Bangladesh - Second Rural Electrification and Renewable Energy Development Project (English)

Ratings for the Second Rural Electrification and Renewable Energy Development Project for Bangladesh were as follows: outcomes were satisfactory, the bank performance was moderately satisfactory, and monitoring and evaluation quality was modest. Some lessons learned included: the test-and-scale approach allowed the RERED II to focus financial and implementation efforts on the activities that empirically demonstrated their market potential during implementation, while dropping activities that showed signs of irrelevance. This approach facilitates the decision-making process on mobilizing additional financing, as it provides specific evidence to substantiate the financing needs of successful activities requiring greater capital investments to scale up (SHS, SIP, ICS) while divesting from others. This approach also allowed to take some calculated risks, by integrating the potential need to change some of the elements decided at appraisal (such as DBD technology choice, CFL component dropping). These changes were facilitated by a clear compartmentation of the project's implementation structure. However, while the strength of this design is its flexibility and capacity to adjust the ambitions of the project as it progresses, it can incentivize indefinite project extensions and/or restructurings if the project design is not sufficiently backed by preparation studies. In the case of the RERED II, successive major restructurings allowed the project to drop irrelevant sub-activities and mobilize additional financing as the test-and-scale approach bore results. However, this approach comes with a high transaction cost which can be mitigated to reduce the number of avoidable changes with further preparation and scoping studies (for instance, willingness-to-pay, market sizing, geospatial assessments, etc.). In addition, had the prospective market been scoped at appraisal, a clear target of market size could have been set, to provide the Borrower and the Bank with an indication of the optimal life duration and/or size of the project. Therefore, such implementation arrangements should be paired with a robustly informed market analysis/scoping reflected in project design, and a clear vision of the optimal project life duration to minimize the risk of over-aging projects becoming irrelevant. o optimize their impact, technical assistance activities should be designed to encourage transferable knowledge and skillsets.