Address delivered at the Spanish Energy Club

08.05.2018 | Madrid, Spain

Ladies and gentlemen

I would like to begin by thanking Mr. Borja Prado Eulate, the president of the Spanish Energy Club, for his kind invitation for me to address you today. 

For me, it is always a pleasure to speak with leaders in the energy sector. Organizations like the Spanish Energy Club provide important venues to discuss strategies for lasting change directly with industry executives. 

To address my main topic today, “Sustainable Energy for All: A Challenge and an Opportunity.” Let us start by defining what SDG7 is all about.

SDG7 is a blueprint for the development of energy, based on sustainability and equality. Pursuing it effectively will underpin profound change in how we generate, consume and provide energy.

Realizing this goal of “ensuring access to affordable, reliable, and modern energy for all” harmonizes with OFID’s own mission to eradicate poverty. We at OFID firmly believe that human development and energy use are inseparably linked. Therefore, we consider energy to be a key enabler of sustainable development.

Ladies and gentlemen

To understand our mission, let me start with a brief introduction to OFID. Since its establishment in 1976, OFID has been fostering south-south partnership withfellow developing countries worldwide with the aim of eradicating poverty. Since inception, OFID’s commitments have totalled over US$ 22 billion financing operations in 134 countries in not only in the energy sector, but also the areas of agriculture, water supply, transportation, education, health, rural development, among many others. 

To date, we have committed more than US$5 billion towards energy operations that is in line with the objectives outlined in SDG7, amounting to more than 23 percent of our total commitments. 

Ladies and gentlemen, 

It has become an undeniable fact that energy poverty is the most severe constraint to sustainable development. There are approximately 1.1 billion people in the world that lack access to electricity and 2.8 billion currently without access to clean cooking facilities. 

Indeed, though the challenge of delivering universal access is great, its pursuit has many ripple effects. We have been able to delineate the strong inter-linkages between energy and virtually every aspect of sustainable development. In particular, we have become acutely aware that besides energy, securing increasing supplies of water and food including the agro chain is required to sustain a growing population.

Indeed, the benefits of achieving universal access to modern energy services are transformational: lighting for schools, functioning health clinics, pumps for water and sanitation, cleaner indoor air, increased food-processing and more income-generating opportunities, among many others.

Allow me to briefly describe some of these and highlight how we at OFID have approached some of the challenges and exploited the opportunities.

Ladies and gentlemen,

The energy challenges facing the world today are too complex for any one organization or even country to overcome alone. Therefore, strong cooperation is needed among the players in the public and private spheres to overcome these hurdles.  

Despite commitments from governments and international development finance institutions, the requirement for additional project financing is perhaps the greatest barrier currently facing energy access projects worldwide. 

Public funds are often insufficient to address the current investment gap to deliver sustainable energy systems as envisaged by the three dimensions of SDG7 and, as such, more private funds have to be mobilised. 

Due to the limitations of commercial investors, alternative institutional investors, pension funds and public-private partnerships play a role in unlocking finance for sustainable infrastructure.

The enormous investment requirements confirm the need for more innovative financing vehicles, cost-effective technology solutions, consistent and credible policies. 

The problem extends not just to the question of how much investment is needed, but how best to allocate funding in order to incentivize additional growth.

Ladies and gentlemen, 

Let me share with you how we at OFID approached SDG7.  

Energy access has been the central theme of our work since 2007, when OFID received a new mandate that called on us to work towards the eradication of poverty together with other institutions and the energy industry. This mandate was through the Riyadh Declaration of the Third Summit of OPEC Heads of States and Governments. And actually it is our reason for being here and a point I will address later. 

That’s why OFID has been championing the role of energy in poverty alleviation for over a decade, proclaiming access to energy services as the “Missing 9th MDG”. Actually our ministerial council in 2012 made an energy declaration committing one billion dollars endowment for this cause. This commitment I announced in Rio+20

This advocacy was validated when energy was included in the post-2015 Sustainable Development Goals as SDG 7. That’s why we can proclaim that OFID has been instrumental in ensuring that energy is now recognized as a priority in its own right in the current development landscape. 

To address the challenges of energy access, we work on three fronts:

Firstly, we aim to build awareness and momentum of the importance of energy in economic growth, social development across the globe through Advocacy. 

Secondly, we consolidated and expanded action and projects on the ground in some of the least developed regions of the world where finance would otherwise be hard to find. Since 2008, OFID has committed more than US$3.7 billion towards energy operations across the globe. 
Here, allow me to expand on the nature and types of our operations. 

OFID’s operations are technology-neutral. While renewable solutions are appropriate where economics permit, fossil fuels will continue to be an important contributor to energy supply. Poor countries cannot be deprived of energy for development during the transition to a more diversified energy mix.

  • They also span the whole spectrum, from large centralized power plants and grid-extensions, to community-level mini-grids, to small home systems and cook stoves.
  • The resources that we have committed to energy support inclusive development through projects in the public sector to governmental entities, and through operations that benefit a mix of private sector players ranging from utilities to project developers /operators. 
  • Our private sector window also collaborates with financial institutions that extend loans to small and medium enterprises and micro finance institutions. 
  • We also extend grants to support innovative solutions and sustainable business models.
  • By working with our partners—bilateral, regional and multilateral development institutions—we have leveraged more than US$60 billion in support of more than 434 operations in over 70 countries.

