S O ELECTR ICITY ACCESS T REP O RT b S TAT E O F E L E C T RI CI TY ACCES S R EPO RT | 2017 Copyright © 2017 International Bank for Reconstruction and Development / THE WORLD BANK Washington DC 20433 Telephone: +1-202-473-1000 Internet: www.worldbank.org 6JKUYQTMKUCRTQFWEVQHVJGUVCHHQHVJG9QTNF$CPMYKVJGZVGTPCNEQPVTKDWVKQPU6JGƂPFKPIU KPVGTRTGVCVKQPUCPFEQPENWUKQPUGZRTGUUGFKPVJKUYQTMFQPQVPGEGUUCTKN[TGƃGEVVJGXKGYUQH 6JG9QTNF$CPMKVU$QCTFQH'ZGEWVKXG&KTGEVQTUQTVJGIQXGTPOGPVUVJG[TGRTGUGPV The World Bank does not guarantee the accuracy of the data included in this work and accept PQTGURQPUKDKNKV[HQTCP[EQPUGSWGPEGQHVJGKTWUG6JGDQWPFCTKGUEQNQTUFGPQOKPCVKQPU and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this work is subject to copyright. 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Any queries on rights CPFNKEGPUGUKPENWFKPIUWDUKFKCT[TKIJVUUJQWNFDGCFFTGUUGFVQ9QTNF$CPM2WDNKECVKQPU 6JG9QTNF$CPM)TQWR*5VTGGV099CUJKPIVQP&%75#HCZ  GOCKNRWDTKIJVU"YQTNFDCPMQTI(WTVJGTOQTGVJG'5/#22TQITCO/CPCIGTYQWNF appreciate receiving a copy of the publication that uses this publication for its source UGPVKPECTGQHVJGCFFTGUUCDQXGQTVQGUOCR"YQTNFDCPMQTI Photo Credits Cover: © World Bank 2CIGKK…/CNEQNO%QUITQXG&CXKGU^9QTNF$CPM 2CIGX…5QƂG6GUUQP^6CKOCPK(KNOU^9QTNF$CPM 2CIGXK…#UKCP&GXGNQROGPV$CPM XKCƃKEMT%%NKE Page 14: © Aarthi Sivaraman | World Bank STATE OF ELECT RI CITY ACCESS R EPORT 2017 CONTENTS Preamble vii Overview xi CHAPTER 1: The Case for Universal Electricity Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Introduction 1 Energy is Necessary to Achieve Sustainable Development Goals 1 How is Electricity Related to Economic Growth? 2 Reliable and Affordable Electricity Services Can Contribute to Poverty Reduction 4 Փ>˜ iÛiœ«“i˜Ì >˜-ˆ}˜ˆwV>˜ÌÞ i˜iwÌvÀœ“ iVÌÀˆVˆÌÞ-iÀۈVià  È What is the Carbon Footprint of Universal Electricity Access? 7 Conclusion 10 References 12 CHAPTER 2: The Status of Electricity Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Introduction 17 Snapshot of Access to Electricity in 2014 17 iޜ˜`̅i ՓLiÀà  £n Future Outlook of Electricity Access 23 iÌ̈˜} iÌÌiÀi>ÃÕÀiÃœv iVÌÀˆVˆÌÞƂVViÃà  Ó{ œ˜VÕȜ˜  ÓÈ References 27 CHAPTER 3: Creating a Better Environment for Transformative Electricity Access . . . . 29 Introduction 29 Grid and Off-Grid: Two Complementary Tracks to Universal Access 29 Ý«>˜`ˆ˜}Àˆ`‡ >Ãi` iVÌÀˆwV>̈œ˜  Σ iÛiœ«ˆ˜}"vv‡Àˆ` iVÌÀˆwV>̈œ˜-V…i“ià  ÎÈ >Žˆ˜} iVÌÀˆVˆÌÞƂVViÃÃ*Àœ}À>“Ã/À>˜ÃvœÀ“>̈Ûi  {ä Conclusion 43 References 44 CHAPTER 4: “Clean Energy” and Electricity Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Introduction 47 ,i˜iÜ>LiÃvœÀ iVÌÀˆVˆÌÞƂVViÃà  {n "vv‡Àˆ`,i˜iÜ>Li ˜iÀ}Þ\ˆ˜ˆÉˆVÀœÀˆ`à  x£ "vv‡Àˆ`,i˜iÜ>Li ˜iÀ}Þ\-Ì>˜`‡>œ˜i-ÞÃÌi“à  xÎ …>i˜}iÃ>˜`-V>ˆ˜}‡Õ«"«Ìˆœ˜Ã  xx ˜iÀ}Þ vwVˆi˜VÞ  xÇ /…i œ‡ i˜iwÌÃœv i>˜ ˜iÀ}Þ  È£ œ˜VÕȜ˜  ÈÎ ,iviÀi˜Vià  È{ CHAPTER 5: Emerging and Innovative Business and Delivery Models . . . . . . . . . . . . . . 67 ˜ÌÀœ`ÕV̈œ˜  ÈÇ œÜ˜ÛiÃ̜ÀÃ*iÀViˆÛi,ˆÃŽÃ>˜` …>i˜}ià  Èn >ÀŽiÌÃ] ÕȘiÃÃœ`iÃ]>˜`/iV…˜œœ}Þ  ș "««œÀÌ՘ˆÌˆiÃvœÀ ÕȘiÃȘ̅i"vv‡Àˆ`>ÀŽiÌö  Çx œ˜VÕȜ˜  nä ,iviÀi˜Vià  n£ ACKNOWLEDGMENTS /…i`iÛiœ«“i˜Ìœv̅i-Ì>Ìiœv iVÌÀˆVˆÌÞƂVViÃÃ,i«œÀÌ­- Ƃ,®Li˜iwÌÌi`vÀœ“>`ۈViœv> -ÌiiÀˆ˜} œ““ˆÌÌiii`LÞ̅i7œÀ` >˜Ž] ˜iÀ}Þ-iV̜À>˜>}i“i˜ÌƂÃÈÃÌ>˜Vi*Àœ}À>“ ­ -Ƃ*®°/…i“i“LiÀň«œv̅i-ÌiiÀˆ˜}ÀœÕ«Ü>Ã>ÃvœœÜÃ\ ƂvÀˆV>˜ iÛiœ«“i˜Ì >˜Ž­Ƃv ® ƂÈ>˜ iÛiœ«“i˜Ì >˜Ž­Ƃ ® Department for International Development—UK Government (DFID) Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) œœ`>˜`Ƃ}ÀˆVՏÌÕÀ>"À}>˜ˆâ>̈œ˜­Ƃ"®] ˜ÌiÀ‡Ƃ“iÀˆV>˜ iÛiœ«“i˜Ì >˜Ž­ ® International Network on Gender and Sustainable Energy (ENERGIA) Kreditanstalt für Wiederaufbau (KfW) Practical Action Renewable Energy Policy Network for the 21st Century (REN21) Sustainable Energy for All (SEforAll) United Nations Foundation (UNF) 7œÀ` >˜Ž­7 ® World Health Organization (WHO) Members of the Steering Committee ÜiÀiÀ°Ƃ˜Ì…œ˜ÞÕ`i­Ƃ ®ÆÀ°ˆœÀ}ˆœÕ>LiÀ̈>˜` À° >˜ˆi-V…ÀœÌ…­Ƃv ®ÆÀ°ƂˆÃÌ>ˆÀ7À>Þ­  ®Æð ÀˆŽ>iˆÝ]ðÀˆ˜ˆ>ÌÜ}œÕ]À° "ˆÛˆiÀ ÕLœˆÃ­Ƃ"®ÆÀ°ƂÀˆi9i«iâ‡>ÀVˆ>­ ®Æ𜘈Ž>,>““iÌ­<®Æð>˜i Lˆ˜}iÀ] À°œ…ˆ˜`iÀ1Ƃ/­- vœÀƂ®ÆÀ°i˜Ã ÀˆˆÃV…­v7®Æð …ÀˆÃ̈˜iˆ˜Ã]ð,>˜>Ƃ`ˆL]ð >˜ˆŽ> …>܏>­, Ó£®Æð,ˆV…i˜`>6>˜iiÕÜi˜]ð9>Ãi“ˆ˜ ÀLœÞ­1 ®ÆÀ° >ÀœÃ œÀ>] ðˆV…>i>*viˆvviÀ]ð-ÕÃ>˜7ˆLÕÀ˜]>˜`ði>̅iÀƂ`>ˆÀ‡,œ…>˜ˆ­7"®° Mr. Rohit Khanna (ESMAP Program Manager), oversaw the development of the State of Electricity Access Report./…iÌiV…˜ˆV>Ìi>“Ü>Ïi`LÞÀ°œvw ŽœÕiۈ­7œÀ` >˜Ž®>˜`𠏈Ã>*œÀÌ>i­ -Ƃ*®° The main contributing authors of the SEAR 2017 were: À°œvw ŽœÕiۈ]𠏈Ã>*œÀÌ>i] ð >˜>,ÞÃ>˜ŽœÛ>]À°Û>˜>µÕiÃ]À°œÀ}>˜ >∏ˆ>˜]À°œÛˆ˜`>/ˆ“ˆÃˆ˜>]À°*i`Àœ Ƃ˜Ì“>˜˜]ð,>ÕV>iœÀ}ˆ>˜>œÕ“Li>˜Õ­7œÀ` >˜ŽÉ -Ƃ*®Æ𠈎ˆƂ˜}iœÕ]À° i>˜ œœ«iÀ]À°i>˜ƂÀ“>˜`œ>Lˆ>˜ˆƂ««>ۜÕ]ð,>˜>Ƃ`ˆL]À°Ƃ>˜ˆiÀ]À°,œLiÀÌ7° >Vœ˜ÆÀ°,>ۈ˜`À>Ƃ˜ˆ >LÀ>>]À° i˜>“ˆ˜i˜˜i̅-œÛ>VœœÆÀ°7ˆˆ>“>“ià Þ̅Æ ðœÃi«…ˆ˜i/ˆœÃiVœÆÀ°>ۈiÀ >Ã̈œƂ˜Ìiâ>˜>ÆÀ°ƂÀ˜>`œ6ˆiÀÀ>`i >ÀÛ>…œÆÀ°ˆ}Õi ,iۜœƂViÛi`œÆÀ°9>VœLՏÕ}iÌÌ>ÆÀ° >˜ˆi-V…˜ˆÌâiÀ]À°-“>ˆ…i˜˜>Ã]À°>ÀŽ œÜiÃ]À°>Lˆ>˜ˆƂ««>ۜÕ]>˜`ð>ÕÀ>7ˆˆ>“Ãœ˜° Valuable support in preparation Ü>ëÀœÛˆ`i`LÞ7œÀ` >˜ŽÉ -Ƃ*ÃÌ>vv>˜`Vœ˜ÃՏÌ>˜ÌÃ\ À°6i˜Ž>Ì>,>“>˜>*ÕÌ̈]ð >ÀL>À>1˜}>Àˆ]ð>À> œÀ˜]ð >À>ƂÛ>Àiâ]ð8Õi}iÕ] ð >ÌÃՎœ/œL>]ð-՘ˆÌ> …ˆŽŽ>ÌÕÀ ÕLiÞ]ð-Àˆ>Ì>>““ˆ>]>˜`𠜘˜ˆi-“ÞÃiÀ° v vi S TAT E O F E L E C T R I CI TY ACCES S R EPO RT | 2017 Special FeaturesÜiÀiVœœÀ`ˆ˜>Ìi`LÞÀ°œvw ŽœÕiۈ>˜`«Ài«>Ài`LÞ̅ivœœÜˆ˜}i>` >Õ̅œÀÃ\À°>ÀŽœÜiÃ]À°>ÀVœ؏Ã]ð “>˜Õi> œœ“Lœ]À°->“iiÀƂŽL>À]À°>ÌÌ œÀ`>˜]ð-œ“> ÕÌÌ>]À° ˆœ}œ,œ`Àˆ}Õiâ]À°"ˆÛˆiÀ ÕLœˆÃ]À°Ƃ˜`Ài>Ã/…ՏÃÌÀÕ«]>˜` À°i“*œÀV>Àœ° Case studies ÜiÀiVœœÀ`ˆ˜>Ìi`LÞð >˜>,ÞÃ>˜ŽœÛ>­ -Ƃ*®>˜`«Ài«>Ài`LÞÀ°-Õ`>ÀÅ>˜ Փ>À->ˆ˜ˆ]À°,>ۈ˜`À>œÃ…ˆ]ð-՘ˆÌ> ÕLiÞ]À°/ˆ“‡*>ÌÀˆVŽiÞiÀ]À°i˜Ã ÀˆˆÃV…]ð >̅Àˆ˜>iÃ̏i]À°,œLiÀÌÛ>˜`iÀ*>Ã]ð/œ“œ/>˜>Ž>]ð/Àˆ«Ì>-ˆ˜}…]À°՘}/ˆi˜6>˜] ði˜˜Þ/À>VÞ]>˜`À°ˆˆ>˜,iˆV…i° Impact evaluation reportsÜiÀiVœœÀ`ˆ˜>Ìi`LÞ𠏈Ã>*œÀÌ>i­ -Ƃ*®>˜`ˆ“«i“i˜Ìi` LÞ  -˜ÌiÀ˜>̈œ˜>-,­ œˆÛˆ>®Æ˜vœÌÀ>VŽ,iÃi>ÀV…>˜` œ˜ÃՏ̈˜}­i˜Þ>®Æ-i˜}Ã>Û>˜},ÕÀ> iVÌÀˆwV>̈œ˜­>œÃ®Æ>˜`wi`ܜÀŽ>˜`>˜>ÞÈÃÜiÀiVœ˜`ÕVÌi`LÞÀ°ÕÃÃ>ˆ˜->“>`>˜` À°6œÀ>Û>Ìi/՘̈Û>Ìi]̅iVœ>LœÀ>̈œ˜œvð7i˜`Þ >ÀˆLiÕiÀÀ> >Û>ÀÀœ]ðÕVˆ>-«ˆ˜iˆ] >˜`À°,œ“i …>Û>«ÀˆV…>° Review and Consultation: /…i7œÀ` >˜Ž½Ãˆ˜ÌiÀ˜>«iiÀÀiۈiÜ«ÀœViÃÃÜ>Ïi`LÞÀ°ÕVˆœ œ˜>Àˆ­ ˆÀiV̜Àœv ˜iÀ}Þ>˜` ÝÌÀ>V̈ÛiÏœL>*À>V̈Vi]7œÀ` >˜Ž®]܈̅Vœ˜ÌÀˆLṎœ˜ÃvÀœ“ À°-ˆ“œ˜-̜«]À°ƂŜŽ->ÀŽ>À]À°œ˜ Ýi]ð-Õ`iŘ> >˜iÀii]>˜`ð9>Liˆ<…>˜}° Substantive comments >œ˜}̅i«ÀœViÃÃÜiÀi«ÀœÛˆ`i`LÞð7i˜`ÞÕ}…iÃ]À°>Vœ“ œÃ}ÀœÛi‡ >ۈiÃ]ð6ˆÛˆi˜œÃÌiÀ]À°,ˆV…>À`œÃˆiÀ]>˜`À°<ÕL>ˆÀ->`iµÕi­7œÀ` >˜Ž®Æ ð >œ“ˆ*>Տ> ÀÕVŽ]À°,ÕÃÃi-ÌÕÀ“]À°iœœÃi«… Þ̅]À°,>…ˆ“>˜>˜ˆ­ ®Æð>˜i Lˆ˜}iÀ­- vœÀƂ®ÆÀ°i˜Ã ÀˆˆÃV…­v7®Æ𜘈Ž>,>““iÌ­<®ÆÀ°ƂˆÃÌ>À7À>Þ­  ®Æ ð9>Ãi“ˆ˜ ÀLœÞ,Õvv­1 ®Æð,>˜>Ƃ`ˆL­, Ó£®ÆÀ°,œLiÀ̜Ƃˆiœ]À°ƂÀ˜>`œ6ˆiÀ>] À°>ۈiÀ >Ã̈œ]ðƂˆVi ÀˆÛiÀ]À°>ÕÀœ>}i‡ˆ…œ­ ®Æ>˜`À°ˆœÀ}ˆœÕ>LiÀ̈­Ƃv ®° Outreach: /…iVœ““Õ˜ˆV>̈œ˜Ã«ÀœViÃÃÜ>ÃVœœÀ`ˆ˜>Ìi`LÞð-ÕÃ>˜*i“ˆ˜}>˜`ðƂ˜ˆÌ> ,œâœÜÎ>­7œÀ` >˜Ž®°œÕÀŜÀÌۈ`iœœ˜- Ƃ,ÜiÀiVœœÀ`ˆ˜>Ìi`LÞðƂ>À̅ˆ-ˆÛ>À>“>˜>˜` À°Ƃ˜`Þ-…Õ>ˆˆÕ°/…iœ˜ˆ˜i«>ÌvœÀ“­…ÌÌ«\ÉÉiÓ>«°œÀ}ÉÃi>À®Ü>Ã`iÛiœ«i`LÞðƂ>À̅ˆ -ˆÛ>À>“>˜>˜`ð >ÀL>À>1˜}>Àˆ°/…iÀi«œÀÌÜ>Ãi`ˆÌi`LÞð>ÕÀ>7>>Vi°À>«…ˆV`iÈ}˜ Ü>ÃLÞ >ޏœÀ iÈ}˜]˜V°܈̅«Àœ`ÕV̈œ˜ÃÕ««œÀÌœvði>̅iÀƂÕÃ̈˜­ -Ƃ*®° This work was funded by ESMAP. /…i>Õ̅œÀÃ}À>ÌivՏÞ>VŽ˜œÜi`}i̅iw˜>˜Vˆ>>˜`ÌiV…˜ˆV> ÃÕ««œÀÌ«ÀœÛˆ`i`LÞ̅i ˜iÀ}Þ-iV̜À>˜>}i“i˜ÌƂÃÈÃÌ>˜Vi*Àœ}À>“­ -Ƃ*®° -Ƃ*ˆÃ> }œL>Ž˜œÜi`}i>˜`ÌiV…˜ˆV>>ÃÈÃÌ>˜Vi«Àœ}À>“>`“ˆ˜ˆÃÌiÀi`LÞ̅i7œÀ` >˜Ž°Ì«ÀœÛˆ`ià analytical and advisory services to low- and middle-income countries to increase their know-how and institutional capacity to achieve environmentally sustainable energy solutions for poverty Ài`ÕV̈œ˜>˜`iVœ˜œ“ˆV}ÀœÜ̅° -Ƃ*ˆÃv՘`i`LÞƂÕÃÌÀ>ˆ>]ƂÕÃÌÀˆ>] i˜“>ÀŽ] ÕÀœ«i>˜ œ““ˆÃȜ˜]ˆ˜>˜`]À>˜Vi]iÀ“>˜Þ]Vi>˜`]>«>˜]ˆÌ…Õ>˜ˆ>]̅i i̅iÀ>˜`Ã] œÀÜ>Þ] /…i,œVŽiviiÀœÕ˜`>̈œ˜]-Üi`i˜]-܈ÌâiÀ>˜`]>˜`̅i1˜ˆÌi`ˆ˜}`œ“]>ÃÜi>Ã̅i 7œÀ` >˜Ž° PREAMBLE T …i7œÀ` >˜Ž½Ã ˜iÀ}Þ-iV̜À>˜>}i“i˜ÌƂÃÈÃ- The Report is organized as follows: Ì>˜Vi*Àœ}À>“­ -Ƃ*®Vœ““ˆÌÌi`̜`iˆÛiÀˆ˜}̅i AN OVERVIEWœv̅i“>ˆ˜̜«ˆVÃ`ˆÃVÕÃÃi`ˆ˜̅iÀi«œÀÌ] º-Ì>Ìiœv iVÌÀˆVˆÌÞƂVViÃÃ,i«œÀÌ­- Ƃ,®»«ÀœiVÌ>à highlighting key messages. «>ÀÌœv̅i-ÕÃÌ>ˆ˜>Li ˜iÀ}ÞvœÀƂ­- {Ƃ®˜œÜi`}i Hub activities. The SEAR is intended to complement the CHAPTER 1: The Case for Universal Electricity Access. The œL>/À>VŽˆ˜}À>“iܜÀŽ­/®,i«œÀÌÃiÀˆiÃ]̅iܜÀŽ wÀÃÌV…>«ÌiÀ`i“œ˜ÃÌÀ>ÌiÃ܅Þi˜iÀ}ވÈ“«œÀÌ>˜ÌvœÀÃÕÃ- œ˜ ̅i Տ̈‡/ˆiÀ À>“iܜÀŽ] >˜` ̅i ÀiVi˜ÌÞ >՘V…i` Ì>ˆ˜>Li`iÛiœ«“i˜Ì]>˜`…œÜi˜ÃÕÀˆ˜}՘ˆÛiÀÃ>>VViÃà Regulatory Indicators for Sustainable Energy by serving as to affordable and reliable modern energy services can con- a periodical stocktaking of the status and nature of prog- ÌÀˆLÕÌi ̜ Ài`ÕVˆ˜} «œÛiÀÌÞ] «Àœ“œÌˆ˜} …Õ“>˜ `iÛiœ«- ress on the target of ensuring universal access to afford- “i˜Ì]>˜`ˆ˜VÀi>Ș}iVœ˜œ“ˆV}ÀœÜ̅° >Li]Àiˆ>Li]“œ`iÀ˜i˜iÀ}ÞÃiÀۈViÃLÞÓäÎä° Chapter 2: The Status of Electricity Access. This chapter The SEAR 2017 begins with an examination of the criti- provides an updated snapshot of the status and trends of cal role of electricity access toward the achievement of the iiVÌÀˆVˆÌÞ >VViÃÃ] …ˆ}…ˆ}…̈˜} ̅i ÃV>i œv ̅i V…>i˜}i - Ã]̅i˜«ÀœÛˆ`iÃ>Ø>«Ã…œÌœv̅iÃÌ>ÌÕÃœviiVÌÀˆVˆÌÞ ahead— including measurement issues. It is largely derived access based on the recent Global Tracking Framework from the methodology adopted by the 2017 Global Track- >Ì> ­ Ƃ >˜` 7œÀ` >˜Ž] Óä£Ç®° Ì }œià œ˜ ̜ iÝ«œÀi ing Report. how countries can create a conducive environment for a ÌÀ>˜ÃvœÀ“>̈ÛiiiVÌÀˆVˆÌÞ>VViÃÃÀœœÕÌ]…œÜVi>˜i˜iÀ}Þ CHAPTER 3: Creating a Better Environment for Transfor- wÌȘ̜̅i«ˆVÌÕÀi]>˜`…œÜi“iÀ}ˆ˜}>˜`ˆ˜˜œÛ>̈ÛiÃiÀ- mative Electricity Access. This chapter explores the key vice delivery models can accelerate progress on meeting factors in designing and implementing successful electric- the goals. ity access programs. It covers challenges in expanding grid Ìà œLiV̈Ûi ˆÃ ̜ «Àœ“«Ì }œÛiÀ˜“i˜ÌÃ] `œ˜œÀÃ] ̅i iiVÌÀˆwV>̈œ˜ >˜` `iÛiœ«ˆ˜} œvv‡}Àˆ` iiVÌÀˆwV>̈œ˜p «ÀˆÛ>Ìi ÃiV̜À] VˆÛˆ ÜVˆiÌÞ œÀ}>˜ˆâ>̈œ˜Ã] >˜` «À>V̈- along with how to plan for a complementarity of grid and tioners to develop interventions to close the electricity œvv‡}Àˆ`iiVÌÀˆVˆÌÞ܏Ṏœ˜Ã°Ì>Ãœ…ˆ}…ˆ}…Ì뜏ˆVÞ]Ài}Õ- access gap by integrating lessons learned from countries >̈œ˜]ÌiV…˜ˆV>]>˜`w˜>˜Vˆ˜}v>V̜Àð ̅>Ì…>ÛiiÝ«>˜`i`iiVÌÀˆVˆÌÞ>VViÃÃ̜̅iˆÀ«œ«Õ>̈œ˜] CHAPTER 4: “Clean Energy” and Electricity Access. This with insights drawn from emerging innovative business V…>«ÌiÀ `ˆÃVÕÃÃià ̅i È}˜ˆwV>˜Ì Àœi ̅>Ì Vi>˜ i˜iÀ}Þp and delivery models. ̅>Ì ˆÃ] Ài˜iÜ>Li i˜iÀ}Þ >˜` i˜iÀ}Þ ivwVˆi˜VÞp VœÕ` /…i - Ƃ, Óä£Ç ˆÃ >À̈VՏ>Ìi` >ÀœÕ˜` wÛi “>ˆ˜ µÕiÃ- play in meeting the electricity access challenge. It focuses tions: œ˜܅>̈Ã՘ˆµÕi>LœÕÌVi>˜i˜iÀ}Þˆ˜œÛiÀVœ“ˆ˜}i˜iÀ}Þ • Why is electricity access critical for the achievement of «œÛiÀÌÞ]>œ˜}܈̅܅i˜>˜`…œÜVi>˜i˜iÀ}ÞV>˜…i« the 2030 Agenda for Sustainable Development? «ÀœÛˆ`i “œ`iÀ˜ i˜iÀ}Þ ÃiÀۈVià “œÀi µÕˆVŽÞ] “œÀi Àiˆ- >LÞ]ˆ˜>˜i˜ÛˆÀœ˜“i˜Ì>ÞÃ>viÀ“>˜˜iÀ]>˜`>Ì>œÜiÀVœÃÌ • What is the status of electricity access? than fossil fuel alternatives. • What are the challenges and drivers of transformative CHAPTER 5: Emerging and Innovative Business and Deliv- electricity access? ery Models. This chapter illustrates several cases where • Why is it important to explore synergies between ˜iÜ `iˆÛiÀÞ “œ`iÃ] w˜>˜Vˆ˜} “iV…>˜ˆÃ“Ã] >˜` «œˆVÞ >VViÃÃ]Ài˜iÜ>LiÃ]>˜`i˜iÀ}ÞivwVˆi˜VÞ¶ and regulation instruments have been put in place to pro- vide energy services. It draws examples from grid and off- • What are the emerging and innovative business and grid interventions. It discusses the market opportunity delivery models? presented by the electricity access challenge and how sev- eral stakeholders are meeting it in practice. And it outlines the main risks and challenges perceived by investors and incentives that are necessary to attract investment. vii vii i S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 Special FeaturesÜiÀiVœœÀ`ˆ˜>Ìi`LÞÀ°œvw ŽœÕiۈ>˜`«Ài«>Ài`LÞ̅ivœœÜˆ˜}i>` >Õ̅œÀÃ\À°>ÀŽœÜiÃ]À°>ÀVœ؏Ã]ð “>˜Õi> œœ“Lœ]À°->“iiÀƂŽL>À]À°>ÌÌ œÀ`>˜]ð-œ“> ÕÌÌ>]À° ˆœ}œ,œ`Àˆ}Õiâ]À°"ˆÛˆiÀ ÕLœˆÃ]À°Ƃ˜`Ài>Ã/…ՏÃÌÀÕ«]>˜` À°i“*œÀV>Àœ° Case studies ÜiÀiVœœÀ`ˆ˜>Ìi`LÞð >˜>,ÞÃ>˜ŽœÛ>­ -Ƃ*®>˜`«Ài«>Ài`LÞÀ°-Õ`>ÀÅ>˜ Փ>À->ˆ˜ˆ]À°,>ۈ˜`À>œÃ…ˆ]ð-՘ˆÌ> ÕLiÞ]À°/ˆ“‡*>ÌÀˆVŽiÞiÀ]À°i˜Ã ÀˆˆÃV…]ð >̅Àˆ˜>iÃ̏i]À°,œLiÀÌÛ>˜`iÀ*>Ã]ð/œ“œ/>˜>Ž>]ð/Àˆ«Ì>-ˆ˜}…]À°՘}/ˆi˜6>˜] ði˜˜Þ/À>VÞ]>˜`À°ˆˆ>˜,iˆV…i° Impact evaluation reportsÜiÀiVœœÀ`ˆ˜>Ìi`LÞ𠏈Ã>*œÀÌ>i­ -Ƃ*®>˜`ˆ“«i“i˜Ìi` LÞ  -˜ÌiÀ˜>̈œ˜>-,­ œˆÛˆ>®Æ˜vœÌÀ>VŽ,iÃi>ÀV…>˜` œ˜ÃՏ̈˜}­i˜Þ>®Æ-i˜}Ã>Û>˜},ÕÀ> iVÌÀˆwV>̈œ˜­>œÃ®Æ>˜`wi`ܜÀŽ>˜`>˜>ÞÈÃÜiÀiVœ˜`ÕVÌi`LÞÀ°ÕÃÃ>ˆ˜->“>`>˜` À°6œÀ>Û>Ìi/՘̈Û>Ìi]̅iVœ>LœÀ>̈œ˜œvð7i˜`Þ >ÀˆLiÕiÀÀ> >Û>ÀÀœ]ðÕVˆ>-«ˆ˜iˆ] >˜`À°,œ“i …>Û>«ÀˆV…>° Review and Consultation: /…i7œÀ` >˜Ž½Ãˆ˜ÌiÀ˜>«iiÀÀiۈiÜ«ÀœViÃÃÜ>Ïi`LÞÀ°ÕVˆœ œ˜>Àˆ­ ˆÀiV̜Àœv ˜iÀ}Þ>˜` ÝÌÀ>V̈ÛiÏœL>*À>V̈Vi]7œÀ` >˜Ž®]܈̅Vœ˜ÌÀˆLṎœ˜ÃvÀœ“ À°-ˆ“œ˜-̜«]À°ƂŜŽ->ÀŽ>À]À°œ˜ Ýi]ð-Õ`iŘ> >˜iÀii]>˜`ð9>Liˆ<…>˜}° Substantive comments >œ˜}̅i«ÀœViÃÃÜiÀi«ÀœÛˆ`i`LÞð7i˜`ÞÕ}…iÃ]À°>Vœ“ œÃ}ÀœÛi‡ >ۈiÃ]ð6ˆÛˆi˜œÃÌiÀ]À°,ˆV…>À`œÃˆiÀ]>˜`À°<ÕL>ˆÀ->`iµÕi­7œÀ` >˜Ž®Æ ð >œ“ˆ*>Տ> ÀÕVŽ]À°,ÕÃÃi-ÌÕÀ“]À°iœœÃi«… Þ̅]>˜`À°,>…ˆ“>˜>˜ˆ­ ®Æ ð>˜i Lˆ˜}iÀ­- vœÀƂ®ÆÀ°i˜Ã ÀˆˆÃV…­v7®Æ𜘈Ž>,>““iÌ­<®ÆÀ°ƂˆÃÌ>À 7À>Þ­  ®Æð9>Ãi“ˆ˜ ÀLœÞ,Õvv­1 ®Æð,>˜>Ƃ`ˆL­, Ó£®ÆÀ°,œLiÀ̜Ƃˆiœ] À°ƂÀ˜>`œ6ˆiÀ>]À°>ۈiÀ >Ã̈œ]ðƂˆVi ÀˆÛiÀ]À°>ÕÀœ>}i‡ˆ…œ­ ®Æ>˜` À°ˆœÀ}ˆœÕ>LiÀ̈­Ƃv ®° Outreach: /…iVœ““Õ˜ˆV>̈œ˜Ã«ÀœViÃÃÜ>ÃVœœÀ`ˆ˜>Ìi`LÞð-ÕÃ>˜*i“ˆ˜}>˜`ðƂ˜ˆÌ> ,œâœÜÎ>­7œÀ` >˜Ž®°œÕÀŜÀÌۈ`iœœ˜- Ƃ,ÜiÀiVœœÀ`ˆ˜>Ìi`LÞðƂ>À̅ˆ-ˆÛ>À>“>˜>˜` À°Ƃ˜`Þ-…Õ>ˆˆÕ°/…iœ˜ˆ˜i«>ÌvœÀ“­…ÌÌ«\ÉÉiÓ>«°œÀ}ÉÃi>À®Ü>Ã`iÛiœ«i`LÞðƂ>À̅ˆ -ˆÛ>À>“>˜>˜`ð >ÀL>À>1˜}>Àˆ°/…iÀi«œÀÌÜ>Ãi`ˆÌi`LÞð>ÕÀ>7>>Vi°À>«…ˆV`iÈ}˜ Ü>ÃLÞ >ޏœÀ iÈ}˜]˜V°܈̅«Àœ`ÕV̈œ˜ÃÕ««œÀÌœvði>̅iÀƂÕÃ̈˜­ -Ƃ*®° This work was funded by ESMAP. /…i>Õ̅œÀÃ}À>ÌivՏÞ>VŽ˜œÜi`}i̅iw˜>˜Vˆ>>˜`ÌiV…˜ˆV> ÃÕ««œÀÌ«ÀœÛˆ`i`LÞ̅i ˜iÀ}Þ-iV̜À>˜>}i“i˜ÌƂÃÈÃÌ>˜Vi*Àœ}À>“­ -Ƃ*®° -Ƃ*ˆÃ> }œL>Ž˜œÜi`}i>˜`ÌiV…˜ˆV>>ÃÈÃÌ>˜Vi«Àœ}À>“>`“ˆ˜ˆÃÌiÀi`LÞ̅i7œÀ` >˜Ž°Ì«ÀœÛˆ`ià analytical and advisory services to low- and middle-income countries to increase their know-how and institutional capacity to achieve environmentally sustainable energy solutions for poverty Ài`ÕV̈œ˜>˜`iVœ˜œ“ˆV}ÀœÜ̅° -Ƃ*ˆÃv՘`i`LÞƂÕÃÌÀ>ˆ>]ƂÕÃÌÀˆ>] i˜“>ÀŽ] ÕÀœ«i>˜ œ““ˆÃȜ˜]ˆ˜>˜`]À>˜Vi]iÀ“>˜Þ]Vi>˜`]>«>˜]ˆÌ…Õ>˜ˆ>]̅i i̅iÀ>˜`Ã] œÀÜ>Þ] /…i,œVŽiviiÀœÕ˜`>̈œ˜]-Üi`i˜]-܈ÌâiÀ>˜`]>˜`̅i1˜ˆÌi`ˆ˜}`œ“]>ÃÜi>Ã̅i 7œÀ` >˜Ž° x S TAT E O F E N E R GY ACCES S R EPO RT | 2017 OVERVIEW KEY MESSAGES • Given current conditions, universal electricity access will not be met by 2030 unless urgent measures are taken. While nearly 1 billion people in Sub Saharan Africa alone may gain electricity access by 2040, due to population growth, an estimated 530 million people in the region will not have electricity access (IEA 2014). U /…ˆÃi˜iÀ}ÞŜÀÌv>“ÕÃÌLiÀiV̈wi`ˆv̅iˆ˜ÌiÀ˜>̈œ˜>Vœ““Õ˜ˆÌÞ…œ«iÃ̜“iiÌ̅iÓäÎä-ÕÃÌ>ˆ˜>Li Development Goals, in light of the linkages between energy and other sustainable development challenges— notably, health, education, food security, gender equality, poverty reduction, and climate change. U ˜“>˜ÞVœÕ˜ÌÀˆiÃ܈̅œÜiÛiÃœviiVÌÀˆwV>̈œ˜>VViÃÃ]LœÌ…}Àˆ`>˜`œvv‡}Àˆ`܏Ṏœ˜Ã>ÀiۈÌ>vœÀ>V…ˆiۈ˜} universal electricity access—but they must be supported by an enabling environment with the right policies, institutions, strategic planning, regulations, and incentives. • Against a backdrop of climate change, plummeting costs for renewable energy technologies and adequate i˜iÀ}ÞivwVˆi˜VÞ“i>ÃÕÀiÃœvviÀ>ÌÀi“i˜`œÕÃœ««œÀÌ՘ˆÌÞvœÀVœÕ˜ÌÀˆiÃ̜LiVÀi>̈Ûi>LœÕÌiiVÌÀˆVˆÌÞ>VViÃà expansion—with the emphasis on “clean energy.” • Emerging and innovative energy service delivery models offer unprecedented opportunities for private ÃiV̜À‡`ÀˆÛi˜œvv‡}Àˆ`iiVÌÀˆwV>̈œ˜>˜`>VViiÀ>̈˜}՘ˆÛiÀÃ>iiVÌÀˆVˆÌÞ>VViÃÃpLÕÌœ˜ÞˆvVœÕ˜ÌÀˆià can create the necessary environment for them to be replicated and scaled up. INTRODUCTION W ˆÌ…œÕÌ>VViÃÃ̜iiVÌÀˆVˆÌÞ]̅i«>̅Ü>ÞœÕÌœv What can be done to get the international community poverty is narrow and long. The current pace of on track to close the electricity access gap? This report— «Àœ}ÀiÃà ˆÃ ˜œÌ “œÛˆ˜} v>ÃÌ i˜œÕ}…\ £°äÈ Lˆ- The State of Electricity Access Report (SEAR) 2017 begins ˆœ˜«iœ«iÃ̈`œ˜œÌ…>Ûi>VViÃÃ̜iiVÌÀˆVˆÌÞ]>˜`ΰä{ with an examination of the critical role of energy toward billion people still rely on solid fuels and kerosene for ̅i>V…ˆiÛi“i˜Ìœv̅i- Ã]̅i˜«ÀœÛˆ`iÃ>Ø>«Ã…œÌœv VœœŽˆ˜}>˜`…i>̈˜}­ Ƃ>˜`7œÀ` >˜ŽÓä£Ç®° iëˆÌi ̅iÃÌ>ÌÕÃœviiVÌÀˆVˆÌÞ>VViÃÃ]L>Ãi`œ˜̅iÀiVi˜ÌœL> È}˜ˆwV>˜Ì«Àœ}ÀiÃȘÀiVi˜Ì`iV>`iÃ]>V…ˆiۈ˜}՘ˆÛiÀÃ> /À>VŽˆ˜}À>“iܜÀŽ >Ì>­ Ƃ>˜`7œÀ` >˜Ž]Óä£Ç®°Ì access to modern energy services by 2030 will not be pos- goes on to explore how countries can create a conducive sible without stepped-up efforts by all stakeholders. i˜ÛˆÀœ˜“i˜ÌvœÀ>ÌÀ>˜ÃvœÀ“>̈ÛiiiVÌÀˆVˆÌÞ>VViÃÃÀœœÕÌ] ˜ -i«Ìi“LiÀ Ó䣣] ̅i -ÕÃÌ>ˆ˜>Li ˜iÀ}Þ vœÀ Ƃ …œÜVi>˜i˜iÀ}ÞwÌȘ̜̅i«ˆVÌÕÀi]>˜`…œÜi“iÀ}ˆ˜} (SEforAll) initiative was launched with a call for: (i) universal and innovative service delivery models can accelerate >VViÃà ̜ “œ`iÀ˜ i˜iÀ}Þ ÃiÀۈViÃÆ ­ˆˆ® `œÕLi ̅i }œL> progress on meeting the goals. À>Ìiœvˆ“«ÀœÛi“i˜Ìˆ˜i˜iÀ}ÞivwVˆi˜VÞÆ>˜`­ˆˆˆ®`œÕLi This report is supplemented by a package of other the share of renewable energy in global energy produc- materials: (i) 10 Special Features that delve into topics rang- tion. This call is also one of the 17 UN Sustainable Devel- ˆ˜}vÀœ“iiVÌÀˆVˆÌÞ«>˜˜ˆ˜}]…Õ“>˜V>«ˆÌ>]}i˜`iÀ]Ü>ÌiÀ] œ«“i˜Ìœ>Ã­- î]܅ˆV…>Ài«>ÀÌœv̅iÓäÎäƂ}i˜`> …i>Ì…]vœœ`]>˜`>}ÀˆVՏÌÕÀipˆ˜VÕ`ˆ˜}ˆ˜i“iÀ}i˜VˆiÃp vœÀ -ÕÃÌ>ˆ˜>Li iÛiœ«“i˜Ì] >`œ«Ìi` ˆ˜ -i«Ìi“LiÀ ̜ Vˆ“>Ìi V…>˜}i] i˜iÀ}Þ ivwVˆi˜VÞ] >˜` ÀiÃՏÌÇL>Ãi` Óä£x°ƂÌÀœœÌˆÃ>ÀiVœ}˜ˆÌˆœ˜̅>Ìi˜iÀ}ÞˆÃ>ŽiÞv>V̜ÀvœÀ w˜>˜Vˆ˜}­Ì…iÞ>ÀiÃՓ“>Àˆâi`>Ì̅ii˜`œv̅ˆÃœÛiÀۈiÜ®Æ ÃÕÃÌ>ˆ˜>Li`iÛiœ«“i˜Ì>˜`«œÛiÀÌÞ>iۈ>̈œ˜]>˜`̅>Ì ­ˆˆ®xV>ÃiÃÌÕ`ˆiÃÆ>˜`­ˆˆˆ®{ˆ“«>VÌiÛ>Õ>̈œ˜Ài«œÀÌð ˆÌ«>ÞÃ>˜ˆ“«œÀÌ>˜ÌÀœiˆ˜>“>œÀ`iÛiœ«“i˜ÌV…>- Ìà œLiV̈Ûi ˆÃ ̜ «Àœ“«Ì }œÛiÀ˜“i˜ÌÃ] `œ˜œÀÃ] ̅i lenges that the world faces. «ÀˆÛ>ÌiÃiV̜À]VˆÛˆÜVˆiÌÞœÀ}>˜ˆâ>̈œ˜Ã]>˜`«À>V̈̈œ˜iÀà xi x ii S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 to develop interventions to close the electricity access WHY IS ELECTRICITY ACCESS CRITICAL gap by integrating lessons learned from countries that FOR ACHIEVING THE 2030 AGENDA …>ÛiiÝ«>˜`i`iiVÌÀˆVˆÌÞ>VViÃÃ̜̅iˆÀ«œ«Õ>̈œ˜]܈̅ FOR SUSTAINABLE DEVELOPMENT? insights drawn from emerging innovative business and `iˆÛiÀÞ“œ`iÃ°/…i- Ƃ,ˆÃœÀ}>˜ˆâi`>ÀœÕ˜`wÛi“>ˆ˜ œÀ̅iˆ˜ÌiÀ˜>̈œ˜>Vœ““Õ˜ˆÌÞ]̅iÀiˆÃLÀœ>`>}Àii“i˜Ì µÕiÃ̈œ˜Ã\ that access to modern energy services is a necessary «Ài‡ÀiµÕˆÃˆÌi vœÀ >iۈ>̈˜} «œÛiÀÌÞ >˜` LœœÃ̈˜} Å>Ài` • Why is electricity access critical for achieving the 2030 «ÀœÃ«iÀˆÌÞ°7ˆÌ…œÕÌi˜iÀ}Þ]ˆÌˆÃV…>i˜}ˆ˜}]ˆv˜œÌˆ“«œÃÈ- Agenda for Sustainable Development? Li] ̜ «Àœ“œÌi iVœ˜œ“ˆV }ÀœÜ̅] œÛiÀVœ“i «œÛiÀÌÞ] • What is the status of electricity access? iÝ«>˜` i“«œÞ“i˜Ì] >˜` ÃÕ««œÀÌ …Õ“>˜ `iÛiœ«“i˜Ì° Sustainable energy is the seventh goal of the 17 UN Sus- • What are the challenges and drivers of transformative Ì>ˆ˜>Li iÛiœ«“i˜Ìœ>Ã­- î]܈̅>V>̜ºi˜ÃÕÀi electricity access? >VViÃà ̜ >vvœÀ`>Li] Àiˆ>Li] ÃÕÃÌ>ˆ˜>Li >˜` “œ`iÀ˜ • Why is it important to explore synergies between ac- i˜iÀ}ÞvœÀ>°»ÌÃwÛiÌ>À}iÌȘ`ˆV>Ìi>Ài>Ã܅iÀi«œˆVˆià ViÃÃ]Ài˜iÜ>LiÃ]>˜`i˜iÀ}ÞivwVˆi˜VÞ¶ can be designed—such as boosting the share of renew- able energy in the global energy mix and doubling the • What are the emerging and innovative business and }œL>À>Ìiœvˆ“«ÀœÛi“i˜Ìˆ˜i˜iÀ}ÞivwVˆi˜VÞ­ œÝ"°£®° delivery models? ÕÀ̅iÀ“œÀi] i˜iÀ}Þ V>˜ Vœ˜ÌÀˆLÕÌi ̜ >V…ˆiۈ˜} ̅i /…iŽiÞw˜`ˆ˜}Ãœv̅iSEAR Report 2017 are that urgent œÌ…iÀ £È - à ­ˆ}ÕÀi "°£®° Ƃ ÀiۈiÜ œv > -  Ì>À}iÌà measures are needed to speed up access to modern ˆ˜`ˆV>ÌiÃ̅>Ìi˜iÀ}ވȘÌiÀVœ˜˜iVÌi`܈̅£Óx­Ç{«iÀ- energy services or there will still be several countries in Vi˜Ì®œÕÌœv̅i£È™Ì>À}iÌÃ]“>Žˆ˜}ˆÌVÀÕVˆ>vœÀ>ÜVˆiÌ- ÓäÎä]“œÃ̏Þˆ˜-ÕL‡->…>À>˜ƂvÀˆV>]܈̅>È}˜ˆwV>˜Ì«iÀ- ies to recognize the key interlinkages of energy and the Vi˜Ì>}i œv ̅i «œ«Õ>̈œ˜ }œˆ˜} ܈̅œÕÌ° œÌ… }Àˆ` >˜` ܈`iÀ `iÛiœ«“i˜Ì >}i˜`> ­6iÀ>] Óä£È®° /…ÕÃ] «>˜˜ˆ˜} œvv‡}Àˆ`>««Àœ>V…iÃ܈LiVÀˆÌˆV>]LÕÌ̅iÞ܈…>Ûi̜Li for universal access to modern energy services should be supported by a conducive enabling environment of the an integral part of national planning efforts to achieve the Àˆ}…̈˜Ã̈ÌṎœ˜Ã]«œˆVˆiÃ]ÃÌÀ>Ìi}ˆV«>˜˜ˆ˜}]Ài}Տ>̈œ˜Ã] SDGs. Studies of power outages indicate that lack of and incentives. The good news is that lower costs for i˜iÀ}Þ`œiÏi>`̜>œÃÃœvœÕÌ«ÕÌ>Ì>wÀ“iÛipvœÀ Ài˜iÜ>Lii˜iÀ}ÞÌiV…˜œœ}ˆiÃ>˜`>`iµÕ>Ìii˜iÀ}Þivw- iÝ>“«i] ˆ˜ Óä£Î] ̅i 7œÀ` >˜Ž ˜ÌiÀ«ÀˆÃi -ÕÀÛiÞà ciency measures should make it possible for countries to showed that power outages in Tanzania cost businesses be creative in meeting this challenge and put the emphasis >LœÕÌ£x«iÀVi˜Ìœv>˜˜Õ>Ã>iÃp>˜`}Ài>ÌiÀ>Û>ˆ>LˆˆÌÞ œ˜ºVi>˜i˜iÀ}Þ»p̅>̈Ã]Ài˜iÜ>Lii˜iÀ}Þ>˜`i˜iÀ}Þ œvi˜iÀ}Þ…>ÃLii˜Ŝܘ̜i>`̜“œÀiˆ˜Vœ“i]œLÃ] ivwVˆi˜VÞ°/…iÀiˆÃ>Ãœ>}ÀœÜˆ˜}ÀœivœÀ̅i«ÀˆÛ>ÌiÃiV- >˜`i`ÕV>̈œ˜>Li˜iwÌÃ>Ì̅iˆ˜`ˆÛˆ`Õ>…œÕÃi…œ`iÛi° ̜À̜w˜>˜Viˆ˜ÌiÀÛi˜Ìˆœ˜Ã]>ÃÃՓˆ˜}̅iˆ˜Vi˜ÌˆÛiÃ>Àiˆ˜ ˜ >``ˆÌˆœ˜] >VŽ œv >VViÃà ̜ “œ`iÀ˜ i˜iÀ}Þ ­iëiVˆ>Þ place for investors to earn returns on their investments. }Àˆ`iiVÌÀˆVˆÌÞ®>VÌÃ>Ã>Vœ˜ÃÌÀ>ˆ˜Ìœ˜iVœ˜œ“ˆV}ÀœÜ̅] while access to modern energy services can stimulate growth and employment opportunities. BOX O.1 Targets for Sustainable Development Goal 7 U ÞÓäÎä]i˜ÃÕÀi՘ˆÛiÀÃ>>VViÃÃ̜>vvœÀ`>Li]Àiˆ>Li>˜`“œ`iÀ˜i˜iÀ}ÞÃiÀۈVià U ÞÓäÎä]ˆ˜VÀi>ÃiÃÕLÃÌ>˜Ìˆ>Þ̅iÅ>ÀiœvÀi˜iÜ>Lii˜iÀ}Þˆ˜̅i}œL>i˜iÀ}Þ“ˆÝ U ÞÓäÎä]`œÕLi̅i}œL>À>Ìiœvˆ“«ÀœÛi“i˜Ìˆ˜i˜iÀ}ÞivwVˆi˜VÞ U ÞÓäÎä]i˜…>˜Viˆ˜ÌiÀ˜>̈œ˜>Vœœ«iÀ>̈œ˜̜v>VˆˆÌ>Ìi>VViÃÃ̜Vi>˜i˜iÀ}ÞÀiÃi>ÀV…>˜`ÌiV…˜œœ}Þ] ˆ˜VÕ`ˆ˜}Ài˜iÜ>Lii˜iÀ}Þ]i˜iÀ}ÞivwVˆi˜VÞ>˜`>`Û>˜Vi`>˜`Vi>˜iÀvœÃȏ‡vÕiÌiV…˜œœ}Þ]>˜`«Àœ“œÌi investment in energy infrastructure and clean energy technology U ÞÓäÎä]iÝ«>˜`ˆ˜vÀ>ÃÌÀÕVÌÕÀi>˜`Õ«}À>`iÌiV…˜œœ}ÞvœÀÃÕ««Þˆ˜}“œ`iÀ˜>˜`ÃÕÃÌ>ˆ˜>Lii˜iÀ}Þ ÃiÀۈViÃvœÀ>ˆ˜`iÛiœ«ˆ˜}VœÕ˜ÌÀˆiÃ]ˆ˜«>À̈VՏ>Ài>ÃÌ`iÛiœ«i`VœÕ˜ÌÀˆiÃ]-“>Ï>˜` iÛiœ«ˆ˜} -Ì>ÌiÃ]>˜`>˜`‡œVŽi``iÛiœ«ˆ˜}VœÕ˜ÌÀˆiÃ]ˆ˜>VVœÀ`>˜Vi܈̅̅iˆÀÀiëiV̈Ûi«Àœ}À>“ÃœvÃÕ««œÀÌ -œÕÀVi\1 Óä£È° OVE RVIE W xiii FIGURE O.1 Energy is linked to all the remaining Sustainable Development Goals POVERTY SDG GLOBAL PARTNERSHIPS SDG 1 SDG END HUNGER 17 2 SDG SDG PEACE HEALTHY LIVES 16 3 TERRESTRIAL SDG SDG EDUCATION ECOSYSTEMS 15 4 OCEANS, SEAS, and SDG SDG SDG MARINE RESOURCES 14 7 5 GENDER ENERGY SDG SDG WATER and CLIMATE CHANGE 13 6 SANITATION SDG SDG SUSTAINABLE CONSUMPTION and PRODUCTION 12 8 ECONOMIC GROWTH SDG SDG INCLUSIVE and 11 SDG 9 INFRASTRUCTURE and RESILIENT CITIES 10 INDUSTRIALIZATION REDUCE INEQUALITY Countries with the highest levels of poverty tend to ˜iÃÃiÃÃÕ}}iÃÌ̅>ÌiiVÌÀˆwV>̈œ˜ÀiÃՏÌȘ…ˆ}…iÀ…œÕÃi- have lower access to modern energy services—a problem …œ` ˆ˜Vœ“i] ܈̅ ̅i “>}˜ˆÌÕ`i Û>Àވ˜} Vœ˜Ãˆ`iÀ>LÞ that is most pronounced in Sub-Saharan Africa and South >“œ˜}VœÕ˜ÌÀˆi𘠅ÕÌ>˜]˜œ˜‡v>À“ˆ˜Vœ“iˆ˜VÀi>Ãi`LÞ ƂÈ>] ܅iÀi > >À}i Å>Ài œv ̅i «œ«Õ>̈œ˜ `i«i˜`à œ˜ ÈΫiÀVi˜Ì]܅ˆiv>À“ˆ˜Vœ“iÜ>Ã՘>vviVÌi`­Փ>À>˜` traditional biomass for cooking and heating and lacks ,>՘ˆÞ>À]Ó䣣®]>˜`ˆ˜˜`ˆ>]˜œ˜‡v>À“ˆ˜Vœ“iÀœÃiLÞÓn access to electricity. Poor households lack the resources to «iÀVi˜Ì ­…>˜`ŽiÀ iÌ >°] Óä£Ó®° œÜiÛiÀ] ÀiVi˜Ì ÃÌÕ`ˆià purchase modern energy services (especially when there is >ÃœŜÜ̅>Ì̅iLi˜iwÌÃœviiVÌÀˆwV>̈œ˜V>˜LiœÛiÀiÃ- >Vœ˜˜iV̈œ˜V…>À}i̜œLÌ>ˆ˜̅i“œ`iÀ˜i˜iÀ}ÞÜÕÀVi] timated if the endogeneity of a household is ignored—that >Ã܈̅iiVÌÀˆVˆÌÞ®°ƂÌ̅iÃ>“ï“i]…œÕÃi…œ`Ï>VŽˆ˜} ˆÃ] iiVÌÀˆwV>̈œ˜ `œià ˜œÌ œ˜Þ >vviVÌ ˆ˜Vœ“i LÕÌ ˆ˜Vœ“i access to electricity and other modern energy sources can also determine whether or not a household is electri- have fewer opportunities for income generation (especially wi`°œÀiÝ>“«i]…ˆ}…iÀ‡ˆ˜Vœ“i…œÕÃi…œ`Ã>Ài“œÀi܈- vÀœ“>}ÀˆVՏÌÕÀi®°/…iÃi…œÕÃi…œ`Ãi>À˜iÃÃ]ëi˜`“œÀi ing to get a connection as soon as the grid arrives ̈“iVœiV̈˜}Lˆœ“>ÃÃ>˜`iÃÃ̈“iœ˜i`ÕV>̈œ˜]>˜` ­«>À̈VՏ>ÀÞˆv̅iVœ˜˜iV̈œ˜viiÃ>Ài˜œÌvՏÞÃÕLÈ`ˆâi`®] pay more per unit for the limited amounts of modern and utilities prefer to provide electricity to higher-income energy that they can purchase (such as batteries for light- Vœ““Õ˜ˆÌˆií >Vœ˜>˜`œˆ“>Óä£È®° ing and phone charging). ƂÃvœÀ̅ii˜ÛˆÀœ˜“i˜Ì]̅iˆ˜ŽLiÌÜii˜i˜iÀ}Þ>˜` ˜>``ˆÌˆœ˜]…œÕÃi…œ`ÃÕȘ}܏ˆ`vÕiÃ>˜`ÌÀ>`ˆÌˆœ˜> Vˆ“>ÌiV…>˜}iˆÃÌܜvœ`°/…ii˜iÀ}ÞÃÞÃÌi“ˆÃ>“>œÀ VœœŽˆ˜} “i̅œ`à >Ài ÃÕLiVÌ ̜ …ˆ}… iÛiÃ œv ˆ˜`œœÀ >ˆÀ Vœ˜ÌÀˆLÕ̜À]>ÈÌ}i˜iÀ>ÌiÃ}Àii˜…œÕÃi}>í®i“ˆÃ- «œṎœ˜] ܅ˆV… ˆÃ >ÃÜVˆ>Ìi` ܈̅ …ˆ}… À>Ìià œv “œÀÌ>ˆÌÞ Ȝ˜Ã̅ÀœÕ}…i˜iÀ}Þ«Àœ`ÕV̈œ˜>˜`ÕÃi]܅ˆiVˆ“>Ìi >˜`“œÀLˆ`ˆÌÞ]iëiVˆ>ÞvœÀܜ“i˜>˜`V…ˆ`Ài˜܅œ…>Ûi V…>˜}i V>˜ `ˆÃÀÕ«Ì ̅i ܜÀ`½Ã i˜iÀ}Þ ÃÞÃÌi“p>à the greatest exposure to this pollution. Access to modern iÝÌÀi“iÜi>̅iÀiÛi˜ÌÃ]Ãi>iÛiÀˆÃi]Ü>ÌiÀ>Û>ˆ>LˆˆÌÞ i˜iÀ}ÞÃiÀۈViÃ]iˆÌ…iÀ̅ÀœÕ}…̅ivœÀ“œv>`Û>˜Vi`Vœ“- V…>˜}iÃ] >˜` Ìi“«iÀ>ÌÕÀi ˆ˜VÀi>Ãià >vviVÌ ÃÕ««Þ >˜` LÕÃ̈œ˜VœœŽ‡Ã̜ÛiÃÕȘ}Lˆœ“>ÃÃ]œÀ̅ÀœÕ}…>Ã܈ÌV…̜ demand of energy. It is particularly challenging to esti- ̅i ÕÃi œv *] V>˜ ÃÕLÃÌ>˜Ìˆ>Þ Ài`ÕVi ̅i œ˜}‡ÌiÀ“ mate future impacts of the energy sector on climate costs to the household from diseases associated with high V…>˜}i]>ÓՏ̈«iv>V̜ÀÃ>ÀiVœ“ˆ˜}ˆ˜Ìœ«>Þ°œÀÌÕ- levels of indoor air-pollution. Several studies estimating the ˜>ÌiÞ]̅i}œ>œv>V…ˆiۈ˜}՘ˆÛiÀÃ>>VViÃÃ̜“œ`iÀ˜ Li˜iwÌà œv iiVÌÀˆwV>̈œ˜ œ˜ …œÕÃi…œ`à œÀ Ó> LÕÈ- energy services in itself would result in a negligible x iv S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 increase of carbon dioxide (CO2) emissions if the energy followed by Nigeria and Ethiopia for electricity—and the `i“>˜`œv̅i>vviVÌi`«œ«Õ>̈œ˜ˆÃ«ÀœiVÌi`̜Ài“>ˆ˜ Óä …ˆ}…iÃÌ >VViÃÇ`iwVˆÌ VœÕ˜ÌÀˆià vœÀ iiVÌÀˆVˆÌÞ >VVœÕ˜Ì œÜ°œÜiÛiÀ]>ëiœ«ii“iÀ}ivÀœ“«œÛiÀÌÞ]`i“>˜` vœÀnä«iÀVi˜Ìœv̅i}œL>`iwVˆÌ­ˆ}ÕÀi"°Ó®° vœÀi˜iÀ}Þ܈ˆ˜VÀi>Ãi]>˜`«œÜiÀÃÞÃÌi“«>˜˜ˆ˜}܈ iÌÜii˜Óäää>˜`Óä£{]̅iÀiÜiÀi>`Û>˜ViȘiiV- have to account for spillover effects. ÌÀˆwV>̈œ˜]܈̅̅i}œL>iiVÌÀˆVˆÌÞ`iwVˆÌ`iVˆ˜ˆ˜}vÀœ“ ˜ÃՓ]̅iÀi>Ài“>˜Þœ««œÀÌ՘ˆÌˆiÃvœÀ>VViÃÃ̜“œ`- £°Î Lˆˆœ˜ ̜ £°äÈ Lˆˆœ˜p>˜` ̅i }œL> iiVÌÀˆwV>̈œ˜ ern energy services to contribute to achieving the other À>Ìi ÀˆÃˆ˜} vÀœ“ ÇÇ°Ç «iÀVi˜Ì ̜ nx°x «iÀVi˜Ì° *Àœ}ÀiÃà SDGs if interventions are designed to operationalize the ܈̅ ÀÕÀ> iiVÌÀˆwV>̈œ˜ ˆÃ iۈ`i˜Ì] ܈̅ ̅i }œL> ÀÕÀ> linkages between electricity access and other sustainable iiVÌÀˆwV>̈œ˜À>Ìiˆ˜VÀi>Ș}vÀœ“ÈΫiÀVi˜Ìˆ˜Óäää̜ `iÛiœ«“i˜ÌV…>i˜}iÃpÃÕV…>Ã…i>Ì…]i`ÕV>̈œ˜]vœœ` 73 percent in 2014. Urban areas across the world are ÃiVÕÀˆÌÞ] }i˜`iÀ iµÕ>ˆÌÞ] «œÛiÀÌÞ Ài`ÕV̈œ˜] >˜` Vˆ“>Ìi already close to universal access at 97 percent. Although change. ÕÀL>˜>VViÃÃÀ>ÌiÃ…>ÛiÀˆÃi˜Ài>̈ÛiÞˆÌ̏iˆ˜̅i«>ÃÌÓx Þi>ÀÃ] ̅ˆÃ iÛi Ài“>ˆ˜Ã > “>œÀ >V…ˆiÛi“i˜Ì ܅i˜ viewed against the rapid urbanization that has brought an WHAT IS THE STATUS OF ELECTRICITY >``ˆÌˆœ˜>£°ÈLˆˆœ˜«iœ«iˆ˜Ìœ̅iܜÀ`½ÃVˆÌˆiÃ`ÕÀˆ˜} ACCESS? this period. ˜ Óä£{] £°äÈ Lˆˆœ˜ «iœ«i Ã̈ ˆÛi` ܈̅œÕÌ >VViÃà ̜ Ƃ“œ˜} ̅i Ài}ˆœ˜Ã] ˆ“«ÀœÛi“i˜Ì ˆ˜ >VViÃà ̜ iiV- iiVÌÀˆVˆÌÞp>LœÕÌ £x «iÀVi˜Ì œv ̅i }œL> «œ«Õ>̈œ˜p tricity in the period 2000–14 has been remarkable in and about 3.04 billion still relied on solid fuels and kero- -œÕ̅ƂÈ>­ÀˆÃˆ˜}vÀœ“xÇ̜nä«iÀVi˜Ì®]ˆ˜œÌ…iÀÀi}ˆœ˜Ã Ãi˜ivœÀVœœŽˆ˜}>˜`…i>̈˜}­ Ƃ>˜`7œÀ` >˜ŽÓä£Ç®° growth during the same period has been moderate: for /…i iiVÌÀˆVˆÌÞ >VViÃà `iwVˆÌ ˆÃ œÛiÀ܅i“ˆ˜}Þ Vœ˜Vi˜- >ÃÌƂÈ>>˜`*>VˆwV­vÀœ“™ä̜™È«iÀVi˜Ì®]ˆ``i >ÃÌ ÌÀ>Ìi`ˆ˜-ÕL‡->…>À>˜ƂvÀˆV>­ÈÓ°x«iÀVi˜Ìœv-ÕL‡->…>À>˜ >˜` œÀ̅ƂvÀˆV>­vÀœ“™£̜™Ç«iÀVi˜Ì®]>̈˜Ƃ“iÀˆV>E ƂvÀˆV>«œ«Õ>̈œ˜®>˜`-œÕ̅ƂÈ>­Óä«iÀVi˜Ì®]vœœÜi` Caribbean (from 92 to 97 percent) and Sub-Saharan LÞ >ÃÌƂÈ>>˜`̅i*>VˆwV­Î°x«iÀVi˜Ì®]>˜`>̈˜Ƃ“iÀ- ƂvÀˆV> ­vÀœ“ ÓÈ°x ̜ ÎÇ°x «iÀVi˜Ì®° /Ài˜`à ˆ˜ «œ«Õ>̈œ˜ ˆV>­Î«iÀVi˜Ì®>˜`̅iˆ``i >ÃÌ>˜` œÀ̅ƂvÀˆV>­Î«iÀ- lacking access to electricity are rising in Sub-Saharan Vi˜Ì®°˜-ÕL‡->…>À>˜ƂvÀˆV>]È䙓ˆˆœ˜«iœ«i­ÈœÕÌœv ƂvÀˆV>]܅iÀiÈ䙓ˆˆœ˜«iœ«iÃ̈`œ˜œÌ…>Ûi>VViÃà £ä®`œ˜œÌ…>Ûi>VViÃÃ̜iiVÌÀˆVˆÌÞ]>˜`ˆ˜-œÕ̅ƂÈ>]Î{Î to electricity services. (Figure 0.3). million people do not have access to electricity. How much improvement will be needed to get the ƂÌ ̅i VœÕ˜ÌÀÞ iÛi] ˜`ˆ> >œ˜i …>à > ˆÌ̏i iÃà ̅>˜ world back on track? Progress has fallen consistently short œ˜i‡Ì…ˆÀ` œv ̅i }œL> `iwVˆÌ ­ÓÇä “ˆˆœ˜ vœÀ iiVÌÀˆVˆÌÞ®] œv ̅i «œ«Õ>̈œ˜ }ÀœÜ̅ À>Ìi ȘVi Óä£ä] “i>˜ˆ˜} ̅>Ì efforts in the remaining years will need to be stepped up to 0.9 percent for electricity (Figure O.4). At the regional iÛi]>̈˜Ƃ“iÀˆV>] >ÃÌƂÈ>]>˜`-œÕ̅ƂÈ>܈Li>Li ̜Ài>V…՘ˆÛiÀÃ>>VViÃÃLÞÓäÎä]>ÃÃՓˆ˜}Vœ˜`ˆÌˆœ˜Ãœv FIGURE O.2 IPFKCJCUVJGYQTNFoUNCTIGUVGNGEVTKEKV[CEEGUUFGƂEKV Vœ˜ÃÌ>˜Ì}ÀœÜ̅ˆ˜iiVÌÀˆVˆÌÞ]Vœ˜ÃÌ>˜Ì}ÀœÜ̅ˆ˜«œ«Õ>- 6QREQWPVTKGUHQTCEEGUUFGƂEKVKPGNGEVTKEKV[ ̈œ˜] >˜` ˜œ “>œÀ V…>˜}ià ˆ˜ «œˆÌˆV> ܈ˆ˜}˜iÃà >˜` w˜>˜Vˆ> ˆ˜ÛiÃ̓i˜Ìà ˆ˜ ˆ˜VÀi>Ș} >VViÃð œÜiÛiÀ] Access deficit, 2014 Sub-Saharan Africa is falling behind—currently growing at India x°{«iÀVi˜Ì>˜˜Õ>Þ>}>ˆ˜ÃÌ̅i˜ii`i`n°{«iÀVi˜Ì>˜˜Õ- Nigeria ally to reach universal access by 2030. Ethiopia ƂÌ…œÕ}…̅i>VViÃÃ`iwVˆÌˆ˜Óä£{vœÀiiVÌÀˆVˆÌÞÜ>à Congo, Dem. Rep. œÛiÀ܅i“ˆ˜}ÞÀÕÀ>]̅iiÝ«iVÌi`«œ«Õ>̈œ˜}ÀœÜ̅œv Bangladesh £°xLˆˆœ˜LÞÓäÎä܈Li>“œÃÌi˜ÌˆÀiÞÕÀL>˜]ÀiyiV̈˜} Tanzania rural-urban migration. This implies that the number of rural Uganda households for which access needs to be created will sta- Kenya Lˆˆâi>˜`˜œÌLiˆ˜y>Ìi`LÞ«œ«Õ>̈œ˜}ÀœÜ̅°ƂÌ…œÕ}… Myanmar urban connections may be perceived as lower cost and Sudan ̅iÀivœÀii>ÈiÀ̜ˆ“«i“i˜Ì̅>˜ÀÕÀ>Vœ˜˜iV̈œ˜Ã]̅i Mozambique V…>i˜}ià «ÀiÃi˜Ìi` LÞ ÕÀL>˜ ÏՓà ÀiµÕˆÀi Ài}Տ>̜ÀÞ Madagascar Korea, Dem. People’s Rep. >˜`w˜>˜Vˆ>ˆ˜Vi˜ÌˆÛiÃ̜i˜ÃÕÀi̅>Ì՘ˆÛiÀÃ>>VViÃÈà Angola attained. A further challenge is presented by the recent Niger spread of the “rapid growth of households” from devel- Malawi œ«i` VœÕ˜ÌÀˆià ̜ `iÛiœ«ˆ˜} VœÕ˜ÌÀˆià ­ >`}iÀ Óä£{] Burkina Faso À>`LÕÀÞ]*iÌiÀܘ]>˜`ˆÕÓä£{®° Chad What is the anticipated price tag for closing the gap? A Mali 2011 study by IEA on comparable estimates of current South Sudan w˜>˜Vˆ˜}ÌÀi˜`Ã>˜`vÕÌÕÀiˆ˜ÛiÃ̓i˜Ì˜ii`ÃvœÀ>V…ˆiۈ˜} universal access to electricity provides a high-level esti- 0 50 100 150 200 250 300 “>Ìi œv ˆ˜ÛiÃ̓i˜Ì ˜ii`à œv f{x Lˆˆœ˜ > Þi>À] >}>ˆ˜ÃÌ Source:  Ƃ>˜`7œÀ` >˜ŽÓä£Ç >VÌÕ> ˆ˜ÛiÃ̓i˜Ì yœÜà >Ì ̅>Ì ̈“i œv >˜ iÃ̈“>Ìi` f™ Note:/…iÃiVœÕ˜ÌÀˆiÃ>VVœÕ˜ÌvœÀ“œÀi̅>˜n£«iÀVi˜Ìœv̅i}œL>>VViÃÃ`iwVˆÌ° billion a year (IEA 2011). OV E RVIE W xv FIGURE O.3 Sub-Saharan Africa is not keeping up with population growth for electricity access 6TGPFUKPRQRWNCVKQPNCEMKPICEEGUUVQGNGEVTKEKV[s Population (million) 700 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 East Asia & Pacific Latin America & Caribbean South Asia Sub-Saharan Africa Source: >Ì>vÀœ“ Ƃ>˜`7œÀ` >˜ŽÓä£Ç /…i 7œÀ` >˜Ž½Ã ƂVViÃà ˜ÛiÃ̓i˜Ì œ`i «ÀœÛˆ`ià FIGURE O.4 Electricity access falls short of the detailed bottom-up estimates of the cost of reaching uni- pace to meet the 2030 target ÛiÀÃ>>VViÃȘi>V…œv£xVœÕ˜ÌÀˆiÃ܈̅>À}iiiVÌÀˆVˆÌÞ >VViÃÃ`iwVˆÌð/…iÃiVœÕ˜ÌÀˆiÃÀiyiVÌ`ˆvviÀi˜ViȘ«œ«- 1.0 Տ>̈œ˜>˜`}iœ}À>«…Þ>ÃÜi>ÏœV>՘ˆÌVœÃÌÃ]>˜`̅iÞ Additional progress can be used to give a global estimate of access investment required due to lag 0.1 since 2010: +0.1 ˜ii`í Ƃ>˜`7œÀ` >˜Ž]Óä£x®°/…i“œ`i]L>Ãi`œ˜ 0.8 ̅iՏ̈‡/ˆiÀÀ>“iܜÀŽ]>œÜÃÕÃiÀÃ̜V…œœÃi̅ïiÀ of access that would be used to meet the universal access Ì>À}iÌ] >˜` ˆÕÃÌÀ>Ìià …œÜ `À>“>̈V>Þ ̅ˆÃ >vviVÌà ̅i 0.6 VœÃÌÃœviiVÌÀˆwV>̈œ˜°,i>V…ˆ˜}՘ˆÛiÀÃ>>VViÃÃ>Ì/ˆiÀ£ (enough to light a few light bulbs and charge a mobile 0.82 Ìii«…œ˜i®ܜՏ`ÀiµÕˆÀiˆ˜ÛiÃ̓i˜ÌÃœvf£°xLˆˆœ˜>˜˜Õ- 0.4 0.69 >ÞÕ«̜ÓäÎä° ÞVœ˜ÌÀ>ÃÌ]Ài>V…ˆ˜}՘ˆÛiÀÃ>>VViÃÃ>Ì /ˆiÀx­vՏÓ{ÝÇ}Àˆ`«œÜiÀ®ܜՏ`ÀiµÕˆÀiˆ˜ÛiÃ̓i˜ÌÃœv 0.51 fxäLˆˆœ˜>˜˜Õ>Þ° 0.2 ˜ ÃՓ] ՘ˆÛiÀÃ> iiVÌÀˆVˆÌÞ >VViÃà ܈ ˜œÌ Li “iÌ LÞ ÓäÎä]՘iÃÃÕÀ}i˜Ì“i>ÃÕÀiÃ>ÀiÌ>Ži˜°7…ˆi˜i>ÀÞ£Lˆ- 0.19 lion people in Sub Saharan Africa alone may gain electricity >VViÃà LÞ Óä{ä] `Õi ̜ «œ«Õ>̈œ˜ }ÀœÜ̅] >˜ iÃ̈“>Ìi` 0.0 1990–2010 2010–2012 2012–2014 2014–2030 xÎ䓈ˆœ˜«iœ«iˆ˜̅iÀi}ˆœ˜܈˜œÌ…>Ûi>VViÃí Ƃ Historical Target rate 2014). One tool that would help facilitate the effort would reference Li > ˜iÜ Ü>Þ œv “i>ÃÕÀˆ˜} ̅i iiVÌÀˆVˆÌÞ >VViÃà Ì>À}iÌ] period beyond the traditional binary metrics—which can be mis- Source:  Ƃ>˜`7œÀ` >˜ŽÓä£Ç leading because they do not capture the multi-dimension- >ˆÌÞœviiVÌÀˆVˆÌÞ>VViÃð/…i7œÀ` >˜Ž>˜` -Ƃ*>Ài working with partners to promote broader adoption of the Տ̈‡ÌˆiÀ À>“iܜÀŽ >à ̅i ŽiÞ “œ˜ˆÌœÀˆ˜} «>ÌvœÀ“ vœÀ tracking progress toward SEforAll and SDG 7. x vi S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 WHAT ARE THE CHALLENGES AND DRIVERS to address the problems of intermittency. In very remote OF TRANSFORMATIVE ELECTRICITY ACCESS? Vœ““Õ˜ˆÌˆiÃ]i˜iÀ}ÞÃiÀۈViÃV>˜Li«ÀœÛˆ`i`LÞœvv‡}Àˆ` ՘ˆÌÃ]ÃÕV…>Ã*6܏>À…œ“iÃÞÃÌi“ÃœÀ«ˆVœ‡Ãœ>À«Àœ`- œÀi̅>˜ÇäVœÕ˜ÌÀˆiÃ…>ÛiLii˜ܜÀŽˆ˜}œÛiÀ̅i>ÃÌ ucts. These can be deployed faster and more simply than vœÕÀÞi>ÀÃ̜`iÛiœ«>V̈œ˜«>˜Ã]ÃÌÀ>Ìi}ˆiÃ]>˜`«ÀœiVÌà a mini-grid. to deliver on the goal of universal access to modern energy What is holding up progress? The key hurdle appears services. Their efforts have been supported by partner- to be creating an enabling environment for an electricity ships and initiatives from both the public and private sec- >VViÃÃÀœœÕÌ°7…ˆi˜œȘ}iÀiVˆ«ii݈ÃÌÃ]̅iiۈ`i˜Vi ̜À ̅>Ì …>Ûi i“iÀ}i` >Ì ̅i ˜>̈œ˜>] Lˆ>ÌiÀ>] >˜` «œˆ˜Ìà ̜ ̅i ˜ii` vœÀ ̅i Àˆ}…Ì «œˆVˆiÃ] ˆ˜Ã̈ÌṎœ˜Ã] multilateral levels. ÃÌÀ>Ìi}ˆV«>˜˜ˆ˜}]Ài}Տ>̈œ˜]>˜`ˆ˜Vi˜ÌˆÛiÃ>ÃۈÌ>«Ài‡ œÀ iiVÌÀˆVˆÌÞ] “iï˜} ̅i `i“>˜` VÀi>Ìi` LÞ ÀiµÕˆÃˆÌi𠈘VÀi>Ãi`>VViÃÃvœœÜÃÌܜ“>ˆ˜ÌÀ>VŽÃ\­ˆ®}Àˆ`‡iiVÌÀˆw- V>̈œ˜ «ÀœÛˆ`ˆ˜} Vœ˜˜iV̈œ˜Ã ̜ ÕÀL>˜] «iÀˆ‡ÕÀL>˜] >˜` For rapid grid-based expansion, lessons from successful ÀÕÀ>>Ài>ÃÆ>˜`­ˆˆ®œvv‡}Àˆ`iiVÌÀˆwV>̈œ˜̅ÀœÕ}…Vœ““Õ- countries suggest the following main drivers: (i) there needs ˜ˆÌޏiÛi“ˆVÀœ‡œÀ“ˆ˜ˆ‡}Àˆ`ÃÞÃÌi“Ã]œÀˆÃœ>Ìi``iۈVià to be a sustained government commitment over a long and systems at the household level. These two approaches «iÀˆœ`œv̈“iÆ­ˆˆ®̅iÀiŜՏ`Li`i`ˆV>Ìi`ˆ˜Ã̈ÌṎœ˜Ã̜ …>Ûi`ˆvviÀi˜ÌV>«ˆÌ>ÀiµÕˆÀi“i˜ÌÃ]ÃiÀÛi`ˆvviÀi˜Ì«œ«Õ>- «>˜]ˆ“«i“i˜Ì]>˜`iÝ«>˜`iiVÌÀˆwV>̈œ˜«Àœ}À>“ÃÆ­ˆˆˆ® ̈œ˜`i˜ÃˆÌˆiÃ]>˜`ÕÃi`ˆvviÀi˜ÌÌiV…˜œœ}ˆið ̅iÀiŜՏ`Li«Ài`ˆVÌ>Liw˜>˜Vˆ˜}“iV…>˜ˆÃ“Ã̜ÃÕ«- /…iiÝ«>˜Ãˆœ˜œv˜>̈œ˜>iiVÌÀˆVˆÌÞ}Àˆ`Ã]܅ˆV…ˆÃ̅i port public sector programs and to attract private sector ºVœ˜Ûi˜Ìˆœ˜>» “i̅œ` vœÀ LÀœ>`i˜ˆ˜} >VViÃÃ] ˆ˜ÛœÛià ˆ˜ˆÌˆ>̈ÛiÃÆ>˜`­ˆÛ®“i>ÃÕÀiÃŜՏ`Li>`œ«Ìi`̜i˜ÃÕÀi adding power plants and extending high-voltage transmis- the affordability of electricity services. sion lines and distribution networks into rural areas. In the past two decades more than 1.7 billion people have been For developing off-grid schemes, mini-grids offer a means >``i`̜˜>̈œ˜>iiVÌÀˆVˆÌÞ˜iÌܜÀŽÃܜÀ`܈`i]“œÃ̏Þˆ˜ œvÃÕ««Þˆ˜}º}Àˆ`‡µÕ>ˆÌÞ»«œÜiÀ̜Vœ““Õ˜ˆÌˆiõՈVŽÞ urban areas. Although progress has also been made in without having to wait many years for the grid-based distri- ÀÕÀ>>Ài>Ã]̅i˜Õ“LiÀÃ>Ài˜œÌÀˆÃˆ˜}>Ãv>ÃÌ]LiV>ÕÃiÀÕÀ> LṎœ˜ ˜iÌܜÀŽ ̜ Ài>V… `ˆÃÌ>˜Ì Vœ““Õ˜ˆÌˆið œÜiÛiÀ] }Àˆ` iiVÌÀˆwV>̈œ˜ «Àœ}À>“à ˆ˜ÛœÛi Vœ˜˜iV̈˜} ۈ>}ià there are challenges to be met in order to ensure that mini- ˆ˜VÀi“i˜Ì>Þ̜̅ii݈Ã̈˜}}Àˆ`]܈̅Ài“œÌi>Ài>Ã܈̅ grids are the least-cost solution and continue to provide Ó>«œ«Õ>̈œ˜Ã]…ˆ}…ˆ˜iœÃÃiÃ]>˜`œÜÕÃ>}iÕÃÕ>Þ >vvœÀ`>LiiiVÌÀˆVˆÌÞÃiÀۈViÃœÛiÀ̅iœ˜}‡À՘]>˜`̅>Ì the last to be connected. key risks are mitigated to offer viable business opportuni- The biggest challenges to expanding grid-based elec- ̈ið ˆ}… Õ«vÀœ˜Ì ˆ˜ÛiÃ̓i˜Ì ÀiµÕˆÀià >˜ÌˆVˆ«>Ìi` œ>` ÌÀˆwV>̈œ˜>˜`>VViÃÃ>Ài̅i>VŽœvÃÕvwVˆi˜Ì}i˜iÀ>̈œ˜ }ÀœÜ̜̅“>ÌiÀˆ>ˆâi]œÀiÃi̅iÀi܈Liˆ˜>`iµÕ>ÌiÀiÛ- V>«>VˆÌÞ] «œœÀ ÌÀ>˜Ã“ˆÃȜ˜ >˜` `ˆÃÌÀˆLṎœ˜ ˆ˜vÀ>ÃÌÀÕV- i˜Õià ̜ VœÛiÀ VœÃÌ𠈘ˆ‡}Àˆ`à Ì>Àˆvvà >Ài ÕÃÕ>Þ …ˆ}…iÀ ÌÕÀi]̅i…ˆ}…VœÃÌÃœvÃÕ««Þ̜ÀÕÀ>>˜`Ài“œÌi>Ài>Ã] ̅>˜}Àˆ`‡L>Ãi`Ì>Àˆvví՘iÃÃ̅iÀiˆÃ>È}˜ˆwV>˜ÌÃÕLÈ`Þ the inability of low income households to pay high con- ̜̅i“ˆ˜ˆ‡}Àˆ`®]܅ˆV…“>ޏˆ“ˆÌ̅i܈ˆ˜}˜iÃÇ̜‡«>Þœv ˜iV̈œ˜V…>À}iÃ]>˜`̅iÜi>Žw˜>˜Vˆ>ÃÌ>Ìiœv̅iṎˆ- households. ties. The investment needs for a program to expand >VViÃÃ̜ÀÕÀ>>Ài>Ã>Ài>À}i]܅ˆi̅i«œÃÈLiÀiViˆ«Ìà Where both grid and off-grid solutions are being devel- >ÀiˆŽiÞ̜Liˆ˜ÃÕvwVˆi˜Ì̜VœÛiÀVœÃÌÃ܈̅œÕÌw˜>˜Vˆ> oped, it is important to ensure complementarity of these support. A very substantial barrier to household access is ܏Ṏœ˜Ã°œÀiÝ>“«i]ˆv̅i}Àˆ`Ài>V…iÃ̅i“ˆ˜ˆ‡}Àˆ` ̅i VœÃÌ œv Vœ˜˜iV̈œ˜° ˜ ƂvÀˆV>] ՘ÃÕLÈ`ˆâi` Vœ˜˜iV- ÃiÀۈVi>Ài>]`i“>˜`vœÀ“ˆ˜ˆ‡}Àˆ`ÃiÀۈViÃܜՏ``iVˆ˜i ̈œ˜VœÃÌÃœvÌi˜iÝVii`̅iVœÕ˜ÌÀ޽Óœ˜Ì…Þˆ˜Vœ“i«iÀ sharply and the investment in the stranded assets would «iÀܘ]>˜`…œÕÃi…œ`Ã…>Ûi̜«>Þ̅iÃi«ÕÃviiÃvœÀ LiVœ“i՘ÀiVœÛiÀ>Li]ˆ˜̅i>LÃi˜ViœvëiVˆ>«œˆVˆià ˆ˜Ã«iV̈œ˜>˜`>««ˆV>̈œ˜]ÃiVÕÀˆÌÞ`i«œÃˆÌÃ]ˆ˜ÌiÀ˜>܈À- ̜>``ÀiÃÃ̅ˆÃˆÃÃÕi°"vÌi˜]œvv‡}Àˆ`܏Ṏœ˜Ã>Ài`iÛi- ˆ˜}]>˜`iµÕˆ«“i˜ÌVœÃÌð/…iÃiviiÃ>ÀiÕÃÕ>ÞV…>À}i` oped in geographic areas far from the grid to provide Õ«vÀœ˜Ì“>Žˆ˜}ˆÌ`ˆvwVՏÌvœÀœÜˆ˜Vœ“i…œÕÃi…œ`Ã̜ communities with electricity services sooner than the afford the service. }Àˆ`° />Ži ̅i V>Ãi œv >“Lœ`ˆ>] ܅iÀi] >à > ÃÌÕ`Þ LÞ Energy services can also be expanded using “off-grid” /i˜i˜L>ՓiÌ>°­Óä£{®iÝ«>ˆ˜Ã]̅iÀiÜ>Ã>>VŽœv«œ- iiVÌÀˆwV>̈œ˜] ܅ˆV… ˆ˜ÛœÛià “ÕV… Ó>iÀ }Àˆ`à ̅>˜ ˆ˜ icy on what to do when the grid reached the mini-grids. }Àˆ` iiVÌÀˆwV>̈œ˜° "˜i >««Àœ>V… ˆÃ º“ˆ˜ˆ‡}Àˆ`ûpˆÃœ- Ûi˜ÌÕ>Þ] ̅i ÈÌÕ>̈œ˜ Ü>à Ài܏Ûi` LÞ ̅i Ài}Տ>̜À >Ìi`}ÀœÕ«Ãœv}i˜iÀ>̈œ˜]`ˆÃÌÀˆLṎœ˜]Ã̜À>}iv>VˆˆÌˆià issuing licenses to transform the mini-grids into distribu- ܈̅ˆ˜ > Vœ˜w˜i` }iœ}À>«…ˆV> ë>Vi° /…iÞ >Ài ÕÃÕ>Þ tion utilities—but it underscores the need for planning œV>Þ“>˜>}i`]…>ÛiiÃÃ̅>˜£ä7œvˆ˜ÃÌ>i`V>«>V- upfront for the eventual arrival of the grid to give inves- ˆÌÞ]ÃiÀÛiÓ>…œÕÃi…œ`œ>`Ã]>˜`ÃiÀÛi>˜>Ài>œvÕ«̜ ̜ÀÓœÀiVœ˜w`i˜Vi̜`iÛiœ«“ˆ˜ˆ‡}Àˆ`ȘÀÕÀ>>˜` x䎈œ“iÌiÀÃÀ>`ˆÕðƂ˜œÌ…iÀ>««Àœ>V…ˆÃº“ˆVÀœ‡}Àˆ`ûp remote areas. The study recommends four options for Ó>iÀ՘ˆÌÃ]ÌÞ«ˆV>Þœ«iÀ>̈˜}܈̅iÃÃ̅>˜£ääŽ7œv when the grid arrives: V>«>VˆÌÞ]>̏œÜiÀۜÌ>}iiÛiÃ]>˜`VœÛiÀˆ˜}>À>`ˆÕÃœv Õ«̜nŽˆœ“iÌiÀð • Small Power Distributor (SPD) Option where the Small œÌ…œv̅iÃiV>˜Li«œÜiÀi`LÞvœÃȏvÕiÃ­`ˆiÃi®œÀ Power Producer (SPP) operating a mini-grid converts to LÞÀi˜iÜ>Lií…Þ`Àœ]܏>À*6]Lˆœ“>ÃÃVœ“LÕÃ̈œ˜]>˜` distributor that buys electricity at wholesale from the wind). Hybrid systems using renewable energy sources national grid and resells it at retail to its local customers. together with batteries or a diesel generator can be used OVE RVIE W xvii • SPP Option where the mini-grid operator sells electrici- Ài˜iÜ>Li«œÜiÀ>˜`vÕiˆ˜`iÛiœ«ˆ˜}VœÕ˜ÌÀˆiȘÓä£x ty to the operator of the national grid but no longer to ÃÕÀ«>ÃÃi` ̅>Ì ˆ˜ `iÛiœ«i` VœÕ˜ÌÀˆið ˜iÀ}Þ ivwVˆi˜VÞ its local customers. >˜`ÌiV…˜œœ}ÞÀi`ÕVi`̅i}ÀœÜ̅œv}œL>w˜>i˜iÀ}Þ demand by almost two thirds (0.7 percent increase as U ÕޜÕÌ"«Ìˆœ˜܅iÀi̅i-**ÃiÃˆÌÃ`ˆÃÌÀˆLṎœ˜}Àˆ` œ««œÃi`̜̅i«ÀiۈœÕÃ`iV>`i½Ã>ÛiÀ>}iÓ«iÀVi˜Ì®°/…ˆÃ to the national grid operator or other entity designated }ÀœÜ̅ …>à Lii˜ `ÀˆÛi˜ LÞ È}˜ˆwV>˜Ì Ài`ÕV̈œ˜Ã ˆ˜ ̅i by the regulator and receives compensation for the sale VœÃÌÃœvÀi˜iÜ>Lið˜Óä£{ÉÓä£x̅i“i`ˆ>˜VœÃÌœv«Àœ- of the assets. `ÕVˆ˜} L>Ãiœ>` «œÜiÀ vÀœ“ ÀiÈ`i˜Ìˆ> ܏>À Ü>à fÓääÉ • Combined SPP and SPD Option where the SPP 7…pÅ>À«Þ`œÜ˜vÀœ“fxääÉ7…ˆ˜Óä£äpVœ“«>Ài` converts to an SPD and also maintains a backup ̜>LœÕÌf£ääÉ7…vœÀVœ˜Ûi˜Ìˆœ˜>ÜÕÀVið7ˆ˜`>˜` generator as a supply source to the main grid and re- ܏>À*6VœÃÌÃÜiÀiœÜiÀ]>˜`œ˜}‡ÌiÀ“Vœ˜ÌÀ>VÌȘܓi tail customers. VœÕ˜ÌÀˆiÃÜiÀiˆ˜̅iÀ>˜}ifÈä‡nävœÀœ˜Ã…œÀi܈˜`]>˜` fn䇣äävœÀṎˆÌÞÃV>i܏>À*6° Ƃë>ÀÌœv̅i«>˜˜ˆ˜}«ÀœViÃÃ]ˆÌˆÃiÃÃi˜Ìˆ>̜V…œœÃi As renewable energyVœ˜Ìˆ˜ÕiÃ̜}>̅iÀ“œ“i˜ÌՓ] ̅iÀˆ}…ÌÌiV…˜œœ}Þ̜«ÀœÛˆ`i̅iiiVÌÀˆVˆÌÞ]܅i̅iÀ̜ grid integration is emerging as a key issue to accommo- ÕÀL>˜ œÀ Ài“œÌi ÀÕÀ> >Ài>Ã] ˆ˜ > VœÃ̇ivviV̈Ûi “>˜˜iÀ° date a higher share of renewables. One of the biggest That is where geographical information system (GIS) mod- challenges will be coping with the variability and intermit- els—which enable the assessment of the cost of electricity tency of modern sources of renewable energy (such provision and energy cost implications of competing tech- as solar and wind)— given that the current grid infra- ˜œœ}ˆV>ÃÞÃÌi“Șë>Vi>˜`̈“ipẅ˜­œÜiÃiÌ>°] structure in many countries was built on the basis of Óä£Ç®° ˜ >``ˆÌˆœ˜] vœÀ iiVÌÀˆVˆÌÞ >VViÃà «Àœ}À>“à ̜ Li controllable energy sources and organized around the ÌÀ>˜ÃvœÀ“>̈Ûi]ëiVˆ>>ÌÌi˜Ìˆœ˜˜ii`Ã̜Li«>ˆ`̜«Àœ- generation-transmission-distribution model. The good `ÕV̈ÛiÕÃiÃœviiVÌÀˆVˆÌÞÃiÀۈViÃp`iw˜i`>Ã>}ÀˆVՏÌÕÀ>] ˜iÜÈÃ̅>ÌÀi˜iÜ>Lii˜iÀ}ÞÌiV…˜œœ}ˆiÃ>Àiyi݈Li] Vœ““iÀVˆ>]>˜`ˆ˜`ÕÃÌÀˆ>>V̈ۈ̈iÃ̅>ÌÀiµÕˆÀiiiVÌÀˆVˆÌÞ “œ`Տ>À] >˜` V>˜ Li ÕÃi` ˆ˜ Û>ÀˆœÕà Vœ˜w}ÕÀ>̈œ˜Ã] services as direct inputs to the production of goods or pro- ranging from those that are grid-connected to those that ۈȜ˜œvÃiÀۈVií 1 * Ó䣣Æ-…œÀÌÓä£xÆ œ˜Ìii>˜ are off-grid. >˜`6iÀˆ˜Óä£Ç®°,ÕÀ>>˜`Ài“œÌi>Ài>Ã]܅ˆV…>ÀiœvÌi˜ ˆ˜ˆ‡}Àˆ`Ã>Àii“iÀ}ˆ˜}>Ã>ŽiÞ«>ÞiÀvœÀVœÃ̇ivviV̈Ûi inhabited by low-income households and lack electricity >˜`Àiˆ>LiiiVÌÀˆwV>̈œ˜œvÀÕÀ>>Ài>íˆ}ÕÀi"°È®°ÌˆÃ ÃÕ««Þ]“>Þ˜œÌ…>Ûiœ««œÀÌ՘ˆÌˆiÃ̜iÝ«>˜`«Àœ`ÕV̈Ûi «ÀœiVÌi` ̅>Ì œ˜i‡Ì…ˆÀ` œv ̜Ì> ˆ˜ÛiÃ̓i˜Ìà ̜Ü>À` ÕÃià iÛi˜ ˆv iiVÌÀˆVˆÌÞ ˆÃ “>`i >Û>ˆ>Li° ˜ ̅œÃi V>ÃiÃ] achieving universal access by 2030 will be targeted to Vœ“«i“i˜Ì>ÀÞˆ˜ˆÌˆ>̈ÛiÃpÃÕV…>Ãv>VˆˆÌ>̈œ˜vœÀ“ˆVÀœ‡w- “ˆ˜ˆ‡}Àˆ`Ã]܈̅̅iÛ>ÃÌ“>œÀˆÌÞ­œÛiÀ™ä«iÀVi˜Ì®Vœ“- nance and vocational training—may be needed to both ing from renewable energy generation. Hybridization of “>݈“ˆâi̅iLi˜iwÌÃœviiVÌÀˆVˆÌÞ«Àœ}À>“Ã>˜`«Àœ“œÌi “ˆ˜ˆ‡}Àˆ`ÈȘVÀi>Ș}Þ«œ«Õ>À]iëiVˆ>Þˆ˜VœÕ˜ÌÀˆià long-term sustainability. that have been powering exiting mini-grids with diesel. ˜ÃՓ]܅ˆiÀiVœ}˜ˆâˆ˜}̅>Ìi>V…VœÕ˜ÌÀÞ܈…>Ûi̜ œÀiœÛiÀ]ˆ“«ÀœÛi“i˜ÌȘÃ̜À>}iÃÞÃÌi“Ã܈ˆ˜VÀi>Ãi `iVˆ`i œ˜ ˆÌà œÜ˜ «>̅Ü>Þà ̜ ՘ˆÛiÀÃ> >VViÃÃ] ÃÕÃÌ>ˆ˜- the use of renewables and decrease the share of diesel >Li }œÛiÀ˜“i˜Ì Vœ““ˆÌ“i˜Ì ܈ Li iÃÃi˜Ìˆ>] >à ܅ˆV… ܜՏ` “>ˆ˜Þ ÃÕ««Þ iÛi˜ˆ˜} «i>ŽÃ° ˆ˜ˆ‡}Àˆ`à œVVÕÀÀi`ˆ˜6ˆi̘>“­ œÝ"°Ó®°ƂÃœۈÌ>܈Li“>Žˆ˜} can also contribute to the socioeconomic development modern energy provision part of a broader vision of social œv > Ài}ˆœ˜° iÈ`ià «ÀœÛˆ`ˆ˜} L>ÈV i˜iÀ}Þ ÃiÀۈVià and economic transformation. In many countries with low ­ˆ}…̈˜} >˜` «…œ˜i V…>À}ˆ˜}®] ̅iÞ V>˜ vÕi «Àœ`ÕV̈Ûi iÛiÃœviiVÌÀˆwV>̈œ˜>VViÃÃ]̅iÞ܈˜ii`LœÌ…}Àˆ`>˜` >V̈ۈ̈ià ÃÕV… >à «Õ“«ˆ˜}] “ˆˆ˜}] >˜` «ÀœViÃȘ}° off-grid solutions—supported by an enabling environment A recent comparison of diesel and hybridized mini-grids ܈̅̅iÀˆ}…Ì«œˆVˆiÃ]ˆ˜Ã̈ÌṎœ˜Ã]ÃÌÀ>Ìi}ˆV«>˜˜ˆ˜}]Ài}- >ÌÃiÛi˜ÈÌiȘƂvÀˆV>]ƂÈ>]>˜`>̈˜Ƃ“iÀˆV>]ŜÜi` Տ>̈œ˜Ã]>˜`ˆ˜Vi˜ÌˆÛið «œÌi˜Ìˆ>Ã>ۈ˜}ÃÀ>˜}ˆ˜}vÀœ“£Ó̜Óä«iÀVi˜Ì]`i«i˜`- ing on oil prices. WHY IS IT IMPORTANT TO EXPLORE It is true that the huge potential for electricity access SYNERGIES BETWEEN ACCESS, using mini-grids is hindered by numerous challenges— ˆ˜VÕ`ˆ˜} ˆ˜>`iµÕ>Ìi «œˆVˆià >˜` Ài}Տ>̈œ˜Ã] >VŽ œv RENEWABLES, AND ENERGY EFFICIENCY? proven business models for commercial roll-out (notably iï˜} ̅i }œL> Ì>À}iÌ vœÀ iiVÌÀˆVˆÌÞ >VViÃà ܅ˆi vœÀ «ˆVœ‡Ãœ>À ÃÞÃÌi“î] >˜` >VŽ œv >VViÃà ̜ œ˜}‡ÌiÀ“ >V…ˆiۈ˜} ̅i *>ÀˆÃ Ƃ}Àii“i˜Ì½Ã }œ> œv ˆ“ˆÌˆ˜} }œL> w˜>˜Vi° ÕÌ“>˜ÞVœÕ˜ÌÀˆiÃ>ÀiVÕÀÀi˜ÌÞ`iÛiœ«ˆ˜}“ˆ˜ˆ‡ Ü>À“ˆ˜} ̜ LiœÜ Ó  ܈ ÀiµÕˆÀi > “>œÀ ňvÌ ̜Ü>À` grid policies to address these problems. India has released ºVi>˜ i˜iÀ}Þ»p̅>Ì ˆÃ] Ài˜iÜ>Li i˜iÀ}Þ >˜` i˜iÀ}Þ > `À>vÌ ˜>̈œ˜> «œˆVÞ vœÀ “ˆ˜ˆ >˜` “ˆVÀœ }Àˆ`Ã] ܅ˆV…] ˆv ivwVˆi˜VÞ°-Õ««ÞvÀœ“Ài˜iÜ>Lii˜iÀ}ÞÌiV…˜œœ}ˆiÈà >`œ«Ìi`] ܈ VÀi>Ìi ̅i «Àœ«iÀ vÀ>“iܜÀŽ >˜` i˜ÛˆÀœ˜- ˜œÜ}ÀœÜˆ˜}>Ì>˜՘«ÀiVi`i˜Ìi`À>Ìi]܅ˆi̅i}ÀœÜ̅ “i˜Ì vœÀ `iÛiœ«ˆ˜} xää7 V>«>VˆÌÞ œÛiÀ ̅i Vœ“ˆ˜} in the global economy is starting to decouple from ener- `iV>`i° i˜Þ>½Ã ˜iÀ}Þ ,i}Տ>̜ÀÞ œ““ˆÃȜ˜ …>à }އÀi>Ìi` V>ÀLœ˜ i“ˆÃȜ˜Ã] ̅>˜ŽÃ ̜ ̅i >`œ«Ìˆœ˜ œv ˆVi˜Ãi`*œÜiÀ…ˆÛi >ÃÌƂvÀˆV>Ì`°̜}i˜iÀ>Ìi]`ˆÃÌÀˆLÕÌi] i˜iÀ}ÞivwVˆi˜Ì“i>ÃÕÀiÃ>˜`ÌiV…˜œœ}ˆið >˜` Ãi iiVÌÀˆVˆÌÞp̅i wÀÃÌ «ÀˆÛ>Ìi Vœ“«>˜Þ ˆ˜ i˜Þ>½Ã -ˆ˜Vi Óä£Î] ̅i ܜÀ` …>à >``i` “œÀi Ài˜iÜ>Li history to receive a utility concession. Powerhive will energy power capacity (an estimated 147 GW by end develop and operate solar mini grids of a total capacity of Óä£x® ̅>˜ Vœ˜Ûi˜Ìˆœ˜> V>«>VˆÌÞ] ܅ˆi ˆ˜ÛiÃ̓i˜Ì ˆ˜ £7̜«œÜiÀ£ääۈ>}ið x vii i S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2017 BOX O.2 Vietnam’s National Drive to Achieve Universal Electricity Access 6ˆi̘>“½ÃiÝ«iÀˆi˜Vi`i“œ˜ÃÌÀ>ÌiÃ̅>Ì܅iÀiÃÌÀœ˜}«œˆÌˆV> ÀiVœÀ` ˆ˜ÛiÃ̓i˜Ìà iÛiÀ>}i` vÀœ“ ÕÃiÀÃ] Vœ““Õ˜ˆÌˆià >˜` Vœ““ˆÌ“i˜Ìi݈ÃÌÃ]̅i}œ>œv՘ˆÛiÀÃ>>VViÃÃ̜iiVÌÀˆVˆÌވà local governments. >V…ˆiÛ>LiˆÀÀiëiV̈Ûiœv̅iVœÕ˜ÌÀÞ½ÃÃÌ>À̈˜}Vœ˜`ˆÌˆœ˜°/…ˆÃ œÜiÛiÀ]̅iÀiÜ>Ã>ÌÀ>`i‡œvvLiÌÜii˜̅i«>Vi>˜`̅i Vœ““ˆÌ“i˜Ì]…œÜiÛiÀ]˜ii`Ã̜}œ…>˜`ˆ˜…>˜`܈̅>܈ˆ˜}- ÃÕÃÌ>ˆ˜>LˆˆÌÞ œv ̅i iiVÌÀˆwV>̈œ˜ ivvœÀÌð Ƃà ˆÌ ÌÕÀ˜i` œÕÌ] ˜iÃÃ̜i>À˜vÀœ“«>ÃÌ“ˆÃÌ>ŽiÃ>˜`VœÀÀiVÌœ˜i½ÃVœÕÀÃi܅i˜ “>˜Þ˜iÜ`ˆÃÌÀˆLṎœ˜˜iÌܜÀŽÃÜiÀiœvœÜÌiV…˜ˆV>µÕ>ˆÌÞ circumstances change. >˜` ÃÕvviÀi` …ˆ}… œÃÃiÃ] >˜` ̅i ˜i܏Þ iÃÌ>LˆÃ…i` i˜ÌˆÌˆià ˜£™™{]܅i˜6ˆi̘>“ÃÌ>ÀÌi`ˆÌÃ՘ˆÛiÀÃ>>VViÃÃ`ÀˆÛi]ˆÌà `ˆ`˜œÌ…>ÛiÃÕvwVˆi˜ÌiÝ«iÀˆi˜Vi˜œÀ̅iw˜>˜Vˆ>ÃÌÀi˜}̜̅ iiVÌÀˆwV>̈œ˜ À>Ìi Ü>à œ˜Þ £{ «iÀVi˜Ì] Vœ“«>À>Li ̜ ̅i œ«iÀ>Ìi ̅i“° /…i ÃÕLÃiµÕi˜Ì «…>ÃiÃ] ̅iÀivœÀi] «ÀˆœÀˆÌˆâi` >VViÃÃÀ>ÌiÃœv̅ii>ÃÌiiVÌÀˆwi`VœÕ˜ÌÀˆiȘƂvÀˆV>° Þ£™™Ç] ÃÕÃÌ>ˆ˜>LˆˆÌÞ“i>ÃÕÀiÃ]܈̅>…iˆ}…Ìi˜i`vœVÕÃœ˜i˜ÃÕÀˆ˜} ̅iÀ>Ìi…>`Õ“«i`̜È£«iÀVi˜Ì]>˜`LÞÓääÓ]ˆÌÜ>ÃœÛiÀnä ÃiÀۈViµÕ>ˆÌÞ>˜`LœÌ…ÌiV…˜ˆV>>˜`w˜>˜Vˆ>ۈ>LˆˆÌÞ°À>`- «iÀVi˜Ì°/œ`>Þ]̅i6ˆi̘>“iÃi«œ«Õ>̈œ˜i˜œÞÃ̅ivՏLi˜- Õ>Þ]̅i`ˆÃ«iÀÃi`œV>iiVÌÀˆwV>̈œ˜˜iÌܜÀŽÃÜiÀiVœ˜Ãœ- iwÌÃœviiVÌÀˆVˆÌÞ]܈̅>˜>VViÃÃÀ>ÌiœÛiÀ™™«iÀVi˜Ì° ˆ`>Ìi`ˆ˜Ìœ>À}iÀ՘ˆÌÃ>˜`̅iˆÀœ«iÀ>̜ÀÃVœÀ«œÀ>̈âi`Æ“œÃÌ 6ˆi̘>“½ÃÃiVÀiÌ̜ÃÕVViÃÃÜ>ØœÌLiÌ̈˜}œ˜>«>À̈VՏ>À œv̅i“ÜiÀiiÛi˜ÌÕ>Þ>LÜÀLi`LÞ̅i˜>̈œ˜>ṎˆÌÞ] 6 ° iiVÌÀˆwV>̈œ˜>««Àœ>V…]LÕÌÀ>̅iÀ>œÜˆ˜}̅i>««Àœ>V…iÃ̜ 7…ˆi“>˜Þii“i˜ÌÃœv6ˆi̘>“½ÃiiVÌÀˆwV>̈œ˜>««Àœ>V… iۜÛiœÛiÀ̈“i°˜̅iˆ˜ˆÌˆ>ºÌ>Ži‡œvv»«…>Ãi­£™™{q™Ç®]̅i >Ài՘ˆµÕi̜6ˆi̘>“]ˆÌÃŽiޏiÃܘÃ>Ài«iÀ̈˜i˜Ì̜>iiV- goal was to trigger fast access expansion by empowering ÌÀˆwV>̈œ˜ivvœÀÌÃ\ communities and local authorities to build their own systems. U 6ˆi̘>“…>Ã>V…ˆiÛi`՘ˆÛiÀÃ>>VViÃÃ̜iiVÌÀˆVˆÌޏ>À}iÞ ÕÀˆ˜}̅ˆÃ«…>Ãi]ˆÌ̏i>ÌÌi˜Ìˆœ˜Ü>ë>ˆ`̜ÃiÀۈViµÕ>ˆÌÞ] `Õi̜̅i}œÛiÀ˜“i˜Ì½Ã՘Ü>ÛiÀˆ˜}Vœ““ˆÌ“i˜Ì̜iiVÌÀˆ- VœÃÌÃ]Ì>ÀˆvviÛiÃ>˜`œÌ…iÀÀi}Տ>̜ÀÞ>ëiVÌðÌÜ>Ã>…ˆ}…Þ wV>̈œ˜] >˜` ˆÌà ܈ˆ˜}˜iÃà ̜ i>À˜ >˜` ܅i˜ ˜iViÃÃ>ÀÞ `iVi˜ÌÀ>ˆâi` >««Àœ>V…] ܈̅ > ÛiÀÞ ˆ“ˆÌi` Àœi vœÀ ̅i change course. ˜>̈œ˜>ṎˆÌÞ 6 ]܅ˆV…Ü>Ãœ˜ÞÃiˆ˜}iiVÌÀˆVˆÌÞˆ˜LՏŽ̜ these newly created mini-distribution entities. This was a • Fast progress and a record fund mobilization was possible «iÀˆœ`œviÝÌÀi“iÞv>ÃÌiiVÌÀˆwV>̈œ˜]܈̅̅iÀ>ÌiÕ“«ˆ˜} LÞ“>Žˆ˜}iiVÌÀˆwV>̈œ˜>˜>̈œ˜>«ÀˆœÀˆÌÞ]i˜}>}ˆ˜}Vi˜- vÀœ“£{«iÀVi˜Ì̜È£«iÀVi˜Ìˆ˜ÕÃÌ̅ÀiiÞi>ÀÃp>ÃÜi>à ÌÀ>]Ài}ˆœ˜>]>˜`œV>}œÛiÀ˜“i˜Ì]>œ˜}܈̅ÀÕÀ>Vœ“- munities. U >ÃÌ«Àœ}ÀiÃÈ؜̍ÕÃÌ>“>ÌÌiÀœv«œˆÌˆV>Vœ““ˆÌ“i˜Ì]ˆÌ FIGURE O.5 'NGEVTKƂECVKQP$GEQOGUC0CVKQPCN2TKQTKV[ >ÃœÀiµÕˆÀiÃ>ÃÌÀœ˜}`i“>˜`>˜`>܈ˆ˜}˜iÃÃ̜«>ÞvÀœ“ 8KGVPCO*QWUGJQNF'NGEVTKƂECVKQP4CVG ̅i«>À̈Vˆ«>̈˜}«œ«Õ>̈œ˜p܅i˜ÀÕÀ>ˆ˜Vœ“iÀœÃi]iiV- ÌÀˆwV>̈œ˜̜œŽœvv° 100% U /…iÌÀ>`i‡œvvLiÌÜii˜ëii`>˜`ÃÕÃÌ>ˆ˜>LˆˆÌÞœviiVÌÀˆw- 80% cation efforts needs to be carefully managed. • Technical standards appropriate for rural areas should be de- 60% veloped and enforced right from the start of the national iiVÌÀˆwV>̈œ˜«Àœ}À>“° 40% “Take off” phase U iVÌÀˆwV>̈œ˜ }œ>Ã ŜՏ` ˜œÌ …>««i˜ >Ì ̅i iÝ«i˜Ãi œv 20% ̅i˜>̈œ˜>ṎˆÌÞ½Ãw˜>˜Vˆ>ۈ>LˆˆÌÞ° 0% Source:- Ƃ, >Ãi-ÌÕ`Þ\6ˆi̘>“½Ã˜>̈œ˜>iiVÌÀˆwV>̈œ˜«Àœ}À>“]vœÀ̅- 1994 1996 1998 2000 2002 2004 2006 2008 2010 2013 coming. ÕÀ̅iÀ] ܈̅ ̅i À>«ˆ`Þ `iVÀi>Ș} VœÃÌà œv ÃÌ>˜`‡ The stand-alone electricity product market is expand- >œ˜iɈ܏>Ìi` Ài˜iÜ>Li i˜iÀ}Þ ÃÞÃÌi“Ã] Ài˜iÜ>Li ˆ˜}À>«ˆ`Þ]>˜` >ۈ}>˜Ì,iÃi>ÀV…iÃ̈“>ÌiÃ̅i“>ÀŽiÌ energy is no longer an expensive solution for electricity vœÀ «ˆVœ‡Ãœ>À «Àœ`ÕVÌà ܈ }ÀœÜ vÀœ“ fxxä “ˆˆœ˜ ˆ˜ >VViÃð -œ>À >˜ÌiÀ˜Ã] ܏>À “œLˆi «…œ˜i V…>À}iÀÃ] >˜` Óä£{ ̜ fÓ°{ Lˆˆœ˜ ˆ˜ ÓäÓ{° œL>Þ] ܓi Óä “ˆˆœ˜ certain solar home systems can provide Tier 1–3 energy households are now powered by solar home systems ÃiÀۈVií>ëiÀ̅iœL>/À>VŽˆ˜}À>“iܜÀŽ/ˆiÀ >Ãi` >˜` ä°n “ˆˆœ˜ …œÕÃi…œ`à >Ài ÃÕ««ˆi` LÞ Ó> ÃV>i -ÞÃÌi“®vœÀLiÌÜii˜{>˜`Óä«iÀVi˜Ìœv̅iVœÃÌÀiµÕˆÀi` ܈˜`ÃÞÃÌi“Ã]>VVœÀ`ˆ˜}̜, ƂiÃ̈“>Ìið*ˆVœ܏>À vœÀ }Àˆ` iÝÌi˜Ãˆœ˜° -œ>À Ƃˆ`] > «ÀˆÛ>Ìi ܏>À Vœ“«>˜Þ] *6 ÃÞÃÌi“Ãp܅ˆV… ÌÞ«ˆV>Þ «ÀœÛˆ`i iÃà ̅>˜ £ä Ü>ÌÌà ܅ˆV… …>à ܏` ܓi £°x “ˆˆœ˜ ܏>À ˆ}…Ìà ­Li˜iẅ˜} of power and are primarily used for lighting or powering ܓi™“ˆˆœ˜«iœ«i®]iÃ̈“>ÌiÃ̅>Ìf£ä܏>Àˆ}…ÌÃV>˜ electrical appliances (like radios or mobile phones)— …i«ƂvÀˆV>˜v>“ˆˆiÃÃ>Ûi>˜>ÛiÀ>}iœvfÈä>˜˜Õ>Þ]ȓ- …>Ûi`iÛiœ«i`À>«ˆ`Þˆ˜ÀiVi˜ÌÞi>ÀÃ]`Õi̜̅iv>ˆ˜ ply by not using kerosene for lighting purposes. «ÀˆVi œv ܏>À “œ`ՏiÃ] ̅i ÕÃi œv …ˆ}…Þ ivwVˆi˜Ì   OVE RVIE W xix FIGURE O.6 A growing role for mini grids and renewables 1RRQTVWPKVKGUHQTITKFGZVGPUKQPOKPKITKFUCPFFKUVTKDWVGFTGPGYCDNGGPGTI[U[UVGOU Unsubsidised electricity retail cost on site [Euro/kWh] National grid extension Solar Home Systems and Pico PV Mini-grid Space rids mini-g Solar/diesel/biomass Hydro mini-grids Large Size of community Small High Density of population Low Close Distance to national grid Far Easy Complexity of terrain Complex Strong Economic strength Weak Source: 1 * É, Ó£Óä£{° ˆ}…̈˜}ÃÞÃÌi“Ã]>˜`̅ii“iÀ}i˜Viœvˆ˜˜œÛ>̈ÛiLÕÈ- ŽiÌà ܅iÀi >VViÃà ˆÃ ̜ Li ˆ˜VÀi>Ãi`Æ ­ˆˆ® w˜>˜Vˆ> Vœ˜- ness models. straints that tend to favor products with the lowest initial So what are the biggest obstacles that countries face in VœÃÌ] iÛi˜ ̅œÕ}… “>˜Þ «Àœ`ÕVÌà ܈̅ ÃÕ«iÀˆœÀ i˜iÀ}Þ introducing and scaling up the share of renewables in performance have a lower lifecycle cost despite a higher energy use? They range from the presence of large fossil Õ«vÀœ˜Ì VœÃÌÆ ­ˆˆˆ® > >VŽ œv œÛiÀ>« LiÌÜii˜ «ÀœviÃȜ˜> vÕiÃÕLÈ`ˆiÃ]̅iˆ˜>`iµÕ>ÌiVœ““Õ˜ˆV>̈œ˜œv̅i>`Û>˜- communities engaged on electricity access and on energy Ì>}iÃœvÀi˜iÜ>LiÃ]՘Vi>À}œÛiÀ˜“i˜Ì«œˆVˆiÃ]>>VŽœv ivwVˆi˜VÞÆ >˜` ­ˆÛ® > >VŽ œv vœVÕà œ˜ ̅i œÛiÀ> i˜iÀ}Þ }œœ`w˜>˜Vˆ>œ«Ìˆœ˜Ã]>˜`ˆ˜ÃÕvwVˆi˜ÌVœ““Õ˜ˆÌÞˆ˜ÛœÛi- ÃiV̜À]œvÌi˜LiV>ÕÃiœvVœ˜Vi˜ÌÀ>̈œ˜œ˜܏Ṏœ˜Ãˆ˜ÛœÛ- “i˜Ì°œÀÌ՘>ÌiÞ]̅iÃiœLÃÌ>ViÃV>˜Li>“iˆœÀ>Ìi`LÞ ing increased grid generation capacity. the creation of a pro-renewables policy and long-term gov- Ûi˜ Ü] ̅iÀi >Ài “>˜Þ iÝ>“«ià œv Ó>ÀÌ «À>V̈Vià iÀ˜“i˜ÌVœ““ˆÌ“i˜ÌpÃ>˜`܈̅ˆ˜̅ˆÃvÀ>“iܜÀŽ]ˆ˜˜œÛ>- >˜` ivviV̈Ûi “œ`iÃ vœÀ ˆ˜VœÀ«œÀ>̈˜} i˜iÀ}Þ ivwVˆi˜VÞ° tive business models are emerging and are leading off-grid Some high-impact programs have prioritized a broader electricity access developments. view on developing electricity access markets looking to ˜iÀ}Þ ivwVˆi˜VÞ] œ˜Vi œÛiÀœœŽi`] ˆÃ Liˆ˜} Ãii˜ Vœ““iÀVˆ>>˜`ÃÕ««Þ‡V…>ˆ˜“>˜>}i“i˜Ì]«œˆVÞÀivœÀ“] increasingly as a tool in delivering modern and clean and consumer awareness. One relatively simple way to i˜iÀ}Þ ÃiÀۈVið Ì Ài`ÕVià ̅i VœÃÌà œv i˜iÀ}Þ ÃÕ««Þ] ˆ“«ÀœÛi ivwVˆi˜VÞ ˆÃ ̅ÀœÕ}… `ˆÃÌÀˆLṎœ˜ ÌÀ>˜ÃvœÀ“iÀÃ] ̅iÀivœÀi “>Žˆ˜} >VViÃà “œÀi >vvœÀ`>Li° œÀ iÝ>“«i] which are an integral part of every grid. Transformers are i˜iÀ}Þ ivwVˆi˜Ì ˆ}…Ì i“ˆÌ̈˜} `ˆœ`ià ­ î À>`ˆV>Þ >}œL>ÞÌÀ>`i`«Àœ`ÕVÌ]>˜`>̏i>ÃÌ£È`iÛiœ«i`>˜` Ài`ÕVi ̅i Èâi >˜` VœÃÌà œv ̅i ܏>À *6 >˜` L>ÌÌiÀˆià `iÛiœ«ˆ˜} iVœ˜œ“ˆià ­ˆ˜VÕ`ˆ˜} À>∏] …ˆ˜>] ˜`ˆ>] ˜ii`i` ̜ «ÀœÛˆ`i ÃiÀۈVi] “>Žˆ˜} ̅iÃi ÌiV…˜œœ}ˆià i݈Vœ]>˜`6ˆi̘>“®…>ÛiiˆÌ…iÀ“ˆ˜ˆ“Õ“i˜iÀ}Þ«iÀ- >vvœÀ`>LivœÀÛ>Ã̘iÜ“>ÀŽiÌÃi}“i˜Ìð Þi˜`‡Óä£x]>Ì formance standards or labels in place that regulate or i>ÃÌ£{ÈVœÕ˜ÌÀˆiÃ…>`i˜>VÌi`i˜iÀ}ÞivwVˆi˜VÞ«œˆVˆiÃ] v>VˆˆÌ>Ìi ̅i ˆ˜ÃÌ>>̈œ˜ œv …ˆ}…Þ‡ivwVˆi˜Ì ÌÀ>˜ÃvœÀ“iÀð ܅ˆi>̏i>ÃÌ£ÓnVœÕ˜ÌÀˆiÃ…>`i˜iÀ}ÞivwVˆi˜VÞÌ>À}iÌð These existing efforts make the establishment of new pro- There has also been a drop of more than 30 percent in the grams and policies far less burdensome for developing primary energy intensity between 1990 and 2014. economies. 7…>̈ň˜`iÀˆ˜}i˜iÀ}ÞivwVˆi˜VÞvÀœ“«>ވ˜}>Lˆ}- The success of off-grid technologies for providing ger role? The barriers are many: (i) high tariffs and import energy solutions in recent years is largely attributable to `Ṏià œ˜ >««ˆ>˜Vià >˜` iµÕˆ«“i˜Ì ÕÃi` ˆ˜ ̅œÃi “>À- ̅i>Û>ˆ>LˆˆÌÞœvi˜iÀ}ÞivwVˆi˜Ì>««ˆ>˜ViðœÀˆ˜ÃÌ>˜Vi] xx S TAT E O F E L E C TR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE O.7 Solar home systems are increasingly offering more for less 4GVCKNRWTEJCUGRTKEGHQTVJTGGUQNCTJQOGU[UVGOUVJCVRTQXKFGKFGPVKECNNGXGNUQHUGTXKEG SHS with Standard Appliances (2009) SHS with Standard Appliances (2014) SHS with Super-Efficient Appliances (2014) SHS with Super-Efficient Appliances (2017) $0 $200 $400 $600 $800 $1,000 $1,200 Retail price by component ($US) Lights Battery PV Balance of system Appliances Source:*…>`Ži]Ƃ°iÌ>°Óä£x° ˆ˜“>˜ÞVœÕ˜ÌÀˆiÃ̅iÕÃiœv…ˆ}…ivwVˆi˜Ì >“«Ã…>à WHAT ARE THE EMERGING AND INNOVA- enabled the implementation of various modern lighting TIVE BUSINESS AND DELIVERY MODELS? «Àœ}À>“à >˜` ˆ˜ˆÌˆ>̈Ûià ˆ˜ ÀÕÀ> >˜` iiVÌÀˆwi` >Ài>ð Ƃà the Royal Swedish Academy of Sciences put it when Ƃ“>œÀvœVÕÃœv̅i՘ˆÛiÀÃ>iiVÌÀˆVˆÌÞ>VViÃëÕÅ̅iÃi >˜˜œÕ˜Vˆ˜} ̅i Óä£{ œLi *Àˆâi ˆ˜ *…ÞÈVÃ\ º/…i   `>Þà ˆÃ Ài>V…ˆ˜} «iœ«i ˆÛˆ˜} ˆ˜ Ài“œÌi >Ài>Ã] LÕÌ ˆÌ ˆÃ >“«…œ`Ã}Ài>Ì«Àœ“ˆÃivœÀˆ˜VÀi>Ș}̅iµÕ>ˆÌÞœvˆvi increasingly clear that the traditional approach to electric- vœÀ œÛiÀ £°x Lˆˆœ˜ «iœ«i >ÀœÕ˜` ̅i ܜÀ` ܅œ >VŽ ˆÌÞ}Àˆ`iÝÌi˜Ãˆœ˜܈˜œÌÃÕvwVi°Àˆ`‡L>Ãi`iÝÌi˜Ãˆœ˜œv >VViÃÃ̜iiVÌÀˆVˆÌÞ}Àˆ`ð Õi̜œÜ«œÜiÀÀiµÕˆÀi“i˜ÌÃ] iiVÌÀˆVˆÌÞÃÕ««Þˆ˜ÛœÛiÃÈ}˜ˆwV>˜ÌÕ«vÀœ˜Ìˆ˜ÛiÃ̓i˜ÌLÞ it can be powered by cheap local solar power.” ṎˆÌˆiÃ]>˜`̅iVœ˜˜iV̈œ˜VœÃÌÃ̜Ài“œÌi>Ài>Ãp܅ˆV… ˜iÀ}ÞivwVˆi˜Ì>««ˆ>˜ViÃ…>Ûi…i«i`̜Ài`ÕVi̅i demand less electricity—are high. Consumers cannot i˜iÀ}Þ ˆ˜ÛiÃ̓i˜Ì VœÃÌà ÀiµÕˆÀi` ̜ ŽˆVŽ‡ÃÌ>ÀÌ iiVÌÀˆVˆÌÞ >vvœÀ`>À}iÕ«vÀœ˜ÌVœÃÌÃ]Ü«>ÞL>VŽ̜̅iṎˆÌˆiÃV>˜Li access programs. Shaving a single watt from an off-grid >V…ˆiÛi` œ˜Þ œÛiÀ >˜ iÝÌi˜`i` «iÀˆœ`] œÀ ˆÃ ȓ«Þ ˜œÌ >««ˆ>˜Vi½Ãœ>`ÀiÃՏÌȘœÜiÀˆ˜ˆÌˆ>܏>À«>VŽ>}iVœÃÌÃ] vi>ÈLi°1˜ÌˆÀiVi˜ÌÞ]ÃÕ««œÀÌvœÀ˜œ˜‡}Àˆ`iiVÌÀˆVˆÌÞÃÞÃ- ˆ“«ÀœÛi` ÃiÀۈVi] œÀ LœÌ… ­6>˜ ÕΈÀŽ Óä£x®° -ˆ“ˆ>ÀÞ] tems has been based on funding allocations from public i˜iÀ}ÞivwVˆi˜VÞV>˜“>Ži>À}iÀœvv‡}Àˆ`܏>À…œ“iÃÞÃ- «Àœ}À>“Ã]LÕÌ̅ˆÃ>««Àœ>V…ˆÃ˜œÌÃÕÃÌ>ˆ˜>Li° tems more affordable. According to a recent analysis “the There are good prospects for private sector business upfront cost of a typical off-grid energy system can be >««ˆV>̈œ˜Ã̜ÃÕ««Þ̅ˆÃ“>ÀŽiÌ]LÕÌ̅iÀi>Àiœ˜Þ>ˆ“- Ài`ÕVi`LÞ>ÓÕV…>Ãxä«iÀVi˜ÌˆvÃÕ«iÀ‡ivwVˆi˜Ì>««ˆ- ited number of successful installations. Experience from >˜Vià >˜` Àˆ}…̇Èâi` ܏>À *6 >˜` L>ÌÌiÀˆià >Ài ÕÃi`] such approaches to energy service delivery suggest that ܅ˆi `iˆÛiÀˆ˜} iµÕˆÛ>i˜Ì œÀ }Ài>ÌiÀ i˜iÀ}Þ ÃiÀۈVi°» the best models have a number of common features (Table ­6>˜ ÕΈÀŽ Óä£x®° /…ÕÃ] >`Û>˜Vià ˆ˜ i˜iÀ}އivwVˆi˜Ì "°£®\­ˆ®Vœ˜Ãˆ`iÀ>̈œ˜œv̅i`i“>˜`Ã]ˆ˜ÌiÀiÃÌ]>˜`ÀiÃÌÀˆV- `iۈViØœÜ>œÜ…œÕÃi…œ`Ã̜Ài>«“œÀiLi˜iwÌÃvÀœ“ ̈œ˜ÃœvœV>VÕÃ̜“iÀÃ]ˆ˜VÕ`ˆ˜}̅i`iÈÀi̜«>Þ܈̅ the relatively small amounts of electricity available to them. “œLˆi «>ޓi˜Ìà ÃÞÃÌi“ÃÆ ­ˆˆ® ÃÌÀœ˜} «>À̘iÀň«Ã >œ˜} ˜ÃÌi>`œvˆÕ“ˆ˜>̈˜}>Ș}iˆ}…ÌLՏL] ->˜`  ̅i܅œiÃÕ««ÞV…>ˆ˜]vÀœ“̅i}œÛiÀ˜“i˜Ì>˜`ṎˆÌˆià lamps use provide more and better light and consumer ̜«ÀˆÛ>ÌiÃiV̜ÀÃiÀۈVi«ÀœÛˆ`iÀÃÆ>˜`­ˆˆˆ®>`>«Ì>̈œ˜œv iÃÃi˜iÀ}Þ]i>ۈ˜}i˜œÕ}…i˜iÀ}Þ̜«œÜiÀœÌ…iÀiiV- “>ÀŽiÌ`ޘ>“ˆVÃ̜œV>Vœ˜`ˆÌˆœ˜Ã̜ÃÕ««œÀÌÃÕVViÃÃvՏ] ÌÀœ˜ˆV`iۈViÃÃÕV…>Ãv>˜Ã>˜`œÜ‡Ü>ÌÌ>}i/6Ã>˜`>««ˆ- sustainable clean energy solutions. ances (Figure O.7). ˜/>˜â>˜ˆ>] °" …>ÃwÛiÓ>‡ÃV>iÀÕÀ>iiVÌÀˆwV>- ˜ÃՓ]ˆÌˆÃVi>À̅>ÌVi>˜i˜iÀ}Þ܈«>Þ>ÃÌÀœ˜}Àœi ̈œ˜ÃÞÃÌi“Ãœ«iÀ>̈˜}]܈̅Vœ˜˜iV̈œ˜Ã̜ÓääqÎääVÕÃ- in ensuring universal access to energy services. Plummet- tomers. The overall goal is to electrify 1 million people in ˆ˜}VœÃÌÃvœÀÀi˜iÜ>Lii˜iÀ}ÞÌiV…˜œœ}ˆiÃ>˜`>`iµÕ>Ìi £äÞi>ÀÃ]œÀ>LœÕÌÓxä]äää…œÕÃi…œ`Ãp܅ˆV…“i>˜Ã̅>Ì i˜iÀ}Þ ivwVˆi˜VÞ “i>ÃÕÀià œvviÀ > ÌÀi“i˜`œÕà œ««œÀÌÕ- LiÌÜii˜ ˜œÜ >˜` i˜ÌiÀˆ˜} ̅i ÃV>i‡Õ« «…>Ãi] ˆÌ “ÕÃÌ nity for countries to think differently and be creative about `iÛiœ«̅i>LˆˆÌÞ̜ÃÌ>˜`>À`ˆâi°˜ i«>]…>“*œÜiÀ] electricity access expansion. a developer of solar micro-grids and commercial off-grid ÃÞÃÌi“Ã]…>Ã`i«œÞi`œÛiÀÈää«ÀœiVÌÃ]ˆ˜VÕ`ˆ˜}>À}i ˆ˜`ÕÃÌÀˆiÃ]Ó>LÕȘiÃÃiÃ]>˜`…Õ˜`Ài`Ãœv…œÕÃi…œ`ð OVE RVIE W xxi /…iÃi >««ˆV>̈œ˜Ã ˆ˜VÕ`i ̅Àii “ˆVÀœ }Àˆ`Ã] ܈̅ ̅i *Ƃ9 «ÀœÛˆ`iÀà V>˜ Ì>Ži œ˜i œv Ìܜ >««Àœ>V…ià ̜ ˆ˜Ìi˜Ìˆœ˜̜`iÛiœ«>̏i>ÃÌ£ääÃÕV…«ÀœiVÌȘ̅i˜iÝÌ w˜>˜Vˆ˜}̅iÃÞÃÌi“̜̅iVœ˜ÃՓiÀ\ viÜ Þi>Àð /…i ̅Àii i݈Ã̈˜} «ÀœiVÌà …>Ûi Lii˜ ˆ“«i- “i˜Ìi` ˆ˜ «>À̘iÀň« ܈̅ ‡Vi] ̅i >À}iÃÌ ÌiiVœ“ U Ƃ˜ˆ˜`iw˜ˆÌiviivœÀÃiÀۈViˆ˜܅ˆV…̅iVœ˜ÃՓiÀ˜iÛ- Vœ“«>˜Þˆ˜ i«>]܅ˆV…«>À̈Vˆ«>ÌiÃLœÌ…>Ã>˜ˆ˜ÛiÃ̜À iÀœÜ˜Ã̅iÃÞÃÌi“ˆÌÃiv]LÕÌÀ>̅iÀ“iÀiÞ«>ÞÃvœÀ̅i and as an off-taker (with a PPA) from the micro-grid system. ability to use it. Payments are typically made on the *>Þ>ÃޜÕ}œ­*Ƃ9®“œ`iÃ…>ÛiLiVœ“iˆ˜VÀi>Ș}Þ basis of when the consumer needs power and can af- attractive in many markets. This is based upon experience ford it. ÃÕ}}iÃ̈˜} ̅>Ì] iÛi˜ ՘`iÀ œV> Vœ˜`ˆÌˆœ˜Ã ˆ˜ Ài“œÌi • The consumer eventually owns the system after paying “>ÀŽiÌÃ]̅iŽiÞ̜>VœÃ̇ivviV̈ÛiÃÌ>˜`‡>œ˜ii˜iÀ}ÞÃÞÃ- off the principal of the system cost—and the consumer Ìi“LÕȘiÃÈÃ>w˜>˜Vi“œ`i̅>Ì“>ÌV…iÃ>vvœÀ`>Li “ÕÃÌ “>Ži `ˆÃVÀiÌi «>ޓi˜ÌÃ] ÌÞ«ˆV>Þ œ˜ > `>ˆÞ] «ÀˆVˆ˜}vœÀ̅iÌ>À}iÌVœ˜ÃՓiÀÃ܈̅>˜>`iµÕ>ÌiÀiÌÕÀ˜ ÜiiŽÞ]œÀ“œ˜Ì…ÞL>Èí̅iÀiLÞÀiÃi“Lˆ˜}>ÌÞ«ˆV> œ˜ˆ˜ÛiÃ̓i˜ÌvœÀ̅iÃÕ««ˆiÀ°*Ƃ9܏>ÀVœ“«>˜ˆiÃÃiiŽ w˜>˜Vˆ˜}>ÀÀ>˜}i“i˜Ì®° ̜«ÀœÛˆ`ii˜iÀ}ÞÃiÀۈViÃ>Ì>«ÀˆVi«œˆ˜Ì̅>̈ÏiÃÃ̅>˜] œÀ iµÕ> ̜] Vœ˜ÃՓiÀý VÕÀÀi˜Ì ëi˜`ˆ˜} œ˜ ŽiÀœÃi˜i] ˆ}…̈˜}œL>­>7œÀ` >˜Ž«>ÌvœÀ“®…>ÃiÃ̈“>Ìi`̅>Ì V>˜`iÃ]L>ÌÌiÀˆiÃ]>˜`œÌ…iÀœÜ‡µÕ>ˆÌÞi˜iÀ}ÞÃiÀۈVið ̅iÀi >Ài ÎÓ *Ƃ9 Vœ“«>˜ˆià ˆ˜ Îä VœÕ˜ÌÀˆiÃ] “>˜Þ œv *ÀœÛˆ`iÀà >Ài ˆ˜Vi˜ÌˆÛˆâi` ̜ œvviÀ µÕ>ˆÌÞ >vÌiÀ Ã>ià ÃiÀ- them in Africa. They use existing mobile payment systems ۈVi]ȘVi>ÕÃiÀ½Ãœ˜}œˆ˜}«>ޓi˜ÌÃ>Àïi`̜̅iÃÞÃ- œÀÃVÀ>ÌV…V>À`ÃvœÀviiVœiV̈œ˜° œ˜ÃՓiÀÃLi˜iwÌvÀœ“ tem continuing to function. ˆ˜VÀi>Ãi`>vvœÀ`>LˆˆÌÞ]ˆ˜VÀi>Ãi`Vœ˜w`i˜Viˆ˜̅i«Àœ`- TABLE O.1 An array of emerging delivery models for mini-grids CURRENT ENERGY COMPANY OUTREACH TARGET COUNTRIES SOURCE SIZE RANGE FOCUS/INNOVATION °"  ÇÃÞÃÌi“Ã] £“«iœ«i />˜â>˜ˆ> -œ>À]Lˆœ‡ Èq£ÓŽ7 -Ì>˜`>À`ˆÃ>̈œ˜vœÀÃV>iÆ  {ÓäVÕÃ̜“iÀà ˆ˜£äÞi>Àà  `ˆiÃi  ÃÌ>LˆÃ…ÌÀ>VŽÀiVœÀ`vœÀw˜>˜Vi Cellphone payment Ƃ*"7 , ΓˆVÀœ‡}Àˆ`à €£ä䓈VÀœ‡}Àˆ`à i«> -œ>À £q£äŽ7 **Ƃ܈̅ ‡Vi­ÌiiVœ“îvœÀ in 10 years reduced risk revenue stream Rent-to-own agreements 1-*"7 , £x]äää…œÕÃi‡ Çx]äää…œÕÃi‡ ˜`ˆ> ˆœ“>ÃÃ] £xqÓxäŽ7 ƂVVi«Ì€xÞi>À«>ÞL>VŽ  …œ`Ã]ÃiÛiÀ> …œ`Ã]£ä]äää />˜â>˜ˆ> -œ>À ­Lˆœ“>ÃîÆ />À}ï˜}nq£äÞi>Àœ>˜Ã  £ääLÕȘiÃÃià LÕȘiÃÃiÃ]   ÓäŽ7­Ãœ>À® ,ÕÀ>i“«œÜiÀ“i˜Ì   £Óx>}Àœ՘ˆÌà    ·Þi>ÀiÝ«>˜Ãˆœ˜«>˜ Inclusive business model  -1- -Õ««œÀÌÓˆ˜ˆ‡}Àˆ``iÛiœ«“i˜Ì -i˜i}> -œ>À]7ˆ˜` xq£äŽ7 œÜ‡VœÃÌÓ>ÀÌV>À`“iÌiÀ in Africa with related management Sale of “electricity blocks”  ÃÞÃÌi“Ã>˜`Vœ˜ÃՏÌ>˜VÞ     ˆVÀœ*œÜiÀ Vœ˜œ“Þ»`iˆÛiÀÞ º ÃÞÃÌi“pyi݈LiÌ>ÀˆvvÃE“ˆVÀœ‡ credit ‡"*Ƃ Î{ä]äää ³xää…œ“iÃÉ i˜Þ>]/>˜â>˜ˆ>] -œ>À xqÓä7 *Ƃ9LÕȘiÃÓœ`i  …œ“ií>À£È® `>Þ 1}>˜`>]   -“>--] ÃE“œLˆi«…œ˜i  charging services *"7 ,  Ó䳓ˆ˜ˆ‡}Àˆ`à x䓈˜ˆ‡}Àˆ`à i˜Þ>E -œ>À £qȎ7 ˆ˜ˆ‡}Àˆ`ÃVœ“«>̈Li܈̅Vi˜ÌÀ> ­, 7Ƃ    ˆ˜Óä£È />˜â>˜ˆ>]   }Àˆ`ÃÌ>˜`>À`à ,9®   <>“Lˆ> *"7 ,6  {ÈÌiÃ]£xää £ääۈ>}ià i˜Þ>] -œ>À HÓäŽ7 ˜Ìi}À>Ìi`ÌiV…ÃÞÃÌi“Æ  «iœ«i­HÎää  *…ˆˆ««ˆ˜ià   œLˆi“œ˜iÞ˜iÌܜÀŽÃ  Vœ˜˜iV̈œ˜Ã®  ­ƂvÀˆV>ÉƂÈ>   vœÀ«Ài‡«>ޓi˜Ì expansion) Dedicated software—predict ÀiÛi˜ÕiÃÌÀi>“ÃÆ ,1ƂƂ*"7 , £«ˆœÌ«ÀœiVÌ £ää«ÀœiVÌà />˜â>˜ˆ> -œ>À]Lˆœ“>Ãà ÎääŽ7 ÕȘiÃÓœ`i܈̅œÕÌÃÕLÈ`ˆià  ­6܈̅ÕÎ     Ո`"ܘ"«iÀ>Ìi“œ`i Power) Pre-payment meters -*Ƃ, / , Î >À̅ë>ÀŽ œwÝi`Ì>À}iÌ ƂÈ>]ƂvÀˆV>] -iÀۈVivœÀ äqxää7 iÌiÀˆ˜}܈̅“œLˆi«>ޓi˜Ì  “ˆ˜ˆ‡}Àˆ`Ș  >̈˜Ƃ“iÀˆV> >ÌÞ«iÃœv  ÃÞÃÌi“ Haiti mini-grids Cloud-based software “Gateway” usage dbase x x ii S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 017 ÕVÌ]>˜`>VViÃÃ̜“>ˆ˜Ìi˜>˜ViÃiÀۈViðœÀ̅iÃÕ««ˆiÀ] MOVING FORWARD *Ƃ9œÜiÀÃ̅iÌÀ>˜Ã>V̈œ˜VœÃÌÃ܈̅œÕÌ̅i˜ii`vœÀ> È}˜ˆwV>˜ÌÀÕÀ>w˜>˜Vˆ>ˆ˜vÀ>ÃÌÀÕVÌÕÀi]>˜`ˆÌÀi`ÕViÃ̅i ˜`iÛiœ«ˆ˜}VœÕ˜ÌÀˆiÃ]ÌÀ>`ˆÌˆœ˜>}Àˆ`ÃÕ««Þ܈Li̅i VœÃÌ>˜`ÀˆÃŽœv`œˆ˜}LÕȘiÃð‡"*Ƃ-œ>ÀˆÃ>˜œvÌi˜‡ «Ài`œ“ˆ˜>˜Ì >««Àœ>V… vœÀ ÃÕ««Þˆ˜} ÕÀL>˜ …œÕÃi…œ`Ã] VˆÌi`iÝ>“«iœv>wÀ“܈̅}œœ`iÝ«iÀˆi˜ViœvÃÕVViÃÃvՏ whose number is likely to rise faster than population growth *Ƃ9>««ˆV>̈œ˜Ã]…>ۈ˜}Vœ˜˜iVÌi`“œÀi̅>˜ÎÎä]äää because of large rural-urban migration and the downward …œ“iȘi˜Þ>]/>˜â>˜ˆ>]>˜`1}>˜`>̜܏>À«œÜiÀ܈̅ ÌÀi˜`ˆ˜…œÕÃi…œ`Èâi°œÜiÛiÀ]̅ˆÃ>««Àœ>V…܈˜œÌLi œÛiÀxää˜iÜ…œ“iÃLiˆ˜}>``i`iÛiÀÞ`>Þ­ Vœ˜œ“ˆÃÌ ÃÕvwVˆi˜ÌvœÀ“iï˜}̅i}œ>œv՘ˆÛiÀÃ>>VViÃÃ̜“œ`- Óä£È®° ern energy services by 2030. Developing countries will also ˜VÀi>Ș}Þ]œ«iÀ>̜ÀȘ̅iœvv‡}Àˆ`“>ÀŽiÌ>Ài`i>- need to use mini-grids and off-grid supply to provide access ing strategically with a set of factors that are opening space ̜̅i“œÀiÀi“œÌi…œÕÃi…œ`Ã]܅œÃi}œL>«œ«Õ>̈œ˜ˆÃ vœÀLÕȘiÃÃp˜œÌ>LÞ]­ˆ®̅ˆ˜Žˆ˜}LÀœ>`iÀ̅>˜i˜iÀ}ÞÆ­ˆˆ® predicted to remain roughly constant during this period. ÃiiŽˆ˜}>“ˆÝœv«ÕLˆV>˜`«ÀˆÛ>Ìiw˜>˜ViÆ­ˆˆˆ®Vœ“Lˆ˜ˆ˜} ˆ˜ˆ‡}Àˆ`Ã>˜`œvv‡}Àˆ`܏Ṏœ˜Ã̜i˜iÀ}ÞÃÕ««Þ>Ài ˆ˜ÛiÃ̓i˜Ì ܈̅ >ÃÈÃÌ>˜ViÆ ­ˆÛ® `i>ˆ˜} ܈̅ >vvœÀ`>LˆˆÌÞ iÝ«iÀˆi˜Vˆ˜} À>«ˆ` v>Ã ˆ˜ VœÃÌ] LiV>ÕÃi œv ÌiV…˜œœ}Þ ˆÃÃÕià ˆ˜ Vœ˜ÌiÝÌÆ ­Û® i˜}>}ˆ˜} ܈̅ Vœ˜ÃՓiÀÃÆ >˜` ­Ûˆ® improvements and scale economies in supplying growing providing after-sales service. markets. Even at the lower hydrocarbon prices of recent The key challenge centers on the need for accessible Þi>ÀÃ]܏>À‡>˜`܈˜`‡L>Ãi`}i˜iÀ>̈œ˜ÃÕ««Þ܏Ṏœ˜Ã w˜>˜Vˆ˜}“œ`iÃp܅ˆV…>ÀiÃÌ>À̈˜}̜Li>՘V…i`ˆ˜̅i are approaching parity with traditional hydrocarbon-based vœÀ“œv˜iÜw˜>˜Vi>˜`ˆ˜ÛiÃ̓i˜ÌVœ“«>˜ˆiÃ̅>ÌvœVÕà generation. The very high on-grid distribution costs associ- œ˜“ˆ˜ˆ‡}Àˆ`Ã>˜`܏>À…œ“iÃÞÃÌi“í--î°/…iÃiwÀ“Ã] ated with connecting remote households in areas of low > iÃÌ>LˆÃ…i` ܈̅ˆ˜ ̅i «>ÃÌ viÜ Þi>ÀÃ] «ÀœÛˆ`i ÃiÛiÀ> population density will mean that few of these households “i>˜Ãœvw˜>˜Vˆ>ÃÕ««œÀÌ]ˆ˜VÕ`ˆ˜}i>ÀÞ‡ÃÌ>}iVœÀ«œÀ>Ìi will be able to afford grid-connection—unless there are ˆ˜ÛiÃ̓i˜Ì]ܜÀŽˆ˜}V>«ˆÌ>]>ÃÃiÌ“>˜>}i“i˜Ì]«œÀÌvœˆœ subsidies available to cover a large fraction of these costs. >}}Ài}>̈œ˜] >˜` ÃiVÕÀˆÌˆâ>̈œ˜° "˜i Ü>Þ ̜ œvvÃiÌ ̅i Even schemes of spreading repayment of such charges investment risk that arises in this sector has been to allo- œÛiÀÃiÛiÀ>Þi>ÀÃ>Ài՘ˆŽiÞ̜Liw˜>˜Vˆ>Þۈ>Li܈̅- V>ÌiŜÀ̇ÌiÀ“«ÕLˆVv՘`ˆ˜}°/…ˆÃ>œÜëÀœiVÌ`iÛi- out subsidies. opers to offset upfront development costs. Recognizing œÜiÛiÀ]iÛi˜܈̅>VœÃÌÃÕ«iÀˆœÀˆÌÞ̜œ˜‡}Àˆ`ÃÕ««Þ] ̅i˜ii`vœÀÃÕV…i>ÀÞ‡ÃÌ>}iÃÕ««œÀÌ]>À>˜}iœvˆ˜ÌiÀ˜>- “ˆ˜ˆ‡}Àˆ`>˜`œvv‡}Àˆ`iiVÌÀˆVˆÌÞ܈ÀiµÕˆÀiÃÌ>ÌiÃÕ««œÀÌ tional development organizations is active in facilitating through a number of channels: (i) a long-term commitment ̅iiÃÌ>LˆÃ…“i˜Ìœv˜iÜ`iˆÛiÀÞ“œ`iÃ°œÜiÛiÀ]ÃÕV… by the government to the goal of reaching universal ÃÕLÈ`ˆiÃ>Ài`ˆvwVՏÌ̜>VViÃÃ>˜`œÌ…iÀvÀ>“iܜÀŽÃ>Ài >VViÃÃÆ ­ˆˆ® ̅i VÀi>̈œ˜ œv ˆ˜Ã̈ÌṎœ˜Ã >˜` Ài}Տ>̈œ˜Ã ̜ Liˆ˜} «Àœ«œÃi` ̅>Ì VœÕ` Li “œÀi ivviV̈Ûi] ˆ˜VÕ`ˆ˜} v>VˆˆÌ>Ìi̅iiÝ«>˜Ãˆœ˜œv˜iÜvœÀ“Ãœvi˜iÀ}ÞÃÕ««ÞÆ>˜` «iÀvœÀ“>˜ViL>Ãi`ÃÕLÈ`ˆiÃ]>˜`ÀˆÃŽ‡>`ÕÃÌi`ÃÕLÈ`ˆià ­ˆˆˆ®܅iÀi˜ii`i`]ܓiw˜>˜Vˆ>ÃÕ««œÀÌiˆÌ…iÀ̜…œÕÃi- for capital and operating expenditures. …œ`ÃÜ̅>Ì̅iÞV>˜>vvœÀ`>VViÃÃ]œÀ̜wÀ“Ã̜Ài`ÕVi ˜ÃՓ]i“iÀ}ˆ˜}>˜`ˆ˜˜œÛ>̈Ûii˜iÀ}ÞÃiÀۈVi`iˆÛiÀÞ the high initial costs of developing a new business model mechanisms are encouraging. Innovations in technologies to deliver energy to previously unserved customers. and business models particularly present unprecedented The bottom line is that substantial progress toward new opportunities for private sector-driven off-grid electri- meeting the 2030 universal access to modern energy ser- wV>̈œ˜°vVœÕ˜ÌÀˆiÃVÀi>Ìi̅i˜iViÃÃ>ÀÞi˜ÛˆÀœ˜“i˜ÌvœÀ vices goal can be expected in the coming years with the ̅i“̜LiÀi«ˆV>Ìi`>˜`ÃV>i`Õ«]̅iÞVœÕ`>VViiÀ- large number of different approaches that are now under ate efforts to achieve universal access to modern energy way to supply off-grid electricity to supplement efforts in services. }Àˆ`iiVÌÀˆVˆÌÞiÝ«>˜Ãˆœ˜° ÕÌ̅ˆÃ܈œ˜ÞœVVÕÀˆvVœÕ˜- tries succeed in creating the enabling environment to de-risk and to attract the much-needed private sector investments. OVERVIE W xxiii REFERENCES >Vœ˜],°]>˜`°œˆ“>°Óä£È°º ˜iÀ}Þ] Vœ˜œ“ˆVÀœÜ̅ …>˜`ŽiÀ]-°]°->“>`],°Ƃˆ>˜` ° >À˜iðÓä£Ó° >˜`*œÛiÀÌÞ,i`ÕV̈œ˜°ƂˆÌiÀ>ÌÕÀi,iۈiÜ°»7œÀ` >˜Ž] º7…œ i˜iwÌÃœÃÌvÀœ“,ÕÀ> iVÌÀˆwV>̈œ˜¶ 7>ň˜}̜˜] ° Evidence from India.” Policy Research Working Paper Èä™x]7œÀ` >˜Ž]7>ň˜}̜˜] ° >`}iÀ] °°iLÀÕ>ÀÞ£{]Óä£{°º7…ÞÜi-…œÕ`Li7œÀÀˆi` About the Rapid Growth in Global Households.” www. Փ>À]-°]>˜`°,>՘ˆÞ>À°Ó䣣°ºÃiiVÌÀˆwV>̈œ˜Üiv>Ài VˆÌޏ>L°Vœ“É…œÕȘ}ÉÓä£{ÉäÓÉܜÀ`Ç̈VŽˆ˜}‡…œÕÃi…œ`‡ improving? Non-experimental evidence from rural Lœ“LÉnÎn™ …ÕÌ>˜°»՘ˆV…]iÀ“>˜Þ\՘ˆV…*iÀܘ>,i* V ƂÀV…ˆÛi°…ÌÌ«Ã\Éɓ«À>°ÕL°Õ˜ˆ‡“Õi˜V…i˜°`iÉ À>`LÕÀÞ]°]° ˆÃ*iÌiÀܘ]>˜`ˆ>˜}՜ˆÕ°Óä£{°ºœ˜} Σ{nÓÉ£É*,ƂÚ«>«iÀÚΣ{nÓ°«`v term dynamics of household size and their environmental implications.” Population and Environment. *…>`Ži]Ƃ°]Ƃ°]>VœLܘ]7°*>ÀŽ]°>],°ii]*°ƂÃ̜˜i] >˜`Ƃ°…>Ài°Óä£x°Powering a Home with Just 25 Watts œ˜Ìii>˜]Ƃ°>˜`°6iÀˆ˜°Óä£Ç°º>Žˆ˜}ˆ˜ˆ‡Àˆ`Ã7œÀŽ\ œv-œ>À*6\-Õ«iÀ‡ vwVˆi˜ÌƂ««ˆ>˜Vià >˜ ˜>Li Productive Uses of Electricity in Tanzania. IIED Working Expanded Energy Access Using Off-Grid Solar Power *>«iÀ° ]œ˜`œ˜° Systems. iÀŽiÞ] Ƃ\>ÜÀi˜Vi iÀŽiÞ >̈œ˜>>L° Vœ˜œ“ˆÃÌ°Óä£È°ºƂvÀˆV>1˜«Õ}}i`°»"V̜LiÀә̅° *iÌiÀÃ]°] °6>˜Vi]>˜`°>ÀÃ`œÀvv°Óä£ä°ºÀˆ` ÝÌi˜Ãˆœ˜ European Union Energy Initiative Partnership Dialogue ˆ˜,ÕÀ> i˜ˆ˜\ˆVÀœ‡>˜Õv>VÌÕÀiÀÃ>˜`̅i iVÌÀˆwV>̈œ˜ Facility (EUEI PDF). 