The searing sad story of why Scaling Solar didn't scale

How a high profile World Bank program was supposed to blaze the trail to a solar future but got lost in the dark.

Lots of sunny places need more electricity. Solar is cheap. So the solution seems pretty simple, right? 

Yet investment in large-scale solar is mostly happening in wealthy temperate countries, not poor tropical ones. It’s crazy that gray cloudy Germany has 58 GW of installed solar capacity while super sunny Ghana or Nigeria have next to nothing. All of Africa has barely 10 GW. So… why aren’t poor countries plastered with solar panels?

The World Bank set out to show how it could be done. Eight years ago, the Bank’s private sector arm launched a high profile program, Scaling Solar, to demonstrate that utility-scale solar could happen in poor countries – and that it could be really cheap. The idea is a simple one: bundle project support and streamline the buying process to make it easier to attract the lowest prices. 

Zambia was Scaling Solar’s first showcase project and the country attracted bids below 5 US cents per kWh. Jim Kim, the World Bank president at the time, touted it widely to government officials and the public. In his TED talk, he explained that trillions of dollars were sitting idly in low-interest instruments, so he had a plan:

Can you bring private sector players into a country and really make things work? Well, we’ve done this a couple times. This is Zambia Scaling Solar. It’s a box set solution from the World Bank. We come in and provide all the things you need to attract private sector investors… in this case, Zambia went from the cost of electricity at 25 cents a kilowatt hour and by just doing simple things… we were able to bring the cost down, the lowest bid… was 4.7 cents. It’s possible.

Sounds amazing. A few simple nudges can attract money, perhaps even trillions, to poor countries. And solar power is the prime example. A win-win-win. 

After Zambia, Scaling Solar’s Senegal project came in even lower at 4 cents. Then Uzbekistan came in under 3 cents. And then… nothing.

The Scaling Solar program didn’t scale. Not only did the initiative itself not grow beyond this handful of pilots, but it seemed to fail at its grander trailblazing mission:  creating a model for how private capital could turbocharge development and the energy transition. (Remember the whole billions to trillions mantra?)

So, what exactly happened? In a new analysis (that’s excruciatingly fair and chock full of fascinating tidbits), Teal Emery arrives at a deeply ironic conclusion: Scaling Solar was so secretive about what it actually took to deliver cheap solar that it undermined its own mission. Teal concludes:

Scaling Solar was a well-designed development finance program tackling a challenging issue. However, official messaging undermined the program’s goals by denying or downplaying the critical role of explicit and implicit subsidies in Zambia’s success. This distorted price signals for African governments and solar developers. Poor messaging also undercut the case for the expansion of concessional lending vital in bringing down the cost of capital and making solar projects financially viable in lower-income countries. 

Teal explains that the cheap prices relied on all kinds of subsidies and other help that are much harder to replicate. And without being honest about what was provided, the Bank was misleading about what’s actually needed. (Teal is very careful to explain that project managers were nuanced and thoughtful; his criticism is directed squarely at Bank leadership.) 

I’ll put it less delicately: Jim Kim claimed the World Bank “just did simple things” but that’s not true. In reality, the projects were loaded up with all kinds of subsidies and then mostly hid them. Bank leadership appears to have been so excited/desperate to publicize a big shiny success (4 cent solar!) that it didn’t bother to explain what was really behind getting to such low prices. It's like becoming hugely rich from your unicorn startup and then selling your magic formula on late night TV by claiming “everyone can do it just like me. Just follow my very simple steps!” Yet, you don’t mention the real magic was an interest-free loan from your rich uncle. 

The really damaging part from the Scaling Solar story is not just overselling an underperforming initiative on partly false pretenses. It’s that the loud crowing by World Bank leadership seems pretty clearly to have disrupted the growth of solar markets just as they were starting to take off. In Nigeria, for example, a 2016 solar auction yielded 14 successful bids to bring in US$2.5 billion for more than 1 MW of new solar capacity. The agreed price was 11.5 cents/kWh. Maybe this was a fair price at the time (given Nigerian interest rates, risk profile, etc.), maybe not. But when the World Bank started publicly insisting that, well geez, everyone could get 4 cent solar, the Nigerians understandably balked at paying more. Without being very clear about what it really takes to get cheaper solar, the Scaling Solar ‘success’ in Zambia wound up killing Nigeria’s solar farms. Some contracts were later renegotiated down, but as of today, none of those original 2016 solar projects were actually built. 

I share Teal’s enthusiasm for the idea that agencies like the World Bank have a big role to play in helping to create markets for clean energy – especially in the countries that need it the most. I’m also unsurprised that non-transparent projects don’t help to build competitive marketplaces. As I’ve argued elsewhere, murky contracts with secretive provisions are never good for anyone except those benefiting from secrecy. It’s bad enough when private developers or government officials hide details for their own benefit. It’s far worse when the World Bank does it because it’s supposed to help raise global standards, not just hype their own projects.

Charles Kenny at the Center for Global Development, a former World Banker and frequent critic of its private sector IFC, is even more blistering in The IFC and (De)Scaling Solar. Charles goes one step further: 

…the failure to launch of one of IFC’s best attempts to catalyze and scale financially sustainable private investment for renewable infrastructure leaves me skeptical of the role of a larger IFC in helping countries deliver on net zero commitments, at least under its current model.

Read Teal Emery’s whole wonderful paper here.