critical

features of the power sector.

7) Energy planning and modelling

a) Utilise energy planning models to examine supply and demand dynamics in energy systems in

Ethiopia. Research should take into account resources, sector growth and directions (households,

industries, agriculture, etc.), energy efficiency, impact on different user groups and some of the

behavioural factors of consumers as decision agents.

b) Assess current capacity and the level of institutional capacity required for robust planning

exercises that matches the speed of development within the sector.

c) Projects should involve practical training as part of the effort to ensure the project takes an action-

research formula.



8) Local renewable energy manufacturing opportunities

a) What is Ethiopia’s potential comparative advantage in manufacturing complete renewable energy

systems and/or components? The research will need to be restricted to four energy technologies:

hydropower, wind power, solar and geothermal energy.

b) Which parts of the value chains offer the best prospects for generating local benefits in terms of

private sector development and building local capabilities?

c) What are the skills requirements for various renewable energy value chains that are critical for

Ethiopia’s energy system? What capabilities exist?

d) How can the required capabilities be developed? What institutional and political obstacles need to

be overcome to capture the domestic benefits? What are the existing policy frameworks for

building domestic energy capabilities? What policy recommendations could be proposed that

could support capacity development across the energy chain?

4.2 Methodological specifications

Applicants are required to describe the proposed research design and methodological approach. Note that the methodological design will be reviewed by a panel including leading experts in the field.

We expect research teams to draw on a variety of rigorous tools and methods to answer the listed research questions, for example, by measuring socio-economic impacts of interventions, understanding the influence of political economic factors, mapping patterns of energy demand and use, and field-testing new technologies, policies and data collection methods.

We anticipate funding five different types of research under the EEG Programme in general:

1. Experimental or quasi-experimental studies that utilise primary survey data and are carried out in low-income countries in South Asia and Sub-Saharan Africa

2. Observational studies that utilise existing administrative or demographic datasets to understand patterns in behaviour and outcomes related to natural experiments

3. Qualitative case studies that utilise focus groups, in-depth interviews, and other rigorous qualitative methods to understand preferences, behaviours, barriers, etc.

4. Engineering design studies that involve the use of existing data 5. Engineering design studies that involve working with an in-country partner to deploy and

test prototypes in the field

Our intention is for those who respond to calls for proposals to specify which methods they think would be most appropriate for answering the specific questions. Under this particular call types 1–3 above are more likely to be appropriate, but types 4 and 5 are not excluded and we welcome innovative proposals that apply research methodologies in ways beyond those listed.

Research related to the policy issues listed here would require different approaches and

timescales. Investigating productive use in relation to grid extension project may span over several

years. Although a baseline study could be done early on, it may be two years or more before some

of the impacts on poverty or livelihoods of access to electricity and/or improvements in reliability of

service could be assessed. Research on other policy issues might progress more quickly but would

involve a range of research approaches from modelling tariffs through to perhaps more

anthropological and/or social science research.



4.3 Research uptake: Stakeholder engagement, meaningful partnerships, capacity development, dissemination

EEG seeks to generate evidence for the specific purpose of informing energy-related policy and decision-making in low-income countries. Research uptake, the link between the research and policy outcomes, forms the basis by which the overall effectiveness of EEG is measured and understood. Our emphasis on research uptake will have bearing on how we evaluate research proposals and what we expect from successful applicants. This section explains how. Research uptake and policy engagement is fully mainstreamed into all aspects of EEG programme design, delivery and communications. They are not treated as a standalone activities. Our research uptake strategy includes:

1. Co-creating the research agenda with policymakers, donors and industry practitioners to ensure that research questions are timely and relevant;

2. Collaborating and co-delivering research in such a way that it engages and gets buy-in from end users;

3. Conducting capacity development and training to improve the knowledge, skills and

capacity of local research communities and national practitioners and policymakers to find, interpret and apply evidence from current best practice and research;

4. Analysing the political economy to ensure research is framed clearly within political

challenges and to identify potential pathways to overcoming barriers;

5. Managing knowledge, disseminating findings and identifying and supporting the mechanisms through which current best practices and new research findings will be adopted into energy programming.

Within the Letter of Interest, all applicants will be required to identify their project’s anticipated impact and propose research uptake activities required to realise that impact. Within the fully developed proposals, each applicant will be required to provide details on the following:

1. Describe the anticipated impact of the research project (e.g. technological innovation,

improved evidence for policymaking, etc.).