2011. Productive Use of Energy-PRO- Trap.” World DevelopmentΙ\ÇÇ·nΰ 1- °Ƃ>˜Õ>vœÀ iVÌÀˆwV>̈œ˜*À>V̈̈œ˜˜iÀð<° -…œÀÌ]°Óä£x°º/…i,œiœv*Àœ`ÕV̈Ûi1ÃiÃœv iVÌÀˆVˆÌÞˆ˜ Eschborn. ,ÕÀ> iÛiœ«“i˜Ì\Ƃ >Ãi-ÌÕ`Þœv8iœ/À>“>˜`œ> European Union Energy Initiative Partnership Dialogue Õ>“iÌÃœvƂœ>Ƃ˜6ˆ>}i]6ˆi̘>“°˜`i«i˜`i˜Ì >VˆˆÌÞ1 * É, Ó£°Óä£{°ˆ˜ˆ‡Àˆ`*œˆVÞ/œœŽˆÌ -ÌÕ`Þ*ÀœiVÌ­-*® œiV̈œ˜°*>«iÀÓ䙙° …ÌÌ«\ÉÉÜÜÜ°Ài˜Ó£°˜iÌÉ*œÀÌ>ÃÉäÉ`œVՓi˜ÌÃÉ,iÜÕÀViÃÉ /i˜i˜L>Փ] °] °Ài>Vi˜]/°-ˆÞ>“L>>«ˆÌˆÞ>]>˜`° /Ɉ˜ˆ}Àˆ`*œˆVÞ/œœŽˆÌÚ-i«Óä£{Ú °«`v ˜ÕVŽiðÓä£{°ºÀœ“̅i œÌ̜“1«\œÜ-“>*œÜiÀ œÜiÃ]°"°œ}iÀ,œ}˜iÀ] °i˜`ˆÃ]"° Àœ>`°Óä£Ç° *Àœ`ÕViÀÃ>˜`ˆ˜ˆ‡Àˆ`à >˜ iˆÛiÀ iVÌÀˆwV>̈œ˜>˜` Energy Access and Electricity Planning. Special Feature Renewable Energy in Africa.” Directions in Development. Paper Contribution to SEAR. 7œÀ` >˜Ž° ˜ÌiÀ˜>̈œ˜> ˜iÀ}ÞƂ}i˜VÞ­ Ƃ®]Óä£{°ƂvÀˆV> ˜iÀ}Þ 1 Óä£È°-ÕÃÌ>ˆ˜>Li iÛiœ«“i˜Ìœ>Ã°-ÕÃÌ>ˆ˜>Li Outlook: A Focus on Energy Prospects in Sub-Saharan iÛiœ«“i˜Ì˜œÜi`}i*>ÌvœÀ“°…ÌÌ«Ã\ÉÉ Africa. Organisation for Economic Co-operation and ÃÕÃÌ>ˆ˜>Li`iÛiœ«“i˜Ì°Õ˜°œÀ}ÉÃ`}à iÛiœ«“i˜Ì]*>ÀˆÃ° 6>˜ ÕΈÀŽ],°Óä£x° œÕLˆ˜}̅iœL>*>Viœv*Àœ}ÀiÃà ˜ÌiÀ˜>̈œ˜> ˜iÀ}ÞƂ}i˜VÞ>˜`7œÀ` >˜Ž]Óä£Ç° vœÀ ˜iÀ}Þ vwVˆi˜VÞ\Ƃ««Þˆ˜}̅iºœœÀi½Ã>Ü»œv “Sustainable Energy for All 2017-Progress toward ˜iÀ}Þ vwVˆi˜VÞ̜/iV…˜œœ}Þ˜˜œÛ>̈œ˜vœÀ"vv‡}Àˆ` -ÕÃÌ>ˆ˜>Li ˜iÀ}Þ°»7œÀ` >˜Ž]7>ň˜}̜˜ ° Ƃ««ˆV>̈œ˜Ã° iÀŽiÞ] Ƃ\ Ƃ-*° …>˜`ŽiÀ]-°] ° >À˜iÃ]>˜`°->“>`°Óä£Î°º7iv>Ài 6iÀ>]°Óä£È° ˜iÀ}Þ>˜`̅i- 𠜘ÌÀˆLṎœ˜̜̅i “«>VÌÃœv,ÕÀ> iVÌÀˆwV>̈œ˜\Ƃ*>˜i >Ì>Ƃ˜>ÞÈà SEAR. vÀœ“6ˆi̘>“°»Economic Development and Cultural 7œÀ` >˜Ž>˜` Ƃ°Óä£{°-ÕÃÌ>ˆ˜>Li ˜iÀ}ÞvœÀƂ Change È£\Èx™q™Ó° Óä£ÎqÓä£{\œL>/À>VŽˆ˜}À>“iܜÀŽ°7>ň˜}̜˜] \7œÀ` >˜Ž°…ÌÌ«\ÉɅ`°…>˜`i°˜iÌÉ£ä™nÈÉ£ÈxÎÇ x iv S TAT E O F E N E RGY ACCES S R EPO RT | 2017 CHAPTER 1 THE CASE FOR UNIVERSAL ELECTRICITY ACCESS KEY MESSAGES • Universal access to modern energy services is a necessary enabler to achieve the 2030 Agenda for Sustainable Development. It should be dealt with as a matter of urgency to increase the likelihood of achieving the Sustainable Development Goals (SDGs). • Access to electricity is essential to break the vicious circle of poverty and to ensure acceptable basic living standards of populations. It plays a catalytic role in addressing the challenges of job creation, human development, gender equality, security, and shared prosperity. • Without access to affordable and reliable energy services there are limited prospects for the cost-effective delivery of goods and services and therefore few opportunities to develop productive activities needed for the social and economic transformation of rural communities. • Thus, planning for universal access to modern energy services should be an integral part of national planning efforts to achieve the SDGs. • Dealing with the challenge of universal electricity access in a context of increasing awareness of climate change impacts offers an opportunity for countries to explore innovative pathways to develop sustainable and resilient communities. INTRODUCTION W hy is electricity access critical for the achieve- development –particularly health, education, employment, ment of the 2030 Agenda for Sustainable Devel- and women’s empowerment—before concluding with a dis- opment? Certainly, there is a broad consensus cussion of the carbon footprint of achieving universal elec- that access to modern energy services is an essential— tricity access. >Ì…œÕ}… ˜œÌ ÃÕvwVˆi˜Ìp«Ài‡ÀiµÕˆÃˆÌi vœÀ >iۈ>̈˜} «œÛ- /…i V…>«ÌiÀ w˜`à ̅>Ì «>˜˜ˆ˜} vœÀ ՘ˆÛiÀÃ> >VViÃà erty. Without energy, it is challenging, if not impossible, to should be an integral part of national planning efforts to promote economic growth, overcome poverty, expand achieve the SDGs. Moreover, dealing with the challenge of employment opportunities, and support human develop- universal electricity access in a context of increasing aware- ment. Nonetheless it is important to integrate electricity ness of climate change impacts offers an opportunity for >VViÃÃivvœÀÌÃ܈̅ˆ˜œÌ…iÀÃiV̜À‡Ã«iVˆwV«œˆVˆiȘœÀ`iÀ̜ countries to explore innovative pathways to develop sus- leverage the inter-dependence of different types of infra- tainable and resilient communities. structure and maximize impact through synergies. The objective of this chapter is to demonstrate why ENERGY IS NECESSARY TO ACHIEVE energy is important for sustainable development, and how SUSTAINABLE DEVELOPMENT GOALS ensuring universal access to affordable and reliable modern energy services can contribute to reducing poverty, promot- The development community recognizes energy as cata- ing human development, and increasing economic growth. lytic in achieving the 2030 Agenda for sustainable devel- The chapter starts by showing how energy can contribute to opment. Energy is a key factor for sustainable development achieving the Sustainable Development Goals (SDGs). It and poverty alleviation, and it plays a central role in every then discusses how electricity is related to economic growth major challenge and opportunity that the world faces. Sus- and explores the impacts of energy on poverty reduction. tainable energy is now the seventh goal of the 17 Sustain- Next it examines how electricity access can affect human able Development Goals (SDGs) and aims to “ensure 1 2 S TAT E O F E L E C T RI CI TY ACCES S R EPO RT | 2017 BOX 1.1 Sustainable Development Goal 7 Targets • By 2030, ensure universal access to affordable, reliable and modern energy services • By 2030, increase substantially the share of renewable energy in the global energy mix U ÞÓäÎä]`œÕLi̅i}œL>À>Ìiœvˆ“«ÀœÛi“i˜Ìˆ˜i˜iÀ}ÞivwVˆi˜VÞ • By 2030, enhance international cooperation to facilitate access to clean energy research and technology, ˆ˜VÕ`ˆ˜}Ài˜iÜ>Lii˜iÀ}Þ]i˜iÀ}ÞivwVˆi˜VÞ>˜`>`Û>˜Vi`>˜`Vi>˜iÀvœÃȏ‡vÕiÌiV…˜œœ}Þ]>˜`«Àœ“œÌi investment in energy infrastructure and clean energy technology • By 2030, expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all in developing countries, in particular least developed countries, Small Island Developing States, and land-locked developing countries, in accordance with their respective programs of support Source: UN 2016. access to affordable, reliable, sustainable and modern but it remains inconclusive as to the existence and the energy for all”, including 5 targets (Box 1.1). With energy direction of causality. The electricity and economic growth among the SDGs, a series of opportunities are expected to nexus has been studied extensively, but empirical evi- i“iÀ}iˆ˜ÌiÀ“Ãœvw˜>˜Vˆ>ÀiÜÕÀViÃ>ÃÜi>ÃÌiV…˜ˆV> `i˜ViŜÜÃVœ˜yˆV̈˜}ÀiÃՏÌÃÀi}>À`ˆ˜}̅iÀi>̈œ˜Ã…ˆ« assistance, to help countries reach energy-related goals between the two variables, based on four different hypoth- and targets. eses (Box 1.2). Despite the wide range of estimates in the For example, electricity and water resources are inextri- literature, there is no prevailing hypothesis explaining the cably linked. As indicated by the SEAR Special Feature link between energy consumption and GDP growth (ECA Paper on Energy Access and the Water-Energy Nexus 2014; CDC 2016). Moreover, studies typically ignore key ­,œ`Àˆ}Õiâ iÌ > Óä£Ç®] È}˜ˆwV>˜Ì >“œÕ˜Ìà œv Ü>ÌiÀ >Ài variables of the production function (such as labor and needed in almost all energy generation processes, includ- capital or electricity prices), leading to a possible misiden- ing electricity generation and fossil fuel extraction and pro- ̈wV>̈œ˜œv̅iV>ÕÃ>«>ÌÌiÀ˜]>˜`̅ÕÃV>˜˜œÌ«ÀœÛˆ`i> cessing. Conversely, the water sector needs energy to reliable assessment of the link between energy use and extract, treat, and transport water. Energy and water are GDP (Bacon and Kojima 2016). >ÃœLœÌ…ÀiµÕˆÀi`̜«Àœ`ÕViVÀœ«Ã]ˆ˜VÕ`ˆ˜}̅œÃiÕÃi` *œÜiÀ ŜÀÌ>}ià >Ài iÃ̈“>Ìi` ̜ …>Ûi > È}˜ˆwV>˜Ì to generate energy through biofu¬els. Furthermore, Rodri- impact on economic growth and productivity. It is widely guez et al (2017) noted that the energy poor and water accepted that outages adversely impact economic activi- poor are often the same people. But for universal access to ties. Several approaches are being used in the literature to an improved water source to occur, there needs to be inte- estimate the effects of power shortages on the economy, grated energy and water planning. ˆ˜œÀ`iÀ̜iÝ«>ˆ˜̅iLi˜iwÌÃvÀœ“«ÀœiVÌÃ̅>ÌÀi`ÕVi power shortages—such as more generation or transmis- sion capacity, pricing schemes to reduce peak loads, or HOW IS ELECTRICITY RELATED TO œÌ…iÀ ˆ˜ÛiÃ̓i˜Ì Õ«}À>`ià ̅>Ì ˆ“«ÀœÛi ̅i µÕ>ˆÌÞ œv ECONOMIC GROWTH? power supply (Bacon and Kojima 2016). Electricity affects economic output by virtue of being part • In Sub-Saharan Africa, the cumulative time of electrical of the production function, along with labor and capital supply interruptions amounts to about three months of ­-ÌiÀ˜ Ó䣣®° Ì ˆÃ ÀiµÕˆÀi` ̜ LœÌ… «œÜiÀ ˆ˜`ÕÃÌÀˆ> «Àœ- production time lost per year, and as a result, busi- ViÃÃiÃ>˜`̜«Àœ`ÕVi}œœ`Ã]iµÕˆ«“i˜Ì]>˜`ÃiÀۈViȘ nesses loose about 6 percent of their turnover, while the majority of productive sectors within an economy. The about half of them are using generators, bearing higher use of modern forms of energy can (i) underpin the cre- costs (Karekezi et al. 2012). ation and upgrading of value chains; (ii) facilitate the diver- ÈwV>̈œ˜ œv iVœ˜œ“ˆV ÃÌÀÕVÌÕÀià >˜` ˆÛiˆ…œœ`ÃÆ >˜` ­ˆˆˆ® • In Tanzania, the World Bank Enterprise Surveys showed reduce vulnerability to multiple stresses and external that power outages in Tanzania in 2013 cost businesses shocks (EUEI 2011). But although energy is a necessary fac- about 15 percent of annual sales (CDC 2016). ̜À]ˆÌˆÃÀ>ÀiÞÃÕvwVˆi˜Ì]>Ã>VViÃÃ̜w˜>˜Vi]“>ÀŽiÌÃ]À>Ü • At the macroeconomic level, the proportion of GDP “>ÌiÀˆ>Ã] ÌiV…˜œœ}Þ] >˜` > µÕ>ˆwi` ܜÀŽvœÀVi ˆÃ >Ãœ lost to unreliable electricity supply can reach close to 7 necessary for driving economic growth. percent in some countries in sub-Saharan Africa (Foster There is an extensive literature showing a strong cor- and Briceno-Garmendia 2010). relation between electricity consumption and GDP growth, T H E CASE FOR UNIVERSAL ELECT RICIT Y A C C E SS 3 TABLE 1.1 Sustainable Development Goals and key links to energy SUSTAINABLE DEVELOPMENT GOAL HOW ENERGY IS RELATED TO THE SUSTAINABLE DEVELOPMENT GOALS GOAL 1. End poverty in all its forms everywhere Access to energy can increase household income and productivity and reduce disparities in wealth. GOAL 2. End hunger, achieve food security and improved nutrition The availability of energy is a key factor for increasing agricultural and promote sustainable agriculture productivity and ending extreme hunger. GOAL 3. Ensure healthy lives and promote well-being for all at Energy access for healthcare services can enhance maternal health, reduce all ages infant mortality, and help curtail disease and epidemics. GOAL 4. ˜ÃÕÀiˆ˜VÕÈÛi>˜`iµÕˆÌ>LiµÕ>ˆÌÞi`ÕV>̈œ˜>˜` ˜iÀ}ÞˆÃ>ŽiÞv>V̜ÀœvÕ«}À>`ˆ˜}i`ÕV>̈œ˜>v>VˆˆÌˆiÃ>˜`œvv>VˆˆÌ>̈˜} «Àœ“œÌiˆviœ˜}i>À˜ˆ˜}œ««œÀÌ՘ˆÌˆiÃvœÀ> “œ`iÀ˜µÕ>ˆÌÞi`ÕV>̈œ˜° GOAL 5. ƂV…ˆiÛi}i˜`iÀiµÕ>ˆÌÞ>˜`i“«œÜiÀ>ܜ“i˜>˜`}ˆÀÃ  iÌÌiÀ>VViÃÃ̜i˜iÀ}ÞV>˜i>`̜…ˆ}…iÀ}i˜`iÀiµÕ>ˆÌÞ]vÀiiˆ˜}Õ« women’s time (previously wasted in collecting fuelwood for example) and providing income-generating opportunities. GOAL 6. Ensure availability and sustainable management of water In the energy sector, water is used for generating hydropower, cooling and sanitation for all thermal power plants, extracting, processing and transporting energy resources, and growing energy crops. Conversely the water sector needs energy to extract, treat and transport water, as well as for irrigation and desalination. GOAL 7. Ensure Access to affordable, reliable, sustainable and modern energy for all GOAL 8. Promote sustained, inclusive and sustainable economic The provision of energy helps to increase GDP and productivity. Modern growth, full and productive employment and decent work for all energy access empowers people. Goal 9. Build resilient infrastructure, promote inclusive and Energy is needed for developing infrastructure and technological sustainable industrialization and foster innovation innovation, including information and communication technologies (ICT). GOAL 10. ,i`ÕViˆ˜iµÕ>ˆÌÞ܈̅ˆ˜>˜`>“œ˜}VœÕ˜ÌÀˆià  VViÃÃ̜i˜iÀ}ÞˆÃVÀÕVˆ>vœÀÃÕÃÌ>ˆ˜i`ˆ˜Vœ“i}ÀœÜ̅œv̅iLœÌ̜“{ä Ƃ per cent. GOAL 11. Make cities and human settlements inclusive, safe, Energy facilitates all urban systems, including transport and is needed resilient and sustainable. for improving living standards in urban slums. GOAL 12. Ensure sustainable consumption and production Sustainable energy consumption & production is a key factor in sustainable «>ÌÌiÀ˜Ã­- *®  œ˜ÃՓ«Ìˆœ˜>˜`«Àœ`ÕV̈œ˜«>ÌÌiÀ˜Ãˆ˜VÕ`ˆ˜}>``ÀiÃȘ}ˆ˜ivwVˆi˜Ì V fossil-fuel subsidies and removing market distortions. GOAL 13. Take urgent action to combat climate change and its Emissions from the energy sector are the leading contributor to impacts anthropogenic climate change. Access to renewable energy and energy ivwVˆi˜VÞ>ÀiŽiÞ̜“ˆÌˆ}>̈œ˜° GOAL 14. Conserve and sustainably use the oceans, seas and Tidal energy and ocean wind power are important renewable energy marine resources for sustainable development technologies but may impact marine ecosystems. GOAL 15. Protect, restore and promote sustainable use of terrestrial The environmental impacts of energy encompass deforestation, mineral iVœÃÞÃÌi“Ã]ÃÕÃÌ>ˆ˜>LÞ“>˜>}ivœÀiÃÌÃ]Vœ“L>Ì`iÃiÀ̈wV>̈œ˜] iÝÌÀ>V̈œ˜>˜`V…>˜}iȘ>˜`ÕÃi]>˜`̅ˆÃV>˜i>`̜`iÃiÀ̈wV>̈œ˜>˜` and halt and reverse land degradation and halt biodiversity loss land degradation. Sustainable use of energy resources is key to sustainable terrestrial ecosystems. GOAL 16. *Àœ“œÌi«i>VivՏ>˜`ˆ˜VÕÈÛiÜVˆïiÃvœÀÃÕÃÌ>ˆ˜>Li ƂVViÃÃ̜vœÃȏvÕiÀiÜÕÀViÃ…>Ã…ˆÃ̜ÀˆV>ÞLii˜>V>ÕÃivœÀVœ˜yˆVÌ>˜` development, provide access to justice for all and build effective, global price volatility that leads to international instability among and accountable and inclusive institutions at all levels within countries. GOAL 17. Strengthen the means of implementation and revitalize Strengthening the means of implementation involves transfer of energy the Global Partnership for Sustainable Development technologies and capacity building for implementing SDG targets and indicators nationally. 4 S TAT E O F E L E C T RI CI TY ACCES S R EPO RT | 2017 BOX 1.2 Energy Consumption and Economic Growth Hypotheses GROWTH HYPOTHESIS: There is a unidirectional causal link from energy consumption to economic growth. An increase in energy consumption will have a positive impact on economic growth, while limited access to modern energy can limit economic growth. CONSERVATION HYPOTHESIS: There is a unidirectional causal link from economic growth to energy consumption. Economic growth will lead to increased energy consumption, while energy conservation policies (such as i˜iÀ}ÞivwVˆi˜VÞ>˜``i“>˜`“>˜>}i“i˜Ì®܈˜œÌ>`ÛiÀÃiÞˆ“«>VÌ *}ÀœÜ̅° FEEDBACK HYPOTHESIS: There are bidirectional causal links between energy consumption and economic growth. Changes in energy consumption will have an effect on economic growth whilst changes in economic growth will impact the demand for energy. NEUTRALITY HYPOTHESIS: There is no causal link between energy consumption and economic growth. An increase or decrease in energy use will not affect economic growth and vice-versa. Source: CDC 2016. Studies investigating the effects of increased energy RELIABLE AND AFFORDABLE ENERGY infrastructure on GDP, show that the size of the power SERVICES CAN CONTRIBUTE TO sector determines the growth and level of GDP, while POVERTY REDUCTION ˆ˜VÀi>ÃiȘ̅iµÕ>˜ÌˆÌÞ>˜`µÕ>ˆÌÞœvˆ˜vÀ>ÃÌÀÕVÌÕÀiÜiÀi Lack of access to modern energy services is correlated to >ÃÜVˆ>Ìi`܈̅>Ài`ÕV̈œ˜ˆ˜ˆ˜iµÕ>ˆÌÞ°/…iÀiˆÃ>}i˜- higher levels of poverty. Countries with the highest levels eral consensus that infrastructure is a key contributor to of poverty also tend to have lower access to modern economic growth . Calderón and Servén (2010) analyzed energy services. This is most pronounced in Sub-Saharan the effects of infrastructure (including power, telecommu- Africa and South Asia, where a large share of the popula- nications and roads) on GDP growth, and on income tion depends on traditional biomass for cooking and heat- ˆ˜iµÕ>ˆÌÞ°,iÃՏÌÃŜÜi`̅>Ì>˜˜Õ>ܜÀ`}ÀœÜ̅ÀœÃi ing and lacks access to electricity (Figure 1.1 ). by 1.6 percentage points due to infrastructure increase— There is a two-way causal relationship between the lack of which 1.1 percentage points were due to the accumu- of access to modern energy services and poverty, also lation of infrastructure stocks and 0.5 percentage points called the vicious cycle of energy poverty. People who lack ̜ ̅i ˆ˜VÀi>Ãi ˆ˜ µÕ>ˆÌÞ° /…i >À}iÃÌ Vœ˜ÌÀˆLṎœ˜ Ü>à access to reliable and affordable modern energy services made by South Asia. On the other hand, Sub-Saharan are often trapped in a re-enforcing cycle of deprivation Africa experienced an increase of 0.7 percentage points, and lower income. Economic productivity (particularly in of which 1.2 percentage points were due to increasing the agricultural sector), opportunities for income genera- µÕ>˜ÌˆÌÞ] ܅ˆi v>ˆ˜} µÕ>ˆÌÞ Ü>à Ài뜘ÈLi vœÀ > ä°x tion, and the ability to raise living standards are strongly percentage points reduction. The increase in infrastruc- affected by the lack of modern energy. Malnourishment ture development globally was related to a decline of 3 and low earnings contribute to the poor remaining poor, «iÀVi˜Ì>}i«œˆ˜ÌȘ̅iˆ˜ˆVœivwVˆi˜Ì]œv܅ˆV…Ó«iÀ- and perpetuating the lack of access to modern energy Vi˜Ì>}i «œˆ˜Ìà ÜiÀi `Õi ̜ µÕ>˜ÌˆÌÞ >˜` £ «iÀVi˜Ì>}i ­>ÀiŽiâˆiÌ>°Óä£Ó®°˜>``ˆÌˆœ˜]̅i«œœÀÕÃiÈ}˜ˆwV>˜Ì «œˆ˜ÌÜ>Ã`Õi̜µÕ>ˆÌÞ° amounts of their limited income on expensive and The existence of complementarities between different unhealthy energy forms that provide weak or unsafe ser- types of infrastructure leads to higher level of economic vices. Plus, low-income households spend a much larger output. Infrastructure should be examined as a whole in share of their income to cover basic energy needs than order to capture the existence of complementarities. For higher income groups (Hussain 2011; Masud 2007). Plus, iÝ>“«i]̅iLi˜iwÌÃÀiÃՏ̈˜}vÀœ“iiVÌÀˆVˆÌÞ>VViÃȘ> the poor pay on average higher unit prices for energy ser- hospital would be greatly increased if such access is cou- vices (such as lighting, phone charging, heating, and cook- pled with availability of paved roads allowing patients to ˆ˜}®]>Ã̅iÞœvÌi˜ÕÃi«œœÀÞivwVˆi˜ÌvÕiÃ­ˆŽiŽiÀœÃi˜i reach the hospital, availability of clean water and telecom- for lighting) or expensive electricity (like battery-based munication. Because of such complementarities, the link electricity or diesel generators), due to non-availability of between provision of reliable infrastructure and economic grid-based energy sources (like electricity and natural gas) output can be more easily demonstrated (Bacon and or unaffordable connection cost and related appliances. Kojima 2016). Finally, poor households tend to pay higher prices due to «œœÀÞivwVˆi˜Ì>««ˆ>˜ViÃ]œÀ«œœÀÞˆ˜ÃՏ>Ìi`…œÕÃiÃvœÀ heating services. T H E CASE FOR UNIVERSAL ELECT RICIT Y A C C E SS 5 FIGURE 1.1 Africa and South Asia are the hardest hit Panel a: Access to electricity and poverty levels (Countries with access <99%) 100 Colombia Paraguay Vietnam Dominican Republic Ecuador Indonesia El Salvador Panama Peru 90 Bolivia Jamaica Mongolia Philippines Sri Lanka Honduras 80 % of population with electricity access in 2012 Bhutan 70 Lao PDR 60 Ghana 50 40 Haiti 30 Cambodia Guinea 20 Uganda Congo, Dem. Rep. 10 0 100 90 80 70 60 50 40 30 20 10 0 % of population living in poverty in 2012 Panel b: Access to non-solid cooking fuels1 and poverty levels (Countries with access < 50%) 100 Malaysia Venezuela Costa Rica Brazil Azerbaijan 90 Armenia Croatia Moldova % of population with access to non-solid cooling fuels in 2012 Panama Jamaica Colombia 80 Romania El Salvador Bolivia Thailand Kyrgyz Republic 70 Peru (with access below 50%) Bhutan 60 Paraguay Indonesia Honduras Georgia 50 Vietnam Philippines 40 Mongolia 30 Sri Lanka 20 Ghana Haiti Cambodia 10 Congo, Dem. Rep. Guinea Lao PDR Uganda 0 70 60 50 40 30 20 10 0 % of population living in poverty in 2012 1 Only primary cooking fuel is considered. Source: GTF 2015; World Development Indicators—Poverty headcount ratio at national poverty lines (% of population): 6 S TAT E O F E L E C T RI CI TY ACCES S R EPO RT | 2017 Fortunately, this vicious cycle can be reversed once the Employment opportunities can be enhanced poor are able to switch to reliable and affordable modern Similar to the relationship between energy consumption energy services. Access to modern energy services con- and economic growth, studies show a strong correlation tributes to creating employment, increasing trade, and between energy consumption and employment—nota- supporting value-adding activities—facilitating the accu- bly through higher household employment following mulation of “surpluses” or savings that will enhance nutri- iiVÌÀˆwV>̈œ˜° œÜiÛiÀ] ÀiÃՏÌà `ˆvviÀ `i«i˜`ˆ˜} œ˜ tion and health, improve housing conditions, and facilitate gender. The majority of the studies show that household access to education, thus contributing to overcoming pov- employment increases only for women. In Nicaragua, erty (Karekezi et al. 2012). women are 23 percent more likely to work while there is -iÛiÀ>ÃÌÕ`ˆiÃiÃ̈“>̈˜}̅iLi˜iwÌÃœviiVÌÀˆwV>̈œ˜ no change for men (Grogan and Sadanad 2013). Similar œ˜…œÕÃi…œ`ÃœÀÓ>LÕȘiÃÃiÃÃÕ}}iÃÌ̅>ÌiiVÌÀˆwV>- results can be found in rural Kwazulu-Natal in South tion results in an increase in household income, but the Africa (Dinkelman, 2011) and India (Khandker et al. magnitude varies considerably from country to country. 2012), although one study found the reverse situation for Access to modern energy services results in a wide range India (Van de Walle et al. 2013). Therefore, further analy- œvLi˜iwÌÃvœÀ…œÕÃi…œ`Ã>˜`Ó>LÕȘiÃÃií…>˜`ŽiÀ sis is needed to understand the different results (Bacon et al. 2013). Several studies have estimated the effects of and Kojima 2016). iiVÌÀˆwV>̈œ˜ œ˜ …œÕÃi…œ` ˆ˜Vœ“ipœÀ iÝ«i˜`ˆÌÕÀi° ˜ Five theoretical effects can link increased employment Bhutan, one study reported that farm income was unaf- and energy consumption: fected while non-farm income increased by 63 percent • Demographic effect: A rising population will have a (Kumar and Rauniyar, 2011) In India, a study found that greater demand for energy, while a greater number of non-farm income rose by 28 percent (Khandker et al. workers entering the work force may result in a higher 2012), while in Vietnam, a study showed an increase of 23 iÛiœvi˜iÀ}ÞÀiµÕˆÀi`° percent in total income (Khandker et al. 2013). Consump- ̈œ˜ iÛiÃ >Ãœ ˆ˜VÀi>Ãi` È}˜ˆwV>˜ÌÞ ˆ˜ ܓi ÃÌÕ`ˆið • Income effect: A growing economy that drives higher Interestingly, unconnected households in villages where levels of employment, leads to increased incomes, there is access to grid electricity exhibited higher con- which results in growing demand for goods and ser- sumption, although to a much smaller extent (1 percent) vices and thus to higher demand for energy. (van de Walle et al. 2013). • Price effect: External price shocks that affect energy œÜiÛiÀ]ÀiVi˜ÌÃÌÕ`ˆiÃŜÜ̅>Ì̅iLi˜iwÌÃœviiV- sources (such as coal and oil) can have an impact on ÌÀˆwV>̈œ˜V>˜LiœÛiÀiÃ̈“>Ìi`ˆv̅ii˜`œ}i˜iˆÌÞœv̅i iVœ˜œ“ˆV}ÀœÜ̅>˜`ÃÕLÃiµÕi˜ÌÞ]œ˜i“«œÞ“i˜Ì° iiVÌÀˆwV>̈œ˜ÃÌ>ÌÕÃœv>…œÕÃi…œ`ˆÃˆ}˜œÀi`°/…iiiVÌÀˆ- wV>̈œ˜ÃÌ>ÌÕÃœv>…œÕÃi…œ`“>ÞLii˜`œ}i˜œÕÃp̅>Ì • Substitution effect: Constraints in energy availability ˆÃ]iiVÌÀˆwV>̈œ˜`œi؜̜˜Þ>vviV̈˜Vœ“iLṎ˜Vœ“i can lead to substitution through increased labor and can also determine whether or not a household is electri- vice-versa. wi`°ˆ}…iÀ‡ˆ˜Vœ“i…œÕÃi…œ`Ã>Ài“œÀi܈ˆ˜}̜}iÌ> • Technological effect: The replacement of old energy connection as soon as the grid arrives (particularly if the technologies with new ones can enhance employment, connection fees are not fully subsidized), but also utilities the extent of which depends on a country’s level of prefer to provide electricity to higher-income communi- development (CDC 2016). ties. These effects lead to an overestimation of the effects œviiVÌÀˆwV>̈œ˜œ˜ˆ˜Vœ“i]>Ã`i“œ˜ÃÌÀ>Ìi`LÞ>ÌiÀ˜>- Energy infrastructure projects are associated with job cre- tive estimation methods (such as instrumental variable (IV) ation through different channels, including direct, indirect, estimation, propensity score matching (PSM), and panel and induced effects, as well as supply effects. Energy infra- data analysis allowing for heterogeneity between house- structure investments create jobs through different chan- holds) (Bacon and Kojima 2016). nels. On one hand, jobs associated with construction, operation, and maintenance of infrastructure assets are created either directly by the developer or indirectly within HUMAN DEVELOPMENT CAN the supply chain or distribution network that are created as SIGNIFICANTLY BENEFIT FROM a result of the infrastructure asset (for example, a power ELECTRICITY SERVICES plant). Moreover, induced jobs can also emerge through In terms of human development, there seems to be a pos- additional rounds of effects (such as spending of workers), itive correlation between well-being and access to modern resulting in additional employment in other sectors that energy services. Access to modern energy services con- serve household consumption, thus creating a multiplier tributes to human well-being, poverty reduction, and eco- for further demand. On the other hand, second-order or nomic growth. Countries with the highest levels of poverty growth related jobs can be created throughout the econ- and unemployment also tend to be those with the lowest omy as energy constraints to economic growth are access to modern energy. There also seems to be a cor- removed (IFC 2013). In the case of rural Lao PDR, grid elec- relation between the level of human well-being (approxi- ÌÀˆwV>̈œ˜LœœÃÌi`…œÕÃi…œ`«iÀV>«ˆÌ>ˆ˜Vœ“iÃ]…œÕÃi- mated by the Human Development Index [HDI]) and hold durable assets, and employment of household access to energy services (shown by the level of energy use members (see Box 1.3). per capita) (Figure 1.2). T H E CASE FOR UNIVERSAL ELECT RICIT Y A C C E SS 7 BOX 1.3 )TKF'NGEVTKƂECVKQP$GPGƂVUKP4WTCN.CQ2&4 Lao PDR experienced a rapid growth in electricity generation and connectivity over the last three decades. Electric power generation increased from 33MW to 2,000MW between 1975 and 2010, and household grid connectivity grew from 16 percent in 1995 to 46 percent in 2004 and to 77 percent in 2015. However, the transmission network …>ØœÌLii˜vՏÞ`iÛiœ«i`̜«ÀœÛˆ`i«œÜiÀ̜>VÕÃ̜“iÀØ>̈œ˜Üˆ`i°ƂÃÃÕV…]ˆ˜ÛiÃ̓i˜ÌÃ>ÀiÀiµÕˆÀi`̜ strengthen the network. Two of the major donors that are assisting in the energy sector development are the Asian Development Bank (ADB) and the World Bank. The First Power Sector Policy of Lao PDR was formed in 1990 with multiple objectives that included making tariff affordable and promoting economic and social welfare. The Ministry of Energy and Mines has also been deploying its Power to the Poor (P2P) program to bring electricity to the poor, with a gender focus. Data for this study came from a household survey (September 2015-January 2016) by the World Bank’s Energy Sector Management Program (ESMAP) in 15 provinces, covering the country’s three rural geographic regions. Overall, 3,500 households (1,500 with grid and 2,000 without) were sampled from 200 villages (100 with grid electricity and 100 without). And there was a village survey in each of the survey communities on village infrastructure, development activities, and price alternate fuels. Key Findings KEROSENE CONSUMPTION: Kerosene consumption for lighting decreases by 0.33 liter per month as a result of grid connectivity. ECONOMIC OUTCOMES AND EMPLOYMENT: Àˆ`iiVÌÀˆwV>̈œ˜À>ˆÃiÃ…œÕÃi…œ`«iÀV>«ˆÌ>ˆ˜Vœ“iLÞÕ«̜În percent and per capita expenditure by up to 7 percent. Household durable assets grow by 180 percent because of grid connection. And employment of household members experiences a substantial growth due to grid elec- ÌÀˆwV>̈œ˜pÕ«̜xΫiÀVi˜ÌvœÀ“i˜>˜`ÎÇ«iÀVi˜ÌvœÀܜ“i˜° EXPOSURE TO ELECTRONIC MEDIA: Àˆ` iiVÌÀˆwV>̈œ˜ ˆ˜VÀi>Ãià ˆÃÌi˜ˆ˜} ̜ À>`ˆœ LÞ …œÕÃi…œ` “i“LiÀà LÞ >LœÕÌ£Ó“ˆ˜ÕÌiëiÀ`>Þ]>˜`Ü>ÌV…ˆ˜}œv/6LÞ>“œÃÌÓ…œÕÀëiÀ`>Þ°Àˆ`iiVÌÀˆwV>̈œ˜>Ãœˆ˜VÀi>ÃiÃ̅i use of mobile phone for conducting income-generating activities—by 9.7 percentage points. WOMEN’S TIME USE: Grid access increases women’s time spent in income generating activities by 43 minutes a day. Women in grid households also spend more time in entertainment and leisure than their counterpart women in non-grid households. EDUCATION: Grid connectivity increases study time in the evening by 30 minutes for boys and 19 minutes for }ˆÀÃ°À>`iVœ“«ïœ˜LÞ…œÕÃi…œ`“i“LiÀÃ>Ãœˆ“«ÀœÛiÃ>Ã>ÀiÃՏÌœv}Àˆ`iiVÌÀˆwV>̈œ˜°œÀiÝ>“«i] completion of secondary schooling increases by 3.6 percentage points for men and 3.4 percentage points for ܜ“i˜LiV>ÕÃiœv}Àˆ`iiVÌÀˆwV>̈œ˜° In sum, about 25 percent of households in rural Lao PDR do not have a grid connection. So, expanding the grid ̜˜œ˜‡}Àˆ`…œÕÃi…œ`Ó>ÞëÀi>`̅iLi˜iwÌÃ]՘iÃÃ}iœ}À>«…ˆVVœ˜`ˆÌˆœ˜Ã>Ài«Àœ…ˆLˆÌˆÛi°Àˆ`Vœ˜˜iV̈œ˜ has its own problems—namely, outages and blackouts—although these can be resolved by increasing genera- ̈œ˜V>«>VˆÌÞ]vœÀ܅ˆV…`œ˜œÀ>ÃÈÃÌ>˜Vi“>ÞLiÀiµÕˆÀi`° Source: SEAR Impact Evaluation Forthcoming. /WNVKRNGJGCNVJDGPGƂVUECPDGCEJKGXGF solid fuel use accounted for 3.5 million deaths and 111 In terms of health, air pollution is considered the greatest million disability-adjusted life years (DALYs) in 2010 (Lim i˜iÀ}އÀi>Ìi`…i>Ì…ÀˆÃŽ° ˆÀÌÞvÕiÃ>˜`ˆ˜ivwVˆi˜ÌÌiV…- et al. 2012), and that the resulting outdoor air pollution nologies generate air pollution. Outdoor (ambient) and caused an estimated 370,000 deaths and 9.9 million indoor (household) air pollution are responsible for about DALYs (Chafe et al. 2014). 