The overall approach
Analyze government policies
Gather information
Prioritize regions
Conduct regional missions
Identify regional lines of action
Collect and analyze regional data
Identify and evaluate projects
Assist governments in defining development opportunities
The role of coordination
The methodology presented below should be interpreted simply as a set of guidelines, not as a step-by-step procedure to be followed rigidly. Each country, region, and circumstance is clearly different and adjustments are necessary to fit the methodology to local conditions. Depending on the situation, some guidelines may be bypassed entirely while others may require significant expansion.
Regional integrated energy development, although ultimately applied on a local level through the projects identified and recommended for implementation, needs to be understood at all levels, from the national to the local. Independent of the stage of analysis and implementation, the goal of integrated energy development is to incorporate energy directly into the development process. This will apply to the community that seeks new possibilities for its own development as well as the entire nation that realizes the potential opportunities derived from integrated energy development and wishes to include these ideas in national policy. The process of integrated energy development can be effectively initiated at any level.
In this chapter, we present a sequence of activities that the OAS has utilized in projects of this nature. The breakdown, which should be viewed as a compendium of these experiences, is as follows:
· Analyze government policies
· Gather information
· Prioritize regions
· Conduct regional missions
· Identify regional lines of action
· Collect and analyze regional data
· Identify and evaluate projects
· Assist Government in defining development opportunities
The appropriate office to carry out integrated energy development projects on the national level depends on the unique institutional structure and strengths in each country, although the national energy office is frequently the most suitable institution. Regardless of the implementing institution, the integrated energy approach is likely to be new and unfamiliar to the staff of these offices.
The approach will be very different from policy analysis, forecasting, generation of energy balances and technology design and assessment, which are the principal and traditional activities of energy offices. Similarly, national and regional planning offices, although deeply involved with integrated development, have not typically dealt with energy planning or energy issues. These traditionally have been considered as limited to supplying energy and hence completely within the purview of the energy companies.
Judging by the experience of the OAS, the approach to integrated energy development requires staff with a great deal of flexibility and good judgment, as well as technical skills. Situations in integrated energy development are rarely standard. Each opportunity identified will have its own idiosyncrasies and will require sequences of analyses and decisions which are difficult to standardize. Although general methodologies are suggested, the approach is not a "cookbook."
At the same time, the integration of energy and development in this context requires strong system and analytical skills and a full knowledge that one generally associates with an "energy expert". For instance, in the context of Isolated electricity generation in a rural agroindustrial project, the staff involved must under- stand the nature of all the aspects of the project-technically, institutionally, culturally, economically, and financially. Moreover, the staff must be able to fit the energy system into this context, recommending the energy source and technology that best match all local conditions. This knowledge and good judgment concerning energy matters are essential.
The delicate issue in any kind of integrated effort is the question of program scope and program responsibility. The key driving factor in regional integrated energy development is that the integration of energy directly with development in various areas provides excellent socio-economic development opportunities, which to date have not been widely cultivated. It is clear that energy is not the sole solution to problems of development and that the integrated energy analysis cannot take over all development questions. The risk of institutional conflict is obvious.
The guidelines that have grown from the experiences of the OAS are that regional integrated energy activities should seek out those areas of development where:
· effective actions are not likely to occur without integration of energy expertise;
· new development opportunities are identified as a result of energy initiatives.
The specific projects cited in this report are reasonable examples of the kind of development scope that regional integrated energy development should be targeting. More is said on this topic below in the section on the role of coordination.
For offices that are considering the institution of integrated energy development programs, it is critical to note that field contact is absolutely essential for the process recommended here. Integrated energy development cannot be performed successfully from within a national office. Governments that decide to pursue integrated energy development must provide the funding and the flexibility for staff to travel throughout the country.
Before initiating a program of regional integrated energy development, the energy office must acquire comprehensive knowledge of the national and regional development policies and plans of the government, including priorities and constraints. These need to be understood from an energy perspective, that is, what the national plans are for infrastructure development, rural electrification, new distribution facilities, etc.
The integrated energy development team needs to understand the financing criteria for project funding from international and national public and private sources.
It also needs to acquire an initial orientation to measures of its own future success. At the policy level, the regional integrated energy development team needs to foresee the balance of objectives of its efforts. Rural energy developments have often been plagued with the problem of high overhead costs, that is, high costs of technical services for small economic and energy benefits. The team should establish initial goals of total investment, energy benefit, total people affected or income generated, etc., to direct and measure from the outset the effectiveness of this program. These goals will assist the program in project identification criteria and in maintaining a balance in program implementation.
Information gathering must be driven and controlled by the question "In what areas and under what conditions are we likely to find integrated energy/development opportunities?"