At an impact level, EEG research processes seek to improve economic/social outcomes for

energy users and thereby enhance overall economic progress and poverty reduction for

Ethiopia, as well. To this end, EEG research can improve the quality and availability of

evidence that feeds into a range of impacts. These include, but are not limited to:

• Supporting development and implementation of better energy policy, including

effective targeting of policy for enhancing economic progress and poverty reduction.

• Mobilising and scaling investments in energy systems, including effective targeting of

investments for enhancing economic progress and poverty reduction.

• Creating the context for change by influencing opinion and building consensus

Research proposals should identify the specific pathway(s) through which their research is

likely to have impact. The identified pathway(s) will then form the core focus of the research

uptake and policy engagement process.



2. Identify the end-users of the knowledge generated by the research and any

additional stakeholders whose participation is required to carry out the research,

and describe the engagement with these end-users and key stakeholders thus far.

To encourage uptake of research, research proposals should be able to demonstrate that

they:

• Have engaged with the anticipated end-users of the evidence that their project will

generate.

• Address evidence gaps that currently impede effective policy making or investment

• Are responding to evidence demanded by key decision makers and/or other

stakeholders. Proposals will be strengthened by providing evidence that the

research is in demand (e.g. data sets acquired, memorandums of understanding,

etc.).

• Have identified all stakeholders whose participation is required to carry out the

research (government officials, utilities, development banks, private companies,

consumers, etc.), and secured their buy-in and cooperation for the project.

3. Describe your research uptake plan, i.e. the steps that should be taken before,

during and after the research to ensure that the knowledge generated will lead to

impact.

Note that researchers will not necessarily be required to deliver all components of the

research uptake plan themselves. They may lead the process throughout, or they may

choose to feed findings into research uptake activities delivered by others. OPM is

particularly adept at providing support in liaising with both policymakers and academics to

help translate the research into the specific needs of the policymaker, thereby ensuring

rigorous research is implemented into positive policy change. We would also welcome

applications delivered in partnership with a technical assistance provider, where the

research will inform the assistance provided.

Whatever the research uptake strategy, all applicants should demonstrate:

• That they have allocated sufficient resources to ensure stakeholder engagement and

inclusion throughout the project;

• A plan to engage with key constituencies through implementation, and co-deliver the

project with local partners where appropriate.

• Outputs that are suitable for the intended audiences in form and content (open

access academic papers; conference presentations; capacity development

workshops or training programmes; etc.)

Where appropriate, applicants should also demonstrate how their research uptake plan will:

• Build capacity of the users of the research to interpret the evidence and apply in

practice

• Identify and overcome the political economy challenges associated with achieving

desired impacts.

4. Describe your plan to build meaningful local research partnerships and enhance

local research capacity.

EEG aims to enhance local research capacity to continue to make progress in knowledge

creation to help solve energy sector policy problems in the future. To this end, while

applications from all research institutions are welcome, we particularly welcome

applications with Principal Investigators that are Ethiopian. We also welcome proposals

from partnerships between Ethiopian and global partners that are genuine and equitable to



build domestic research capacity. If research is being led by a non-Ethiopian research

organisation, the proposal should demonstrate a plan to enhance local research capacity.

5 How to apply

5.1 Dates

All Letter of Interest must be submitted by email to [email protected] by 17.00 (UK time) on 31 July 2018. Detailed guidance about how to apply is provided in the section below. If successful in the Letter of Interest submission stage, EEG will contact the applicant with a request to submit a fully developed project proposal and provide details on the next phase of the selection process. If not successful in the Letter of Interest submission stage, EEG will make sure to contact the applicant with an official notification.

5.2 Templates

The following template will need to be filled and submitted to [email protected] by 1700 on the 31 July 2018

1. Letter of intent template

The following document is annexed as a reference and does not require any action at this stage:

2. DFID/OPM conditions of contract for research organisations In the event that the applicant is successful, specific follow-up will occur to guarantee that the applicant is eligible for DFID funding.