7 million premature deaths annually, making air pollution Fortunately, modern energy services can greatly one of the largest single causes of premature mortality reduce the burden of diseases associated with indoor air and morbidity worldwide. Women and children bear the pollution, burns, and poisonings. Sustainable use of clean heaviest burden, due to their high exposure (WHO 2014). cooking solutions would reduce the long-term exposure Studies that examined the global burden of disease ̜…i>Ì…‡`>“>}ˆ˜}«œÕÌ>˜ÌÃVÀi>Ìi`LÞœ«i˜wÀiÃ>˜` caused by air pollution from household solid fuel use for traditional solid fuel cookstoves. These exposure reduc- cooking and heating, found that indoor air pollution from tions would decrease the burden from cardiovascular dis- 8 S TAT E O F E L E C T RI CI TY ACCES S R EPO RT | 2017 ease (ischaemic heart disease) and respiratory disease ism in many developing countries (Gaye 2007). By provid- (such as childhood pneumonia, chronic obstructive pul- ˆ˜} µÕ>ˆÌÞ ˆ}…̈˜} vœÀ Vœ“vœÀÌ>Li ˜ˆ}…̇̈“i ÃÌÕ`ވ˜}] monary disease, or lung cancer), as well as stroke. The access to electricity allow children to study longer in the risk for burns, scalds, and poisonings would also be iÛi˜ˆ˜} ­>«>Žœ Óä£ä®] ܅ˆV… V>˜ …>Ûi > È}˜ˆwV>˜Ì reduced. Increasing access to modern heating services impact on learning outcomes, while reducing risks to chil- and replacing polluting and dangerous kerosene lamps dren’s eyesight (WHO 2011). with electric lighting would yield similar results (IEA and Access to modern energy services in schools can World Bank 2015). improve learning and teaching experiences. Energy can ˜iÀ}Þ>ÃœœvviÀÓՏ̈«i…i>Ì…Li˜iwÌÃLÞi˜ÃÕÀˆ˜} contribute to improving basic amenities in schools (such as Vi>˜ Ü>ÌiÀ «ÀœÛˆÃˆœ˜ >˜` ˆ“«ÀœÛˆ˜} vœœ` µÕ>ˆÌÞ >˜` access to clean water, sanitation, lighting, space heating, nutrition. It can contribute to controlling waterborne dis- and cooling), thus creating a more child and teacher eases (such as diarrhea) through the provision of energy for friendly environment, which helps increase school atten- Ü>ÌiÀ«Õ“«ˆ˜}]>˜`Ü>ÌiÀÌÀi>̓i˜Ì>˜`«ÕÀˆwV>̈œ˜°Ƃ˜` dance and reduce dropout rates (Bacolod and Tobias ˆÌV>˜ˆ“«ÀœÛivœœ`µÕ>ˆÌÞ>˜`˜ÕÌÀˆÌˆœ˜̅ÀœÕ}…VœœŽˆ˜} 2006). Lighting allows schools to run in the evening to and refrigeration (IEA and World Bank 2015). (See SEAR’s accommodate more and better-sized classes, and facili- Special Feature Paper on Modern Energy Access and tates lesson preparation and administrative task for teach- Health on these linkages; Porcaro et al. 2017). iÀð-ÌÕ`i˜ÌÃ܈̅œÕÌ>`iµÕ>Ìiˆ}…̈˜}>Ì…œ“i“>Þ>Ãœ Further, reliable energy access in health facilities can stay at school to complete homework. Electricity facilitates È}˜ˆwV>˜ÌÞi˜…>˜Vi…i>Ì…V>Ài«ÀœÛˆÃˆœ˜\ access to information and communication technologies (ICTs), improving learning experience through audiovisual • Without energy, many life-saving interventions cannot Ìi>V…ˆ˜}>ˆ`Ã>˜`iµÕˆ«“i˜Ì­ÃÕV…>ëÀœiV̜ÀÃ]Vœ“«ÕÌ- be undertaken, and essential medical devices and iÀÃ]>˜`ÃVˆi˜ViiµÕˆ«“i˜Ì®°-ÌÕ`i˜ÌÃV>˜i>À˜Vœ“«ÕÌiÀ appliances for prevention, diagnosis, and treatment skills and teachers have more timely access to the latest cannot be powered. information. Distance learning and staff training become • Energy can provide lighting, power medical devices, possible, while administrative tasks are facilitated. Results and enable refrigeration for blood and vaccines. from the SEAR Impact Evaluation in Laos PDR show that }Àˆ` iiVÌÀˆwV>̈œ˜ ˆ˜VÀi>Ãi` ÃÌÕ`Þ ̈“i ˆ˜ ̅i iÛi˜ˆ˜} • Electricity access seems to have a notable impact on increases by up to 30 minutes for boys and 19 minutes for some key health service indicators, such as prolonging girls as shown by Box 1.3 (SEAR Impact Evaluation, Forth- nighttime service provision, attracting and retaining Vœ“ˆ˜}®° iVÌÀˆwV>̈œ˜Li˜iwÌÃvœÀi`ÕV>̈œ˜>œÕÌVœ“ià skilled health workers (especially in rural areas), and are also evident from the solar home system program in providing faster emergency response, including for ÀÕÀ> œˆÛˆ>°œÜiÛiÀ]Vœ“«>Ài`}Àˆ`Li˜iwÌÃ]--Li˜i- childbirth deliveries. Every day, some 800 women die wÌÃÃii“Ó>iÀq-->`œ«Ìˆœ˜ˆ˜ÀÕÀ> œˆÛˆ>ˆ˜VÀi>Ãià worldwide from preventable causes related to preg- evening study time by up 8 minutes for boys and 6 minutes nancy and childbirth (SE4All, 2013). for girls. Moreover, the increase in study hours does not • Access to electricity in health facilities can increase the Ãii“ ̜ Li i˜œÕ}… ̜ ˆ˜yÕi˜Vi œÌ…iÀ ˆ˜ÌiÀ“i`ˆ>Ìi‡ ̜ number of successful childbirth deliveries, especially at long-term educational outcomes (SEAR Impact Evaluation, night. Forthcoming). ƂVViÃÃ̜iiVÌÀˆVˆÌÞV>˜>Ãœˆ˜VÀi>ÃiÀiÌi˜Ìˆœ˜œvµÕ>- • Electricity access also enables mobile-health applica- ˆwi` Ìi>V…iÀà ˆ˜ ÀÕÀ> >Ài>ð ,ÕÀ> iiVÌÀˆwV>̈œ˜] «>À̈VÕ- tions and facilitates public health education and infor- larly grid extensions to rural schools and teachers’ mation. residences, tends to have a positive impact on the reten- • Thermal energy is also critical for space and water heat- tion of teachers who are much sought in rural areas. Teach- ˆ˜}] ÃÌiÀˆˆâˆ˜} “i`ˆV> iµÕˆ«“i˜Ì] >˜` ˆ˜Vˆ˜iÀ>̈˜} ers are more willing to relocate to rural schools when living medical waste safely (WHO and World Bank 2015). standards are higher as a result of improved access to elec- tricity (AllAfrica 2004; Cabraal et al. 2005; World Bank Education and learning can be improved 2008; Harsdorff and Peters 2010). Access to modern energy services in the household can ՓiÀœÕà ÃÌÕ`ˆià …>Ûi Ŝܘ ̅>Ì iiVÌÀˆwV>̈œ˜ translate into increased time for education of rural children. increases time spent in schooling and on homework. In Rural children, especially girls, are often responsible for Bhutan, access to electricity resulted in an increase in the contributing to household chores, including collection of time spent in schooling by 0.54 year and in the time cooking fuels. One study found a strong association spent on homework by 10 minutes per day (Kumar and between the time children spends on resource collection ,>՘ˆÞ>ÀÓ䣣®°˜˜`ˆ>]̅iÀiÜiÀiÈ}˜ˆwV>˜Ìˆ˜VÀi>Ãià and a reduced likelihood of school attendance, especially in enrollment (6 percent for boys and 7 percent for girls), among girls (Nanhuni and Findes, 2003). Access to mod- study time at home (1.4 hours/week for boys and 1.6 ern energy solutions for cooking can reduce fuel collection hours/week for girls), and years of education completed ̈“iÃÈ}˜ˆwV>˜ÌÞ]>˜`V>˜ÌÀ>˜Ã>Ìiˆ˜Ìœˆ˜VÀi>Ãi`̈“ivœÀ (0.3 years for boys and 0.5 years for girls) (Khandker et al. education, encouraging school attendance and reducing Óä£Ó®°˜6ˆi̘>“]̅iÀiÜiÀiÈ}˜ˆwV>˜Ìˆ˜VÀi>ÃiȘ̅i dropout rates (Mapako 2010; UNEP 2008). Also, studies completion rates for education for boys and girls (Khand- report that acute respiratory infections (ARIs), often caused ker et al. (2013)). There is variation among countries as to by indoor air pollution, are the principal cause of absentee- the magnitude of these effects and there is no direct evi- T H E CASE FOR UNIVERSAL ELECT RICIT Y A C C E SS 9 dence within these studies on how increased education ̅i …œ“i “œÀi ̅>˜ “i˜ >Ài] ̅iÞ >Ài ̜ Li˜iwÌ “œÀi leads to increased income (Bacon and Kojima 2016). from electricity. Availability of electricity in the household Anecdotal evidence also supports positive correlation enables women to use labor saving appliances. This may between electricity access and academic success, show- well have an impact on women’s time allocation as they ing higher completion rates and lower absenteeism in give up time-consuming drudgery and are engaged into ˜i܏ÞiiVÌÀˆwi`ÃV…œœÃˆ˜-Õ`>˜]/>˜â>˜ˆ>]i˜Þ>>˜` more productive and satisfying activities. According to the Philippines (Goodwin 2013; Kirubi et al. 2009; Valerio - Ƃ,“«>VÌ Û>Õ>̈œ˜w˜`ˆ˜}íÃii œÝ£°Î®]ܜ“i˜ˆ˜ 2014). grid connected households in rural Lao PDR spend more time in income generating activities than their counterparts Women’s empowerment can be enhanced ˆ˜ ˜œ˜‡}Àˆ` …œÕÃi…œ`ð œÀi ëiVˆwV>Þ] }Àˆ` >VViÃà In terms of women’s empowerment, access to affordable increases women’s time spent in income generating activi- modern energy services can reduce both time and effort ties by 43 minutes a day. Grid access also increases their spent in reproductive and productive labor. Women are time spent in entertainment and leisure. SHS adoption also particularly time poor, and the associated drudgery of affects same outcomes in rural Bolivia. For example, ̅iˆÀ Ì>Îà ­«>À̈VՏ>ÀÞ VœiV̈˜} wÀiܜœ`] viÌV…ˆ˜} because of SHS, women spend up to 62 minutes more Ü>ÌiÀ] >˜` «ÀœViÃȘ} vœœ`® ˆÃ “>ˆ˜Þ vՏwi` ̅ÀœÕ}… daily in income generating activities. They also spend their own physical labor, which has implications for their more time in satisfying activities such as entertainment health and the well-being of their children and families. (SEAR Impact Evaluation, Forthcoming). Studies have shown that women, as well as girls, can have longer working days than men, particularly in rural areas, and carry (usually on their heads) more weight WHAT IS THE CARBON FOOTPRINT OF than men (Bardasi and Wodon 2006; Charmes 2006). UNIVERSAL ELECTRICITY ACCESS? Women may suffer skeletal damage from carrying heavy As for the environment, the link between energy and cli- loads, such as fuelwood and water (Waris and Antahal mate change is two-fold, and future impacts are challeng- 2014; WHO 2004.; Geere et al. 2010), and may also be ing to estimate. The energy system is a major contributor exposed to sexual and other forms of violence (Kasirye to climate change as it generates greenhouse gas (GHG) et. al 2009; MSF 2005). emissions through energy production and use, while cli- The good news is that empirical evidence suggests that mate change can disrupt the world’s energy system—as street lighting may reduce the risk of gender-based vio- extreme weather events, sea level rise, water availability lence, although social norms and values can take time to changes, and temperatures increase affect supply and adjust after new technologies are brought in (Doleac & demand of energy. It is particularly challenging to estimate ->˜`iÀÃ] Óä£Ó®° Þ ˆ˜VÀi>Ș} ivwVˆi˜VÞ >˜` «Àœ`ÕV̈ۈÌÞ] future impacts of the energy sector on climate change, as better access improves well-being and frees up time for multiple factors are coming into play. leisure and rest. Time spent on fetching water can be The future impact of universal access on GHG emis- sharply reduced through piped water supply, often made sions will depend on the projected level of energy con- possible through fuel-based water pumps. The use of sumption and the expected energy mix of each country. modern cooking solutions can decrease time spent in col- Energy demand is mainly determined by population lecting fuelwood, while reducing indoor air pollution. }ÀœÜ̅] iVœ˜œ“ˆV `iÛiœ«“i˜Ì] >˜` i˜iÀ}Þ ivwVˆi˜VÞ° Access to electric labor-saving appliances, such as food Different tools and methods of a varying degree of com- processors or washing machines, further improves wom- plexity are used to estimate future energy demand (Bazil- i˜½Ã µÕ>ˆÌÞ œv ˆvi] >˜` “>Þ VÀi>Ìi ˆ˜Vœ“i‡}i˜iÀ>̈˜} ian et al. 2012), making it challenging to compare results. opportunities (IEA and World Bank 2015). Nonetheless, as countries make progress toward achiev- Dissemination of off-grid access solutions can be an ing universal electricity access, the affected populations opportunity for both men and women, expanding eco- are expected to gradually come out of poverty—driving nomic activities for women, diversifying productive higher energy consumption not only in households but options, and creating new sources of wealth and income. also in the industrial and commercial sector. Future CO2 Besides being energy consumers, women can be import- emissions will also depend on the energy mix of each ant energy providers, expanding electricity access to poor country. The future energy supply system will be affected and hard-to-reach customers, individually and through by regulatory and policy efforts aimed at decarbonizing their networks. A growing number of energy enterprises ̅i iVœ˜œ“Þ] ܈̅ Ài˜iÜ>Li i˜iÀ}Þ >˜` i˜iÀ}Þ ivw- have begun to employ women as sales representatives to ciency playing a key role. In 2015, the IEA estimated that reach low-income consumers at the base of the pyramid the world’s primary energy demand will increase by 45 with lighting and cooking solutions. Women help ensure percent to 2040 in the Current Policies Scenario, versus a ̅>Ìi˜iÀ}Þ«Àœ`ÕVÌÃÀiyiVÌ̅i«ÀˆœÀˆÌˆiÃœvܜ“i˜ÕÃiÀÃ] 32 percent increase in the New Policies Scenario and 12 increasing the likelihood of adoption and continued use percent in the 450 Scenario—in which 46 percent of pri- (Box 1.4) (CRT/N 2014; Hamakawa & et al. 2014; Johnson mary energy demand is met through low-carbon energy 2015; Smith 2015). SEAR’s Special Feature on Energy sources (IEA 2015c). Access and Gender: Getting the Balance Right provides a Several studies estimate that achieving universal elec- detailed discussion on energy access and women empow- tricity access by 2030 would only result in a negligible erment (Dutta et al. 2017). Access to modern energy is increase of CO2 emissions, as they project that energy very important to women. Since women are physically in demand of the affected population will remain low. 10 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 BOX 1.4 Solar Sisters and Solar Grannies—Women in the Solar Energy Sector In Africa, Solar Sister, a women-led social enterprise founded in have brought transforming clean energy access to over 700,000 2010, empowers women by recruiting, training and supporting people, and the model is further scaling up. them with a clean energy business opportunity. Solar Sister’s last In India, the Barefoot College in Rajasthan provides training to mile distribution network taps into the potential of women’s older women, most of whom are illiterate, to become solar engi- enterprise to eradicate energy poverty in some of the hardest to neers. This focus is a strategic choice, because these women are reach, energy poorest communities. Solar Sister is creating a embedded in their communities, and play a key role in household chain of local, female clean-energy entrepreneurs that sell and chores, including energy use. They also are less likely to leave deliver world-class solar and clean cookstoves solutions directly their village to work in the city—which would leave the commu- to their rural community’s doorsteps. In 2016, an independent nity without someone to maintain solar panels and lamps—as assessment by International Center for Research on Women occurs with the majority of young men. This social justice approach (ICRW) found multi-level impacts that extend to Solar Sister entre- offers the opportunity to older women, one of the most vulnera- preneurs, their families and communities. Entrepreneurs decrease LiÜVˆ>}ÀœÕ«Ã]̜À>ˆÃi̅iˆÀÜVˆ>ÃÌ>ÌÕÃ>˜`ˆ˜yÕi˜Vi̅iˆÀ their expenditures on kerosene, mobile charging and fuelwood community, thus defying the perceptions of their obsolescence. for cooking, saving on average $200 per year in reduced energy Following a six-month course at Barefoot College, Solar Grannies costs. Income from clean energy businesses allows women to understand how resistors and electrical devises function and can Vœ˜ÌÀˆLÕÌi ̜ …œÕÃi…œ` i>À˜ˆ˜}Ã] }>ˆ˜ Vœ˜w`i˜Vi] w˜>˜Vˆ> handle controllers and advanced converters. Solar Grannies are independence, respect from their families and play a larger role in able to build solar lanterns, install solar panels and link them to decision-making power. Over 2,700 Solar Sister entrepreneurs batteries, and carry out repairs. Solar Sister Business Model: A Complete Value-Chain Innovation. Source: Solar Sister 2016 • In 2010, the IEA estimated that to achieve universal • Pachauri et al. (2012) estimate that the climate impacts access to modern energy services by 2030, global elec- of achieving universal energy access are negligible or tricity generation would be 2.9 percent higher com- might even be negative, even in the case where access pared to the New Policies Scenario (NPS), while oil is provided entirely from fossil fuel sources. This would demand would rise less than 1 percent. As a result, occur because transitioning to modern energy ser- CO2 emissions would be 0.8 higher compared to the ۈVià ܈ `ˆÃ«>Vi >À}i µÕ>˜ÌˆÌˆià œv ÌÀ>`ˆÌˆœ˜> Lˆœ- NPS—or around 2 percent of 2010 OECD emissions mass use for cooking and kerosene for lighting, thus (IEA 2010). Although the energy mix used in these pro- ˆ“«ÀœÛˆ˜}i˜iÀ}ÞivwVˆi˜VÞœÛiÀ>° œ˜i̅iiÃÃ]̅i jections is the one of the 450 scenario, these results are study assumes 420kWh of yearly electricity consump- also based on IEA’s assumptions about minimum levels tion per household. of electricity consumption of 250kWh/year for rural households and 500kWh/year for urban households. T H E CASE FOR UNIVERSAL ELECT RICIT Y A C C E SS 11 • The World Development Report (WDR) 2010 states resulting from energy production and use (as emphasized that “increasing access to electricity services and by the agreement reached in the 21st Conference of the clean cooking fuels in many low- income developing Parties of the UNFCCC in Paris in December 2015). countries, particularly in South Asia and Sub- Saharan The challenge is to provide reliable and affordable Africa, would add less than 2 percent to global CO2 energy services for economic development without com- emissions” by 2050 (World Bank 2010). Such esti- promising the climate. Low carbon energy options can mates are based on 170kWh of yearly electricity con- improve energy security by reducing price volatility or sumption per capita. exposure to energy supply disruptions. Such options can >ÃœLi̅ii>Ã̇VœÃÌ܏Ṏœ˜vœÀÀÕÀ>iiVÌÀˆwV>̈œ˜ˆ˜ViÀ- • Chakravarty and Tavoni (2013) show that a global tain areas. However fossil fuels, coal in particular, can pro- energy poverty reduction policy aimed at providing vide a low-cost and secure energy source in many cases 10GJ of energy per capita per year to the global poor (World Bank 2010). would increase energy demand by 7 percent by 2030, It is crucial to include externalities into decision-making and the impacts on climate change will be very small, process of power system planning. Decision-making pro- even with a carbon-intensive energy infrastructure. cesses that focus primarily on expanding energy access Nonetheless, the assumption is that yearly total energy but disregarding externalities run the risk of facing higher consumption per capita would correspond to 750 kWh costs in the future—especially in the case of large, long- >˜` £xä Ž} œv œˆ] ˆÃ Vœ˜Ãˆ`iÀi` ÃÕvwVˆi˜Ì ̜ i˜ÃÕÀi ˆÛi`] >˜` …ˆ}…‡i“ˆÃȜ˜ V>«ˆÌ> Ã̜VŽ ­ÃÕV… >à Vœ>‡wÀi` productive uses of energy. power plants) (Bazilian et al. 2011). Externalities may be However, as people come out of poverty, they will tend both positive (such as contribution of secure energy sup- to consume higher levels of energy, closer to those of plies to welfare and economic development) and negative the developed world. As households come out of pov- (such as CO2 emissions and other adverse environmental erty and enter the middle class, they are likely to pur- ˆ“«>VÌî°/…iVœÃÌÃ>˜`Li˜iwÌÃœv̅iÃiiÝÌiÀ˜>ˆÌˆiÓ>Þ V…>ÃivœÀ̅iwÀÃÌ̈“ii˜iÀ}އVœ˜ÃՓˆ˜}>ÃÃiÌÃ]ÃÕV…>à outweigh the direct costs of building and operating spe- vehicles and household appliances (Wolfram et al. 2012). VˆwV i˜iÀ}Þ ÌiV…˜œœ}ˆiÃ] LÕÌ >Ài ÛiÀÞ `ˆvwVՏÌ ̜ Û>Õi° Energy is needed to manufacture and use these new Power system planning should use advanced analytical assets, driving energy demand in the industrial and com- tools to evaluate externalities and show the trade-offs mercial sectors as well. Per-capita energy use differs dra- among risks to better inform the decision-making process. matically across countries with different income levels. In (For more, see SEAR’s Special Feature Paper on The Cli- 2010, the average residential yearly consumption of mate Change and Energy Access Nexus; Akbar et al. electricity per capita was 2,652 kWh in high-income 2017). countries, 378 kWh in middle-income countries, and 179 kWh in low-income countries (World Bank 2013). Assum- ing that the 1.1 billion people that lack electricity access CONCLUSION in 2012, will consume low levels of electricity by 2030, This chapter has shown that energy is catalytic for achiev- implies that they will remain impoverished (Bazilian and ing the SDGs. It has also shown that ensuring universal Pielke 2013). access to affordable and reliable modern energy services Energy demand forecasts are critical for future plan- can contribute to increasing economic growth, reducing ning. Models estimating future energy demand in devel- poverty, and improving well-being—while promoting oping countries should consider the process by which human development, supporting health, education, poor consumers move into the middle-class, to be able to employment, and women’s empowerment. For those rea- µÕ>˜ÌˆvÞ ̅i ˆ“«ˆV>̈œ˜Ã œv «œÛiÀÌÞ Ài`ÕV̈œ˜ œ˜ vÕÌÕÀi sons, it is essential that the international community take energy consumption and related CO2 emissions (Wolfram ÃÌi«ÃÕÀ}i˜ÌÞ̜“>ŽiÃÕV…>VViÃÃ…>««i˜>õՈVŽÞ>à et al. 2012). Energy forecasts should not understate the possible throughout the world. degree to which the distribution of economic growth How can this be done? It is critical that planning for affects energy demand, as they may undermine the universal access be an integral part of national planning achievement of the SDGs. Energy demand forecasts are efforts to achieve the SDGs. And as much as possible, critical for future planning. In fact, ,underestimating future electricity access interventions should be innovative and energy demand is likely to result in a misinterpretation of `iÈ}˜i`ˆ˜>Ü>Þ̅>Ì̅iÞÀiyiVÌ̅iˆÀiÛi˜ÌÕ>V>Ì>Þ̈V the scale of the challenge (Bazilian et al. 2012) and lead to nature within context. Moreover, dealing with the chal- ˆ˜>`iµÕ>Ìi«œˆVˆiÃ>˜`ÌiV…˜œœ}ˆií >∏ˆ>˜>˜`*ˆiŽi lenge of universal electricity access in a context of increas- 2013; Wolfram et al. 2012). ing awareness of climate change impacts offers an A joint solution is needed to resolve the energy access opportunity for countries to explore innovative pathways and climate change issues. On one hand, there is an imme- to develop sustainable and resilient communities `ˆ>Ìi ÀiµÕˆÀi“i˜Ì ̜ «ÀœÛˆ`i Àiˆ>Li >˜` >vvœÀ`>Li energy to a large population without access, and facilitate economic expansion of emerging economies. 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Geneva, Switzerland: WHO. power-idINDEE87C0AC20120813. T H E CASE FOR UNIVERSAL ELECT RICIT Y A C C E SS 15 ____. 2011. Indoor Air Pollution: Multiple Links between Facilities in Resource-Constrained Settings. A review of Household Energy and the Millennium Development 5VCVWU5KIPKƂECPEG%JCNNGPIGUCPF/GCUWTGOGPV. Goals. Geneva, Switzerland: WHO. Geneva, Switzerland: WHO. ____. 2014. Fact sheet No. 292: Household air pollution and WWAP (World Water Assessment Program). 2012. The health. Geneva, Switzerland: WHO United Nations World Water Development Report 4: Managing Water under Uncertainty and Risk. Paris: WHO (World Health Organization) and World Bank. 2014. UNESCO. Access to Modern Energy Services for Health 16 S TAT E O F E N E RGY ACCES S R EPO RT | 2017 CHAPTER 2 THE STATUS OF ELECTRICITY ACCESS KEY MESSAGES • Globally, 1.06 billion people have no electricity—with India and Nigeria having the greatest numbers of people without access to electricity. Lack of electricity access is predominant in rural areas of Sub-Saharan Africa and -œÕ̅čÈ>]܈̅ÓäVœÕ˜ÌÀˆiÃ>VVœÕ˜Ìˆ˜}vœÀnä«iÀVi˜Ìœv̅i}œL>>VViÃÃ`iwVˆÌˆ˜Óä£{° • Latin America and the Caribbean, East Asia, and South Asia will be able to reach universal access to electricity by 2030—assuming conditions of constant growth in electricity, constant growth in population, and no major V…>˜}iȘ«œˆÌˆV>܈ˆ˜}˜iÃÃœÀLiÌÌiÀ>VViÃÃ̜w˜>˜Vˆ>ˆ˜ÛiÃ̓i˜Ìð U œÜiÛiÀ]̅iÀiܜՏ`Ã̈LiÃiÛiÀ>VœÕ˜ÌÀˆiÃp“>ˆ˜Þˆ˜-ÕL‡->…>À>˜čvÀˆV>p܈̅>È}˜ˆwV>˜Ì«iÀVi˜Ì>}i of their population without access to modern energy services by 2030 if urgent measures are not taken to reverse course. • New methodologies to measure electricity access are needed to better spell out exactly where countries stand on the level of energy services to help guide policies and interventions. INTRODUCTION W hat is the status of electricity access? In 2011, the global progress toward the three SE4All objectives (IEA international community launched the Sustain- and World Bank 2017). It then explores how four countries able Energy for All (SE4ALL) initiative, which calls (Morocco, Bangladesh, India, and China) have managed to for (i) universal access to modern energy services; (ii) double secure huge increases in access between 2000 and 2014. ̅i}œL>À>Ìiœvˆ“«ÀœÛi“i˜Ìˆ˜i˜iÀ}ÞivwVˆi˜VÞÆ>˜`­ˆˆˆ® Ƃ˜`ˆÌw˜ˆÃ…iÃ܈̅>`iÃVÀˆ«Ìˆœ˜œvivvœÀÌÃ̜ˆ“«ÀœÛi…œÜ double the share of renewable energy in the global energy. electricity access is measured—focusing on the Multi-Tier 9iÌ`iëˆÌiÈ}˜ˆwV>˜Ì«Àœ}ÀiÃȘÀiVi˜Ì`iV>`iÃ]>V…ˆiÛ- Framework (MTF), which was developed under the ing universal access to modern energy services by 2030 will umbrella of SE4ALL (World Bank 2017)—which would help not be possible without stepped-up efforts. policymakers and other stakeholders track their efforts. In 2014, two out of ten people in the world still lacked electricity access (IEA and World Bank 2017). Although the SNAPSHOT OF ACCESS TO ELECTRICITY }œL> iiVÌÀˆVˆÌÞ >VViÃà `iwVˆÌ …>à `iVˆ˜i` ȘVi Óäää] IN 2014 still 15 percent of the world population do not have elec- tricity. Moreover, these numbers may misrepresent the Global Access to Electricity: As of 2014, 1.06 billion peo- ÃV>iœv̅iV…>i˜}i]>Ã̅iÞÀiyiVÌ>ȓ«ˆÃ̈V`iw˜ˆÌˆœ˜ ple still lived without access to electricity—about three œviiVÌÀˆVˆÌÞ>VViÃÃ̅>Ì…ˆ`iÃÃiÛiÀ>ˆÃÃÕiÃpµÕ>ˆÌÞ]Àiˆ- times the population of the United States (Figure 2.1). The ability, affordability, and duration. iiVÌÀˆwV>̈œ˜ À>Ìi ÃÌ>˜`à }œL>Þ >Ì nx «iÀVi˜Ì] ܈̅ ™È This chapter tries to shed more light on where the percent in urban areas and 73 percent in rural areas (IEA global community stands now on universal access to elec- and World Bank 2017). tricity (measured in a binary way—that is, having, or not having, an electricity connection) and what remains to be Regional breakdown on access to electricity in 2014: On done to reach the SDG7.1 target: “By 2030, ensure univer- >Ài}ˆœ˜>L>ÈÃ]̅iiiVÌÀˆVˆÌÞ>VViÃÃ`iwVˆÌˆÃœÛiÀ܅i“- sal access to affordable, reliable and modern energy ser- ingly concentrated in Sub-Saharan Africa (57 percent of vices.” It begins with a snapshot of the status and trends of }œL>>VViÃÃ`iwVˆÌpÈ䙓ˆˆœ˜«iœ«ipÈÝœÕÌœvÌi˜p electricity access, as presented in the Global Tracking do not have access to electricity) and South Asia (32 per- À>“iܜÀŽ ­/®] ܅ˆV… ˆ`i˜Ìˆwià ˆ˜`ˆV>̜Àà vœÀ ÌÀ>VŽˆ˜} cent—343 million people do not have access to electricity) 17 18 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 2.1 Africa and South Asia have the BEYOND THE NUMBERS NCTIGUVGNGEVTKEKV[CEEGUUFGƂEKVU Between 2000 and 2014, Morocco and Bangladesh were among the fastest growers in terms of improving the electri- Electricity Access Deficit 2014 wV>̈œ˜>VViÃÃÀ>Ìi­ˆ}ÕÀiÓ°x®]>˜`˜`ˆ>>˜` …ˆ˜>ÜiÀi Others 3% East Asia & >“œ˜}̅iVœÕ˜ÌÀˆiÃ܈̅̅i…ˆ}…iÃ̘ՓLiÀœviiVÌÀˆwi` Pacific 7% people per year. Their stories show a variety of approaches (bottom-up versus top-down) and mixes of technologies (on and off-grid). /QTQEEQ7VKNKV[NGF4WTCN'NGEVTKƂECVKQP2TQITCO South In 1990, 49 percent of Morocco’s population had access to Asia 32% electricity, but by 2014, that rate was up to 100 percent— the highest increase in the electricity access rate during that Sub-Saharan period for any country in the world. As a result, 20 million Africa 57% «iœ«iœLÌ>ˆ˜i`>VViÃÃ]̅>˜ŽÃ̜>ṎˆÌއi`ÀÕÀ>iiVÌÀˆw- cation program. The big push began in 1996, when the government Source: Data from IEA and World Bank 2017. >՘V…i`̅iœL>,ÕÀ> iVÌÀˆwV>̈œ˜*Àœ}À>“­Ž˜œÜ˜ >à * ,®] ܈̅ ̅i ˜>̈œ˜> ṎˆÌÞ ­"vwVi >̈œ˜> i l’Electricité [ONE]) responsible for implementation. The program was aimed at providing electricity access to all rural households, using least-cost technologies. The ONE ­ˆ}ÕÀiÓ°£®° iVÌÀˆwV>̈œ˜À>ÌiÛ>ÀˆiÃ܈`iÞ>VÀœÃÃÀi}ˆœ˜Ã\ «Ài«>Ài`>,ÕÀ> iVÌÀˆwV>̈œ˜>ÃÌiÀ*>˜̜`iÌiÀ“ˆ˜i 37.6 percent in Sub-Saharan Africa, 80 percent in South ̅i ̜Ì> ˆ˜ÛiÃ̓i˜Ì ÀiµÕˆÀi` ̜ Ài>V… Î{]äää ۈ>}ið Asia, and near-universal access in all the other regions. Data was collected to establish a database of demo- graphic, social, economic, and administrative details for 6QR  CEEGUU FGƂEKV EQWPVTKGU At the country level, each village, and get a geographical picture of the existing India alone has a little less than one-third of the global electricity supply networks (George 2002). Although most `iwVˆÌ­ÓÇ䓈ˆœ˜®]vœœÜi`LÞ ˆ}iÀˆ>­Çx“ˆˆœ˜®]>˜` villages were connected to the central grid, decentralized Ethiopia (71 million) (Figure 2.2)—and the 20 highest iiVÌÀˆwV>̈œ˜ ÃÞÃÌi“à ÜiÀi >Ãœ ˆ˜ÃÌ>i` ̜ …i« “iiÌ >VViÃÇ`iwVˆÌVœÕ˜ÌÀˆiÃ>œ˜i>VVœÕ˜ÌvœÀnä«iÀVi˜Ìœv local demand at least cost (IsDB 2013). Funding came from ̅i }œL> `iwVˆÌ° /…i >VViÃà `iwVˆÌ ˆÃ œÛiÀ܅i“ˆ˜}Þ local communities (20 percent of the connection cost), rural, at about 87 percent. Li˜iwVˆ>ÀÞ…œÕÃi…œ`í>LœÕÌÓx«iÀVi˜Ì®]>˜`̅i"  ­>LœÕÌ xx «iÀVi˜Ì®p>˜` œV> Vœ““Õ˜ˆÌˆià >˜` Li˜iw- Trends in Access to Electricity Vˆ>ÀÞ…œÕÃi…œ`ÃÜiÀi>œÜi`̜«>ÞœvvV…>À}iÃœÛiÀwÛi Global Trends: Between 2000 and 2014, there were to seven years. Pre-paid meters were also provided to help >`Û>˜ViȘiiVÌÀˆwV>̈œ˜]܈̅̅i}œL>iiVÌÀˆVˆÌÞ`iwVˆÌ consumers monitor consumption and facilitate payment declining from 1.3 billion to 1.06 billion. At the same time, (IsDB 2013; George 2002). ̅i}œL>iiVÌÀˆwV>̈œ˜À>ÌiÀœÃivÀœ“ÇÇ°Ç«iÀVi˜Ì̜nx°x Three main principles contributed to the rapid rural percent—covering additional 1.4 billion people (Figure 2.3), iiVÌÀˆwV>̈œ˜ˆ˜œÀœVVœ\­ˆ®>Vi>ÀۈȜ˜>˜`>Vœ˜Ìˆ˜Õˆ˜} mostly in urban areas. political commitment to follow the plan; (ii) an institutional *Àœ}ÀiÃÃ܈̅ÀÕÀ>iiVÌÀˆwV>̈œ˜ˆÃiۈ`i˜ÌȘViÓäää] framework leveraging the strength of the utility and includ- rising from 63 to 73 percent of the rural population in 2014 ˆ˜} ˜>̈œ˜> >˜` ˆ˜ÌiÀ˜>̈œ˜> >V̜ÀÃÆ >˜` ­ˆˆˆ® > w˜>˜Vˆ˜} adding access to 4oo million people in rural areas. Urban model that included all stakeholders, including interna- areas across the world are already close to universal access ̈œ˜> w˜>˜Vˆ> ˆ˜Ã̈ÌṎœ˜Ã ­ Þ}>>À` >˜` >vÀ>>… Óä£È®° at 97 percent. Although urban access rates have increased ƂÃœˆ“«œÀÌ>˜ÌÜ>Ã̅i…ˆ}…iÛiœvÕÀL>˜iiVÌÀˆwV>̈œ˜ relatively little in the last 25 years, this remains a major that allowed cross-subsidization from urban consumers achievement considering the rapid urbanization that has and Morocco’s high GDP (compared to Sub-Saharan Africa brought an additional 1.6 billion people into the world’s countries). cities during this period (see Box 2.1). Major challenges are in both rural and urban areas. Bangladesh Solar Home System Program Between 2000 and 2014, Bangladesh increased the level Regional Trends: Among the regions, improvement in of electrical access from 32 percent of the population to 62 access to electricity in the period 2000–14 has been remark- percent—an additional 57 million people (IEA and World able in South Asia (rising from 57.2 to 80 percent), South >˜Ž Óä£Ç®p`ÀˆÛi˜ LÞ > ˜>̈œ˜> œvv‡}Àˆ` iiVÌÀˆwV>̈œ˜ Asia (from 57.2 to 80 percent), and Middle East and North «Àœ}À>“ ̅>Ì «ÀœÛˆ`i` ÌiV…˜ˆV> >˜` w˜>˜Vˆ˜} ܏Ṏœ˜Ã Africa (from 90.9 to 97 percent). Trends in population lack- vœÀ ÕÃiÀà ­->`iµÕi iÌ >° Óä£{®° ,ÕÀ> iiVÌÀˆwV>̈œ˜ Ü>à ing access to electricity is negative for Sub-Saharan Africa, initially led by cooperatives that managed commercial where 609 million people still do not have access to elec- œ«iÀ>̈œ˜œv}Àˆ`‡L>Ãi`iiVÌÀˆVˆÌÞÃÕ««Þ]w˜>˜Vi`LÞ̅i tricity services. (Figure 2.4) T H E STAT US OF ENERGY A C C E SS 19 FIGURE 2.2 +PFKCJCUVJGYQTNFoUNCTIGUVGPGTI[FGƂEKVU FIGURE 2.3: 'NGEVTKƂECVKQPTKUKPIGURGEKCNN[KP 6QREQWPVTKGUHQTCEEGUUFGƂEKVKPGNGEVTKEKV[  urban areas (Trend in population with access for total, urban and rural Access deficit, 2014 population 2000–2014) India Nigeria 7,000 Ethiopia Congo, Dem. Rep. 6,000 Bangladesh Tanzania Uganda 5,000 Kenya Myanmar 4,000 Sudan Mozambique 3,000 Madagascar Korea, Dem. People’s Rep. Angola 2,000 Niger Malawi 1,000 Burkina Faso Chad Mali 0 South Sudan 2000 2002 2004 2006 2008 2010 2012 2014 0 50 100 150 200 250 300 Total Urban Rural Source: IEA and World Bank 2017 Note: /…iÃiVœÕ˜ÌÀˆiÃ>VVœÕ˜ÌvœÀ“œÀi̅>˜n£«iÀVi˜Ìœv̅i}œL>>VViÃÃ`iwVˆÌ° FIGURE 2.4: Sub-Saharan Africa unable to keep up with population growth for electricity access (Trends in population lacking access to electricity, 2000-2014) Population (million) 700 600 500 400 300 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 East Asia & Pacific Latin America & Caribbean South Asia Sub-Saharan Africa Source: Data from IEA and World Bank 2017 20 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 BOX 2.1 Access Challenges in Urban Slums UN-Habitat estimates that the number of people living in the slums and appliances dropped in prices, electricity companies found that of the world’s developing regions stands at 863 million and is ̅iÞÜiÀi՘>Li̜>vvœÀ`̅iˆÀ}œÛiÀ˜“i˜Ì½ÃLi˜iwVi˜Vi>Ì̅i expected to increase to 2 billion by 2030 (UN Habitat, 2014). In expense of paying customers. Low-cost efforts to regularize slums Sub-Saharan Africa, about 60 percent of the total urban population and stem the mounting losses began with mixed results. Fixed lives in slums, and in Asia, about 30 percent, with most of the pro- price services failed when the regularized customers failed to pay. jected increase going to come from Sub Saharan Africa. At the œ>`ˆ“ˆÌiÀÃÜiÀiLÞ«>ÃÃi`°œ˜Ì…ÞLˆˆ˜}Ü>Ã`ˆvwVՏÌ̜VœiVÌ country level, India and Nigeria alone are expected to add 404 and failed as well. million and 212 million people, respectively, to their urban popula- By the turn of the century, urbanization was on a roll, and tions, between 2014 and 2050. Even the Democratic Republic of non-technical losses to electricity companies had mounted some- Congo, Ethiopia, Tanzania, Bangladesh, Indonesia, and Pakistan times as high as 30 percent of served electricity (of which informal are projected to increase their urban population by more than 50 communities often contributed a major portion). Simultaneously, million each. governments were reforming their electricity sectors, often privatiz- In some countries, such as Brazil, Pakistan, and Kenya, there are ing them, and creating regulatory bodies to manage the electricity already more children growing up in slums than non-slums. UN sector in order to reduce the costs that governments had formerly Habitat State of the Cities Report 2012/2013 shows a graphic of borne and passed on to taxpayers. Performance contracts (or par- the proportion of persons in cities without electricity. On a global tial privatization which brought some business rigor to otherwise level it is around 10 percent or by simple math 200 million persons. >VŽ>`>ˆÃˆV> “>˜>}i“i˜Ì® ÜiÀi ˆ˜Ã̈ÌÕÌi` ̜ ëÕÀ ivwVˆi˜Ì «À>V- In Africa, the proportion without electricity in cities is more than 70 tices, and limits were placed on the return that companies could percent. The backstory is that many of expect from billed customers. these light their homes with unsafe, FIGURE B.2.1 Infrastructure coverage by region By 2004, a number of companies had stolen electricity, or worse, with can- Percentage of urban population with electricity managed through pilots and trial-and-er- dles and kerosene. ror to start turning around the losses. Rec- 100 Ƃà iiVÌÀˆwV>̈œ˜ iÝ«>˜`i` >VÀœÃà ognizing that informal communities and developing countries in the 20th cen- 90 residents were far more marginal than ÌÕÀÞ]ÏՓiiVÌÀˆwV>̈œ˜Li}>˜>Ã>Ü>Þ 80 areas where development had been to provide electricity in informal urban 70 controlled, they adjusted their service and peri-urban areas to make them approach to the realities of such areas. 