There is increasing interest in results-based funding (sometimes referred to as Payment by Results) from both client and donor countries, but their deployment in the energy sector has been limited in comparison to other sectors such as health, ICT and transport. In response, ESMAP initiated a work program in 2011 to assess how, and under what circumstances, results-based funding can be used to improve outcomes and scale up financing for energy sector development. Under this work program ESMAP has supported the design, implementation and assessment of results-based funding— including provision of support to the Climate Investment Funds (CIF) and Energy+, and by funding two projects (in Indonesia and Lao) exploring the use of results-based funding for the promotion of improved cookstoves.
Results-based funding refers to development assistance that is provided in response to verified results (for example, households provided with a working electricity connection), rather than providing funding up-front for inputs (for example, electricity meters, wires and poles). It can include funding provided from donors or development organizations to governments for results achieved at the national level (“results-based aid”), and also funding for the delivery of basic services (such as health, water and energy) by private sector companies, community organizations, and public providers (“results-based financing”).
This cross-cutting work program includes three components:
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Analytical work and guidance on when and how to use results-based funding instruments in the energy sector
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Knowledge management and outreach to learn and share lessons on results-based funding programs and projects, including with our development partners
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Operational support to country-based technical assistance projects to design and test out new results-based concepts and ideas
Outputs
Resources
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Blog post: Paying for results: Energy+
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Energypedia articles providing definitions for the key terms: Results-based aid | Results-based financing.
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Results-Based Financing for Promoting Clean Stoves: Pilots in China and Indonesia
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Use of output-based aid (OBA) approaches for energy access projects: Summary Table.
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UK Department for International Development (DFID): Strategy for Payment by Results | Results-Based Financing for Low Carbon Energy Access
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GIZ Energising Development Program (implementing DFID program on RBF for Low Carbon Energy Access, mentioned above): EnDev website | 2-Pager
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SNV outputs: Results-Based Approaches to Support the National Biogas Programme of Ethiopia | How Results-Based Financing is Spurring Solar Market Development in Tanzania
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Organisation for Economic Co-operation and Development (OECD) and German Technical Institute (DIE) technical workshop on results-based funding (May 19-20, 2014): Summary and Agenda | ESMAP presentation on results-based financing in the energy sector: incentives and sustainability (delivered by John Ward, Vivid Economics).
Contact: Oliver Knight at esmap@worldbank.org