6 Review process

6.1 Dates

The following presents key dates in the procurement process:

• Deadline for submitting a Letter of Interest – 17.00 on 31 July 2018 • Decisions to applicants – 15 August 2018 • Deadline for submitting a full proposal and budget – 17.00 on 30 September 2018 • Official start of the research project – no earlier than the 1 November 2018

6.2 Process

OPM will organize and convene an evaluation committee that will conduct an impartial evaluation of all applications and make the final recommendation for issuing the contract. The committee will consist of an additional 3 individuals to the Programme Directorate and will possess the requisite technical knowledge or expertise to evaluate the technical merit of the applications. A core group of the same individuals will review all applications and experts chosen will come from different institutions. The evaluation committee will consider all applications received using the stated evaluation criteria.



https://energyeconomicgrowth.org/sites/eeg.opml.co.uk/files/2018-06/EEG%20Letter%20of%20Intent%20template.docx

https://energyeconomicgrowth.org/sites/eeg.opml.co.uk/files/2018-06/1.%20Conditions%20of%20Contract_Research%20Organisation.pdf



6.3 Criteria

Technical reviewers will be asked to score proposals based on a clearly defined set of criteria outlined in Table 2. Requirements for EEG research were outlined in EEG’s Terms of Reference: “Emphasis will be placed on ensuring that research has clear operational relevance, that research will be tractable and high quality, and finally that research will be reasonably conclusive (not just interesting preliminary findings). There will be a strong practical focus on what has and has not worked and where, why and how and on the transferability of those results to low income countries in Africa and South Asia.” These factors are reflected the selection criteria outlined below.

Table 1: Selection criteria for technical review

Tier 1 (most important) Tier 2 (slightly less important)

Relevance to EEG’s priority research areas in Ethiopia, as outlined in table 2.

Addresses multiple questions within one of the research ‘packages’ in table 2, as opposed to just a single question.

Impact: Potential to inform policy decisions, government strategies and/or investments in low-income country on high-cost energy infrastructure.

Strength of research team (empirical research experience, publication record, capacity to perform high-quality work)

Interest/commitment of local partner: e.g. could be demonstrated by letter from by local decision-maker or one of the ‘users’ listed in table 3.

Makes innovative data available, develops new methods of measurement.

Research uptake and capacity development: Projects must include strategies in their proposal.

Novelty

Value-for-money: e.g. evidence could include the existence of co-funding, or collaboration with another energy-focused development programme

External validity and scalability

Quality: Methodological rigor and likely conclusiveness of the research

Involvement of local researchers



Annex A – Background and descriptions of proposed research areas

Ethiopia is at a momentous economic transformation and social development crossroads. Widening energy access and securing reliable energy services is fundamental to the Government of Ethiopia’s Growth and Transformation Plan (GTP II) to transform the country into a major manufacturing hub, and to address some of the intractable development and poverty challenges the country faces. Ethiopia’s electricity system is at the core of its growth ambitions. The country must meeting the energy requirements of a fast-growing economy, and deliver power to large numbers of people who currently lack it. EEG has engaged widely with key government officials, donors and other energy stakeholders through scoping visits, co-organising a widely attended research gap workshop and supporting delegates from the Ministry of Water, Irrigation and Electricity (MoWIE), Ethiopian Electricity Agency, and the Public Private Partnership Unit in the Ministry of Finance & Economic Development to attend an energy financing course in March 2018. Through these consultations, a number of proposed activities for a country programme have been identified and a call for applications for research in these areas will be released in July 2018. Section 4.1 summarised the proposed research areas for an EEG programme in Ethiopia. This section provides a more detailed background and description of each area.

Research Area 1: Enabling agro-linked productive uses of electricity Research Area 2: Linking commercial unit data to aid utility planning Research Area 3: On-grid and off-grid planning and coordination Research Area 4: Linking tariffs with user behaviour and strategies Research Area 5: Barriers and opportunities for private sector participation Research Area 6: Strategic planning: System rehabilitation & upgrade Research Area 7: Energy planning and modelling Research Area 8: Local renewable energy manufacturing opportunities