60 Ã>viÀ­vÀœ“wÀiî]…i>Ì…ˆiÀ>˜`“œÀiˆÛ- Also in 2004, USAID began documenting able. Often service was provided free 50 these successes in Brazil (COELBA, or at very low prices (below cost) as 40 LIGHT), India (Ahmedabad Electricity social support. Few could afford more 30 Company), South Africa (PN Energy), and than a than a lightbulb at that time. the Philippines (MERALCO). In 2005, 20 But as slums grew rapidly and more USAID and the World Bank co-sponsored structures were connected (sometimes 10 > ÏՓ iiVÌÀˆwV>̈œ˜ ܜÀŽÃ…œ« ˆ˜ À>∏] by on-selling and/or illegal connection) 0 inviting these successful companies and Africa Asia LAC Developing World countries FIGURE 2.5 Morocco and Bangladesh are among the fastest ,ÕÀ> iVÌÀˆwV>̈œ˜ œ>À`° ÕÌ LÞ ̅i i>ÀÞ ÓäääÃ] ̅i growers in access to electricity «>Vi œv iiVÌÀˆwV>̈œ˜ Ü>à ˜œÌ v>ÃÌ i˜œÕ}… ­`iëˆÌi (Incremental percentage point in access to electricity, 2000-2014) 400,000–500,000 connections per year), costs were in- VÀi>Ș}] >˜` ˆ˜ÃÕvwVˆi˜Ì }i˜iÀ>̈œ˜ ÀiÃՏÌi` ˆ˜ vÀiµÕi˜Ì 蘘Õ>}ÀœÜ̅À>Ìi£™™äqÓä£{­¯® power outages. Micronesia, Fed. Sts. 1.8 ˜ÓääÎ]ˆ˜>˜ivvœÀÌ̜w˜`>“œÀiVœÃ̇ivviV̈Ûi܏Õ- Morocco 1.9 tion for remote households—one that complemented grid Cape Verde 2.0 extensions—Bangladesh’s solar home system (SHS) pro- Botswana 2.1 gram was initiated, providing electricity to 3 million rural Kiribati 2.1 households by 2013 (Figure 2.6). At the same time, 1.3 Congo, Rep. 2.1 million households received grid electricity through coop- Ghana 2.3 eratives. The SHS program opted for the ownership 2.3 >««Àœ>V…]iÛiÀ>}ˆ˜}̅iÃÌÀœ˜}«ÀiÃi˜Viœv“ˆVÀœw˜>˜Vi Bangladesh institutions (MFIs), which were mostly NGOs, in rural areas. Comoros 2.3 The MFIs were responsible for all aspects of the SHS busi- Lao PDR 2.7 ˜iÃà ­ÌiV…˜ˆV>] Vœ““iÀVˆ>] >˜` w˜>˜Vˆ>® >˜` i` «>Þ- Source: Data from IEA and World Bank 2017 T H E STAT US OF ENERGY A C C E SS 21 governments, interested electricity companies, and NGOs to share • Making payment more convenient and affordable (prepayment, their experiences. The response was so good that a second confer- electronic payment, social tariffs, on-the-spot bill collection, etc.). ence was held in 2007, vastly widening the number and geographic • Investing in a community’s basic needs (such as street and secu- VœÛiÀ>}iœv̅iV>ÃiÃ܅iÀiiÃܘÏi>À˜i`vÀœ“ÏՓiiVÌÀˆwV>- rity lighting, and electrifying essential facilities like shared tion were applied. latrines). 1  >LˆÌ>Ì] ̅i 7œÀ` >˜Ž½Ã ƂvÀˆV>˜ iVÌÀˆwV>̈œ˜ ˜ˆÌˆ>̈Ûi and Energy Sector Management Assistance Program began pro- • Investing in the communities’ futures (such as pairing up with moting and disseminating these lessons. South-south exchanges water, sewer, roads, and housing improvement efforts). brought experts to work with utilities to understand how to design • A technological approach that makes theft harder and reduces >˜`ˆ“«i“i˜ÌÃÕVViÃÃvՏÏՓiiVÌÀˆwV>̈œ˜«Àœ}À>“ð >ÃiÃÌÕ`- risks from electrocution. ies on India’s TPDDL, LIGHT (Brazil), EPM (Colombia), AES (Brazil), and Kenya Power (KP) were produced. The World Bank’s GPOBA’s The results are in all cases highly encouraging, with millions con- support was instrumental in getting KP to launch its program, but nected legally while losses dropped dramatically and revenues lackluster results were turned around only after exchanges with increased commensurately. Productive uses tended to increase India, Brazil, EPM, ESKOM, and LIGHT helped KP confront the over time with improving economic conditions, and customers are extreme problems it had encountered in its cartel-controlled slums better able to afford electricity, while company and government in Nairobi. images improved. With these lessons, it is now possible to lay out a process with Maintaining the good results of initial pilots when the numbers elements that can help an electricity company turn around its losses of regularizations reaches hundreds of thousands is an ongoing in informal urban areas and to keep them under control going for- challenge. Continuing support from the other service providers and ward. Essential elements include: government brings informal areas up to basic needs and helps electricity companies do their job in an improved environment that • Strong top management buy-in and support. creates a receptive community and empowered new “citizens” • A program management “ownership” approach that puts while reducing the lure of illegal service providers and activities. responsibility on regional managers for success in their region’s As those with stolen electricity are converted to legal connections, slums and responsibility for materials and labor support to cover electricity use goes down to users’ “affordable” level, and electric- an area comprehensively to avoid falling back into a theft ˆÌÞˆÃÕÃi`“œÀiivwVˆi˜ÌÞ°/…ˆÃˆ˜ÌÕÀ˜vÀiiÃÕ«iiVÌÀˆVˆÌÞvœÀœÌ…iÀð mode,. In cases studied, such as that of India’s Tata Power Delhi Distribu- tion Limited, the savings are on the order of 40 to 50 percent of the • Effective communication with, and engagement of ,the commu- electricity formerly used. The investment in regularization of elec- nities—in part by locating personnel in the communities, using tricity use in slums thus brings multiple advantages to society, other community leaders to communicate within their entourage, and electricity users, and those living in slums. employing youth for surveys and when infrastructure works are being implemented. Source: ESMAP Urban Poor Program ment collection, maintenance provision, and customer preferred to keep their solar system, given the electricity training. The government-owned implementing agency, grid’s unreliability. Initial subsidies were phased out as IDCOL, provided training in technology, supplier-selec- rural household income increased, and unit cost was ̈œ˜]>˜`>vÌiÀ‡Ã>iÃÃiÀۈViðÌ>ÃœœvviÀi`Àiw˜>˜Vˆ˜}>Ì reduced thanks to economies of scale, PV panel price a 6-9 percent interest rate over a 5-7 year repayment Ài`ÕV̈œ˜] >˜` ivwVˆi˜VÞ ˆ“«ÀœÛi“i˜Ìð "˜Þ > “œ`iÃÌ «iÀˆœ`]œ˜Viˆ˜ÃÌ>>̈œ˜Ü>ÃÛiÀˆwi`° subsidy was kept for small systems designed for the poor- The SHSs were made affordable to households through est households. a combination of consumer credit and decreasing subsi- Some aspects of the Bangladeshi SHS program may be `ˆi𠏈}ˆLiVÕÃ̜“iÀÃÜiÀiœvviÀi`“ˆVÀœw˜>˜Viœ>˜Ã] >««ˆV>Li̜œÌ…iÀœvv‡}Àˆ`iiVÌÀˆwV>̈œ˜ˆ˜ˆÌˆ>̈Ûið/…iÞ with a 10–15 percent down payment and an interest rate include: (i) strong pre-existing network of competitive MFIs of 12–15 percent over a 2–3 year repayment period. Dif- with deep reach in rural areas; (ii) an entrepreneurial cul- ferent system sizes were available to match users’ energy ture; (iii) high density of the rural population, which fos- needs and willingness to pay. A buy-back guarantee gave tered competition and economies of scale; (iv) rising rural customers an option to sell their system back at a depre- incomes (boosted by remittances from abroad), which ciated price if the household obtained a grid connection stimulated demand; (v) competent implementing agency within a year of purchase—although most customers have with strong management and promotion capacity; (vi) tech- 22 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 2.6 Bangladesh’s successful solar home system program (systems installed each year) 900,000 852,388 Smaller LED Subsidy eliminated 800,000 systems except for systems introduced under 30 Wp 700,000 Buy-back 643,812 scheme 1 million 600,000 introduced solar home systems installed by 500,000 First target 469,572 mid-2011 50,000 Start of reached 400,000 IDCOL Program 324,775 300,000 200,000 169,916 172,761 103,301 100,000 69,562 20,635 27,579 37,151 11,697 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: ->`iµÕiiÌ>°Óä£{ ˜ˆV> >˜` w˜>˜Vˆ˜} ܏Ṏœ˜Ã Ì>ˆœÀi` ̜ ̅i «œ«Õ>̈œ˜½Ã ticularly in the past decade, to increasing electricity access >LˆˆÌÞ̜«>ÞÆ>˜`­Ûˆˆ®>`iµÕ>ÌiVœ˜ÃՓiÀ>Ü>Ài˜iÃÃ>˜` (Banerjee et al. 2015). In 2005, it launched the India’s rural Vœ˜w`i˜Vi] ܅ˆV… Ü>à vœÃÌiÀi` ̅ÀœÕ}… Vœ“«Ài…i˜ÃˆÛi iiVÌÀˆwV>̈œ˜«Àœ}À>“]̅i,>ˆÛ>˜`…ˆÀ>“ii˜6ˆ`ÞṎ- “i`ˆ>V>“«>ˆ}˜Ã>˜`>˜i“«…>ÈÃœ˜µÕ>ˆÌÞ>ÃÃÕÀ>˜Vi° karan Yojana (RGGVY), with the aim of electrifying all vil- lages and habitations with more than 100 people, installing India’s Energy Sector Reforms and Rural small generators and distribution networks where grid 'NGEVTKƂECVKQP2TQITCO extension is not considered cost-effective, and providing In the period 2000-14, India more than halved the num- free electricity connections to households below the pov- ber of people without access to electricity (from 422 to erty line (Banerjee et al. 2015). This program is comple- 264 people without access)(IEA and World Bank 2017). In “i˜Ìi` LÞ ̅i ,i“œÌi 6ˆ>}i iVÌÀˆwV>̈œ˜ ­,6 ® Óä£{]˜`ˆ>½ÃiiVÌÀˆwV>̈œ˜À>ÌiÀi>V…i`Ǚ°È«iÀVi˜Ì]Õ« program, which is being implemented by the Ministry of from 60 percent in 2000—with 70 percent of the newly New and Renewable Energy (MNRE). iiVÌÀˆwi` «œ«Õ>̈œ˜ ÀiÈ`i` ˆ˜ ÀÕÀ> >Ài>Ã] ÀiyiV̈˜} In 2014, around 264 million people, or 20 percent of LœÌ… ̅i VœÕ˜ÌÀ޽à vœVÕà œ˜ ÀÕÀ> iiVÌÀˆwV>̈œ˜ >˜` ̅i India’s population, remain without access to electricity. In relative saturation already achieved in urban areas. By ÕÀL>˜>Ài>Ã]iiVÌÀˆwV>̈œ˜À>ÌiÃ>Ài“ÕV……ˆ}…iÀ̅>˜iÃi- 2012, the national electricity grid reached 92 percent of ܅iÀi] LÕÌ ̅i µÕ>ˆÌÞ œv ÃiÀۈVi Ài“>ˆ˜Ã ÛiÀÞ ՘iÛi˜] India’s rural villages, corresponding to about 880 million especially in large peri-urban slum areas (IEA 2015a). The people. (Banerjee et al. 2015). Between 2000 and 2014 sustainability of the RGGVY program is challenged by alone, 400 million people gained access—the biggest ՘`iÀw˜>˜Vi`>˜`՘Àiˆ>Liˆ˜vÀ>ÃÌÀÕVÌÕÀi«ÀœÛˆ`ˆ˜}iiV- absolute increase globally. ÌÀˆVˆÌÞ̜̅iۈ>}iˆ˜iÃ]>œ˜}܈̅>˜ˆ˜ÃÕvwVˆi˜ÌÀiÛi˜Õi The energy sector reforms were initiated in the early ÃÌÀi>“ vÀœ“ ÀÕÀ> …œÕÃi…œ`à ̜ ÃiVÕÀi > w˜>˜Vˆ>Þ ÃÕÃ- 1990s, with the unbundling of the State Electricity Boards— tainable electricity distribution system. Exacerbating mat- aimed at forming separate companies for various opera- ÌiÀÈÃ̅i`ˆvwVՏÌÞœv«ÀˆVˆ˜}iiVÌÀˆVˆÌÞ>««Àœ«Àˆ>ÌiÞ܅ˆi tions (such as generation, transmission, and distribution) ensuring household affordability. Thus, solutions are need- and privatizing the distribution companies. In the late i` ̜ iÝ«>˜` iiVÌÀˆVˆÌÞ >VViÃà ˆ˜ w˜>˜Vˆ>Þ Ài뜘ÈLi 1990s, central and state level regulators were introduced. ways that encourage investment in the operation and ˜ÓääÎ]̅i˜iÜ iVÌÀˆVˆÌÞƂVÌ]܅ˆV…v>VˆˆÌ>Ìi`>˜ˆ˜yÕÝ maintenance of rural systems to minimize supply shortages of private capital into the sector, was implemented to (Banerjee et al. 2015). enhance competition in the distribution sector to ensure >˜ >`iµÕ>Ìi µÕ>˜ÌˆÌÞ >˜` µÕ>ˆÌÞ œv iiVÌÀˆVˆÌÞ ÃÕ««Þ %JKPCoU$QVVQOWR#RRTQCEJVQ'NGEVTKƂECVKQP (Krishnaswamy 2010). Over the past 50 years, China has succeeded in providing ˆÃ̜ÀˆV>Þ] ˜`ˆ>½Ã ÀÕÀ> iiVÌÀˆwV>̈œ˜ «œˆVˆià …>Ûi access to electricity to 900 million people—with 165 mil- shifted from line extension to villages in the 1950s, to agri- lion people gaining access between 2000 and 2014 (IEA cultural production in the 1960s and 1970s, to rural devel- and World Bank 2017). The big push began in 1979, driven opment in the 1990s, and, in 2000, to access for the poor. by economic reforms in rural areas (Peng and Pan 2006), /…i }œÛiÀ˜“i˜Ì …>à i“«…>Èâi` iiVÌÀˆwV>̈œ˜ ˆ˜ ˆÌà and by 1997, the country was providing electricity to over national policies, and allocated substantial resources, par- 95 percent of households (Yang 2003). Electricity access T H E STAT US OF ENERGY A C C E SS 23 increased further, reaching 99 percent in 2009, driven by out electricity in 2030—increasingly concentrated in the modernization of rural infrastructure and the harmoni- sub-Saharan Africa, which will have around 80 percent of zation of rural/urban consumer tariffs. As a result, in 2009, the global total at that time (IEA and World Bank 2017). ̅i `iwVˆÌ Ü>à `œÜ˜ ̜ n “ˆˆœ˜ «iœ«i] œÕÌ œv > ̜Ì> Yet universal access to modern energy services is still population of 1.3 billion (Bhattacharyya and Ohiare 2012). ܓi`ˆÃÌ>˜Vi>Ü>Þ>˜`܈ÀiµÕˆÀi̅>ÌVœÕ˜ÌÀˆiÃiÝ«>˜` Nonetheless, rural electricity consumption per capita in access more rapidly than demographic growth. Universal 2008 was just 30 percent of China’s average electricity con- >VViÃÃ̜iiVÌÀˆVˆÌÞÀiµÕˆÀiÃ>˜iÛi˜…ˆ}…iÀ>˜˜Õ>«>Viœv sumption, suggesting that the rural electricity market has growth of 161 million people from 2014 through 2030. not reached saturation. ƂÌ…œÕ}… ̅i >VViÃà `iwVˆÌ ˆ˜ Óä£{ Ü>à œÛiÀ܅i“ˆ˜}Þ …ˆ˜>…>ÃÀiˆi`œ˜>LœÌ̜“‡Õ«>««Àœ>V…̜iiVÌÀˆw- rural, the forecast population increment is almost entirely cation, with local administration responsible for the local urban (Box 2.1) (IEA and World Bank 2017). ܏Ṏœ˜° >V… VœÕ˜ÌÞ VÀi>Ìi` > ÀÕÀ> iiVÌÀˆwV>̈œ˜ Vœ“- At the regional level, Latin America and Caribbean, mittee (led by the county governor), which made decisions East Asia, and South Asia will be able to reach universal œ˜ ÀÕÀ> iiVÌÀˆwV>̈œ˜ ˆ˜ÛiÃ̓i˜Ìà >˜` œ«iÀ>̈œ˜] ܅ˆi access to electricity by 2030, assuming conditions of con- overall program planning was kept at the central level. stant growth in electricity, constant growth in population, The solutions have involved a mix of grid extension >˜`˜œ“>œÀV…>˜}iȘ«œˆÌˆV>܈ˆ˜}˜iÃÃ>˜`w˜>˜Vˆ> >˜`œvv‡}Àˆ`œ«Ìˆœ˜Ãp܈̅ÀÕÀ>iiVÌÀˆwV>̈œ˜ÀiÞˆ˜}œ˜ investments to increase access (Figure 2.8). However, three modes of delivery: local grids, central grid, and a Sub-Saharan Africa is falling behind—currently growing at hybrid system (Pan et al. 2006). Although the central grid 5.4 percent annually, against the needed 8.4 percent annu- remained the main mode of supply, local grids played a ally to reach universal access by 2030. key role in areas with large hydro potential, with county /…i >ÃÌ w}ÕÀià «ÕLˆÃ…i` LÞ ̅i  Ƃ ­ Ƃ] Ó䣣® œ˜ water bureaus or small hydropower companies, responsi- Vœ“«>À>Li iÃ̈“>Ìià œv VÕÀÀi˜Ì w˜>˜Vˆ˜} ÌÀi˜`à >˜` ble for electricity supply. Incentives targeting small hydro- future investment needs for achieving universal access to power, such as a reduced VAT rate and state investment electricity provided a high-level estimate of investment funds, also helped. Stand-alone systems were dissemi- ˜ii`Ãœvf{xLˆˆœ˜>Þi>À]>}>ˆ˜ÃÌ>VÌÕ>ˆ˜ÛiÃ̓i˜ÌyœÜà nated through distribution companies that procure major at that time of an estimated $9 billion a year. components from manufacturers directly, small assembly The World Bank’s Access Investment Model provides shops selling directly to installers, and retailers selling rather detailed bottom-up estimates of the cost of reach- `ˆÀiV̏Þ̜i˜`ÕÃiÀí -Ƃ*Óäää®°/iV…˜œœ}ˆV>yi݈- ing universal access in each of 15 countries with large bility has allowed local resource utilization and avoided iiVÌÀˆVˆÌÞ>VViÃÃ`iwVˆÌð/…iÞÀiyiVÌ`ˆvviÀi˜ViȘ«œ«- ̅i…ˆ}…iÃ̇VœÃÌœ«Ìˆœ˜ÃvœÀ`ˆvwVՏ̏œV>̈œ˜Ã° ulation and geography across countries as well as local …ˆ˜> …>à iiVÌÀˆwi` Ài“œÌi >Ài>à ̅ÀœÕ}… > «…>Ãi` unit costs, and can be extrapolated to give a global esti- approach, based on pilot projects and capacity building. In mate of access investment needs (IEA and World Bank, 1996, the Brightness Program started with pilot projects, installing over 5,500 SHS, and over 500 wind and solar hybrid systems at a cost of $50 million (Shyu 2010). In ÓääÓ]̅i/œÜ˜Ã…ˆ« iVÌÀˆwV>̈œ˜*Àœ}À>“Ü>Ï>՘V…i` to scale-up pilot projects to extend electricity access to FIGURE 2.7 Access falls short of the pace to meet the over 1,000 townships in 11 western provinces (Shyu 2010). 2030 target It relied on 13 system integrators, chosen through a com- 1.0 petitive bidding process, who designed, procured and installed the systems, while the service companies were Additional progress required due to lag 0.1 responsible for operation and maintenance. By 2005, over since 2010: +0.1 840,000 people had gained access to electricity (Bhat- 0.8 tacharyya and Ohiare 2012). 0.6 FUTURE OUTLOOK OF ELECTRICITY ACCESS 0.82 The outlook for access to electricity shows that the world is 0.4 0.69 far from being on track to meeting the SE4All goal of univer- sal access to modern energy by 2030 (Figure 2.7). When the 0.51 2030 Sustainable Energy for All objective of universal access 0.2 was announced, it was estimated that the global rate of access to electricity would need to increase by 0.8 percent- 0.19 age points each year throughout 2010–30. But because 0.0 progress has fallen consistently short of this rate since 2010, 1990–2010 2010–2012 2012–2014 2014–2030 efforts in the remaining years need to be stepped up to 0.9 Historical Target rate percentage points. reference period Under the IEA’s latest World Energy Outlook New Poli- cies Scenario, around 780 million people will remain with- Source: IEA and World Bank 2017 24 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 2.8 Latin America and Asia on target for electricity universal and main grid connections), based on the performance of electricity access by 2030 i>V…܏Ṏœ˜ˆ˜ÌiÀ“ÃœvµÕ>˜ÌˆÌÞ>˜`µÕ>ˆÌÞœviiVÌÀˆVˆÌÞ supplied. That is why the multi-tier framework (MTF) for 10 measuring electricity access was recently developed in 8.4% partnership with a large number of stakeholders, under the 8 ՓLÀi> œv - {Ƃ° Ì “i>ÃÕÀià >VViÃà >VÀœÃà wÛi ̈iÀà ­âiÀœ Liˆ˜} ̅i œÜiÃÌ >˜` wÛi Liˆ˜} ̅i …ˆ}…iÃÌ® >˜` iˆ}…Ì >ÌÌÀˆLÕÌià ­V>«>VˆÌÞ] >Û>ˆ>LˆˆÌÞ] Àiˆ>LˆˆÌÞ] µÕ>ˆÌÞ] 6 5.4% affordability, legality, convenience, and health and safety), encompassing all energy sources used within households, 4.0% productive uses of energy, and community facilities. Based 4 2.7% on the combination of multiple attributes of energy supply, higher tiers feature progressively higher performance, as 2 1.7% 1.2% 1.3% the energy supply accommodates an increasing number of 0.9% energy applications, or delivers improved user experience 0 (World Bank 2015). East Asia & Pacific Latin America & South Asia Sub-Saharan For policymaking and investment decisions, the Caribbean Africa advantages of the MTF are many: (i) it provides more Electricity growth rate 2000–2014 Projected rate 2014–2030 accurate data on the actual level of services that end users receive, and tracks progress in providing access to reli- Source: Data from IEA and World Bank 2017. able, affordable, and modern energy services at both Note: The estimates assume conditions of constant growth in electricity, constant growth in national and program levels; (ii) it enables a detailed «œ«Õ>̈œ˜]>˜`˜œ“>œÀV…>˜}iȘ«œˆÌˆV>܈ˆ˜}˜iÃÃ>˜`w˜>˜Vˆ>ˆ˜ÛiÃ̓i˜ÌÃ̜ˆ˜VÀi>Ãi analysis of current energy usage and provides other rele- access. vant supply and demand data for both electricity and clean cooking; and (iii) it provides more granular and dis- aggregated data, which facilitates targeted interventions that could move users to higher tiers. As a result, it will be possible to determine the key reasons holding back the 2015). The model, based on the Multi-Tier Framework country from achieving higher tier levels. It can also track (World Bank, 2015) allows users to choose the tier of contributions to access from upstream investments, such access that would be used to meet the universal access as generation and transmission. And it allows setting target, and illustrates how dramatically this affects the VœÕ˜ÌÀއëiVˆwV Ài>ˆÃ̈V Ì>À}iÌà vœÀ ՘ˆÛiÀÃ> >VViÃÃ] VœÃÌÃœviiVÌÀˆwV>̈œ˜°,i>V…ˆ˜}՘ˆÛiÀÃ>>VViÃÃ>Ì/ˆiÀ£ which account for a country’s initial conditions and the (enough to light a few light bulbs and charge a mobile timeframe for achieving targets. Ìii«…œ˜i® ܜՏ` ÀiµÕˆÀi ˆ˜ÛiÃ̓i˜Ìà œv f£°x Lˆˆœ˜ Take the case of a country that has still needs to sharply annually up to 2030. By contrast, reaching universal step up access to electricity, as illustrated in Figure 2.9. >VViÃà >Ì /ˆiÀ x ­vՏ Ó{ÝÇ }Àˆ` «œÜiÀ® ܜՏ` ÀiµÕˆÀi A binary approach would show that about 40 percent of investments of $50 billion annually. the population lacks access to electricity, while 60 percent has it. But the MTF may show a different electricity access level—either higher (if the binary indicator does not GETTING BETTER MEASURES OF account for off-grid solutions) or lower (if grid-connected ELECTRICITY ACCESS households are not receiving a minimum number of hours ÕÀÀi˜ÌÞ] iiVÌÀˆVˆÌÞ >VViÃà ˆÃ `iw˜i` >˜` “i>ÃÕÀi` ܈̅ œvÃÕ««Þ̜µÕ>ˆvÞvœÀ/ˆiÀ£]܅ˆV…ܜՏ`Li>̏i>ÃÌ{ binary indicators—that is, yes or no on “having a household hours a day and at least one hour in the evening). It also electrical connection,” “using electricity for lighting,” or sheds light on the key reasons holding the country back “cooking with non-solid fuels” (World Bank and IEA 2013). from achieving higher tier levels. For example, a large /…ˆÃ>««Àœ>V…Ü>Ã>Ài>ܘ>LiwÀÃÌivvœÀÌœ˜L>>˜Vˆ˜}̅i number of grid-connected households could be moved ideal metric that best captures progress in the energy sector from Tier 0-2 to Tiers 3–5 if the duration of service, espe- with the constraints posed by the need to use data, and it is cially in the evening, could be increased. the one that was used in the SE4ALL GTF reports released Since 2012, the MTF approach has been piloted in sev- in 2013 and 2015 (World Bank and IEA 2013; World Bank eral areas (for example, Kinshasa City) to test the method- and IEA 2015). ology, and by end-2016, the “Global Survey for Multi-Tier Such binary indicators can easily be obtained through Energy Access Tracking” will be launched in about 15-30 …œÕÃi…œ`ÃÕÀÛiÞÃ܈̅>ÛiÀÞÓ>˜Õ“LiÀœvµÕiÃ̈œ˜Ã] VœÕ˜ÌÀˆià ̅>Ì …>Ûi …ˆ}… >VViÃà `iwVˆÌð /…i ÀiÃՏÌà ܈ but they fail to capture the multi-dimensionality of elec- help policymakers determine gaps in the performance of tricity access—and thus misrepresent the scale of the the energy supply, identify types of interventions and challenge. For electricity, they do not provide any insight w˜>˜Vˆ> ˆ˜ÛiÃ̓i˜Ì ÀiµÕˆÀi“i˜Ìà ÀiµÕˆÀi`] >˜` ÃiÌ ̅i œ˜̅iµÕ>ˆÌÞ]Àiˆ>LˆˆÌÞ]>vvœÀ`>LˆˆÌÞ]œÀi}>ˆÌÞœv܅>̈à baseline to track progress toward ensuring universal being supplied. access. Open-Source Country Energy Databases will be What is needed now are indicators that can capture two accessible after the implementation of the MTF global sur- aspects: (i) all technologies (mini-grid, off-grid solutions, vey by the end of 2017. 26 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 2.9 Multi-tier framework tells much more about electricity access % of population with and without Technology break-down by tier (%) Reasons why grid connections have not electricity access met higher tiers requirements (%) 70 Tier 5 Without any service Tier 5 Day duration 60 Off-grid Evening duration Tier 5 Tier 4 Grid Tier 4 Reliability and quality Tier 4 50 Affordability Tier 3 Tier 3 Tier 3 40 30 Tier 2 Tier 2 Tier 2 20 Tier 1 Tier 1 10 Tier 0 Tier 1 Tier 0 Tier 0 0 No access Access (tier 0) (tier 1–5) 0 10 20 30 40 0 5 10 15 20 Source: Introducing Multi-Tier Approach to Measuring Energy Access https://www.esmap.org/node/55526 CONCLUSION So where does the international community stand on One tool that would help facilitate the effort would be achieving universal access to modern energy services by a new way of measuring the electricity access target, 2030? As the latest GTF binary indicators show, in 2014, beyond the traditional binary metrics—which can be mis- 15 percent of the population still lacked access to elec- leading because they do not capture the multi-dimen- tricity despite some successful initiatives across several sionality of access and thus misinterpret the scale of the technologies. Clearly, the pace of growth has to be accel- challenge. The World Bank and ESMAP are working with erated to achieve universal access by 2030: each year, partners to promote broader adoption of the MTF as the £È£ “ˆˆœ˜ «iœ«i ˜ii` ̜ Li iiVÌÀˆwi` vÀœ“ Óä£{ key monitoring platform for tracking progress toward through 2030. SE4ALL goal and Sustainable Development Goal 7— ensuring access to affordable, reliable, sustainable, and modern energy for all. T H E STAT US OF ENERGY A C C E SS 27 REFERENCES Banerjee, S., D. Barnes, B. Singh, K. Mayer, and H. Samad. Krishnaswamy, S. 2010. Shifting of Goal Posts. Rural 2014. Power for all : electricity access challenge in India. 'NGEVTKƂECVKQPKP+PFKC#2TQITGUU4GRQTV#PCPCN[UKUQH Washington, DC: World Bank. ITQWPFTGCNKVKGUQHGNGEVTKƂECVKQPYKVJTGEKRGUHQT accelerated progress. New Delhi, India: Vasudha Bhattacharyya, S., and S. Ohiare. 2012. “The Chinese Foundation. GNGEVTKEKV[CEEGUUOQFGNHQTTWTCNGNGEVTKƂECVKQP approach,experience and lessons for others.” Energy Lighting Global. 2016. Off-Grid Solar Market Trends Report Policy 49: 676–687. 2016. Washington, DC: Bloomberg New Energy Finance and Lighting Global. >ÀˆÃ]-°Óä£x°º/…i-œ>À œ“«>˜Þ>Žˆ˜}>*ÀœwÌœ˜ Poor Africans.” Bloomberg Businessweek, December 02. Niez, A. 2010. %QORCTCVKXG5VWF[QP4WTCN'NGEVTKƂECVKQP http://www.bloomberg.com/features/2015-mkopa- Policies in Emerging Economies: Keys to Successful solar-in-africa. Policies. Paris, France: International Energy Agency. Cabraal, A., D. Barnes, D., and S. G. Agarwal. 2005. Þ}>>À`°>˜`/° >vÀ>>…°Óä£È°º1̈ˆÌޏi`ÀÕÀ>iiVÌÀˆwV>- “Productive Uses of Energy for Rural Development.” tion in Morocco: combining grid extension, mini-grids, Annual Review of Environment and Resources 30: and solar home systems.” Wiley Interdisciplinary Reviews 117–144. (WIREs) Energy and Environment 5(2): 155–168. Dollar, D. 2008. “Lessons from China for Africa.” Policy Pan, P., Wuyuan, L. Meng, W. Xiangyang, W. Lishuang, H. Research Working Paper No. 4531, World Bank, Ã] °<…>˜}>˜`6ˆV̜À] °ÓääÈ]Rural Washington, DC. GNGEVTKƂECVKQPKP%JKPC*KUVQTKECNRTQEGUUGU and key driving forces. PESD Working paper no. 60, , , ESMAP (Energy Sector Management Assistance Program). Stanford, California: Stanford University Program on 2000. “Assessing markets for renewable energy in rural Energy and Sustainable Development. areas of Northwest China.” ESMAP Technical Paper 003, World Bank, Washington, DC. *i˜}]7°>˜`°*>˜°ÓääÈ°º,ÕÀ> iVÌÀˆwV>̈œ˜ˆ˜ …ˆ˜>\ History and Institution.” China & World Economy 14(1): EUEI (European Union Energy Initiative). 2011. Productive 71–84. 7UGQH'PGTI[t241&75'#/CPWCNHQT'NGEVTKƂECVKQP Practitioners. Germany: European Union Energy Initiative. ->`iµÕi]<°] °,ÞÃ>˜ŽœÛ>],° >…ˆ]>˜`,°-œ˜ˆ°Óä£{° “Scaling Up Access to Electricity: The Case of Bangla- ____. 2015. .QY%QUV)TKF'NGEVTKƂECVKQP6GEJPQNQIKGU desh.” Live Wire note series, no. 2014/21, World Bank #*CPFDQQMHQT'NGEVTKƂECVKQP2TCEVKVKQPGTU. Germany: Group, Washington, DC. European Union Energy Initiative. Shyu, C. 2010. 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Geneva, Switzerland: WHO. 9>˜}°Óääΰº …ˆ˜>½ÃÀÕÀ>iiVÌÀˆwV>̈œ˜>˜`«œÛiÀÌÞ reduction.” Energy Policy 31: 283–95. 