Audit of AID renewable energy projects

Audit report covers the period 1977-2/86 and is based on review of documents related to 24 REPs. Indirect and intangible benefits have occurred since Section 106 was legislated in 1977, and lessons have been applied to improve REP management. However, with the exception of the Bureau for Africa, AID has generally undertaken projects which did not adhere to key aspects of Section 106. (1) A full 58% of projects and 81% of Mission energy programs have not been integral parts of agriculture and rural development activities. (2) REP technologies still have not been operational long enough to have had a significant impact, in part because 11 or more of the 24 REPs focused on research and development rather than applications. (3) With the exception of Bureau for Africa activities, the technologies have not been simple and inexpensive to build, use, and maintain; at least 12 REPs involved complex and expensive technologies, such as a $528,000 rice hull fed thermal power plant in the Philippines. (4) Most REPs have not targeted the rural poor; 16 involved technologies unsuited to needs of the intended users. (5) Lastly, REPs have lacked attention to replicability; 21 project papers lacked replication planning, and the bulk of evaluation reports identified problems, such as complexity, which make their commercial viability highly unlikely. It is estimated that $28 million in future annual renewable energy expenditures could be used more efficiently by correcting the inadequacies - in energy, agriculture, and rural development policy guidance; in policy implementation oversight; and in coordination and information exchange among the Office of Energy, geographic Bureaus, and Missions - which have been responsible for REP flaws. Although a needs-driven, rather than technology-driven, approach has been applied over the recent past, accountability for implementing this approach has not been established. Recommendations are therefore for S&T to: (1) amend the energy, agriculture, and rural development policy papers to comply with Section 106; and (2) establish the Office of Energy as the AID-wide office for monitoring energy policy implementation and for coordinating information exchange among geographic Bureaus and Missions.