4.1.1 Enabling agro-linked productive uses of electricity As part of Ethiopia’s Growth and Transformation Plan I and II, the country intends to drive strong economic and agro-industrial growth. Some of the bottlenecks to growth arise due to lack of reliable and affordable power for locally sourced groundwater, subsoil storage or storage in smaller surface water structures. Other demands would in areas where farmers can take advantage of management of lowering post-harvest losses through cold-storage, or cold chains for dairy or fish or meat. Further there are related demands such as those for processing, such as extracting oil from seeds or hulling and milling. In particular synergies with agricultural clusters will be important just as synergies with special economic zones. There are also trading and market access functions that are enhanced through communication and electricity access. Note that energy demand for productive uses might not be equally distributed across all landscapes or settlements. MoWIE recognizes the importance of understanding, forecasting and prioritizing areas where such productive growth is most likely to occur. Proposals are requested that map productive use opportunities in different regions across Ethiopia and address the need to strengthen the capacity with the utility to prioritise an enabling environment where energy access is not limited to residential consumption but also encompassed productive use. While detailed methods and processes are welcome, proposers would consider the longer-term need where coding talent is nurtured. For example, this could happen through university student internships/projects, which can assist with the creation of surveys, smartphone apps for surveys, data aggregation, analysis, visualization and decision tools with the end goal



being ability to make prudent decisions as to where to bring power and in what prioritization. Such tools must be able to work at scale. This is feasible though the use of utility staff that during part of routine field operations can also be tasked to acquire data, an in-kind contribution of the utility. The proposed plan of activities should describe how this capability will be built. For example, assistance could be provided to develop appropriate indicators and field test them. These indicators could be early signs of private energy use, could be measurable environmental, land-use and/or water availability indicators, or a combination of factors that can assess market access, need for post-processing or other impediments. Proposers will ideally engage in learning by doing, in close collaboration with the utility and ministry staff.

4.1.2 Linking commercial unit data to aid utility planning The Ethiopian Electric Utility (EEU), responsible for power distribution, sales, and customer service is undergoing changes to improve and streamline delivery functions and further strengthen its quality of service delivery to its customers. The EEU manages the distribution assets and provides access to their networks to generators and retail service providers, and as such the EEU needs to have strong capabilities in designing, constructing, operating and maintaining distribution lines and supporting infrastructure. It will also need to build stronger capabilities for managing electricity demand and supply in real time and integrating power from different central and distributed generation resources, also demanding deep skills in system operations data analytics that can enable insight into asset and network performance and optimisation. The EEU gathers historical record of which customers are connected when, where they are located, which transformer and feeder they are associated with it, what type of loads are being served (e.g. residential, agricultural, SME, industrial parks, etc.), the actual monthly consumption (by kWh) and monthly bills (in local currency). These are all very important measurements that are generally gathered for commercial operation of the utility. Developing research capacity within the Ethiopian Electric Utility (EEU) to utilize historical commercial data to aid planning is an important step forward to enhance the EEU’s effectiveness. Proposals are requested that address the following: (i) provide a diagnosis of the level of digitization within the commercial department, the level of administrative units where such commercial data are processed, and how far back such data is available in digital format, will be an early first deliverable. (ii) ensure that the appropriate meta-data are gathered- for example the administrative unit, feeder, and transformer associated with the customer commercial bill. Note that the goal of the exercise will be to develop methods, tools and provide training to the utility to ensure that commercial unit data are utilized and linked to inform utility planning. Such customer and payment records can provide the utility valuable insight into the design and planning standards that are being used and their appropriateness. Insight into anticipated loads and load growth is very valuable for sizing transformers, distances that low-voltage wire serves, wire and pole configurations, choice of single or three phase, and how phases are balanced.

4.1.3 On-grid and off-grid planning and coordination

There is some certainty about Ethiopia’s National Electrification Programme (NEP) pathways until 2025 where a combination of grid (65%) and off-grid (35%) would be deployed to close the access gap. However, there is significant uncertainty in what will happen beyond 2025, largely attributed to endogenous and exogenous factors, such as how the energy system would have evolved until then, changes in the characteristics of consumption, changes in economic and social activities, technological changes and their prices, etc. In view of such uncertainty, it is vital to initiate a national conversation around the possible transition pathways to create a collective buy-in around technical, distributional, institutional, and regulatory challenges where multiple visions are present in the electricity system (and its evolution)



in Ethiopia. As such, there is a clear need for a complimentary top-down (grid expansion) and bottom-up (off-grid expansion) thinking to plan the future of the power sector where reliability, affordability, technical resilience, environmental and equity concerns are embedded. Proposals are requested that consider an exploratory study to assess the possible future electrification pathways, taking into account factors such as energy demand trajectories, information on other infrastructures (such as hospitals and water supply systems), technological directions, cost of technology considerations, resource issues, climate change, etc. Further the proposals will need to engage with some of the following questions: (i) How can planning integrate both off-grid and on-grid systems for long term? (ii) What rules and regulations (feed-in tariffs for mini-grids, technology standards, interface, etc.) are required for off-grid and on-grid system planning? (iii) What studies have been done or should be done on the demand side for planning?