28 LE S TAT E O F E N RGY ECTR I CI ACCES S R EPO TY ACCES EPO |RT 2 0|1 72 0 17 S RRT CHAPTER 3 CREATING A BETTER ENVIRONMENT FOR TRANSFORMATIVE ELECTRICITY ACCESS KEY MESSAGES U ˜ÃÕVViÃÃvՏV>ÃiÃœvÌÀ>˜ÃvœÀ“>̈ÛiiiVÌÀˆVˆÌÞ>VViÃÃ]«ÕLˆVw˜>˜Vˆ˜}ÃÕ««œÀÌ…>ë>Þi`>ۈÌ>Àœiˆ˜̅iˆ˜ˆÌˆ> ÃÌ>}iÃœv}Àˆ`‡L>Ãi`iiVÌÀˆwV>̈œ˜«Àœ}À>“ð • Best practices for successful grid-based implementation include: sustained government commitment, dedicated ˆ˜Ã̈ÌṎœ˜Ã]«Ài`ˆVÌ>Liw˜>˜Vˆ˜}“iV…>˜ˆÃ“Ã]Ài>ˆÃ̈V“i>ÃÕÀiÃ̜i˜ÃÕÀi>vvœÀ`>LˆˆÌÞ>˜`ÃÕÃÌ>ˆ˜>LˆˆÌÞ]>˜` iiVÌÀˆwV>̈œ˜«Àœ}À>“Ã̅>Ìẅ˜Ìœ>LÀœ>`iÀۈȜ˜œvÜVˆ>>˜`iVœ˜œ“ˆVÌÀ>˜ÃvœÀ“>̈œ˜° • Mini-grids can supply “grid-quality” power to communities quickly, but they must address challenges—such as high upfront investment, regulatory uncertainties, tariff differential issues, the stranded assets problem, manage- ment and operations capabilities, supply and demand mismatch, and the need for productive load. U œÀ̅i«ÀˆÛ>ÌiÃiV̜À̜«>Þ>˜ˆ˜VÀi>Ș}Àœiˆ˜w˜>˜Vˆ˜}“ˆ˜ˆ‡}Àˆ`ˆ˜ÌiÀÛi˜Ìˆœ˜Ã]̅iÀi“ÕÃÌLiˆ˜Vi˜ÌˆÛiȘ place to allow investors to make returns on their investment. U ˆÛi˜̅>ÌÃV>ˆ˜}Õ«>VViÃÈȘyÕi˜Vi`LÞVœ˜ÌiÝÌ]ˆÌˆÃVÀˆÌˆV>̜V>ÀivՏÞÜiˆ}…Ài}ˆœ˜>«iÀëiV̈ÛiÃ>˜` encourage each country to choose its own pathway. INTRODUCTION W hat are the challenges and drivers of transfor- sures and tools to plan for complementarity of grid and mative electricity access? More than 70 coun- }Àˆ` ܏Ṏœ˜Ã° Ƃ˜`] w˜>Þ ˆÌ «ÀœÛˆ`ià ܓi ˆ˜Ãˆ}…Ìà œ˜ tries have been working over the last four years how to make access transformative. to develop action plans, strategies, and projects to deliver on the international community’s goal of universal access GRID AND OFF-GRID: to modern energy services—as spelled out in the Sustain- TWO COMPLEMENTARY TRACKS TO able Energy for All (SE4ALL) initiative and the UN’s Sustain- UNIVERSAL ACCESS able Development Goal 7 (SE4ALL, 2016). Their efforts have been supported by partnerships and initiatives from Meeting increased energy demand, which is linked to uni- both the public and the private sector that have emerged versal, basic and affordable energy services can be at the national, bilateral, and multilateral levels. achieved following two complementary tracks: (i) ensuring What is holding up more progress being made? The }Àˆ`‡L>Ãi` iiVÌÀˆwV>̈œ˜] ܅iÀi ̅i }Àˆ` ˆÃ iÝÌi˜`i` key hurdle appears to be creating an enabling environ- beyond urban and peri-urban areas; and (ii) ensuring off- ment for an energy access roll out. While no single recipe }Àˆ`iiVÌÀˆwV>̈œ˜LÞiÃÌ>LˆÃ…ˆ˜}Vœ““Õ˜ˆÌޏiÛi“ˆVÀœ‡ exists, the evidence points to some facilitative ingredients or mini-grid systems, or using isolated devices and systems that are foundational—including the right institutions, stra- at the household level. Each of these tracks operates at tegic planning, strong regulations, and appropriate incen- different scales and provides differing energy services, fea- tives. This chapter tries to provide some entry points to ÌÕÀiÃÛ>Àˆi`V>«ˆÌ>ÀiµÕˆÀi“i˜ÌÃ]>˜`ÃiÀÛiÃëiVˆwVÌÞ«ià help energy planners, policy makers, and other stakehold- of customers and population densities (Table 3.1). iÀÃw˜`Ü>ÞÃ̜VÀi>Ìi̅i˜ii`i`i˜>Lˆ˜}i˜ÛˆÀœ˜“i˜Ì° It begins with a discussion of the two complementary )TKF GNGEVTKƂECVKQP The expansion of national electricity tracks to universal access to modern energy services—grid grids is the “conventional” method of expanding access to based and off-grid—followed by the key challenges asso- energy services. It involves adding power plants and electric ciated with each one of them. It then outlines some mea- utilities and expanding high-voltage transmission lines and 29 30 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 TABLE 3.1 Two technological tracks for expanding energy services CHARACTERISTICS GRID ELECTRIFICATION OFF-GRID ELECTRIFICATION Systems Centralized Micro-grids and Mini-grids Stand-alone systems Scale National, regional, and even international Community Household iœ}À>«…ˆVÀ>`ˆÕà œÀi̅>˜xäõÕ>ÀiŽˆœ“iÌiÀà £̜{™õÕ>ÀiŽˆœ“iÌiÀà £õÕ>ÀiŽˆœ“iÌiÀ Number of customers Thousands to millions Dozen to hundreds Usually a dozen or less Installed capacity More than 10 MW 20 kW to 10 MW < 20kW Technologies involved Large-scale and centralized Medium-scale and small-scale Very small-scale ˜ÛiÃ̓i˜ÌÀiµÕˆÀi` ˆˆœ˜Ãœv`œ>Àà ˆˆœ˜Ãœv`œ>ÀÃ̜…Õ˜`Ài`à  /…œÕÃ>˜`Ãœv`œ>Àà of thousands distribution networks into rural areas, “its tendrils reaching often locally managed, have less than 10 MW of out into the countryside and bringing with it opportunities installed capacity, serve small household loads, and for jobs, communication, improved education, better health cover a radius of 50 kilometers or less. They can be and a host of other welfare improvements.” connected to a national grid, but typically, they operate In the past two decades, more than 1.7 billion people autonomously and are better suited for communities have been added to national electricity networks world- ܅iÀi ̅iÀi ˆÃ ÃÕvwVˆi˜Ì `i“>˜` ̅ÀœÕ}…œÕÌ ̅i `>Þ wide, mostly in urban areas (Figure 3.1). Although a lot of and year-round. progress has also been made in rural areas, the numbers • Another approach is a “micro-grid.” It typically operates Vœ˜˜iVÌi`>Ài˜œÌÀˆÃˆ˜}>Ãv>ÃÌ]LiV>ÕÃiÀÕÀ>iiVÌÀˆwV>̈œ˜ with less than 100 kW of capacity, has even lower volt- involves connecting villages incrementally to the existing age levels, and covers a three to eight kilometer radius. grid, with remote areas with small populations, high line losses, and low usage levels usually the last to be served. Both of these can be powered by fossil fuels, using diesel >̈œ˜> iiVÌÀˆwV>̈œ˜ «Àœ}À>“à ˆ˜ …ˆi] …ˆ˜>] i݈Vœ] generators or fuel cells, or renewable energy sources (like the Philippines, and Tunisia, for example, were implemented micro-hydro dams, solar PV plants, biomass combustion, through grid extension activities that involved operationaliz- and wind turbines). A clean energy technology mini-grid ing large-scale power plants and grid networks. may comprise a single power source (like a small hydro- power plant), or a hybrid system with renewable energy 1HHITKF GNGEVTKƂECVKQP Energy services can also be sources with batteries or a diesel generator. iÝ«>˜`i` ÕȘ} ºœvv‡}Àˆ` iiVÌÀˆwV>̈œ˜]» ܅ˆV… ˆ˜ÛœÛià 7…i˜Vœ˜w}ÕÀi`«Àœ«iÀÞ]“ˆ˜ˆ‡>˜`“ˆVÀœ‡}Àˆ`ÃV>˜ “ÕV…Ó>iÀ}Àˆ`Ã̅>˜ˆ˜º}Àˆ`iiVÌÀˆwV>̈œ˜°» operate more cost effectively than centralized generation and distribution. That is why diesel-power and small • One approach is a “mini-grid.” It is a localized or iso- hydropowered mini-grids have been used for many lated grouping of electricity generation, distribution, decades. In Indonesia, many of the 6,000 inhabited Ã̜À>}i] >˜` Vœ˜ÃՓ«Ìˆœ˜ ܈̅ˆ˜ > Vœ˜w˜i` }iœ- islands are powered by diesel- or small hydro- mini-grids; }À>«…ˆVë>Vi°/…œÕ}…`iw˜ˆÌˆœ˜ÃÛ>ÀÞ]̅iÃi}Àˆ`Ã>Ài >˜`>viÜ>ÀiÀiÌÀœ‡wÌÌi`܈̅܏>À*6ÃÞÃÌi“Ã̜>ۜˆ` high-cost diesel fuel. In the Maldives, about 200 inhab- ited islands and all resort islands are powered by diesel FIGURE 3.1 #DKIRWUJKPGNGEVTKƂECVKQPUKPEG mini-grids. Plus, some of these are being converted into (Incremental increases in grid electricity access, 1990–2010) solar-PV-diesel mini-grids, as part of the government’s strategy to transition to 100 percent renewable ener- gy-based economy. Rural 510 In very remote communities, energy services can be provided with “stand-alone” systems, which can be de- ployed usually far faster and with less complexity than a Urban 1,219 mini-grid. Increasingly, small PV systems (called “pico” solar systems), using a few watts of solar PV to tens of watts, provide high value lighting and mobile phone ser- Total 1,718 ۈVið ˜ `ˆÀiV̏Þ VœÕ«i` Vœ˜w}ÕÀ>̈œ˜Ã] ̅iÞ «ÀœÛˆ`i motive power for activities like water pumping, grain mill- 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 ing. And stand-alone PV systems with batteries also offer a Population (million) highly reliable electricity supply for telecommunications base stations where reliable grid supply is unavailable. Population with access in 1990 Moreover, in recent years, the stand-alone electricity Population with access in 1990–2000 product market has been expanding rapidly—and is Population with access in 2010 expected to continue to do so. Source: Bazilian 2013. CR EAT ING A BET T ER ENVIRONMENT FOR T RANSFORMAT IVE ENERGY A C C E SS 31 • Navigant Research estimates that the market for solar ÀiÃՏÌ ˆ˜ ՘ˆµÕi «œÜiÀ “>ÀŽiÌà >˜` ÌÀ>˜Ã“ˆÃȜ˜ Vœ˜- PV products will grow from about $550 million in 2014 straints inherent in islands and archipelagos that are highly to $2.4 billion in 2024. vulnerable to natural disasters and climate change-related ÀˆÃŽÃ°˜̅i*>VˆwV]̅i`ˆÃÌ>˜ViLiÌÜii˜ˆÃ>˜`Ã>˜`̅i • Off-Grid Solar Market Trends Report 2016 notes that challenging terrain pose major problems, as most of the this market has shown impressive growth in the past island-countries (like Palau) are made up of large chains of wÛiÞi>ÀÃ]܈̅“œÀi̅>˜£ääVœ“«>˜ˆiÃ…>ۈ˜}܏` coral atolls and islets. about 20 million branded pico-solar products (mainly High customer connection charges. Sub-Saharan Africa portable lights) by 2015 (Bloomberg New Energy has the highest number of countries with connection Finance and Lighting Global, 2016). The report also charges higher than $100 per customer at the lowest con- estimates that about one in three off-grid households nection service rating, as shown in Figure 3.2 (Golumbeanu globally will use off-grid solar by 2020. and Barnes, 2013). In some cases (like Kenya, Tanzania, Central African Republic, and Burkina Faso), the unsubsi- EXPANDING GRID-BASED ELECTRIFICATION dized connection charges even exceed the country’s monthly income per person. Why are the costs so higher What are the key challenges to expanding electricity from for smaller customers? The reasons are many: (i) weak com- ̅i}Àˆ`¶>˜ÞÀiۈiÜÃ…>Ûiˆ`i˜Ìˆwi`ŽiÞV…>i˜}iÃ̜ mitment of utilities to provide electricity access to rural iÝ«>˜`iiVÌÀˆVˆÌÞvÀœ“̅i}Àˆ`]À>˜}ˆ˜}vÀœ“ˆ˜ÃÕvwVˆi˜Ì VÕÃ̜“iÀÃ]­ˆˆ®ˆ˜>`iµÕ>ÌiiiVÌÀˆwV>̈œ˜«>˜˜ˆ˜}]­ˆˆˆ®…ˆ}… power generation capacity to high customer connection investment cost for providing electricity connection due to charges (Barnes, 2007; Bazilian et al, 2010; World Bank, œÛiÀÀ>Ìi`ÌiV…˜ˆV>ëiVˆwV>̈œ˜ÃvœÀœÜœ>`Ã]­ˆÛ®ˆ˜ivw- 2010; World Bank, 2011; Eberhard et al, 2011; Sovacool, cient procurement practices, (v) low population density, 2013; Banerjee et al, 2014; World Bank IEG, 2015). >˜` ­Ûˆ® >VŽ œv w˜>˜Vˆ˜} œ«Ìˆœ˜Ã ̜ “>Ži Vœ˜˜iV̈œ˜ +PUWHƂEKGPV RQYGT IGPGTCVKQP ECRCEKV[ Many countries charges affordable. Exacerbating matters are various fees in Sub-Saharan Africa and South Asia often experience for inspection and application procedures, government load shedding in a context of growing demand for electric- taxes, mandatory security deposits, and connection ity services—with power shortages costing Africa 2-4 per charges—and households are responsible for internal wir- cent of GDP annually (Africa Panel Report, 2015). Consid- ing, which can run at least $100. Plus, the utilities often erable load shedding is reported in Nepal (where power V…>À}i > ̅iÃi viià իvÀœ˜Ì] “>Žˆ˜} ˆÌ `ˆvwVՏÌ vœÀ œÜ `iwVˆÌÜ>ÃÎä«iÀVi˜Ìˆ˜Óä£Î®]*>ŽˆÃÌ>˜­Ü…iÀi{Ó«iÀVi˜Ì income households to afford the service. of employees faced 4-8 hours power cut daily), and India Poor performance of power utilities. In many countries ­Ü…iÀi ̅i iiVÌÀˆVˆÌÞ `iwVˆÌ Ü>à x{ /7… >˜` ̅i «œÜiÀ where electricity rates are low, power utilities tend to have `iwVˆÌÜ>Ãΰ{7ˆ˜Óä£{q£x®° Poor transmission and distribution infrastructure. Many decades of under-investment, poor governance in the i˜iÀ}ÞÃiV̜À]>˜`]ˆ˜ܓiV>ÃiÃ]Vœ˜yˆVÌÃ>˜`VˆÛˆÜ>ÀÃ] FIGURE 3.2 Sub-Saharan Africa has highest rates and poorest service >Ài…>“«iÀˆ˜}̅i`iÛiœ«“i˜Ìœv>`iµÕ>ÌiÌÀ>˜Ã“ˆÃȜ˜ and distribution infrastructure. In a business-as-usual sce- Connection charges and national electriciation rates nario, some rural communities could wait for 20 to 30 years 450 to have access to grid-based electricity. Meeting Africa’s Connection charge for grid electricity—lowest rating (US$) ˆ˜VÀi>Ș} `i“>˜` vœÀ «œÜiÀ ܈ ÀiµÕˆÀi È}˜ˆwV>˜Ì >˜` 400 Kenya sustained expansion of the generation capacity—at a rate of 7,000 MW each year—as well as transmission and distri- 350 Rwanda LṎœ˜ ÃÞÃÌi“ð /…ˆÃ ˆÃ iÝ«iVÌi` ̜ ÀiµÕˆÀi “œLˆˆâˆ˜} about $41 billion—roughly 6.4 percent of the region’s 300 Tanzania GDP. Currently, spending is estimated at under $5 billion Central African Republic Burkina Faso per year, mostly focused on operating and maintaining 250 i݈Ã̈˜} ˆ˜vÀ>ÃÌÀÕVÌÕÀi] i>ۈ˜} > …Õ}i w˜>˜Vˆ˜} }>« ˆ˜ power sector expansion. 200 Zambia High costs of supplying consumers in rural and remote 150 Benin communities. Many rural communities are characterized Uganda Cote d’Ivoire by a low population density and a very high percentage of 100 Mauritania Lao PDR poor households. Demand for electricity is usually limited Ethiopia Madacascar Tunisia to residential and some agricultural consumers. Many 50 Ghana households consume less than 30 kilowatt-hours (kWh) per Sudan India Sri Lanka Vietnam Bangladesh Thailand month. The combination of these factors results in high Philippines 0 Cape Verde average costs of supply for each unit of electricity con- 0 10 20 30 40 50 60 70 80 90 100 sumed. Often grid extension to these communities is pro- National Electrification coverage rate (%) hibitory expensive and technically challenging due to remoteness—and even geo-physical constraints, which Source: Golumbeanu and Barnes, 2013. 32 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 ˜œÌœ˜Þ«œœÀÌiV…˜ˆV>>˜`w˜>˜Vˆ>«iÀvœÀ“>˜ViLÕÌ>Ãœ involved measures to gradually move from central plan- weak governance. This prevents them from being able to ning to market mechanisms, open up the economy to «ÀœÛˆ`i>`iµÕ>Ìi]Àiˆ>Li]>˜`>vvœÀ`>LiiiVÌÀˆVˆÌÞÃiÀ- trade and foreign investment, and reform the agricultural vices to their customers and to expand electricity services sector. Similar experiences are recorded elsewhere. In to peri-urban and rural areas. Over the past two decades, /՘ˆÃˆ>]ÀÕÀ>iiVÌÀˆwV>̈œ˜Ü>ÃÀœœÌi`ˆ˜>ÃÌÀœ˜}˜>̈œ˜> many countries have pursued energy sector reforms initia- commitment to integrated rural development, gender, tives aimed at improving utility performance issues, but iµÕˆÌÞ] >˜` ÜVˆ> iµÕ>ˆÌÞ ­ iViÃŽˆ iÌ >° Óä£Ç®p>˜` > the results have been mixed. In a recent paper on the high level of government commitment was also observed w˜>˜Vˆ> ۈ>LˆˆÌÞ œv ṎˆÌˆià ˆ˜ Ι -ÕL‡->…>À>˜ ƂvÀˆV>˜ in China (Han et al, 2014) and Brazil (Jannuzzi and Golden- VœÕ˜ÌÀˆiÃ]ˆÌÜ>ÃvœÕ˜`̅>Ìœ˜ÞÌܜVœÕ˜ÌÀˆiÃ…>`>w˜>˜- berg, 2014). cially viable electricity sector (the Seychelles and Uganda) and only 19 countries covered operating expenditures Dedicated institutions and adequate human capacity. (Trimble et al 2016). Dedicated and operational institutions in charge of plan- ˜ˆ˜}]w˜>˜Vˆ˜}]Ài}Տ>̈˜}]ˆ“«i“i˜Ìˆ˜}]>˜`“œ˜ˆÌœÀˆ˜} Principles for Model Grid Expansion Efforts iiVÌÀˆwV>̈œ˜«Àœ}À>“Ã>Àiˆ“«œÀÌ>˜Ìvi>ÌÕÀiÃœvÃÕVViÃÃ- Despite these many challenges to expand grid-based ful programs. According to Howells, 2015, the principal electricity, many countries have managed, or are manag- «ÕÀ«œÃiœv«>˜˜ˆ˜}vœÀiiVÌÀˆwV>̈œ˜ˆÃ̜VÀi>Ìiˆ˜Ãˆ}…Ìà ing, to implement successful programs—including Bangla- on the issues at stake, appraise policy options, and provide desh, Brazil, Chile, China, Costa Rica, Mexico, Morocco, guidance for action, often in the form of an energy plan or Peru, Philippines, Thailand, Tunisia, Rwanda, the United roadmap. Certainly, Rwanda’s leap from single-digit to States, South Africa, and Vietnam. Lessons learned do not `œÕLi‡`ˆ}ˆÌ iiVÌÀˆwV>̈œ˜ À>ÌiÃ] ÃÌ>À̈˜} ˆ˜ Óää™] ˆÕÃ- lead to a single approach, but they reveal some principles trates how strategic planning pays off (Box 3.3). that have contributed to create a favorable environment to ˜Ã̈ÌṎœ˜Ã ˆ˜ V…>À}i œv «>˜˜ˆ˜} iiVÌÀˆwV>̈œ˜ ÀœœÕÌ develop and implement successful programs. are responsible for determining what technological approaches are applicable and cost-effective—for exam- Government support and commitment. The rollout of a «i] ܅i̅iÀ ˆÌ ˆÃ VœÃ̇ivviV̈Ûi ̜ iÝ«>˜` iiVÌÀˆwV>̈œ˜ >À}iÃV>i}Àˆ`‡L>Ãi`iiVÌÀˆwV>̈œ˜«Àœ}À>“ˆÃ>«ÀœViÃà with the grid, or to consider off-grid solutions such as mini- ̅>ÌÌ>ŽiÃ̈“i°ÌÀiµÕˆÀiÃ…ˆ}…iÛi>˜`ÃÕÃÌ>ˆ˜i`}œÛiÀ˜- grids or isolated systems. The choice of technology ment support and commitment. Almost every country that depends on many factors, including natural resource avail- has achieved universal electricity access has reached this ability of a country, availability of appropriate sites, technol- goal with a strong leadership that established a common ogy output characteristics, and complexity of installation, national vision of social welfare and economic develop- operations, and maintenance. ment with electricity access as a catalytic enabler. In the ,ÕÀ> iiVÌÀˆwV>̈œ˜ V>˜ Li ՘`iÀÌ>Ži˜ LÞ `ˆvviÀi˜Ì United States, the 1935 Electricity for All program was part types of enterprises (public, private, or community-based), of the New Deal Program, aimed at improving living stan- each with different incentives. Whereas public companies dards and the economic competitiveness of the farm (Box «>Þi`>È}˜ˆwV>˜ÌÀœiˆ˜iÝ«>˜`ˆ˜}iiVÌÀˆVˆÌÞ>VViÃȘ ΰ£®°˜6ˆi̘>“]̅i…ˆ}…ÞÃÕVViÃÃvՏÀÕÀ>iiVÌÀˆwV>̈œ˜ numerous countries (like Lao PDR, Mexico, Thailand, and program was part of the broader Doi Moi, economic reno- /՘ˆÃˆ>®] «ÀˆÛ>Ìi >˜` `iVi˜ÌÀ>ˆâi` iiVÌÀˆwV>̈œ˜ Vœ“«>- vation reforms launched in 1986 (Box 3.2). These reforms nies played an important role in others (like Chile). Several BOX 3.1 754WTCN'NGEVTKƂECVKQP6TCPUHQTOGF5QEKGV[ ˆÃ̜ÀˆV>Þ]œ˜iœv̅i“œÃÌiÝÌÀ>œÀ`ˆ˜>ÀÞiÝ«iÀˆi˜ViÃœvÜVˆ>ÌÀ>˜ÃvœÀ“>̈œ˜ˆÃ̅iiiVÌÀˆwV>̈œ˜œvÀÕÀ>Vœ“- munities in the United States. In the early 1930s, while 90 percent of urban households had electricity, only 10 percent of rural ones did. Private companies had not been interested in connecting rural households, because the v>À“iÀÃÜiÀi̜œ«œœÀ̜>vvœÀ`iiVÌÀˆVˆÌÞ°"˜>Þ££]£™Îx]̅i,ÕÀ> iVÌÀˆwV>̈œ˜Ƃ`“ˆ˜ˆÃÌÀ>̈œ˜Ü>ÃVÀi>Ìi` as part of President Roosevelt’s New Deal Program. He believed that if private enterprise could not supply electric power to the people, then it was the government’s duty to do so. ,ÕÀ>iiVÌÀˆwV>̈œ˜Ü>ÃL>Ãi`œ˜̅iLiˆiv̅>Ì>vvœÀ`>LiiiVÌÀˆVˆÌÞܜՏ`ˆ“«ÀœÛi̅iÃÌ>˜`>À`œvˆÛˆ˜}>˜` the economic competitiveness of the family farm. There were opponents of the program on the grounds of waste of federal funding, but there were also supporters who believed it was the right thing to do for moral and eco- nomic reasons. Farmers were urged to create electricity cooperative companies. Electricity fairs were organized ̜ŜÜv>À“iÀÃ̅iÕÃiÃœviiVÌÀˆV«œÜiÀ>Ì…œ“i>˜`œ˜̅iv>À“°Ƃ˜`œÜVœÃÌw˜>˜Vˆ˜}Ü>Ó>`i>Û>ˆ>Li to farmers to purchase electric powered tools and appliances. Source: Wohlman 2007; Brodoff 2014. CR EAT ING A BET T ER ENVIRONMENT FOR T RANSFORMAT IVE ENERGY A C C E SS 33 BOX 3.2 Vietnam’s National Drive to Achieve Universal Electricity Access Vietnam’s experience demonstrates that where strong political aged from users, communities and local governments. commitment exists, the goal of universal access to electricity is However, there was a trade-off between the pace and the achievable irrespective of the country’s starting condition. This ÃÕÃÌ>ˆ˜>LˆˆÌÞœv̅iiiVÌÀˆwV>̈œ˜ivvœÀÌðƂÈÌÌÕÀ˜i`œÕÌ]“>˜Þ commitment, however, needs to go hand in hand with a willing- ˜iÜ`ˆÃÌÀˆLṎœ˜˜iÌܜÀŽÃÜiÀiœvœÜÌiV…˜ˆV>µÕ>ˆÌÞ>˜`ÃÕv- ness to learn from past mistakes and correct one’s course when fered high losses, and the newly established entities did not circumstances change. …>ÛiÃÕvwVˆi˜ÌiÝ«iÀˆi˜Vi˜œÀ̅iw˜>˜Vˆ>ÃÌÀi˜}̜̅œ«iÀ>Ìi In 1994, when Vietnam started its universal access drive, its ̅i“°/…iÃÕLÃiµÕi˜Ì«…>ÃiÃ]̅iÀivœÀi]«ÀˆœÀˆÌˆâi`ÃÕÃÌ>ˆ˜>Lˆ- iiVÌÀˆwV>̈œ˜ À>Ìi Ü>à œ˜Þ £{ «iÀVi˜Ì] Vœ“«>À>Li ̜ ̅i ˆÌÞ“i>ÃÕÀiÃ]܈̅>…iˆ}…Ìi˜i`vœVÕÃœ˜i˜ÃÕÀˆ˜}ÃiÀۈViµÕ>- >VViÃÃÀ>ÌiÃœv̅ii>ÃÌiiVÌÀˆwi`VœÕ˜ÌÀˆiȘƂvÀˆV>° Þ£™™Ç] ˆÌÞ >˜` LœÌ… ÌiV…˜ˆV> >˜` w˜>˜Vˆ> ۈ>LˆˆÌÞ° À>`Õ>Þ] ̅i the rate had jumped to 61 percent, and by 2002, it was over 80 `ˆÃ«iÀÃi`œV>iiVÌÀˆwV>̈œ˜˜iÌܜÀŽÃÜiÀiVœ˜Ãœˆ`>Ìi`ˆ˜Ìœ percent. Today, the Vietnamese population enjoys the full ben- larger units and their operators corporatized; most of them iwÌÃœviiVÌÀˆVˆÌÞ]܈̅>˜>VViÃÃÀ>ÌiœÛiÀ™™«iÀVi˜Ì° were eventually absorbed by the national utility, EVN. Vietnam’s secret to success was not betting on a particular 7…ˆi“>˜Þii“i˜ÌÃœv6ˆi̘>“½ÃiiVÌÀˆwV>̈œ˜>««Àœ>V… iiVÌÀˆwV>̈œ˜>««Àœ>V…]LÕÌÀ>̅iÀ>œÜˆ˜}̅i>««Àœ>V…iÃ̜ >Ài՘ˆµÕi̜6ˆi̘>“]ˆÌÃŽiޏiÃܘÃ>Ài«iÀ̈˜i˜Ì̜>iiV- evolve over time. In the initial “take-off” phase (1994-97), the ÌÀˆwV>̈œ˜ivvœÀÌÃ\ goal was to trigger fast access expansion by empowering com- • Vietnam has achieved universal access to electricity largely munities and local authorities to build their own systems. During due to the government’s unwavering commitment to electri- ̅ˆÃ«…>Ãi]ˆÌ̏i>ÌÌi˜Ìˆœ˜Ü>ë>ˆ`̜ÃiÀۈViµÕ>ˆÌÞ]VœÃÌÃ]Ì>Àˆvv wV>̈œ˜] >˜` ˆÌà ܈ˆ˜}˜iÃà ̜ i>À˜ >˜` ܅i˜ ˜iViÃÃ>ÀÞ levels and other regulatory aspects. It was a highly decentral- change course. ized approach, with a very limited role for the national utility • Fast progress and a record fund mobilization was possible EVN, which was only selling electricity in bulk to these newly LÞ“>Žˆ˜}iiVÌÀˆwV>̈œ˜>˜>̈œ˜>«ÀˆœÀˆÌÞ]i˜}>}ˆ˜}Vi˜- created mini-distribution entities. This was a period of extremely tral, regional, and local government, along with rural com- v>ÃÌiiVÌÀˆwV>̈œ˜]܈̅̅iÀ>ÌiÕ“«ˆ˜}vÀœ“£{«iÀVi˜Ì̜È£ munities. percent in just three years—as well as record investments lever- • Fast progress is not just a matter of political commitment, it >ÃœÀiµÕˆÀiÃ>ÃÌÀœ˜}`i“>˜`>˜`>܈ˆ˜}˜iÃÃ̜«>ÞvÀœ“ FIGURE B3.2.1 'NGEVTKƂECVKQP4CVGKP8KGVPCO the participating population—when rural income rose, elec- ÌÀˆwV>̈œ˜̜œŽœvv° 100% U /…iÌÀ>`i‡œvvLiÌÜii˜ëii`>˜`ÃÕÃÌ>ˆ˜>LˆˆÌÞœviiVÌÀˆw- 80% cation efforts needs to be carefully managed. • Technical standards appropriate for rural areas should be 60% developed and enforced right from the start of the national iiVÌÀˆwV>̈œ˜«Àœ}À>“° 40% “Take off” phase U iVÌÀˆwV>̈œ˜ }œ>Ã ŜՏ` ˜œÌ …>««i˜ >Ì ̅i iÝ«i˜Ãi œv 20% ̅i˜>̈œ˜>ṎˆÌÞ½Ãw˜>˜Vˆ>ۈ>LˆˆÌÞ° 0% Source: - Ƃ, >Ãi-ÌÕ`Þ\6ˆi̘>“½Ã˜>̈œ˜>iiVÌÀˆwV>̈œ˜«Àœ}À>“]œÀ̅- 1994 1996 1998 2000 2002 2004 2006 2008 2010 2013 coming. countries have adopted the cooperative approach derived Ó>ˆÃœ>Ìi`ۈ>}iȘÀi“œÌi>Ài>Ã܅iÀiˆÌˆÃ`ˆvwVՏÌ̜ from the US experience (like Bangladesh, Costa Rica, and provide services and implement regulation. Regulation of ̅i*…ˆˆ««ˆ˜iî°-œ“iœÌ…iÀÃ…>ÛiVÀi>Ìi`,ÕÀ> iVÌÀˆw- ÀÕÀ>iiVÌÀˆwV>̈œ˜ÃV…i“iÈÃÃÕVViÃÃvՏˆvˆÌˆÃ>`>«ÌˆÛi̜ cation Agencies (REAs) to manage multi-year earmarked i˜ÃÕÀi̅>Ì>v>ˆÀ«>ވ˜}wi`ˆÃVÀi>Ìi`vœÀiiVÌÀˆVˆÌÞÃiÀ- ÀiÜÕÀViÃ̜ÃÕ««œÀÌÀÕÀ>iiVÌÀˆwV>̈œ˜«ÀœiVÌ폈Ži>ˆ] vice providers to develop cost recovery solutions and for Senegal, Uganda, and Tanzania). This approach is often consumers to be able to afford electricity tariff. >VVœ“«>˜ˆi` LÞ > ÀÕÀ> iiVÌÀˆwV>̈œ˜ v՘` ­, ® ̅>Ì ˆÃ Ƃ`iµÕ>Ìi …Õ“>˜ V>«>VˆÌÞ ˆÃ >Ãœ ÀiµÕˆÀi` ̜ ˆ“«i- managed jointly or by a separate entity. ment a successful access program. As indicated by the -“>ÀÌÀi}Տ>̈œ˜œviiVÌÀˆwV>̈œ˜iÝ«>˜Ãˆœ˜>Ãœ“>Ì- SEAR Special Feature Paper on The Power of Human Cap- ÌiÀð-ÕVViÃÃvՏiiVÌÀˆwV>̈œ˜œvÌi˜ÀiµÕˆÀiÃ̅>Ì̅iÌÀ>`ˆ- ital (Colombo et al, 2017), “over the last decade, the tional functions of regulation be performed in simpler, debate on access to energy has tended to lean mostly on non-traditional ways. This is particularly true for off-grid ÌiV…˜œœ}Þ]w˜>˜Vi]>˜`«œˆVÞ>ÃŽiÞ`ÀˆÛiÀð-V>ˆ˜}Õ« iiVÌÀˆwV>̈œ˜] ܅ˆV… ˆÃ V…>À>VÌiÀˆâi` LÞ œÜ ÀiÛi˜Õià ˆ˜ ̅iÃÌÀ>Ìi}ˆiÃvœÀ>VViÃÃ̜i˜iÀ}ÞÀiµÕˆÀiÃ>`ˆvviÀi˜Ì«iÀ- 34 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 BOX 3.3 4YCPFCoU5RGGF[4QCFVQ*KIJGT'NGEVTKƂECVKQP4CVGU ˜£™™ä]̅iÀiÜiÀi£ÇVœÕ˜ÌÀˆiÃ܅œÃiiiVÌÀˆwV>̈œ˜ get in 2012, rising further to XX percent by 2015 (Fig- rates were still in single digits, but by 2012, this num- ÕÀi ΰΰ£®° Ƃ,*ˆÃ>ˆ“i`>Ì>˜iiVÌÀˆwV>̈œ˜Ì>À}iÌ ber was reduced to three. Among the countries that of 70 percent by 2018, using grid and off-grid solu- made the leap from single to double digits, Rwanda is ̈œ˜Ã°ÌV>ÃvœÀ>˜iÜÃÌÀ>Ìi}ÞvœÀœvv‡}Àˆ`iiVÌÀˆwV>- an undisputed winner, having demonstrated the fast- tion, mirroring the coordinated approach applied to iÃÌiiVÌÀˆwV>̈œ˜«Àœ}ÀiÃð the grid rollout—but with greater emphasis on lever- ˜ˆÌˆ>Þ] iiVÌÀˆwV>̈œ˜ «Àœ}ÀiÃà Ü>à ˜œÌ ÛiÀÞ v>ÃÌ° aging private sector investments. The bottom line is iÌÜii˜£™™ä>˜`Óään],Ü>˜`>½ÃiiVÌÀˆwV>̈œ˜À>Ìi that better planning, coordination, and new technical œ˜Þ}ÀiÜvÀœ“Ó«iÀVi˜Ì̜È«iÀVi˜Ìp܈̅iiVÌÀˆw- standards have resulted in connection costs dropping cation efforts hampered by high costs per connection from an average $2,000 to $880 under EARP I to an (average $2,000), lack of funding, and uncoordinated average $698 by 2014 under EARP II. iiVÌÀˆwV>̈œ˜ivvœÀÌðœÜiÛiÀ]̅i«>Vi«ˆVŽi`Õ«ˆ˜ Rwanda’s case demonstrates that even countries 2009, when the government adopted a new Electricity with very low access rate can successfully, and rapidly, Sector Wide Approach (eSWAp), with the aim of reach- ÃV>i Õ« iiVÌÀˆwV>̈œ˜ À>Ìið /…i ŽiÞ v>V̜Àà Li…ˆ˜` ˆ˜} £È «iÀVi˜Ì iiVÌÀˆwV>̈œ˜ À>Ìi LÞ Óä£Î° /…ˆÃ Rwanda’s success are: (i) a strong focus on implemen- approach was underpinned by: (i) an ambitious, yet tation— common target and monitoring system for all ˆ“«i“i˜Ì>Li iiVÌÀˆwV>̈œ˜ Ì>À}iÌÆ ­ˆˆ® > }iœÃ«>̈> development partners, and adherence to the agreed least cost plan; (ii) an investment prospectus to rally iiVÌÀˆwV>̈œ˜«>˜Æ­ˆˆ®}œÛiÀ˜“i˜Ìi>`iÀň«>˜`ÃÕÃ- i݈Ã̈˜}>˜`˜iÜw˜>˜VˆiÀÃÆ>˜`­ˆÛ®>œˆ˜ÌVœœÀ`ˆ˜>- tained commitment to the program; (iii) geospatial tion and monitoring system. In addition, technical least-cost planning, which has allowed a cost-effective standards were revised to drive costs per connection prioritization of investments; (iv) an investment pro- down. The SWAp was implemented through the Elec- spectus to help mobilize resources; and (v) affordable tricity Access Rollout Program (EARP), executed by the connections for households, while lowering costs per ˜>̈œ˜>ṎˆÌÞ]>˜`w˜>˜Vi`LÞ“Տ̈«i`œ˜œÀð connection for the utility. ƂÈÌÌÕÀ˜i`œÕÌ],Ü>˜`>½ÃiiVÌÀˆwV>̈œ˜À>ÌiÀœÃi µÕˆVŽÞ]“iï˜} Ƃ,*½Ã£È«iÀVi˜ÌiiVÌÀˆwV>̈œ˜Ì>À- FIGURE B3.3.1 Rwanda: Cumulative electricity connections 1,200,000 1,000,000 EARP target 800,000 achieved EARP ahead of time 600,000 starts 400,000 200,000 0 1990 2006 2007 2008 2009 2010 2011 2012 2013 2014 2018 target Source: SEAR Case Study: Rwanda—Sector-Wide Planning for Universal Access, Forthcoming. spective and an innovative approach to capacity building important as electricity access is a long-term process that needs to be put in place. In line with the aim of the Agenda involves many specialized tasks (such as planning, sus- 2030 of “no one left behind” and its focus on people, the tained implementation, operation and maintenance, mon- cross-cutting role of human capital, individually and collec- itoring, and impact assessment). tively, as communities and institutions, becomes crucial both as a catalyst and a booster. Indeed, without the 2TGFKEVCDNG ƂPCPEKPI OGEJCPKUOU Financing mecha- proper human resources, accompanying and adapting the ˜ˆÃ“à ̜ ÃÕ««œÀÌ iiVÌÀˆwV>̈œ˜ œv ÀÕÀ> >˜` «iÀˆ‡ÕÀL>˜ «ÀœViÃÃÃÕ««œÀÌi`LÞÌiV…˜œœ}Þ]w˜>˜Vi]>˜`«œˆVÞ]˜œ Vœ““Õ˜ˆÌˆià Û>ÀÞ `i«i˜`ˆ˜} œ˜ ̅i iiVÌÀˆwV>̈œ˜ «Àœ}ÀiÃÃV>˜LiÀi>ÞÌÕÀ˜i`ˆ˜Ìœ>˜ivwVˆi˜Ì>˜`ivviV- >««Àœ>V… >`œ«Ìi`° 7…i˜ ÀÕÀ> iiVÌÀˆwV>̈œ˜ ˆÃ ՘`iÀ- ̈Ûi] iµÕˆÌ>Li >˜` i“«œÜiÀˆ˜} œ˜} >Ã̈˜} ÌÀ>˜ÃvœÀ“>- taken by the national utility, resources are channeled ̈Ûi V…>˜}i vœÀ >VViÃà ̜ i˜iÀ}Þ°» ˜`ii`] >`iµÕ>Ìi ̅ÀœÕ}…̅iṎˆÌÞ̜Li˜iwÌvÀœ“œÜiÀVœÃÌÃp̅>˜ŽÃ̜ human resources are essential for planning, implementing, iVœ˜œ“ˆiÃœvÃV>i>˜`ÃVœ«iˆ˜«>˜˜ˆ˜}]w˜>˜Vi]Ìi˜`iÀ- and monitoring access programs. This is particularly ing, investment, and operation and maintenance (Mostert, CR EAT ING A BET T ER ENVIRONMENT FOR T RANSFORMAT IVE ENERGY A C C E SS 35 BOX 3.4 7UKPI2WDNKE5GEVQT(KPCPEKPIHQT'NGEVTKƂECVKQP • CHINA: Strong state support and the ability to • SOUTH AFRICA:-ˆ˜ViÓääÎ]iiVÌÀˆwV>̈œ˜՘`iÀ̅i engage the local communities to create local ˜Ìi}À>Ìi` >̈œ˜> iVÌÀˆwV>̈œ˜ *Àœ}À>“ …>à infrastructure have contributed to the success of Lii˜ w˜>˜Vi` LÞ ̅i ÃÌ>Ìi LÕ`}iÌ° ƂÌ…œÕ}… …ˆ˜>½Ã˜i>À£ää«iÀVi˜ÌiiVÌÀˆwV>̈œ˜°՘`ÃvœÀ -"ˆ˜ˆÌˆ>Þ̅œÕ}…Ì̅iiiVÌÀˆwV>̈œ˜«Àœ}À>“ ÀÕÀ> iiVÌÀˆwV>̈œ˜ …>Ûi yœÜi` vÀœ“ ̅i Vi˜ÌÀ> VœÕ`LiÃiv‡w˜>˜Vi`]ˆÌLiV>“i>««>Ài˜Ì̅>Ì̅ˆÃ and local governments, with local residents even was unlikely, prompting the state to take responsi- «>À̈Vˆ«>̈˜}° /…i `iVi˜ÌÀ>ˆâi` iiVÌÀˆwV>̈œ˜ ˆÃ bility for funding infrastructure development and either fully funded by the central government or subsidizing supply. The improvement in the electri- involves a cost-sharing scheme with the provincial wV>̈œ˜À>ÌiV>˜Li«>À̈>Þ>ÌÌÀˆLÕÌi`̜̅iÃÌ>Ìi government. funding of the program. • BRAZIL:-iÛiÀ>«Àœ}À>“Ã]܈̅`ˆvviÀi˜Ìw˜>˜Vˆ˜} • INDIA: 1˜`iÀ̅i,>ˆÛ>˜`…ˆ,ÕÀ> iVÌÀˆwV>̈œ˜ structures, have contributed to Brazil’s high rates *Àœ}À>“]>՘V…i`ˆ˜Óääx]̅iiiVÌÀˆwV>̈œ˜À>Ìi œviiVÌÀˆwV>̈œ˜°/…iiiVÌÀˆwV>̈œ˜«Àœ}À>“*,"‡ has risen substantially. The central government pro- DEEM was funded by donor agencies and the vides 90 percent of the funds, and the provincial federal government, while the rural power supply government provides the rest for infrastructure program (LnC) and the Lights for All program (LpT) `iÛiœ«“i˜Ì°/…iÀiˆÃ>Ãœ>È}˜ˆwV>˜ÌV>«ˆÌ>ÃÕL- were funded by the federal government—with the È`ÞvœÀœvv‡}Àˆ`iiVÌÀˆwV>̈œ˜«ÀœiVÌð states contributing about 10 percent of the cost. Source: Bhattacharyya 2013. 2008). Over the years, China, Brazil, South Africa, and India Vˆi˜Ì]ivviV̈Ûi]>˜`iµÕˆÌ>Li­ >À˜iÃ]ÓääÇÆ7œÀ` >˜Ž] have successfully dedicated public funding to support 2010; World Bank 2011; World Bank IEG, 2015). Many iiVÌÀˆwV>̈œ˜]>Ì…œÕ}…i>V……>ÃÌ>Ži˜ˆÌÜܘ>««Àœ>V… countries have provided subsidies to support initial capital (Box 3.4). VœÃÌÃœvÀÕÀ>iiVÌÀˆwV>̈œ˜ˆ˜vÀ>ÃÌÀÕVÌÕÀi°/…iÃiÃÕLÈ`ˆià are used to partially cover the high costs of supply of Affordable electricity services. Determining what is remote communities and to incentivize distribution utilities affordable is a complex calculation, typically involving or other actors to engage in these settings. The capital three interrelated dimensions: (i) affordability by con- subsidy could be determined through competitive bidding sumers for connection fees and consumption costs; (ii) in the case of multiple service providers, or as the differ- affordability by electricity service providers for opera- ence between the unit cost and the willingness to pay of ̈œ˜>>˜`w˜>˜Vˆ>ۈ>LˆˆÌÞÆ>˜`­ˆˆˆ®wÃV>>vvœÀ`>LˆˆÌÞœv poor households for electricity access. In Bangladesh, a subsidies needed for sustainable supply and expansion system of subsidies that supports the viability of the elec- of electricity access by local and national government tricity cooperatives includes: (i) long-tenor loans, low-inter- (World Bank, 2011). If the electricity tariff is not afford- iÃÌ À>ÌiÃ] >˜` wÛi‡Þi>À }À>Vi «iÀˆœ`ÃÆ ­ˆˆ® > }œÛiÀ˜“i˜Ì able to potential customers, they will not connect to the }À>˜Ì̜̅i,ÕÀ> iVÌÀˆwV>̈œ˜ œ>À`]VœÛiÀˆ˜}œ˜i‡Ì…ˆÀ` service. But if it is too low, the service provider will not of the capital costs; (iii) a low bulk energy tariff; and (iv) be able to collect enough revenues to cover operation V>ŇyœÜÃÕ««œÀÌ̜̅iVœœ«iÀ>̈ÛiÃ]VœÛiÀˆ˜}Õ«̜wÛi and maintenance costs. years of operation (World Bank 2010). To achieve this balance, some countries (Peru and Connection cost subsidies are used when the connec- Colombia) have implemented mechanisms to transfer tion cost barrier to electricity services is high even when resources from electricity distribution in urban areas to distribution lines are constructed. The connection charge deliver electricity to isolated areas, which meets the condi- ˆÃ`iw˜i`>Ã̅iVœÃÌ̜Vœ˜˜iVÌ̅iVœ˜ÃՓiÀ½Ãœ>`̜ ̈œ˜Ã œv «ÀœÛˆ`ˆ˜} >vvœÀ`>Li À>Ìià >˜` ÃÕvwVˆi˜Ì ˆ˜Vœ“i the existent grid. Some connection cost subsidy programs for the service provider, and also funding for the invest- >Ài `iÈ}˜i` >à ÀiÃՏÌÇL>Ãi` w˜>˜Vˆ˜} œÀ œÕÌ«Õ̇L>Ãi` ment subsidy (IDB,2015). In Chile, the last mile in rural aid (OBA), meaning that subsidy payments are based on iiVÌÀˆwV>̈œ˜ ˆÃ Liˆ˜} >V…ˆiÛi` LÞ ˆ˜VœÀ«œÀ>̈˜} >˜ ˆ˜`i«i˜`i˜Ì ÛiÀˆwV>̈œ˜ œv œÕÌ«ÕÌÃ] œvÌi˜ “iÌiÀi` Vœ˜- income compensation mechanism for service in remote nection and a number of billing cycles. The World Bank, areas. It supplements the income, earned by applying an the Global Partnership on Output-Based Aid (GPOBA), affordable rate, with a direct government contribution to and other development partners have been piloting vari- ̜Ì> ÀiÛi˜Õi vœÀ ̅i ÃiÀۈVi «ÀœÛˆ`iÀ ̅>Ì ˆÃ ÃÕvwVˆi˜Ì ̜ ous subsidy schemes to provide the poor with basic ser- keep the system operating. vices, including electricity (grid, mini-grid, solar home However, regardless of the approach taken, numerous systems) in a number of countries (like Kenya, Ethiopia, ÃÌÕ`ˆiÃŜÜÃ̅>ÌÀÕÀ>iiVÌÀˆwV>̈œ˜iÝ«>˜Ãˆœ˜ÀiµÕˆÀià Uganda, Zambia, Liberia, Ghana, Mali, Senegal, Bangla- ܓivœÀ“œvÃÕLÈ`Þp>˜`̅iÃiÃÕLÈ`ˆiÓÕÃÌLiivw- desh, India, Bolivia, Laos PDR, and Vanuatu). 