Thirdly, we build strong alliances and create synergies by working with our strategic partners, bilateral, regional and multilateral development institutions.We have also joined efforts with other stakeholders, including the energy industry and UN agencies.

One such partnership that OFID has spearheaded is the  “Oil and Gas Industry Energy Access Platform,” or EAP. This strategic partnership is intended to leverage the knowledge, experience and technology of the oil and gas industry to provide a framework for collaboration on energy access solutions. The 2016 launch of the Energy Access Platform was a pivotal moment for both OFID and for the industry leaders who joined us such as Shell, Total, OMV, the WPC, and Schlumberger, among others, in the effort to realize the goal of SDG7.

Ladies and gentlemen,

Having identified the challenges of energy access and OFID’s approach to meeting them, we are now at a pivotal point: let us now define the energy systems of the future. 

Firstly, we all know that renewable energy deployment is accelerating at an unprecedented rate. 

In 2016, China and India, commissioned over 94 gigawatts of renewable generation, which accounted for 59 percent of the global total. 

Solar power and efficient lighting are reducing energy access costs in remote areas. 

Innovation and the digital revolution are merging to usher in more sustainable and consumer-friendly energy approaches through storage, smart grids and block chain energy trading.

In energy-poor regions of developing countries, electricity storage devices play an important role in enhancing the economics and performance of mini-grids that offer a viable alternative to largescale grid extension.

The increasing presence of electric vehicles is due in part to advances in battery technology that allow for more power and extended range of travel.

As such OFID recently hosted a Symposium on Electricity Storage which offered a platform to explore the current status and the future prospects of this topic. Participants analysed and discussed the applicability and need for storage in both mobile and stationary applications, which provided insights into technological developments, economics and market trends. Focus areas included:

  • Technology & Market Prospects of Electricity Storage.
  • Applications of Electricity Storage Systems.
  • Policy Issues & Government Perspectives.

Ladies and gentlemen

Secondly is the expanded scope of decentralized infrastructure. 

Although extending existing infrastructure will be critically important to providing affordable, reliable and safe energy to those in rural areas and perhaps more immediately to the world’s rapidly expanding urban populations, the decentralized approach is especially crucial. This is largely because transmission costs will continue to make grid extension to many rural areas far too costly for either private or publicly funded ventures.

Decentralized energy technologies can be split into two categories: stand-alone systems and mini-grids, both of which can vary tremendously in their size, complexity and cost.

When developing rural electrification programs, questions such as operation and maintenance, the role of the private sector, tariffs and subsidies, and capacity building and training are being considered.

These new features of the energy system can contribute to new partnerships, ideas and investment that are needed to develop viable commercial models that can effectively attract and channel financial resources in the quest for modern and affordable energy for all.

Let me add that given the journey required to achieve SDG7 depends on the unique challenges and opportunities each country faces. In order to meet these varied and diverse needs, all available types and sources of funding should be utilized, including international funds, public-private partnerships, bank finance at multilateral, bilateral and local levels, as well as climate change-related funds. 

Ladies and Gentlemen,

A further opportunity to meeting SDG7 is the effect energy access has on other sectors. We have been able to delineate the strong inter-linkages between energy and virtually every aspect of sustainable development. In particular we have become acutely aware that besides energy, securing increasing supplies of water and food including the agro chain is required to sustain a growing population. 

By 2050, the demand for energy, water, and food is estimated to increase by 80 percent, 55 percent and 60 percent, respectively.
It thus became evident to OFID that for energy access to be sustainable, it has to be related to the food and water dimensions. The “silo thinking” of the past is no longer an option; there is a need for a new paradigm that views development interventions in a holistic approach.

With this in mind, OFID has adopted the Water-Energy-Food Nexus as the central theme of our Corporate Plan 2016-2025. Based on this Plan, 70% of our activities in the current decade will be dedicated to these sectors, with transportation as an enabling sector.

Furthermore, OFID is a partner in the Sustainable Energy for All water-energy-food nexus High Impact Opportunity and we are co-leading the High Impact Initiative of “Applying the WEF nexus in ththirde field.”

Ladies and Gentlemen,

In conclusion, meeting the goal of universal energy access by 2030 requires strong political and sustainable financial commitments, strategic partnerships at all levels, and the integration of energy access into national development strategies.

It will require dramatic improvement in efforts by all stakeholders: governments, the private sector, local communities, civil society and international organizations. Only concerted action can help accelerate energy access for all. 

SDG7 is an extraordinary opportunity for our generation - one that will create jobs, promote a cleaner environment and increase the productivity of our economies. This is an opportunity we should seize.

I can see that it is time to replenish our own energy with the delicious lunch our hosts have arranged, which, as I have mentioned, is the third key component of the Water-Energy-Food nexus.

In a spirit of true cooperation, each of us here had a job to do. My job was to talk and yours was to listen. The challenge is for me to finish my job before you have finished yours.

I hope you enjoyed the talk and if you did not, I hope you have a good lunch.

Thank you.