4.1.4 Linking tariffs with user behaviour and strategies: An empirical study Electricity is generally viewed as a public good in Ethiopia, and thus from a government perspective, equity and fairness are important concerns. The current average flat rate of electricity tariff charged to consumers is around 0.5203 birr/kwh (equivalent to about 0.02 US $/kWh), which is far lower than the cost of providing the service and does not allow the utility to recover its cost of service, resulting in insufficient operation and maintenance of the existing facilities. This has the dual effect of poor electricity service delivery and undermines the utility’s ability to finance the investments required to meet the increasing demands for electricity. This situation is exacerbated further with the rapid rise in the consumption of electricity in Ethiopia – across all sectors. Residential and enterprise sectors are the leading electricity consumers and their demand is greater than existing supply - despite the government’s significant investment in the sector. Together with the advantages of cheap labour, tax incentives and big market potential, the low cost of power is a major attraction for investors, mainly those in manufacturing industry. And as connection rates continue to rise, there will be greater demand in the future for more power, highlighting the need for a comprehensive strategy for managing demand. This would include establishing the evidence base needed for an effective demand side intervention. Proposals are requested that consider the impact of different electricity tariffs on the consumption modelling of end-users across social groups and sectors; and their willingness and ability to pay. What other incentives also exist, apart from tariffs? The proposals should also explore various forms of tariff setting and structures (from other parts of the world) and demand response actions in the context of Ethiopia’s policy and political economy reality. This may mean a consideration of what is the right balance between cost-reflective tariff and ‘developmentally appropriate’ tariff.

4.1.6 Barriers and opportunities for private sector interest and participation Ethiopia’s desire to engage the private sector highlights Ethiopia’s drive to sustain its new generation targets expansion plan, on the one hand, and the recognition of a changed financial environment, on the other. Concessional loans for government owned/operated generation facilities have decreased significantly, making the joint effort between the public and private sector an important part of the development of energy infrastructure into the future. As part of the effort to create the foundation for these plans the Ethiopian Parliament ratified the comprehensive Public-Private Partnership (PPP) Proclamation on 25 January 2018. The proclamation provides the framework for the private sector to bring in its own finance, and in the process help realize the country’s infrastructure systems. PPPs in the power generation sector are typically represented by independent power producers (IPPs), which design, finance, build, operate, maintain and decommission a power generation plant and contract to sell the electricity to a power utility. To date, there is considerable experience globally in the development of IPP projects in deregulated electricity markets as well as vertically integrated state-owned utilities.



Conducting a study on best practices in developing IPPs, bid-evaluation, licensing, permitting and authorisation of energy projects will have significant value for Ethiopia. This would serve to evaluate the Ethiopian policy, regulatory and business environment in terms of the gaps and explore ways to help design contextually relevant IPP projects. It would also help to develop and adopt measures to mitigate investment risk and foster the deployment of energy projects. Proposals are requested that consider the following questions: (i) What is the history and performance of IPPs in energy and other sectors? Why was there a decline in the 1990s and what has changed today to expect different results? (ii) What are the principal factors that explain the wide variation in outcomes for IPP investors and hosts? (iii) What barriers and constraints are faced during planning, engineering, procurement, construction and decommissioning of energy projects? (iv) Are there adequate skills available in Ethiopia to design, build and operate energy projects? How does the capacity gap get addressed? (v) What are the key agenda of the private sector actors involved in IPPs in Ethiopia, and what levels of risk are acceptable for them generally? The proposals should also consider integrating training programmes on IPP designs, jointly with MoWIE and Universities, using local academics.