36 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 DEVELOPING OFF-GRID ELECTRIFICATION Tariff differential issues. Mini-grid tariffs are usually higher SCHEMES than utility provided electricity tariffs, especially for those consuming small amounts of electricity. Unless there is a 7…ˆi}Àˆ`‡L>Ãi`iiVÌÀˆwV>̈œ˜“>Þ…>Ûi>Àœi̜«>Þˆ˜ È}˜ˆwV>˜Ì ÃÕLÈ`Þ «ÀœÛˆ`i` ̜ “ˆ˜ˆ‡}Àˆ`Ã] ̅i Ì>Àˆvv achieving universal access to modern energy services, charged will need to fully recover the mini-grid investment there is now enormous interest in renewable energy-based and operating costs. Even when differential tariffs are per- “ˆ˜ˆ‡}Àˆ`Ã]>Ã̅iÞœvviÀ>“i>˜ÃœvÃÕ««Þˆ˜}º}Àˆ`‡µÕ>- mitted, such as in Tanzania or Bangladesh, political realities ˆÌÞ»«œÜiÀ̜Vœ““Õ˜ˆÌˆiõՈVŽÞ܈̅œÕÌ…>ۈ˜}̜Ü>ˆÌ may prevent charging a vastly different tariff. In Bangla- many years for the distribution network to reach distant `iÅ]̅iÌ>ÀˆvvvœÀ̅iwÀÃÌ܏>À‡`ˆiÃi“ˆ˜ˆ‡}Àˆ`œ˜->˜`- communities. Nevertheless, there are challenges that must wip Island was set at $0.40 per kWh, six times higher than be addressed to ensure that the mini-grids are the least- the average grid-based tariff of about $0.07 per kWh. Ini- cost solution, that they continue to provide affordable tially, the higher tariff was not an issue, as consumers were electricity services over the long term, and that key risks running their own expensive small diesel generators. But it are mitigated to offer viable business opportunities. Which LiV>“i>˜ˆÃÃÕi>vÌiÀ̅i,ÕÀ> iVÌÀˆwV>̈œ˜ œ>À`­, ® are the biggest challenges? They cover a wide range of set up its own diesel generation mini-grid on the same w˜>˜Vˆ>]ÌiV…˜ˆV>]Ài}Տ>̜ÀÞ]>˜`«œˆVÞˆÃÃÕið island and started charging customers the national aver- age tariff. High up-front investment. Renewable energy mini-grids can have high initial costs. These costs are incurred upfront Stranded assets problem. Another challenge centers to build the capital intensive power plant to meet antici- around assets that become obsolete or nonperforming pated load growth. If demand does not materialize to the well ahead of their useful life—known as stranded assets. same extent or does so at a slower pace, the plant will be The reality is that if the grid eventually reaches the mini- ՘`iÀṎˆâi`>˜`̅iÀiÛi˜ÕiȘ>`iµÕ>Ìi̜VœÛiÀVœÃÌð grid service area, even if the network is built for grid-com- patibility, the investment in generation assets may not be Regulatory uncertainties. i˜`iÀà >˜` ˆ˜ÛiÃ̜Àà ÀiµÕˆÀi recoverable. Thus, policies to permit recovering the invest- Ài}Տ>̜ÀÞViÀÌ>ˆ˜ÌÞˆ˜œÀ`iÀ̜ˆ˜ÛiÃ̈˜>˜`w˜>˜Vi“ˆ˜ˆ‡ ment are needed and some countries have made such grids and provide services over the long term. Larger mini- provisions. }Àˆ`ÃÀiµÕˆÀiÀi}Տ>̈œ˜Ã̜«iÀ“ˆÌ̅ˆÀ`«>À̈iÃ̜«ÀœÛˆ`i electricity services, authorize concessions, adopt tariff set- Management and operations capabilities. The mini-grid ting rules and tariff approval procedures, and to establish ˆÃ>˜iiVÌÀˆVṎˆÌÞLÕȘiÃÃ]>˜`>ÃÃÕV…]ÀiµÕˆÀiÃV>«>Li safety and service standards. In Rwanda, the government managers and operators. But skilled manpower may be adopted a regulatory framework in 2015 to facilitate mini- `ˆvwVՏÌ̜w˜`>˜`ÀiÌ>ˆ˜ˆ˜Ài“œÌiœV>̈œ˜Ã° grid development (Box 3.6). BOX 3.5 Rwanda’s Regulatory Framework for Mini-grids In 2015, in an effort to overcome the regulatory risks Importantly, it permits differential tariffs and pro- that might inhibit mini-grid development, the Rwanda ۈ`iÃȓ«iÀiµÕˆÀi`ÀiÛi˜ÕiÌ>ÀˆvvV>VՏ>̈œ˜ÀՏiÃ\­ˆ® Utilities Regulatory Agency (RURA) issued its “Regula- the reasonable costs of operating the grid, including ̈œ˜œÛiÀ˜ˆ˜}̅i-ˆ“«ˆwi`ˆVi˜Ãˆ˜}À>“iܜÀŽvœÀ depreciation charges and fuel costs if any, plus; (ii) a ,ÕÀ> iVÌÀˆwV>̈œ˜ ˆ˜ ,Ü>˜`>°» /…iÃi Ài}Տ>̈œ˜Ã Ài>ܘ>LiÀiÌÕÀ˜œ˜̅i˜iÌwÝi`Û>Õiœv̅i}i˜iÀ- support the government’s commitment to electrify 22 ation and distribution assets, plus; (iii) a reasonable percent of the population using off-grid means by margin to cover the costs of supply activities; and less Óä£ÇÉ£n° "˜ ̅i w˜>˜Vˆ> È`i] ˜iÀ}ˆâˆ˜} iÛiœ«- ­ˆÛ®ÃÕLÈ`ˆiÃœÀ}À>˜ÌÃÀiViˆÛi`ëiVˆwV>ÞvœÀ̅i«ÕÀ- “i˜Ì ,Ü>˜`> ­i` LÞ < >˜` w˜>˜Vi` LÞ `œ˜œÀî pose of lowering tariff levels. The tariffs can be offers up to a 70 percent subsidy on investments in reviewed by RURA if there are customer complaints. privately owned and operated mini-grids of up to 100 However, a complaint based on the fact that the mini- kW installed capacity. grid tariff is higher than the national grid tariff is not an Very small isolated grids under 50 kW are exempt acceptable reason for review. vÀœ“ˆVi˜Ãˆ˜}œÌ…iÀ̅>˜˜œÌˆwV>̈œ˜̜,1,Ƃ°˜VÀi>Ã- Sources: Rwanda Utilities Regulatory Agency, Regulation No. ˆ˜}Þ] ȓ«ˆwi` Ài}Տ>̈œ˜Ã ܈ >««Þ vœÀ “ˆ˜ˆ‡}Àˆ`à ä£É,É ‡ 7-É,1,ƂÉÓä£x œÛiÀ˜ˆ˜} ̅i -ˆ“«ˆwi` ˆVi˜Ãˆ˜} with capacities of 100 to 1,000 kW and small mini-grids À>“iܜÀŽvœÀ,ÕÀ> iVÌÀˆwV>̈œ˜ˆ˜,Ü>˜`>° …ÌÌ«\ÉÉÜÜÜ°ÀÕÀ>°ÀÜÉwi>`“ˆ˜É`œVÃÉ,1,Ƃ‡-ˆ“«ˆwi`ÚˆVi˜Ãˆ˜}Ú in the 50 to 100 kW range. The Electricity Licensing Regulations_FINAL_APPROVED.pdf. Mirco Gaul, Rwanda offers a Regulation of 2013 will apply for large mini-grids strong policy and regulatory framework for mini-grid, Alliance for (above 1 MW). ,ÕÀ> iVÌÀˆwV>̈œ˜ÞLÀˆ`ˆÃ>̈œ˜>˜`ˆ˜ˆ‡}Àˆ`à iÜÏiÌÌiÀ] October 2015. http://ruralelec.org/index.php?id=678#c9526. CR EAT ING A BET T ER ENVIRONMENT FOR T RANSFORMAT IVE ENERGY A C C E SS 37 TABLE 3.2 Measures to facilitate developing mini-grids KEY ASPECTS ACTIONS AND SOLUTIONS POLICY Establish a clean set of rules for scaling up the central grid. This is critical for assuring mini-grid operators that they will be properly compensated if and when the centralized grid becomes available. Support productive use/enterprise development to increase local abilities to pay for energy, thus increasing demand. Provide risk guarantees, tax cuts, or other market incentives to private mini-grid operators. REGULATORY ,i}Տ>̈œ˜ŜՏ`Liˆ}…̇…>˜`i`>˜`ȓ«ˆwi`°   ÃÌ>LˆÃ…Ài>ˆÃ̈V>˜`>vvœÀ`>LiµÕ>ˆÌÞÃÌ>˜`>À`ð-Ì>˜`>À`ÃŜՏ`>``ÀiÃëœÜiÀµÕ>ˆÌÞ]ÃiÀۈViµÕ>ˆÌÞ]>˜` Vœ““iÀVˆ>µÕ>ˆÌÞ̜v>VˆˆÌ>Ìi˜iÜVœ˜˜iV̈œ˜Ã>˜`>VVÕÀ>ÌiLˆˆ˜}°   ii}>Ìi“ˆ˜ˆ‡}Àˆ`Ài}Տ>̈œ˜Ã̜>˜iÃÌ>LˆÃ…i`ÀÕÀ>iiVÌÀˆwV>̈œ˜>}i˜VÞ°ƂœÜÌ>ÀˆvvÃiÌ̈˜}>˜`ÃÕLÈ`ޏiÛiÃ to account for local circumstances. TECHNICAL   iÜÕÀVi>ÃÃiÃÓi˜Ì>˜`>VVÕÀ>ÌiÈ∘}œv̅i“ˆ˜ˆ‡}Àˆ`ˆÃŽiÞ̜«ÀœÛˆ`ˆ˜}µÕ>ˆÌÞ«œÜiÀ>˜`“iï˜}vÕÌÕÀi , œ>`ÀiµÕˆÀi“i˜Ìð Adding batteries to hybrid power systems that have variable renewable energy ensures that electric power is >Û>ˆ>Li>˜`V>˜«ÀœÛˆ`ivÀiµÕi˜VÞ>˜`ۜÌ>}iÃÌ>LˆˆÌÞ° Local involvement and training is essential for a successful reliable power system from mini-grids. Training and scheduled O&M services can increase life and reliability of the system. FINANCIAL Encourage cluster-based mini-grid development to ensure bankability and commercial viability.  "vviÀœ˜}‡ÌiÀ“w˜>˜Vˆ>ÃÕ««œÀ̈˜̅ivœÀ“œvÃÕLÈ`ˆiÃ]œ>˜Ã]}À>˜ÌÃ]>˜`ˆ˜ÛiÃ̓i˜Ìˆ˜Ài˜iÜ>Lii˜iÀ}Þ  service companies. Consider the long-term investment in renewable hybrid mini-grids— typically the least cost solution among mini-grids for most locations over the long term.  -  Õ««œÀÌ«>À>iVÀi>̈œ˜œv«Àœ`ÕV̈ÛiiVœ˜œ“ˆVÃiÀۈViÃ܈̅ˆ˜̅i«ÀœiVÌ̜…i«i˜ÃÕÀiw˜>˜Vˆ>ۈ>LˆˆÌÞ] long-term project sustainability, and revenues. Source: Extracted and adapted from Clean Energy Ministerial 2013. Supply and demand mismatch. Given the seasonality of • In Bangladesh, the potential for productive uses by hydro, solar, and wind, mini-grids powered by these cooperatives is a key factor in increasing revenues and sources will invariably result in under-utilization of the “iï˜}̅iÀiµÕˆÀi“i˜ÌÃ̜µÕ>ˆvÞvœÀiiVÌÀˆwV>̈œ˜° resource because the system must be sized to meet Thus, cooperatives are encouraged to engage in pro- demand during months where resource availability is low. ductive uses, especially in agriculture (like rice mills and Today, diesels are cost-effective for balancing loads, but tube-wells). they add a high recurring cost. Similarly, batteries are • In Thailand, the Provincial Electricity Authority (PEA) has costly. Some amount of demand management can be successfully promoted replacing diesel motors with undertaken where there are loads that can be discon- electric motors, mostly for rice mills, in villages with nected during times when resource availability is low. How- lower-than-expected consumption of electricity. To this iÛiÀ]>Lˆœ“>ÃÃ}>ÈwiÀ‡L>Ãi`“ˆ˜ˆ‡}Àˆ`ˆÃ`i«i˜`i˜Ìœ˜> i˜`]ˆÌ…>Ãv>VˆˆÌ>Ìi`w˜>˜Vˆ˜}vœÀۈ>}iÃ̜«ÕÀV…>Ãi year-round availability of fuel at an acceptable price. Thus, iiVÌÀˆV“œÌœÀÃ>˜`œÌ…iÀiµÕˆ«“i˜Ì° there is a risk that once such a mini-grid is built, fuel prices might rise unless there is a diversity of supply within a rea- • In Cuzco, Peru, there has been a promotional and mar- sonable transport distance from the plants. keting campaign to encourage productive uses of elec- tricity and develop business assistance in rural areas to Need for anchor or productive loads. An important «Àœ“œÌi iVœ˜œ“ˆV >V̈ۈ̈ià Ṏˆâˆ˜} iiVÌÀˆV> iµÕˆ«- ÕÃ̈wV>̈œ˜ vœÀ > “ˆ˜ˆ‡}Àˆ` >˜` ˆÌà w˜>˜Vˆ> ۈ>LˆˆÌÞ ˆÃ ment. This region has up to 800 micro-entrepreneurs anchor customers and productive loads—especially that are being supported in the adoption or the increase daytime loads. They can use the power generated when of electricity for productive uses (mainly milling, coffee, household demand is low and would be willing to pay a cocoa, bakery, dairy products, and carpentry) (Tarnaw- premium tariff (less costly than running their own gener- iecki 2009). ators). But there are two important barriers to the pro- So what can be done to facilitate the development of mini- ductive use of electricity: the lack of technical knowledge grids? The possible measures are many, falling into the >˜`ΈÃœv«œÌi˜Ìˆ>ÕÃiÀÃ>˜`̅iw˜>˜Vˆ>“i>˜Ã̜ >Ài>à œv «œˆVÞ] Ài}Տ>̜ÀÞ] ÌiV…˜ˆV>] >˜` w˜>˜Vˆ> ­/>Li >VµÕˆÀiÀiiÛ>˜ÌiµÕˆ«“i˜Ì­ -Ƃ*Óään®°/…>̈Ã܅Þ 3.2). One recent study (Walters et al, 2015) that focuses on several countries are taking steps to encourage more case studies of public-private partnerships in Bangladesh, productive uses. Ethiopia, Mali, Mexico, and Nepal, suggests four main 38 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 areas: (i) establishing an enabling policy development for • SPP Option where the mini-grid operator sells electric- planning and coordination with clear rules on detailed ity to the operator of the national grid but no longer to «>˜ÃvœÀ}Àˆ`iÝÌi˜Ãˆœ˜>˜`ˆ`i˜ÌˆwV>̈œ˜œvœvv‡}Àˆ`iiV- its local customers. ÌÀˆwV>̈œ˜ˆ˜ÌiÀÛi˜Ìˆœ˜Ã܈̅Ài}Տ>̜ÀÞˆ˜Vi˜ÌˆÛiÃÆ­ˆˆ®V>Ì>- • Buyout Option where the SPP sells its distribution grid Þ∘} w˜>˜Vi ̜ i˜VœÕÀ>}i «ÀˆÛ>Ìi ÃiV̜À œ«iÀ>̜Àà ̜ to the national grid operator or other entity designated Li˜iwÌ vÀœ“ > Àiˆ>Li >˜` «Ài`ˆVÌ>Li w˜>˜Vˆ> “iV…>- by the regulator and receives compensation for the sale nisms (including subsidies, concessionary loans, and of the assets. reduced taxes and duties; (iii) building human capacity needed at the local level to support interventions; and • Combined SPP and SPD Option where the SPP converts (iv) integrating electricity access with development pro- to an SPD and also maintains a backup generator as a grams to enable access to alleviate poverty and to enhance supply source to the main grid and retail customers. human development. Ƃœ˜}̅iÃ>“iˆ˜iÃ]6 *­Ó䣣®ˆ`i˜ÌˆwiÃ̅ivœ- Case Study: Ethiopia and GIS Models lowing areas: (i) improving policy and regulatory frame- What would need to happen in Ethiopia to provide better work with an alignment with rural development goals, a electricity access and services in a cost-effective manner, reduction of transaction costs by simplifying licensing combining grid and off-grid solutions? A Special Feature and approval schemes, and setting up suitable tariffs and prepared for the SEAR report by Howells et al. (2017) on subsidies; (ii) careful considering technical choices to iiVÌÀˆVˆÌÞ«>˜˜ˆ˜}ÌÀˆiÃ̜>˜ÃÜiÀ̅ˆÃµÕiÃ̈œ˜LÞÕȘ} i˜ÃÕÀi ÃÕvwVˆi˜Ì «Àˆ“>ÀÞ i˜iÀ}Þ ÀiÜÕÀViÃ] `iÈ}˜ Geographical Information System (GIS) models. These schemes based on local context, and invest in technology models enable analysts to assess the cost of electricity pro- development and manufacturing; (iii) securing predict- vision and energy cost implications of competing techno- >Li w˜>˜Vˆ˜} ̜ VœÛiÀ œ«iÀ>̈œ˜>] “>ˆ˜Ìi˜>˜Vi] >˜` logical systems in space and time. The use of GIS-based management costs; and (iv) ensuring that all relevant analyses has increased since the mid-1990s with a clear stakeholders are engaged in the project with provisions focus on using levelized cost (that is, the breakeven cost) for capacity building. for choosing the appropriate technology. The Ethiopia study relies on two tools: (i) the ONSSET– Planning for Complementarity of Grid and -‡L>Ãi` ̜œ vœÀ ÀÕÀ> iiVÌÀˆwV>̈œ˜ ̜ `iÌiÀ“ˆ˜i ̅i Off-Grid Electricity Solutions. cost optimal way of providing high levels of electricity ˜“>˜ÞVœÕ˜ÌÀˆiÃ܈̅>œÜiÛiœviiVÌÀˆwV>̈œ˜>VViÃÃ] access; and (ii) the OSeMOSYS tool to determine the cost where both grid and off-grid solutions are being devel- optimal way of expanding grid-based bulk generation. The oped, it is important to ensure complementarity of these combination of these two tools forms a consistent solutions. Often, off-grid solutions are developed in geo- >««Àœ>V…̜“ˆ˜ˆ“ˆâˆ˜}̅iVœÃÌœviiVÌÀˆwV>̈œ˜­ iŽŽiÀ graphic areas far from the grid to provide communities et al. 2008) while concurrently meeting the economics of with electricity services sooner than the grid. Take the case ÃÕ««Þˆ˜} LՏŽ µÕ>˜ÌˆÌˆià œv œÜ VœÃÌ] Àiˆ>Li iiVÌÀˆVˆÌÞ° of Cambodia, where, as a study by Tenenbaum et al (2014) Per capita electricity consumption in Ethiopia is low at explains, there was a lack of policy on what to do when the 52kWh—compared to 13,246kWh in the United States and grid reached the mini-grids. Eventually the situation was 1,743 kWh in neighboring Egypt (World Bank, 2014). resolved by the regulator issuing licenses to transform the mini-grids into distribution utilities—but it underscores the Providing High Levels of Electricity Access need for planning upfront for the eventual arrival of the /…ii>ÃÌVœÃÌVœ˜w}ÕÀ>̈œ˜œv}Àˆ`]“ˆVÀœ‡}Àˆ`]>˜`ÃÌ>˜`‡ }Àˆ` ̜ }ˆÛi ˆ˜ÛiÃ̜Àà “œÀi Vœ˜w`i˜Vi ̜ `iÛiœ« “ˆ˜ˆ‡ alone technologies to meet two rural (50 and 150 kWh/ grids in rural and remote areas. The study recommends V>«ˆÌ>ÉÞi>À®>˜`œ˜iÕÀL>˜iiVÌÀˆwV>̈œ˜Ì>À}iÌ­ÎääŽ7…É four options for when the grid arrives: capita/year) are considered. As Figure 3.3 shows, a higher • Small Power Distributor (SPD) Option where the Small target results in the deployment of grid and mini-grid sys- Power Producer (SPP) operating a mini-grid converts to tems, with remote and low density populations relying on distributor that buys electricity at whole sale from the ÃÌ>˜`‡>œ˜iiiVÌÀˆwV>̈œ˜°/…iV…>˜}iˆ˜ÌiV…˜œœ}ÞvÀœ“ national grid and resells it at retail to its local customers. high to low is indicated in Table 3.3, with a noticeably large shift to stand alone systems. TABLE 3.3 Optimal split for new connections 2QRWNCVKQPDCUGFHQTFKHHGTGPVTWTCNGNGEVTKƂECVKQPVCTIGVU SPLIT POPULATION (150/300) POPULATION (50/300) CHANGE Grid 65,431,650 62,270,395 ↘ –4.8% Mini Grid 3,958,695 245,825 ↘ –93.8% Stand Alone 656,767 7,530,892 ↗ 1046.7% CR EAT ING A BET T ER ENVIRONMENT FOR T RANSFORMAT IVE ENERGY A C C E SS 39 FIGURE 3.31RVKOCNGNGEVTKƂECVKQPOKZKP'VJKQRKC A. Higher target B. Lower target Source: Author’s calculation based on Mentis et al 2016 b. FIGURE 3.4 Higher levels of provision mean lower rural area costs Spatial levelized cost of electricity A. Higher levels of provision B. Lower levels of provision Source: Author’s calculation based on Mentis et al 2016 b. Underlying the shift in technology is how the cost of pared to just diesel stand-alone options. PV stand-alone electricity. Figure 3.4 indicates how the levelized cost of technology would be more viable than diesel stand alone supply on a geo-spatial basis changes in response to the for 22,624,921 people (or 32 percent of the population higher and lower supply targets. With higher levels of pro- ̅>̘ii`Ã̜LiiiVÌÀˆwi`®°v}Àˆ`iÝÌi˜Ãˆœ˜>˜`“ˆ˜ˆ‡ vision, the cost per unit is reduced in rural areas. With }Àˆ`ÌiV…˜œœ}ˆiÃÜiÀi̜Vœ˜ÌÀˆLÕÌi̜̅iiiVÌÀˆwV>̈œ˜ lower targets, unit costs are higher. Note that costs near mix of the country, only 656,767 people would be electri- the grid in urban areas remain unchanged, following their wi`LÞÃÌ>˜`‡>œ˜iÃÞÃÌi“í`ˆiÃi]*6®°® Vœ˜ÃÌ>˜ÌiiVÌÀˆwV>̈œ˜Ì>À}iÌ° Thus, an optimal deployment strategy would include What would happen if electricity costs increase where extra grid extension and the deployment of micro-grids— there is no systematic deployment of solar and mini- information that could be used to support better poli- grids? As Figure 3.5 (panel A) shows, if the grid is not cy-making. And knowing the cost optimal deployment extended and users only have access to diesel genera- V…>À>VÌiÀˆÃ̈Và VœÕ` Li ÕÃi` ̜ `iÛiœ« ëiVˆwV «œˆ- tors, electricity costs are high. But if the PV market cies—ranging from state-led deployment to facilitation of LiVœ“ià “œÀi yՈ`] œÀ ̅i }œÛiÀ˜“i˜Ì …i«Ã v>VˆˆÌ>Ìi market development. At this point, Ethiopia is undergoing ˆ˜ÛiÃ̓i˜Ì]̅iVœÃÌœvÀÕÀ>iiVÌÀˆwV>̈œ˜`Àœ«ÃÈ}˜ˆw- rapid expansion in its generation capacity. Consistent with cantly (Figure 3.5, panel B). This occurs because the the most recent eastern African power pool development deployment of PV stand-alone solutions decreases the plan (EAPP/EAC, 2011), the power system grew by 20 per- levelized cost of electricity in some settlements as com- cent between 2013 and 2016, increasing by over 4.7GW. 40 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 3.5 A case for more grids and PV solar (Spatial levelized cost of electricity for the electricity access targets 150-300 kWh/capita/year A. Grid and stand alone diesel B. Grid, stand alone diesel and solar PV Source: Author’s calculation based on Mentis et al 2016 b. Note: ivÌ«>˜i\*œ«Õ>̈œ˜>Ài>`ÞVœ˜˜iVÌi`̜̅i}Àˆ`ˆÃ}Àˆ`Vœ˜˜iVÌi`>˜`̅iÀiÃÌ>ÀiiiVÌÀˆwi`LÞÃÌ>˜`‡>œ˜i`ˆiÃi° ,ˆ}…Ì«>˜i\*œ«Õ>̈œ˜>Ài>`ÞVœ˜˜iVÌi`̜̅i}Àˆ`ˆÃ}Àˆ`Vœ˜˜iVÌi`>˜`̅iÀiÃÌ>ÀiiiVÌÀˆwi`LÞÃÌ>˜`‡>œ˜i`ˆiÃi>˜`*6܏>À° One baseline projection (WB) of electricity growth is MAKING ELECTRICITY ACCESS PROGRAMS around 5 percent per year. TRANSFORMATIVE When designing electricity access programs, it is essential Pinpointing the lowest cost route for grid expansion to ensure that a holistic view on the ultimate developmen- To determine the lowest cost expansion of the grid-based tal outcomes prevails. But it is also becoming clear that for electricity system, the Open Source energy Modeling Sys- these programs to be transformative, special attention tem (OSeMOSYS)—which is driven by demand for “grid” should be paid to productive uses of electricity services— electricity resulting from the ONSSET analysis, as well as a `iw˜i` >à >}ÀˆVՏÌÕÀ>] Vœ““iÀVˆ>] >˜` ˆ˜`ÕÃÌÀˆ> >V̈ۈ- national projection of other (bulk) demand growth (based ̈iÃ̅>ÌÀiµÕˆÀiiiVÌÀˆVˆÌÞÃiÀۈViÃ>Ã`ˆÀiV̈˜«ÕÌÃ̜̅i on GDP projections) is used. It captures potential candi- production of goods or provision of services (EUEI PDF, date power plants, fuel costs, and resource availability (fos- 2011) (Box 3.7). sil and renewable) to calibrate the model cost and Often, access to electricity may not automatically performance data relating to existing power plants and enhance productive uses. Enabling activities or business their retirement schedule. A cost optimal system is then development services might be needed. For example, calculated (Howells et al 2011). On the resource front, œ˜iÃÌÕ`Þ>À}ÕiÃ̅>ÌÜ>ˆÌˆ˜}vœÀiiVÌÀˆwV>̈œ˜«ÀœiVÌà hydropower is expected to form the foundation for Ethio- to generate spontaneous positive effects in rural areas pia’s electricity system (Taliotis et al 2016), although recent appears to be a passive attitude (De Gouvello and Durix, analysis (IRENA, 2014) also indicates relatively high poten- 2008). It suggests a proactive approach to facilitate tials of non-hydro renewables available. Plus, there are lim- iÝ«>˜Ãˆœ˜œv«Àœ`ÕV̈ÛiÕÃiȘVÕ`ˆ˜}\­ˆ®ˆ`i˜ÌˆwV>̈œ˜ ˆÌi`ÀiÃiÀÛiÃœvVÀÕ`iœˆ>˜`>À}iÀµÕ>˜ÌˆÌˆiÃœv˜>ÌÕÀ> of the productive activities taking place in a project area }>ð/…i“œ`i>ÃÃՓiÃ̅>̘i܏ÞiiVÌÀˆwi`…œÕÃi…œ`à and the supporting sectors; (ii) assessment of the poten- meet their demand target of 150kWh per capita in rural ̈> Vœ˜ÌÀˆLṎœ˜ œv iiVÌÀˆVˆÌÞ ˆ˜ ̅i ˆ`i˜Ìˆwi` >V̈ۈ̈ià areas and 300kWh per capita in urban areas. and sectors; (iii) technical and economic feasibility and Results show that generation investment is dominated ̅iÜVˆ>ۈ>LˆˆÌÞÃÌÕ`ˆiÃœv̅iˆ`i˜Ìˆwi`>V̈ۈ̈iÃÆ>˜` LÞ…Þ`Àœ­ˆ}ÕÀiÈ«>˜iƂ®]܈̅>À}iµÕ>˜ÌˆÌˆiÃÕÃi`vœÀ (iv) a targeted promotion campaign to potential users iÝ«œÀÌp>Ì…œÕ}…̅iÀi>ÀiÈ}˜ˆwV>˜Ì˜i܈˜ÛiÃ̓i˜ÌȘ about the gains from the use of electricity for a new pro- V>«>VˆÌÞÀiµÕˆÀi`vœÀiiVÌÀˆwV>̈œ˜­ˆ˜`ˆV>Ìi`…>Åi`ˆ˜ià duction process involving various stakeholders (such as in Figure 3.6 panel B). But if trade in Africa is to reach its iiVÌÀˆVˆÌÞ ÃiÀۈVi «ÀœÛˆ`iÀÃ] iµÕˆ«“i˜Ì “>˜Õv>VÌÕÀiÀÃ] cost optimal potential, Ethiopia will need to join a number w˜>˜Vˆ> ˆ˜Ã̈ÌṎœ˜Ã] ÀiiÛ>˜Ì œV> }œÛiÀ˜“i˜Ì i˜ÌˆÌˆià œvVœÕ˜ÌÀˆiÃ̅>Ì}i˜iÀ>ÌiÈ}˜ˆwV>˜ÌµÕ>˜ÌˆÌˆiÃœviiVÌÀˆV- and community organizations). (EUEI PDF, 2011 provides ity for export by 2030 (Figure 3.6 panel C) (Taliotis et al. a manual with a step by step guideline on how to support 2016). productive uses of electricity services.) The promotion of productive uses of electricity in rural areas has the potential to contribute to increasing the pro- `ÕV̈ۈÌÞœvÀÕÀ>LÕȘiÃÃ]>ÃÜi>Ã>V…ˆiۈ˜}>“œÀiivw- cient use of the electricity supply infrastructure and CR EAT ING A BET T ER ENVIRONMENT FOR T RANSFORMAT IVE ENERGY A C C E SS 41 FIGURE 3.6 Hydro will dominate in Ethiopia Generation mix Total capacity 80 16 14 60 12 Capacity (GW) 40 10 Generation (Twh) 8 20 6 0 4 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2 –20 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 –40 Generation mix per country, 2030 (%) 100 80 60 40 20 0 Central African Rep. Gambia Djibouti Eritrea Algeria Benin Burkina Faso Burundi Chad Congo Guinea Kenya Liberia Rwanda Somalia South Africa Sudan Swaziland Togo Zambia Zimbabwe Morocco Guinea-Bissau Libya Uganda Gabon Malawi Nigeria Ghana Equatorial Guinea Mauritania –20 Côte d’Ivoire Egypt Tunisia Niger Cameroon Sierra Leone Mali Tanzania, United Rep. of Senegal Mozambique –40 Ethiopia Congo, the Dem. Rep. of the Angola –60 Botswana Namibia –80 Lesotho Coal HFO Wind Hydro Nuclear Dist. diesel Net imports Diesel Gas Solar Geothermal Biomass Dist. solar Electrification Source: (Taliotis et al. 2016) and author’s calculation based on Mentis et al 2016 b. improving the revenues of distribution companies— small businesses through NGOs and developed a market- ̅iÀiLÞ i˜…>˜Vˆ˜} ̅i iVœ˜œ“ˆVà œv iiVÌÀˆwV>̈œ˜° ÕÌ ing strategy for the electricity supplier (Fishbein 2003). The there are two important barriers to the productive use of Implementation Completion Report (ICR) of the project electricity: the lack of technical knowledge and skills of (World Bank, 1995) reports that the project created 66,000 «œÌi˜Ìˆ>ÕÃiÀÃ]>˜`̅iw˜>˜Vˆ>“i>˜Ã̜>VµÕˆÀiÀiiÛ>˜Ì enterprises and 22,000 new jobs in food and beverages, iµÕˆ«“i˜Ì­ -Ƃ*Óään®° light engineering, textile, wood products, rice mills and ˜ ˜`œ˜iÈ>] ̅i ÀÕÀ> iiVÌÀˆwV>̈œ˜ «Àœ}À>“ ˆ“«i- other agro-industries, small tools and metal products and mented by the World Bank in the early 1990s, pioneered roof tiles and building materials. However, it is not clear the concept of Business Development Services to facilitate how the information on impacts were collected. productive use of electricity as an integral part of rural elec- ˜*iÀÕ]̅i -Vœ˜Vi«ÌÜ>ÃÕÃi`ˆ˜>ÀÕÀ>iiVÌÀˆw- ÌÀˆwV>̈œ˜ «Àœ}À>“° /…i «ÀœiVÌ vœVÕÃi` œ˜ œÕÌÀi>V… ̜ cation project implemented in 2010, which sought to pro- 42 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 BOX 3.7 Energy Services Support Agriculture and Food Production The provision of modern energy services is essential for and need to be better tailored to local contexts, as food production and food security. An increase in experiences from energy and agricultural mechaniza- access to energy to smallholder farmers would result in: ̈œ˜ …>Ûi Ŝܘ° œÀi ëiVˆwV>Þ ̅ˆÃ “i>˜Ã ̜ >``ÀiÃÃ̅ivœœÜˆ˜}µÕiÃ̈œ˜Ã\ U ˆ}…iÀ «Àœ`ÕV̈ۈÌÞ >˜` ވi`à ۈ> ˆ“«ÀœÛi` ivw- ciency of land preparation, planting, cultivation, • What do people want energy for? irrigation, and harvesting. U 7…ˆV…ÌÞ«iÃœviµÕˆ«“i˜Ì>ÀiÕÃi`¶ • What can people afford? • Lower food losses through improvements in pro- • What about the capacity to run and maintain the ViÃȘ}] «ÀœÛˆ`ˆ˜} LiÌÌiÀ µÕ>ˆÌÞ >˜` µÕ>˜ÌˆÌÞ œv systems? «Àœ`ÕVÌÃ]ÀiµÕˆÀˆ˜}iÃÃ̈“i>˜`ivvœÀÌ­Ûˆ>i˜iÀ}Þ supported cooking, heating, storage, preservation, For poor farmers to reach these goals and achieve œÀ ÌÀ>˜ÃvœÀ“>̈œ˜ ˆ˜Ìœ …ˆ}…iÀ µÕ>ˆÌÞ «Àœ`ÕVÌîp …ˆ}…iÀˆ˜Vœ“iÃ]̅iÀi˜ii`Ã̜Li>˜ˆ“«ÀœÛi`µÕ>ˆÌÞ thus adding value. and affordability of energy supplies, an increase in the amount of energy used, and access to a wider range of • Increased earnings from more produce through appliances providing energy services. But since these new market opportunities (such as access to infor- outcomes are interlinked with non-energy factors – mation about pricing). including access to land, water, seeds, knowledge, and In order to scale-up the uptake of sustainable energy market for produce—there also needs to be a holistic solutions, practices and behaviors, it is important to approach to smallholders’ energy needs. align available solutions with local settings. Interven- Source: SEAR Special Feature Paper on Energy Access: Food and ̈œ˜ÃÀiµÕˆÀi>«iœ«i‡Vi˜ÌiÀi`ºLœÌ̜“‡Õ«»>««Àœ>V… Agriculture (Dubois et al. 2017) mote productive uses of electricity (Finucane et al. 2012). • In India, Chakravorty et al. (2014) infers that access to Three NGOs were hired to identify the target areas for electricity causes expansion of micro-enterprises that «Àœ`ÕV̈Ûi ÕÃi œv iiVÌÀˆVˆÌÞ >˜` «œÌi˜Ìˆ> Li˜iwVˆ>Àˆið create new employment and income opportunities for The role of NGOs was basically to advocate for produc- the rural population. tive use of electricity as they were paid based on their • In the Philippines, Barnes et al. (2002) reports that a performance (for example, MWh sold, and numbers of …œÕÃi…œ` ÃÕÀÛiÞ œ˜ ÀÕÀ> iiVÌÀˆwV>̈œ˜ ŜÜà ̅>Ì enterprises that increased productive uses of electricity). electricity access enhances the productive capacity They assisted small-scale producers and cooperatives to through the expansion of small variety stores, tailors `iw˜i>˜`>ÃÃiÃÃ>Û>ˆ>LiLÕȘiÃÃœ««œÀÌ՘ˆÌˆiÃ]iÃ̈- and dressmakers, food stands and restaurants, hair- “>Ìi`V>ÅyœÜ]>˜>Þâi`̅i«ÀœwÌ>LˆˆÌÞœviµÕˆ«“i˜Ì dressers and barbershops, carpentry, goldsmith, laun- and electricity infrastructure investments, and created dry, etc. ˆ˜ŽÃ ܈̅ LÕÞiÀÃ] iµÕˆ«“i˜Ì ÃÕ««ˆiÀÃ] >˜` ÜÕÀVià œv w˜>˜Vi>˜`ÌÀ>ˆ˜ˆ˜}° U ˜ÌiÀ«ÀˆÃià ܈̅ iiVÌÀˆVˆÌÞ V>˜ Li˜iwÌ ˜œÌ œ˜Þ vÀœ“ However, the literature on the evidence of productive improved lighting, but also from electric appliances, use of electricity is limited. Some empirical studies (Khand- tools and machinery. ker et al. 2012a & 2012b; Khandker et al. 2013) show that • Electric machinery and tools can be expensive, but they electricity access boosted household employment, or >Ài“œÀi«Àœ`ÕV̈Ûi]>˜`>Ì̅ii˜`̅iˆÀLi˜iwÌÃœÕÌ- income, or both, but they do not identify the actual pro- weigh the costs. SEAR Impact Evaluation in Rural Ban- ductive activities that generated these results. A small gladesh consider three measures of outcomes as number of studies identify some productive activities that `iw˜i`LiœÜ° helped electricity access in Sub-Saharan Africa and Asia. – Revenue: Annual receipt from the sale of all prod- U ˜i˜Þ>]ˆÀÕLˆiÌ>°­Óä䙮w˜`Ã̅>Ì>VViÃÃ̜iiV- ucts and services of the enterprise; tricity extends operating hours of businesses and lon- q *ÀœwÌ\Ƃ˜˜Õ>ÀiViˆ«ÌvÀœ“̅iÃ>iœv>«Àœ`ÕVÌà ger hours for households to produce hand-made and services of the entity minus total operating }œœ`ðÌ>Ãœw˜`Ã̅>Ì>VViÃÃ̜iiVÌÀˆVˆÌÞi˜>LiÃ̅i costs; and, ÕÃi œv iiVÌÀˆV iµÕˆ«“i˜Ì >˜` ̜œÃ LÞ Ó> >˜` micro-enterprises thereby improving their productivity q *ÀœwÌ“>À}ˆ˜­*É,®\*ÀœwÌ>Ã>«iÀVi˜Ì>}iœv̅iÀiÛ- (100–200 percent depending on the task at hand) and enue. the revenue of the enterprises (20–70 percent, depend-  ÌÜ>ÃvœÕ˜`̅>Ì}Àˆ`iiVÌÀˆwV>̈œ˜À>ˆÃiÃ̅iÀiÛi˜Õi ing on the product made). œv Vœ““iÀVˆ>° Ì >Ãœ ˆ˜VÀi>Ãià ̅iˆÀ «ÀœwÌ LÞ Ó{ «iÀ- CR EAT ING A BET T ER ENVIRONMENT FOR T RANSFORMAT IVE ENERGY A C C E SS 43 Vi˜Ì>˜`«ÀœwÌ“>À}ˆ˜LÞ>LœÕÌÓä«iÀVi˜Ì>}i«œˆ˜Ìð CONCLUSION ƂÃvœÀˆ˜`ÕÃÌÀˆ>i˜ÌiÀ«ÀˆÃiÃ]}Àˆ`iiVÌÀˆwV>̈œ˜ˆ˜VÀi>Ãià In sum, delivering on the challenge of universal access to their productivity too. For example, their revenue goes modern energy services is a tremendous endeavor with Õ«LÞÕ«̜xx«iÀVi˜Ì]>˜`«ÀœwÌLÞÕ«̜Èä«iÀVi˜Ì È}˜ˆwV>˜ÌV…>i˜}iÃ]LÕÌ>Ài>`Þ]“>˜ÞVœÕ˜ÌÀˆiÃ…>Ûi (SEAR Impact Evaluation, Forthcoming). successfully organized to overcome these challenges. Several studies have either provided or implied the expan- While recognizing that each country will have to decide sion of productive capacities as they found electricity on its own pathways to universal access to modern access increased employment, or income, or both. How- energy services, a central message emerging from this iÛiÀ]̅iÞ…>Ûi˜œÌˆ`i˜Ìˆwi`̅i>VÌÕ>«Àœ`ÕV̈Ûi>V̈ۈ- chapter is that of the fundamental role that sustained ties expanded due to the electricity access. While one government commitment plays in the process and how could expect that providing access to electricity would the provision of modern energy services should be part naturally expand productive capacity, especially in situa- of a broader vision of social and economic transforma- tions where such expansions were suppressed due to lack tion. of electricity supply, there is no guarantee that this pro- The fact that many countries have adopted the SE4ALL cess always occurs. Rural and remote areas that are often goal of universal access to modern energy services is inhabited by low-income households and lack electricity indeed an important step forward. These countries should supply may not have opportunities to expand their pro- now be encouraged to create or strengthen the necessary ductive capacities even if electricity is made available— enabling environment for action, consider earmarking «œÃÈLÞ`Õi̜>>VŽœvw˜>˜ViœÀΈÃ°/…ÕÃ]ˆÌܜՏ`Li public sector resources over the medium to long term, and more appropriate if some activities to facilitate the pro- facilitate the leveraging of these resources with private ductive use of electricity are launched along with the elec- ÃiV̜Àw˜>˜Vˆ˜}° tricity access initiatives—an approach that both maximizes ̅iLi˜iwÌÃœv̅i>VViÃȘˆÌˆ>̈ÛiÃ>˜`…i«Ãœ˜}‡ÌiÀ“ sustainability. 