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Energy
Engine for progress
According to forecasts of the International Energy Agency (IEA), global primary energy demand will continue to rise, by approximately 40 % until the year 2040. The vast majority of this growth will be generated by emerging and developing countries. Modern energy is a key factor of successful economies and a fundamental requirement in the battle against poverty. However, using fossil fuels also has negative implications for the environment and the climate. For this reason, KfW supports its partner countries in developing and converting their energy systems in a sustainable manner. KfW's commitment dovetails to the "sustainable development goals" of the United Nations, which have for the first time included a separate objective for energy. According to it, all people are supposed to get "access to affordable, reliable, sustainable and modern energy" until 2030. That is precisely what KfW is aiming for with its projects and programmes. This is why, in addition to the issue of access to energy, it also makes a contribution to increasing the share of renewables in the global energy mix and increasing energy efficiency.
More on this topic (PDF, 189 KB, non-accessible)
In order to develop the global energy supply in a sustainable manner and to bring it into line with climate objectives, the use of fossil fuels must be curtailed alongside a parallel increase in the use of renewable energy. Reserves of coal and oil are diminishing, while their use also has negative consequences for the environment and our climate. For various reasons, developing and emerging countries have so far tapped only a small part of their potential in the field of renewable energy: sometimes the legal infrastructure is lacking, other times the wrong tariff structures or subsidies for fossil energies prevent the emergence of a fair market for regenerative energies. Project developers, investors, local banks and political decision-makers also frequently lack necessary know-how.
All told, this means that developing countries still have a lot of catching up to do in terms of creating modern energy supplies - lust but not least due to the Paris climate accord and the so called "nationally determined contributions". IAlso because the untapped potential for renewables is still very large in most developing nations. n Africa, for example, estimates suggest that 90 % of the available hydropower is still unused. Theoretically, this alone would be enough to supply the entire continent with electricity. Developing such potential and covering an increasing amount of the growing demand with eco-friendly energy is a key objective of KfW's work around the world. In 2018 alone it disbursed grants and loans for these purposes amounting to roughly EUR 1.9 billion, thus slightly ramping up the level of its commitment for projects related to solar energy, wind and hydro power, bioenergy and geothermal energy. Including the domestic promotional business, the KfW Group is one of the largest financers of renewable energy in the world.
Current topics – Renewable Energy (PDF, 232 KB, non-accessible)
Project Information – Energy Supply Uganda (PDF, 198 KB, non-accessible)
Even in well-organised and highly developed countries, only part of the primary energy converted is actually used. Between one half and two thirds is left unused because of conversion, storage and distribution losses. This balance is much poorer in many developing countries and the specific energy consumption per unit of gross national product (energy intensity) is usually considerably higher than the energy consumption of industrialised countries. The impact of energy efficiency is still underestimated. The potential is particularly high in developing countries and emerging economies, where around 60 % of the comparatively easily accessible efficiency gains could be achieved.
In light of the massive opportunities linked to energy efficiency, the International Energy Agency (IEA) no longer just talks about "hidden fuel", but about the "world´s first fuel", the most important energy source in the world. In its Energy Efficiency Report 2018, the IEA explains in the "Efficient World Scenario" that emerging economies could reduce their energy intensity by 50% using the energy efficiency potentials technologically available today.
However, this would require average annual energy efficiency investments to double by 2025 and then again by 2040. On behalf of the Federal German Government KfW is promoting a wide choice of energy efficiency projects in its partner countries. It supports measures in the building sector, in industry and in households, which can range from simple electrical appliances to complex technical solutions. In Mexico, for example, the government has joined forces with KfW Development Bank and the Inter-American Development Bank to launch the "EcoCasa" programme for energy-efficient social housing. To date, EcoCasa has financed about 61,000 homes for over 237,000 Mexicans in all four climate zones of the country. EcoCasa thus saves around one million tonnes of CO2 and also offers low-income families a higher quality of living.
Approximately 1 billion people have no access to modern electricity supply, while more than twice this number has to rely on ever-dwindling traditional sources of biomass energy, like wood or manure, for cooking and heating. This has dramatic consequences not only for the health of women and children, but also for future prospects in general: modern energy is indispensable for households, social institutions like hospitals or schools and for productive purposes with a view to improving the living standards of those affected.
As part of the "Sustainable Energy for All" initiative launched by the United Nations, the German Federal Government is committed to providing access to modern energy for another 100 million people by 2030. KfW Development Bank contributes to this by supporting projects that supply more people with energy. Through the energy projects commissioned in 2018 KfW has helped to ensure that around 1.6 million people have access to modern energy for the first time or improved access to it.
KfW Development Bank has focused on the electricity sector as a priority area. In this context the bank supports traditional "access projects" such as solar home systems, stand-alone grids and grid expansions. But KfW also ensures the grids have more electricity available via integrated generation and efficiency projects. In this way, electricity should also reach households that already have a connection but do not have reliable access to electricity due to power cuts.
In Indonesia, for example, KfW is supporting an electricity access project which helps to increase power production capacities, improve transmission in the remote island grid and provide new connections. This will provide around 20,000 households with reliable electricity for the first time.
The percentage of renewable energy in power generation is growing rapidly virtually all around the world. This means that the power supply systems and power station need to be adapted — both in industrial and developing countries. One reason is the fluctuation in the supply of renewable energies, which are dependent on the weather.Furthermore, electricity often cannot be produced in those places where it is needed most urgently. Therefore, this requires a substantial level of investment in energy storage and energy grids. An improved integration contributes towards balancing certain location-specific meteorological conditions across different regions. Moreover, it enables different types of storage power stations to be connected. This includes batteries for smaller power stations (such as decentralised photovoltaic systems), and, on a larger scale, pumped-storage power stations and compressed air storage. These stabilise the network despite generation fluctuations and ensure that power is available in the required quantity and quality. Both, large-scale and small-scale solutions can be envisaged. One possibility is, for example, the use of Norwegian pumped-storage power stations as "Europe's battery". Its underwater connection to the rest of the European power grid is set to become one of the main pillars of a modern energy supply model.
Working on behalf of the German government, KfW Development Bank is actively shaping the future of modern energy systems and energy infrastructure around the world. A small selection of projects can be used to illustrate this: in Bosnia and Herzegovina, KfW Development Bank is financing a pumped-storage power station in Vrilo and thus contributing towards reliable power supply in the region. In South Africa, KfW is promoting a transmission infrastructure project connecting a pumped-storage power station to the existing grid so that it can be brought on line. In India, KfW is supporting the construction of "green energy corridors", by co-financing transmission lines and substations for transporting sustainably-generated electricity from remote regions to the centres of consumption. KfW is providing financial resources for the emerging "Caucasus energy network" in order to link the supply systems from Armenia and Georgia and form a regionally interconnected grid. The support from KfW is based not least upon the recognition that cooperation in the energy sector between neighbouring states can, in case of doubt, also serve as a starting point for more extensive collaboration in other areas.
Project Information – WAPP (PDF, 166 KB, non-accessible)
Project Information – India Green Corridors (PDF, 174 KB, non-accessible)