4.1.7 Strategic planning: System rehabilitation & upgrade

The reliability and quality of power supply depends on the performance of generation, transmission and distribution. Ethiopia often experiences reliability challenges with its power sector, and as the demand increases the problem is made more complex and potentially intractable. Long power interruptions have become a daily phenomenon. Moreover, according to MoWIE, about 28% (and 19% according to the World Bank) of all electrical power in Ethiopia is lost. This leads to reduced government revenues, diminished ability of the public sector to invest in new power generation and maintenance of existing ones; increases the risk and frequency of power shortages; and reduces the availability of electricity to paying businesses and consumers. Poor power quality in Ethiopia is both technical and planning problem, and can have major cost implications, mostly attributable to the distribution system through the overloading the substations. Useful research can be carried out mapping and locating where in the electricity chain the losses are being experienced. Research in the area is critical to understand the extent of poor quality power, and what measures and actions could be undertaken. Research proposals are requested to assess the cost/benefit of rehabilitation and upgrading of distribution facilities and other critical features of the power sector. Projects that can enhance the state of data generation and collection and clearly articulate network expansion plans to have a better sense of future demand forecasts and the geospatial-based on-grid and off-grid planning are welcome.

4.1.8 Research for planning and modelling Energy planning models (EPMs) can play an important role in the development of the energy sector by enabling informed decision-making. EPMs are especially crucial as significant investments in innovative energy research and planning are required for widening energy access while pursuing a low carbon pathway. Through its Climate Resilient Green Growth (CRGE) strategy, Ethiopia has committed to zero carbon growth, and so models that provide a comprehensive picture of the interrelationships between energy, environment, and climate change at national and regional levels would be welcome. Hence, this would draw in a wide range of indicators relevant to Ethiopia such as issues regarding resource management; assessment of energy alternatives; energy intensity; regional energy demand; high share of rural settlement; climate change; suppressed demand; the economic and technical challenges associated with the transformation of the energy infrastructure, etc.



Modelling capability is important for good energy planning. Often in Ethiopia, external institutions take up this role. This needs to change. The country needs to build its own army of competence and capability in modelling to support planning. For this it is important to facilitate the collaboration between academia, industry and policy institutions since data are collected in different places. Further, it would be useful to assess current capacity and the level of institutional capacity required for robust planning exercises that matches the speed of development within the sector. As an immediate step, it would be useful to organize a workshop to explore the possibility of setting up a modelling community and capability in Ethiopia. Research proposals are requested that look into supply and demand dynamics in energy systems in Ethiopia. This would take into account resources, sector growth and directions (households, industries, agriculture, etc.), energy efficiency, impact on different user groups and some of the behavioural factors of consumers as decision agents. Part of this research would involve practical training as part of the effort to ensure the project takes an action-research formula.

4.1.9 Research on local renewable energy technology manufacturing opportunities The National Electrification Programme (NEP) proposes that a good proportion of the growth will be met via on-grid, off-grid and grid-tied systems, from renewable energy technologies. The challenge is that much of the technology will be imported unless there is a strategy for some of the components to be produced internally. The opportunities for localising manufacturing are seen one way for Ethiopia to take better advantage of its climate resilient & green economy strategy. Local manufacturing industry potentially brings a number of benefits such as local job creation, export of domestic manufactured products to regional and international markets, cost savings and generation of foreign currency. The country may aspire to manufacture complete systems, manufacture some components and import others or simply serve as an assembly platform for imported components. In a country where there is a serious deficit of foreign currency, this becomes paramount. To all the above benefits, it would also be possible to add the benefit of accumulating technological capabilities for further innovation and competitiveness. However, building systems for local manufacturing to meet local needs and exports come with many challenges. Research proposals are requested that look to understand the size of the renewable energy market in Ethiopia, the country’s potential in manufacturing of complete systems and/or parts of systems, and enabling conditions. The research should inform about the comparative advantage of engaging in manufacturing different systems and components, their potential to create jobs, reduce forex spending, and support innovation. The research will need to be restricted to four energy technologies: hydropower, wind power, solar and geothermal energy, which are seen as strategically important technologies for the power sector. This may provide analysis for each technology the barriers to developing local manufacturing capacities, in terms of skills development and training, complexity of manufacturing processes, financing for upgrades in industrial production or capacity extensions, etc. The research may also consider conducting research to determine electrical equipment that will provide best value for assembly in Ethiopia (equipment that has high volume demand, equipment that is labour intensive to take advantage of low local labour rates, weighs less and is easily scalable). The research must propose concrete recommendations for international and domestic actors to support the effort of RE manufacturing in Ethiopia.

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