The programs of regional integrated energy development of the OAS have approached this question in various ways, from very rapid, time-limited analysis to more structured techniques that have covered more than a year of effort. There is a commonality to all the methodologies, which we briefly present here.
If the regional integrated energy development program begins at the national level, it is necessary to decide on a level of spatial aggregation or regionalization to reduce the scope of the problem to workable sizes. Because development is integrally tied to natural resources, one regionalization approach is to aggregate according to geographical criteria. The benefit of this technique lies in the fact that integrated development opportunities will more likely be similar within geographically uniform regions. It has been found that this approach may be more useful for quick overviews than for more detailed analyses.
In general, information will be available or more easily acquired according to political subdivisions of a country. Moreover, utilizing political borders permits easier implementation of the projects identified at the end of the planning process. For this reason, the OAS has concluded that for extensive analyses, the political subdivisions are often the most effective for regional integrated energy development planning. Development regions, if in use in a country, may also be very useful, especially if these regions are simple aggregates of political regions and if the use of these development regions is institutionalized in national planning.
The first step after the regionalization decision is to begin to characterize the energy and development relationships within a region. On the energy side, this will require information on:
· energy resources
· energy infrastructure
· energy consumption
Data required on development conditions and opportunities include:
· natural resources
· economic activities
· social conditions
· opportunities and needs for development
The energy data, although well defined, in some cases may be difficult to acquire because they have not been collected at this level of aggregation. The typical problem with development data is not unavailability, but dimensionality. Experience has shown that without a careful screening process, much effort can be placed on the data collection without great benefit.
The key to efficient data gathering and analysis is to focus on the desired product of the identification of energy/development opportunities. It is not efficient to collect data that will not be used. A technique which has been effective in some of the OAS programs is to hypothesize energy/development opportunities for the various regions based on initial data and then to pursue in more depth the data required to confirm or reject these hypotheses. In later analyses, more efforts can be directed to filling in the information gaps.
The tools of the regional planner are very useful in data collection and analysis: resource maps, land use maps, demographic information, information on principal productive activities in the various regions of the country, etc.
One product of the data collection exercise which has been useful in a number of the projects has been the construction of an energy/development atlas which provides a cartographic and tabular presentation of the country energy and development data.
Before making trips to the various regions, it is important to obtain an initial indication of the areas in the country where integrated energy development is promising. From the information available, the planning team assigned to the integrated energy program should evaluate region by region the criteria given in Chapter 2 and obtain initial ideas of what energy resources might match with productive activities to provide development in that region.
Clearly, if a region shows promise of a number of such activities consistent with the development objectives of the country, that region should become a primary target for further investigation. Of course, the national-level analysis may overlook important integrated energy development opportunities in certain regions which only will surface as a result of direct missions to these areas. These regions will eventually need to be visited as the integrated energy planning process becomes more mature.
Before missions are scheduled, a decision needs to be made as to the sequence of regions that should be visited. Communication with the appropriate institutions in these regions needs to be made with explanation of the purpose of the analysis and requests for regional participation.
Direct contact at the regional level is a critical element of the integrated energy process. Officials in regional institutions generally have excellent knowledge of the development situation throughout their region. They understand the problems and are an excellent resource of ideas about actions that could be undertaken. At the same time, it is common that these people have had little formal experience with energy, and especially with the concept of direct integration of energy in the development process. The interchange between energy experts and these regional development specialists can be extremely productive in the generation of integrated energy development ideas.
The mechanism that the OAS has used successfully in the generation of these ideas is what we have called "the structured interview." Using the knowledge gained from review and analysis of the regional data at the national office, the interviewers can extract from conversations with regional experts the development picture across the various subregions of the area and assure that certain topics of potential integrated energy and development application are discussed.
Clearly, the visiting team will want to review the body of information existing in the regional offices, attempting to fill in important data missing at the national level.
The visiting team will want to visit and interview a wide range of individuals from various regional institutions. Regional offices of the electric company, the petroleum company, regional development organizations, the offices of elected regional officials, church officials, etc., are all potential targets for these structured interviews. Each will provide a different perspective and insight on the development picture in the region.
In conjunction with the local counterpart organization, the team should also organize a short mission through the region to identify firsthand some of the resources, projects, communities, problems, etc. The process of structured interviewing needs to continue throughout these missions, capturing a fuller picture of the regional development situation.
The team and the local counterparts need to use this time in the region to brainstorm and discuss ways in which energy could be instrumental in catalyzing development. Ideas will be generated through interviews and the initial cartographic and data analysis. Quite possibly, additional development ideas will be proposed because energy opportunities in a certain sub-region looks so promising.
Documentation during this mission needs to be almost continuous so as not to lose ideas. Project ideas, even those discussed only briefly at this stage, can later generate additional integrated energy development possibilities given new or better information. A mission report, including a summary of all the ideas discussed, should be prepared before the mission returns to the national office, if at all possible.
A line of action is a statement of an action required to solve a given energy-related problem (improve the LPG distribution network, increase the overall efficiency of fuelwood stoves, provide electricity to new mining companies, etc.). For each region that is analyzed in some detail in the field, it is useful to provide a summary of the lines of actions in energy and integrated energy development that are identified. These lines of action are useful for national energy planning and also for regional authorities in the assignment of priorities for development activities.
The evaluation of the combination of the existing regional energy and development data, the structured interviews, and the direct contact of the project team in this region may show that the information available is inadequate to support specific hypotheses concerning problem areas or project opportunities. In these cases, depending on the time and resources available, it may be recommendable to organize a data gathering effort. The additional effort can be extremely beneficial in providing hard evidence for supposed problem areas.
In larger efforts, the OAS, in conjunction with the counterpart organizations, has found that the preparation of a regional energy balance has been most useful for planning purposes. In most of these cases, some additional energy data collection has been required.
Integrated energy development projects can appear at any time in the process. Because of this fact, it is wise for the integrated energy planning team to develop a system for presenting and cataloging project ideas. A standard mechanism, through which projects identified automatically enter an evaluation process, will eventually result in investment, construction, and implementation of the best ideas. The standardized levels of project presentation and evaluation used commonly by financing institutions are useful to provide for easy transfer of projects to these institutions at the appropriate stage.
These levels are as follows:
· Profile
· Advanced Profile
· Prefeasibility Study
· Feasibility Study
With the prioritization of the projects identified agreed upon by the participating institutions, the high-priority projects should be evaluated technically to determine their viability.
The national energy office should maintain the technical capability to evaluate the energy aspects of the integrated energy development projects identified. Because of the integrated nature of these projects, it is essential that the energy office coordinate with other national and regional offices possessing the technical capability to evaluate the non-energy portions of these same projects. To facilitate the efforts, it is very useful for the national energy office to have specific budget for evaluation of projects of particularly promising opportunities. Additional funds for project evaluation will need to be extracted from other preinvestment sources.
A key element in the evaluation process is the institutional need for an implementing agency. Special emphasis needs to be placed on this aspect since integrated energy projects may easily fall outside the purview of existing institutions.
The work of integrated energy development planning will provide new insights into the possibilities of energy in the development arena. It is likely that this will need to be incorporated into national energy planning. Two types of target opportunities have appeared in the integrated energy programs of the OAS: first are projects that have been identified and developed on a regional basis as noted above; second are those that may have specific regional application, but also are seen as highly replicable throughout the country (regional natural gas use in Bolivia, charcoal production systems in the Dominican Republic, industrial wood energy use in Uruguay, etc.).
It is recommended that the national energy office provide a mechanism by which these replicable opportunities become incorporated into national energy and development planning, and eventually implemented.
The successful implementation of an integrated energy development program will be in large part dependent on the capability of the institution involved to become a focus of coordination and cooperation among the various institutions that will be involved in an integrated energy project.
At the national level, this coordination will need to be applied to all the agencies that have responsibilities in the subject material of the identified area of integration between energy and development. A good project idea may easily flounder late in the project development process if an important institutional tie has been omitted. Although possibly burdensome at the initial stages of such efforts, the establishment of good coordination ties pays off at the point of evaluation and implementation. This coordination is also most essential between energy agencies.
At the regional level, experience has shown that regional institutions are most interested in becoming involved with energy and development issues. A written blanket agreement between the national energy office in charge of the integrated energy development effort and the regional institution can be very useful for eliminating conflicts and delays during actual field work. Probably most important is that these regional institutions are the key agencies for providing the links to the actual projects themselves and also may be the key institutions for controlling the financing and even the implementation of these projects.
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Case Highlight 5 The Role of Institutions: Bolivia and Ecuador In the Ecuador Energy Geography Project, the National Energy Institute (INE) acted as coordinating agency between the regional development agency, PREDESUR, the national electricity company, INECEL, and the local organizations of shrimp producers in the identification and initial evaluation of a coastal electrification program in El Oro province to provide electricity for water pumping and more efficient and cost-effective shrimp production. In the Bolivian Energy Regionalization Program, the activity of the Monteagudo agroindustrial project was initiated at the national level from the Ministry of Energy and Hydrocarbons (MEH), which has the responsibility for national energy policy. At the departmental level, the principal coordinating institution was the Chuquisaca Development Corporation (CORDECH). The coordination of these two institutions spread to the National Petroleum Company (YPFB) for the agreement on the extension of the natural gas pipeline network to Monteagudo, and to the National Electricity Company (ENDE) in the planning of options for provision of electricity to the Monteagudo community. |