44 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 REFERENCES Africa Progress Panel. 2015. Power, People, Planet: Seizing Dubois, O. et al. 2017. “State of Energy Access Report Africa’s Energy and Climate Opportunities: Special Feature: Energy Access: Food and Agriculture.” African Progress Report 2015. 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Yumkella, K. 2013. “Smart and iVÌÀˆwV>̈œ˜Ƃ}i˜VˆiÃ\iÃܘÃvœÀƂvÀˆV>°» À>vÌ Just Grids for sub-Saharan Africa: Exploring options.” Report prepared for the European Union Energy Initiative Renewable & Sustainable Energy Reviews 20: 336–352. Partnership Dialogue Facility (EUEI-PDF). Wolman, P. 2007. “The new deal for electricity in the United Mukwedeya, B. 2011. “Off Grid Systems: Micro and States, 1930-1950.” In 6JG%JCNNGPIGQH4WTCN'NGEVTKƂEC- Mini-grids For Rural and Marginalised Communities.” tion: Strategies for Developing Countries, edited by D. Presented at the Zimbabwe International Energy and Barnes. Washington, DC: ESMAP and Resources for the Power Convention HICC, Harare, September 27-29. Future. http://www.sapp.co.zw/docs/Rural%20Microgrids_ World Bank. 2010. Addressing the Electricity Access Gap. ver_Final.pdf Washington, DC: World Bank. Practical Action. 2014. Poor People’s Energy Outlook 2014: ____. 2014. Africa Centers of Excellence (ACE) Appraisal Key Messages on Energy For Poverty Alleviation. Rugby: Document. Washington, DC: World Bank. UK: Practical Action Publishing. World Bank and IEG (Independent Evaluation Group). 2015. Rieger, S. 2015. GET FiT Uganda: PPIAF Short Story World Bank Group Support to Electricity Access, Competition. Washington, DC: World Bank. FY2000-2014. An Independent Evaluation. Washington, Ritouch, E. 2011. Cambodian Power Development Planning. DC: World Bank. Presentation made at the Jica Seminar, Tokyo. May. Lii˜iÀ}Þ…>Ã`iVÀi>Ãi`È}˜ˆwV>˜ÌÞˆ˜̅i«>ÃÌxÞi>ÀÃ]LiVœ“ˆ˜}ˆ˜VÀi>Ș}Þ Vœ“«ï̈Ûi܈̅Vœ˜Ûi˜Ìˆœ˜>i˜iÀ}ÞÜÕÀVið ÕÌ}Ài>ÌiÀvÕÌÕÀi}Àˆ`yi݈LˆˆÌވØœÜÀiµÕˆÀi`̜>œÜˆ“«ÀœÛi` integration of renewables without compromising the quality of supply. • Clean energy mini-grids have huge potential for supplying electricity to remote areas though they still face many challenges, including the need for appropriate regulations, the demonstration of workable business models, and >VViÃÃ̜œ˜}‡ÌiÀ“w˜>˜Vi°6ˆ>Li«œˆVÞvÀ>“iܜÀŽÃ>Ài>˜ÕÀ}i˜Ì˜ii`]>˜`“>˜ÞVœÕ˜ÌÀˆiÃ>Ài>V…ˆiۈ˜} good progress. U ˜iÀ}ÞivwVˆi˜VÞV>˜Ài`ÕVi̅iiÛiÃœvˆ˜ÛiÃ̓i˜ÌÀiµÕˆÀi`̜ˆ˜VÀi>ÃiiiVÌÀˆVˆÌÞ>VViÃÃ>˜`̜>V…ˆiÛi ˆ“«ÀœÛi`Àiˆ>LˆˆÌÞœvÃÕ««Þ°č««Àœ«Àˆ>ÌiÈ∘}œvÃÞÃÌi“Ã>˜`̅iÕÃiœvivwVˆi˜Ì>««ˆ>˜ViÃV>˜È}˜ˆwV>˜ÌÞ reduce the barrier of upfront costs for clean energy technology. U ,i`ÕV̈œ˜œvVœÃÌÃœvÀi˜iÜ>Lii˜iÀ}ÞÌiV…˜œœ}ˆiÃ>˜`>`>«ÌˆÛii˜iÀ}ÞivwVˆi˜VÞ“i>ÃÕÀiÃœvviÀ>ÌÀi“i˜`œÕà opportunity for countries to think differently and to be creative about electricity access expansion. INTRODUCTION W hy is it important to explore synergies between Since 2013, the world has added more renewable >VViÃÃ] Ài˜iÜ>LiÃ] >˜` i˜iÀ}Þ ivwVˆi˜VÞ¶ energy power capacity (an estimated 147 GW by end- Much of the world now faces the twin challenges 2015 (REN21 2016) than conventional capacity combined of providing modern energy services and mitigating climate (coal, gas, and oil) (Randall 2015). Similarly, there has been change as countries embark on a new development path to a shift in investment patterns: in 2015, global investment in meet the 2030 Agenda for Sustainable Development and renewable energy power was more than double that in the Sustainable Development Goals (SDGs) (SE4All 2015). new coal and gas generation (McCrone et al. 2015b). The provision of basic electricity access to over one billion œÀiœÛiÀ]vœÀ̅iwÀÃÌ̈“i]ˆ˜ÛiÃ̓i˜Ìˆ˜Ài˜iÜ>Li«œÜiÀ «iœ«i >ÀœÕ˜` ̅i ܜÀ` >˜` ̅i ÃÕLÃiµÕi˜Ì iVœ˜œ“ˆV and fuel investment in developing countries surpassed `iÛiœ«“i˜Ì ÌÀˆ}}iÀi` >Ài ˆŽiÞ ̜ i>` ̜ > È}˜ˆwV>˜Ì investment in developed economies. These positive devel- increase in energy demand. Meeting this demand calls for a opments are major milestones in tackling the energy major energy shift, driven by the adoption of “clean access challenge faced by many developing countries and i˜iÀ}Þ»p̅>̈Ã]Ài˜iÜ>Lii˜iÀ}Þ>˜`i˜iÀ}ÞivwVˆi˜VÞp in reaching universal energy access by 2030 as envisioned if we are to also achieve the Paris Agreement’s goal of limit- by the SE4ALL initiative. As the IEA notes: “If the universal ing global warming to well below 2oC (Lima Paris Action energy access goal is to be achieved by 2030, 55 percent Agenda 2015). of all new power between now and 2030 must come from The good news is that clean energy is playing an increas- decentralised energy sources with 90 percent of it being ingly important role in the provision of energy services renewable” (IEA 2011). worldwide. Renewable energy technologies are mush- ˜iÀ}ÞivwVˆi˜VÞ“i>ÃÕÀiÃ>˜`ÌiV…˜œœ}ˆiÃ…>Ûi>Ãœ rooming across the globe at an unprecedented rate, while …i«i`ˆ“ˆÌ̅iˆ˜VÀi>Ãiˆ˜}œL>w˜>i˜iÀ}Þ`i“>˜`°˜ the growth in the global economy is starting to decouple 2014, they cut the increase by almost two-thirds, thereby from energy-related carbon emissions, thanks to the adop- …œ`ˆ˜} ̅i }ÀœÜ̅ ˆ˜ w˜> Vœ˜ÃՓ«Ìˆœ˜ ̜ ä°Ç «iÀVi˜Ì] ̈œ˜ œv i˜iÀ}Þ ivwVˆi˜VÞ “i>ÃÕÀià >˜` ÌiV…˜œœ}ˆià ­ Ƃ rather than the past decade’s average 2 percent (IEA 2015a). 2015d). This, in turn, led to a drop of 2.3 percent in global 47 48 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 energy intensity in 2014, more than double the average /…ˆÃV…>«ÌiÀœÕ̏ˆ˜iÃ̅iLi˜iwÌÃœvVi>˜i˜iÀ}ÞvœÀiiV- À>Ìi œÛiÀ ̅i «>ÃÌ `iV>`i° ˜ >``ˆÌˆœ˜] i˜iÀ}Þ ivwVˆi˜VÞ ÌÀˆVˆÌÞ >VViÃÃ] ÃÕV… >à ÀiVi˜Ì >˜` È}˜ˆwV>˜Ì VœÃÌ `iVˆ˜ià measures implemented in 1990 in the IEA countries have and technological innovations. It discusses how renewable avoided an estimated 10 billion tons of cumulative emis- i˜iÀ}Þ >˜` i˜iÀ}Þ ivwVˆi˜VÞ V>˜ …i« «ÀœÛˆ`i “œ`iÀ˜ sions, as of end-2014 (IEA 2015b). Investments in such i˜iÀ}Þ ÃiÀۈVià µÕˆVŽÞ] Àiˆ>LÞ] Ã>viÞ] >˜` >Ì œÜ VœÃÌp measures across the buildings, transport, and industrial including the obstacles to scaling up that must be overcome sectors topped an estimated $130 billion in 2012 (REN21 ­ˆŽi ˆ˜>`iµÕ>Ìi w˜>˜Vi œ«Ìˆœ˜Ã >˜` ՘Vi>À }œÛiÀ˜“i˜Ì 2016b). policies). The report concludes that what is needed are a Clean energy is currently high on the political agenda— better communication of the advantages of renewables and at global and national levels—in both developed and i˜iÀ}Þ ivwVˆi˜VÞ] “œÀi ViÀÌ>ˆ˜ÌÞ œ˜ }œÛiÀ˜“i˜Ì «œˆVˆiÃ] developing countries, with 2015 featuring many high-pro- «ÕLˆV w˜>˜Vi “iV…>˜ˆÃ“à >˜` ˆ˜˜œÛ>̈Ûi ÃÕÃÌ>ˆ˜>Li wi>}Àii“i˜ÌÃ>˜`>˜˜œÕ˜Vi“i˜ÌÃ\ business models, and greater community involvement. • Commitments by both the Group of Seven (G7) and the Group of Twenty (G20) to accelerate access to renew- RENEWABLES FOR ACCESS >Lii˜iÀ}Þ>˜`̜>`Û>˜Vii˜iÀ}ÞivwVˆi˜VÞ° ,i˜iÜ>Lii˜iÀ}ÞÌiV…˜œœ}ˆiÃ>Àiyi݈Li]“œ`Տ>À]>˜` • Adoption by the UN General Assembly of a dedicated V>˜LiÕÃi`ˆ˜Û>ÀˆœÕÃVœ˜w}ÕÀ>̈œ˜Ã]À>˜}ˆ˜}vÀœ“̅œÃi SDG on Sustainable Energy for All (SDG 7). that are grid-connected to those that are off-grid, whether large, mini/micro, stand-alone, or pico (like solar pico PV • Agreement by 195 countries at the UN Framework systems (Box 4.1). Convention on Climate Change’s (UNFCCC) 21st Con- ference of the Parties (COP21) to limit global warming Grid-Connected Renewable Energy to well below 2oC. For grid-connected, commercial, or larger scale installa- • Commitments by a majority of countries at the climate tions, renewables are a source of energy. Rapid growth, change conference to scale up renewable energy and particularly in the power sector, is driven by several fac- i˜iÀ}Þ ivwVˆi˜VÞ ̅ÀœÕ}… ̅iˆÀ ˜Ìi˜`i` >̈œ˜>Þ tors—including the improving cost-competitiveness of Determined Contributions (INDCs). Out of the 189 renewable technologies, dedicated policy initiatives, better countries that submitted INDCs, 147 countries men- >VViÃÃ̜w˜>˜Vˆ˜}]i˜iÀ}ÞÃiVÕÀˆÌÞ>˜`i˜ÛˆÀœ˜“i˜Ì>Vœ˜- tioned renewable energy, and 167 countries mentioned cerns, growing demand for energy in developing and i˜iÀ}ÞivwVˆi˜VÞ°-œ“iVœÕ˜ÌÀˆiÃVœ““ˆÌÌi`̜ÀivœÀ“- emerging economies, and the need for access to modern ing fossil fuel subsidies. i˜iÀ}Þ° œ˜ÃiµÕi˜ÌÞ]˜iÜ“>ÀŽiÌÃvœÀLœÌ…Vi˜ÌÀ>ˆâi`>˜` distributed renewable energy are emerging in all regions. • Precedent-setting commitments to renewable energy by regional, state, and local governments as well as by • India is planning to add 14 gigawatts of new solar the private sector. i˜iÀ}Þ iÛiÀÞ Þi>À vœÀ ̅i ˜iÝÌ wÛi Þi>ÀÃpÌ܈Vi ̅i level of what Germany achieved in its record years of • Pledges by over 100 banks from 42 countries to invest solar investment. “œÀiˆ˜i˜iÀ}ÞivwVˆi˜VÞ«ÀœiVÌð BOX 4.1 Renewable Technologies Come in Various Shapes and Sizes At utility scale, they provide electricity to meet the waiting for grid extension. A clean energy technology diverse needs of grid-connected urban and rural cus- mini-grid can be a single power source—such as a tomers. Grid-connected clean energy technologies can small hydropower plant, or a hybrid system with renew- range from a few kilowatts of roof top solar photovolta- able energy sources with batteries or a diesel genera- ics (PV) systems connected to the low voltage distribu- tor. In the Indonesian archipelago, many of the 6,000 tion network, to 10 to 1,000s of megawatts of large inhabited islands are powered by diesel- or small centralized utility scale power plants. Examples include …Þ`Àœ‡“ˆ˜ˆ‡}Àˆ`ÃÆ ÀiVi˜ÌÞ ܓi >Ài Liˆ˜} ÀiÌÀœwÌÌi` hydropower, solar parks, wind farms, geothermal with solar PV systems to avoid high cost diesel fuel. power plants, or biomass-fueled plants connected to When communities are small or dispersed and elec- medium and high voltage substations. These utility tricity demand is limited, stand-alone systems—such scale renewable energy plants are in place in Ethiopia, as solar home systems (SHS)—can be more cost effec- i˜Þ>],Ü>˜`>]>˜`iÃi܅iÀi]«ÀœÛˆ`ˆ˜}LiÌÌiÀµÕ>- tive, especially when coupled with new business and ity service to existing customers, as well as widening w˜>˜Vˆ>“œ`iÃ°˜VÀi>Ș}Þ]Ó>*6ÃÞÃÌi“Ã]Ž˜œÜ˜ the reach of the grid to those previously without access. as pico-solar systems (ranging from a few watts to tens ˜“ˆ˜ˆ‡}Àˆ`Vœ˜w}ÕÀ>̈œ˜Ã]clean energy technolo- of watts of solar PV) provide high value lighting and gies can meet the needs of communities sooner than mobile phone services. “ CLEAN ENERGY” AND ENERGY A C C E SS 49 • Jordan passed a new renewable energy law in 2012 announced over four successive rounds. The fourth round, that eased the development of large-scale projects. As held in 2015, resulted in solar PV prices under $0.07/kWh >ÀiÃՏÌ]̅iVœÕ˜ÌÀÞÀiVi˜ÌÞw˜>ˆâi`v՘`ˆ˜}vœÀÃiÛi˜ and $0.05/kWh for wind, which is a substantial decline in solar power plants with a combined capacity of 102 Vœ“«>ÀˆÃœ˜܈̅̅iwÀÃÌÀœÕ˜`° megawatts—the largest-ever private sector-led solar The cost of producing electricity (LCOE) from solar «ÀœiVÌ ˆ˜ ̅i ˆ``i >ÃÌ] ܈̅ wÛi “œÀi >À}i‡ÃV>i >˜`܈˜`…>Ã`iVÀi>Ãi`È}˜ˆwV>˜ÌÞˆ˜̅i«>ÃÌxÞi>ÀÃ] projects to follow. narrowing the gap with conventional energy sources (Patel 2015). As Figure 4.2 shows, the IEA reports that the • Sri Lanka and Thailand—developing country “pio- median cost of producing baseload power in 2014/2015 neers” that adopted a favorable regulatory environ- from residential solar was $200/MWh (sharply down from ment—are using renewable energy for electricity. Sri $500/MWh in 2010), compared to about $100/MWh for Lanka has small (up to 10 MW), private sector renew- conventional sources (Patel 2015). But the fall in fossil able energy facilities, and Thailand has 3,000 MW of fuel prices during that time period had only a limited Ó>Ài˜iÜ>Lii˜iÀ}Þ«œÜiÀ«>˜ÌÃ]iµÕ>ˆ˜}>LœÕÌ™ impact on the power sector’s cost dynamics. The global percent of installed capacity. average LCOEs for onshore wind eased slightly from Renewable energy is no longer luxury and is rapidly mov- fnxÉ7…ˆ˜̅iwÀÃÌ…>vœvÓä£x̜fnÎÉ7…ˆ˜̅iÃiV- ing from niche to mainstream. In many areas, it represents ond half of 2015, and for solar PV, from $129/MWh to the least-cost option to overcome a lack of access to $122/MWh, according to Bloomberg New Energy i˜iÀ}Þ ÃiÀۈVià `Õi ̜ È}˜ˆwV>˜ÌÞ Ài`ÕVi` ÌiV…˜œœ}Þ Finance (BNEF). Meanwhile, the LCOEs for combined costs—helped by better procurement practices and incen- cycle gas turbine (CCGT) in Europe increased from $103/ ̈ÛiÃÌÀÕVÌÕÀiÃ̅>ÌLi˜iwÌvÀœ“̅iˆ˜VÀi>Ãi`Vœ“«ï̈Ûi- MWh to $118/MWh, and for coal, from $82/MWh to ness of the supply industry and a stronger project $105/MWh (Beetz 2015). developer market. In India, South Africa, and Peru, as Fig- Moreover, many countries have recently announced the ure 4.1 shows, utility-scale solar PV auctions prices have long-term contract prices for renewable energy power, come down sharply since 2010-2011. notably through preferred bidding exercises, power pur- Wind is already often the cheapest form of new power chase agreements (PPAs), and feed-in tariffs (FITs), high- generation capacity. In South Africa, Brazil, India, and lighting that even lower generation costs are possible in Egypt, recent energy auctions have resulted in prices for the coming years. For example, new onshore wind can be solar and wind that are competitive with oil and gas, and in contracted for around $60-80/MWh (in Brazil, Egypt, South some markets they are now competitive with new/green- Africa, and some U.S. states), and utility scale solar PV for wi`Vœ>°7i‡œÀ}>˜ˆâi`Ìi˜`iÀˆ˜}«ÀœViÃÃiȘܓiŽiÞ around $80-100/MWh (in the United Arab Emirates, Jor- developing countries—including India, Egypt, Brazil, and dan, South Africa, and some U.S. states (IEA 2015c). Fur- South Africa—have proven successful in delivering renew- thermore, IRENA estimates that the LCOE of renewable able energy tariffs close to grid parity. Since 2009, South energy options around the world will be at par with—or Africa has successfully tendered 7GW of renewable energy even lower than—the cost of fossil fuels options, with sig- FIGURE 4.1 Utility-scale solar PV auction prices are dropping around the world US$/MWh 350 South Africa 300 India 250 France Peru 200 Morocco Jordan 150 Zambia Germany 100 Brazil China Argentina 50 USA Mexico Saudi Arabia UAE (Dubai) Chile 0 2010 2011 2012 2013 2014 2015 2016 Source: IRENA 2017. 50 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 4.2 Renewables now only about double that of conventional fuels Panel a: (LCOE ranges for baseload conventional technologies, at Panel b: (LCOE ranges for solar and wind technologies, at each each discount rate) discount rate) 160 400 350 140 LCOE (US$/MWh) 300 120 LCOE (US$/MWh) 250 100 200 80 150 60 100 50 40 0 Large, ground-mounted PV Large, ground-mounted PV Large, ground-mounted PV Commercial PV Commercial PV Commercial PV Residential PV Residential PV Residential PV Onshore wind Offshore wind Onshore wind Offshore wind Onshore wind Offshore wind 20 0 CCGT Coal Nuclear CCGT Coal Nuclear CCGT Coal Nuclear 3% 7% 10% Source: IEA 2015. Notes: LOCE refers to levelized cost of electricity. In panel a: CCGT refers to combined 3% 7% 10% VÞVi}>ÃÌÕÀLˆ˜iÆvÕi«ÀˆViÃ>ÀiÀi}ˆœ˜ëiVˆwVvœÀ̅i1˜ˆÌi`-Ì>ÌiÃ] ÕÀœ«i]>˜`ƂÈ>Æ load factor is 85 percent load factor; CO2 price of $30/ton. ˜ˆwV>˜Ì `iVÀi>Ãià iÝ«iVÌi` vœÀ ܓi ÌiV…˜œœ}ˆià LÞ œ«Ìˆœ˜]`Õi̜̅iˆÀ>LˆˆÌÞ̜Ài뜘`µÕˆVŽÞ̜V…>˜}iÃ] 2025 (Scott 2015). >Ì…œÕ}……Þ`Àœ½Ã>LˆˆÌވõՈÌiœvÌi˜Ài`ÕVi`LÞ“iÌiœÀœ- As renewable energy continues to gather momentum logical events like droughts (IEA—RETD 2015). globally, grid integration is emerging as a key issue to be addressed to accommodate a higher share of variable Grid infrastructure. Transforming the grid to allow for a renewables, such as wind and solar. Many countries have larger share of renewables involves: (i) the bi-directional È}˜ˆwV>˜Ì Å>Àià œv «œÜiÀ vÀœ“ Û>Àˆ>Li Ài˜iÜ>Li yœÜœvi˜iÀ}Þ]vÀœ“«œÜiÀ«>˜ÌÃ̜ÕÃiÀÃ>˜`vÀœ“ÕÃiÀà sources—with Denmark leading the pack at about 50 per- to the grid; (ii) the establishment of a smart grid to improve cent—and substantial increases in solar PV and wind responsiveness and reduce peak loads; (iii) the introduction expected by the end of this decade (Figure 4.3) (IEA of technologies for grid stability and control; and (iv) grid 2016a). Experiences in these countries show that, at lower interconnection, where possible (Martinot 2016). It is esti- levels, integration is possible with very little effort (since mated that the grid infrastructure option can be achieved at the additional variability is small compared with the normal a relatively low cost—for instance, changes in the transmis- changes), and that solutions exist to integrate high shares sion network may cost as low as $2/MWh (IEA 2016b). of variable renewables. However, the current grid infra- structure in many countries was built on the basis of con- Storage. Electricity can be stored from variable renewable trollable energy sources and organized around the energy sources when supply for the latter exceeds demand, generation–transmission–distribution model (Denholm et and regenerate when supply is lacking. However, the cur- al. 2016). In particular, countries with a nation-wide, exten- rently high cost of various storage systems hampers their sive grid infrastructure need to adapt their operation to full deployment. For instance, the capital expenditure ˆ˜VÀi>Ãi ̅i yi݈LˆˆÌÞ œv ̅i ÃÞÃÌi“° œÕ˜ÌÀˆià ܈̅ ˜iÜ (CAPEX) for pumped hydro storage is estimated at $1,170/ and less developed power systems have the opportunity, Ž7 >˜` ÀiÃՏÌà ˆ˜ > œÜ Li˜iwÌÃÉVœÃÌà À>̈œ ܅i˜ Vœ“- to plan, design, and build, from the outset, energy systems pared to other options (Figure 4.4) (IEA 2014). In Europe, >˜` }Àˆ`à ̅>Ì ˆ˜Ìi}À>Ìi ˜iÜ yi݈LˆˆÌÞ Vœ˜Vi«Ìà >˜` ̅i storage capacity accounts for some 5 percent of total possibility to integrate high shares of variable renewables. energy capacity, 99 percent of which is pumped hydro Flexibility of the power system can be improved mainly (IEA-RETD 2015). through the following four distinct but interconnected channels (IEA 2016a). Demand side integration (DSI). This refers to the ability to ÕÃi`i“>˜`“>˜>}i“i˜Ì“iV…>˜ˆÃ“ÃpÃÕV…>Ãw˜>˜Vˆ> Flexible power plants. Power plants need to vary their incentives and behavioral change through education—to output to cater for changes in the net load. Variable renew- either shift demand away from peak load times or shed able power can be complemented by dispatchable renew- loads to match supply with demand (IEA-RETD 2015). DSI able power. Gas fueled power plants and hydropower ÕÃÕ>Þ i݅ˆLˆÌà ̅i …ˆ}…iÃÌ Li˜iwÌÉVœÃÌà «iÀvœÀ“>˜Vi «>˜Ìà >Ài ̅i “œÃÌ yi݈Li «>˜Ìà >˜` ̅i i>ÃÌ VœÃÌ (Figure 4.5) (IEA 2016b). “ CLEAN ENERGY” AND ENERGY A C C E SS 51 FIGURE 4.3/CP[EQWPVTKGUDQQUVKPITGPGYCDNGUJCTGUGURGEKCNN[KPYKPF (Share of variable renewable energy generation in selected countries, 2014 and 2020) 60% Additional share PV 2020 50% Additional share wind 2020 Share PV 2014 40% Share wind 2014 30% 20% 10% 0% Norway Canada Finland Mexico Japan United France China India Brazil Australia Sweden Italy United Spain Germany Denmark States Kingdom Source: IEA. FIGURE 4.4 Managing demand ranks higher than of renewable based and hybrid (combination of diesel and UVQTCIGHQTKPETGCUKPIƃGZKDKNKV[ renewable) types. $GPGƂVUEQUVUTCVKQQHUGNGEVGFƃGZKDKNKV[QRVKQPU ˆ˜ˆ}Àˆ`Ã…>Ûi̅i՘ˆµÕi>`Û>˜Ì>}iœvyi݈LˆˆÌÞ>˜` scale and as such can provide electricity to rural areas at 2.5 2.3 a much lower cost than grid extension in certain regions. 2.2 It is estimated that in Tanzania, the cost of connecting 2.0 rural areas is around $2,300 per connection while with mini-grid it could cost as much as $1,900 per connection (McKinsey 2015). The two main factors affecting the com- 1.5 1.2 petitiveness of mini-grid are usually the distance from the 1.1 1.1 }Àˆ`ˆ˜vÀ>ÃÌÀÕVÌÕÀi>˜`̅iœ>`ÈâiÀiµÕˆÀi`­ˆ}ÕÀi{°È®° 1.0 The Rocky Mountain Institute (RMI) estimates that mini grids are the least cost option for household consump- 0.5 tion—between 2 to 12 kWh per month and at a distance of approximately 4km from the existing grid (RMI, 2017). 0.0 In addition, mini-grids could be scaled up to meet Tiers 4 DSI + IC DSI IC Storage Storage and 5, although they typically provide energy for Tiers 2 + IC and 3. This would thus further increase the savings made Source: IEA 2014. compared to extending the grid. Notes: DSI refers to demand side integration; IC refers to grid Although the majority of mini-grids currently installed interconnection. are diesel based (mainly due to the low capital cost involved), in recent years, renewable energy based mini- grids have been producing electricity at a very competitive cost—if not cheaper than diesel ones, depending on the OFF-GRID RENEWABLE ENERGY: fuel price. As such, on average a renewable based mini- MINI/MICRO GRIDS grid could cost as much as $0.33 per kWh produced com- Mini-grids are emerging as a key player for cost-effective pared to $0.43/kWh for diesel driven mini-grids (Figure >˜`Àiˆ>LiiiVÌÀˆwV>̈œ˜œvÀÕÀ>>Ài>íˆ}ÕÀix®°/…i Ƃ 4.7) (APP, 2017). IRENA estimates that by 2035, the cost of estimates that 36 percent of total investments toward electricity generation from a solar PV minigrid will be as achieving universal access by 2030 will be targeted toward low as $0.20/ kWh. mini-grid efforts, or $4 to 50 billion annually, with the vast In Sub-Saharan Africa, South, and East Asia, mini grids majority (over 90 percent) coming from renewable energy are rapidly emerging as a viable option for providing generation (IEA 2011). energy services, thanks to both technological and institu- Mini grids are usually composed of a set of electricity tional innovations and cost reductions (ESMAP and CIF generators and energy storage systems interconnected to 2016). It is estimated that some 5 million households run a distribution network (Climate Change and Development on renewables-based mini-grids (usually powered by n.d.). Traditionally, mini grids were powered by diesel gen- micro-hydro) worldwide with primary markets in Bangla- erators, but the advent of cheaper renewable energy tech- desh, Cambodia, China, India, Mali, and Morocco (Odarno nologies, among others, has contributed to the deployment et al. 2016). In Tanzania, some 180,000 households are 52 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 4.5 A growing role for mini grids and renewables (Opportunities for grid extension, mini grids, and distributed renewable energy systems) Unsubsidised electricity retail cost on site [Euro/kWh] National grid extension Solar Home Systems and Pico PV Mini-grid Space rids mini-g Solar/diesel/biomass Hydro mini-grids Large Size of community Small High Density of population Low Close Distance to national grid Far Easy Complexity of terrain Complex Strong Economic strength Weak FIGURE 4.6 Least cost option for energy access varies FIGURE 4.7 Renewable energy-based mini grids becoming with load size and distance from existing grid very competitive (Cost of electricity generated by mini-grids) High Grid extension 50 (”100kW) • Large loads allow for further extension of grid Minigrids 43 45 • Larger loads justify added added investment in minigrids 40 • Shorter distrance between users reduces cost to interconnect 33 35 Load 1 30 26 US cents Solar Home Systems 25 1 33 • Smaller loads don’t justify interconnection 19 20 17 32 Low 15 Distance to grid 25 8 Close Far (”16km) 10 19 3 Source: RMI 2017. 5 8 6 2 0 Solar PV Mini-wind Biomass Micro- Diesel Gasifier hydro Generator Investment cost O&M cost Fuel cost Source: APP 2017 being served by 109 mini grid systems, while in Mali about }Àˆ`ÃÕȘ}Lˆœ}>ëÀœ`ÕVi`vÀœ“}>ÈwV>̈œ˜œvLˆœ“>Ãà Óää`ˆiÃiL>Ãi`“ˆ˜ˆ‡}Àˆ`Ã>Àiœ«iÀ>̈˜}]܈̅>È}˜ˆw- residues. India’s Jewaharlal Nehru National Solar Mission cant number in the process of hybridization (EUEI PDF has announced the installation of a 2,000 MW PV system 2014; Odarno et al. 2016). In the Indian state of Uttar including pico/mini-grids. And about 50 percent of the Pradesh, a 250 kW solar mini-grid powering 60 streetlights Philippines’s population can best be served using mini- and 450 buildings (homes, schools, and a healthcare facil- }Àˆ`í-ˆ``ˆµÕˆÓä£x®° ˆÌÞ®Ü>Ãw˜ˆÃ…i`ˆ˜Óä£xÆ>˜œÌ…iÀnäۈ>}iÃœ«iÀ>Ìi“ˆ˜ˆ‡ “ CLEAN ENERGY” AND ENERGY A C C E SS 53 Hybridization of mini-grids is increasingly popular, • In Nepal, 2,600 micro and pico-hydro systems have especially in countries that have been powering their exist- been installed across the country. ing mini-grids with diesel. Hybrid mini grids reduce the • In the Philippines, there are plans to build 150 to 200 generation costs of electricity, leading to potential savings micro-hydropower plants to provide electricity to and a lower fuel price risk exposure (PWC n.d.). Moreover, remote regions, with a goal of increasing hydro gener- an expected decrease in prices of storage/battery systems ating capacity by 50 MW (Harris 2015). will increase the use of renewables and reduce the share of diesel. Renewables will thus be used to cover low loads at Mini grids can also contribute to the socio-economic night, and morning and mid-day loads, with diesel mainly development of a region or community. Besides providing supplying evening peaks (Carbon Tracker Initiative 2014). basic energy services (like lighting and charging), they can A recent comparison of diesel and hybridized mini grids at fuel productive activities (like pumping, milling, and pro- seven sites (three in Africa, two in Asia, and three in Latin cessing (Table 4.1) and provide electricity to community America and the Caribbean) shows potential savings range health clinics and schools. India has announced plans to from 12 to 20 percent, depending on oil prices (Al-Ham- install some 8,960 solar agri-pumps and 500 solar-pow- mad et al. 2015). ered mini grids by 2016 in the state of Maharashtra. The work is being carried out through the state’s Smart Power U ˜ Ƃ«Àˆ Óä£È] />˜â>˜ˆ> ˆ“«i“i˜Ìi` ̅i wÀÃÌ œv Îä vœÀ,ÕÀ> iÛiœ«“i˜Ì«Àœ}À>“]w˜>˜Vi`LÞ̅i,œVŽivi- solar/diesel mini grids to be installed over the next two iÀœÕ˜`>̈œ˜­7ˆi“>˜˜>˜`iVœµÕiÓä£x®° years, which should serve about 100,000 people (Afri- But the huge potential for access of mini grids is hin- can Review of Business and Technology 2016). `iÀi`LÞ˜Õ“iÀœÕÃV…>i˜}iÃ]ˆ˜VÕ`ˆ˜}ˆ˜>`iµÕ>Ìi«œ- • In the Maldives, its 200 inhabited islands are powered icies and regulations, lack of proven business models for by diesel mini-grids. Some of these are now being con- commercial roll-out (notably for pico-solar systems), and verted into solar-PV-diesel mini grids, as part of the >VŽœv>VViÃÃ̜œ˜}‡ÌiÀ“w˜>˜Vi­*7 œL>*œÜiÀE government’s strategy to transition to a 100 percent Utilities 2016). renewable energy-based economy. • In Africa (Mali, Kenya, and Tanzania) and Asia (Bangla- OFF-GRID RENEWABLE ENERGY: desh and Myanmar), various donors and governments STAND-ALONE SYSTEMS are supporting clean energy mini-grids. It is estimated that the 1.2 billion people living off the grid Micro and pico-hydro stations (1kW) offer a very affordable in the world spend some $27 billion every year on lighting source of electricity for many communities. In Indonesia, 20 and mobile phone charging—using kerosene lamps, kero- percent of the country’s 51 MW installed capacity is from Ãi˜i}i˜iÀ>̜ÀÃ]V>˜`iÃ]>˜`V>À‡L>ÌÌiÀˆiÃ̅>Ì>Àiˆ˜ivw- micro-hydro systems, with about 20 percent of its unelectri- cient and damaging to both human health and the wi`«œ«Õ>̈œ˜˜œÜ…>ۈ˜}>VViÃÃ̜V…i>«iiVÌÀˆVˆÌÞ° environment as well as being safety hazards. Renewable TABLE 4.1 Renewables offer a wide range of energy services for productive uses 2QRWNCVKQPDCUGFHQTFKHHGTGPVTWTCNGNGEVTKƂECVKQPVCTIGVU ENERGY SERVICES INCOME-GENERATING VALUE RENEWABLE ENERGY TECHNOLOGIES Irrigation Better crop yields, higher value crops, greater Wind, solar PV, biomass, micro-hydro reliability of irrigation systems, enabling of crop growth during periods when market prices are higher Illumination Reading, extending operating hours Wind, solar PV, biomass, micro-hydro, geothermal Grinding, milling, Creation of value-added products from raw Wind, solar PV, biomass, micro-hydro husking agricultural commodities Drying, smoking Creation of value-added products, preservation Biomass, solar heat, geothermal (preserving with of products that enables sale in higher-value process heat) markets Ý«iˆ˜} *Àœ`ÕV̈œ˜œvÀiw˜i`œˆvÀœ“Ãii`à ˆœ“>ÃÃ]܏>À…i>Ì Transport Reaching new markets Biomass (biodiesel) TV, radio, computer, Support of entertainment businesses, education, Wind, solar PV, biomass, micro-hydro, internet, telephone access to market news, co-ordination with suppliers geothermal and distributors Battery charging Wide range of services for end-users (e.g., phone Wind, solar PV, biomass, micro-hydro, charging business) geothermal Refrigeration Selling cooled products, increasing the durability Wind, solar PV, biomass, micro-hydro of products 54 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 4.8 Many types of solar pico PV systems are available Solar lanterns Solar kits Solar home systems Solar lanterns are single devices Solar kits comprise more than one Solar home systems are a larger PV panel, with an associated PV panel to light offering phone charging, radio permanently installed on a roof or pole, charge them. or additional lights. with various uses. From top to bottom: From top to bottom: From top to bottom: d.light, Kamworks, Greenlight Planet Barefoot power, Duron, Sundaya Tecnosol, SELCO, Sunlabob Source: IFC energy technologies (such as solar lamps and charging lamps they can be purchased on average for $10 making it kits) can offer a reliable, more cost effective, and safe alter- an affordable alternative for lighting and mobile charging. native to the tradition methods of lighting. There are many The use of pico-solar systems can help considerably types of solar pico PV systems available—notably solar lan- decrease the amount spent on lighting. For instance, Solar terns, solar kits, and solar home systems (SHS) (Figure 4.8). Aid, a private solar company, which has sold some 1.5 mil- Solar lanterns, solar mobile phone chargers, and certain ˆœ˜ ܏>À ˆ}…Ìà ­Li˜iẅ˜} ܓi ™ “ˆˆœ˜ «iœ«i®] iÃ̈- SHS can provide Tier 1–3 energy services (as per the mates that solar lights can help African families reduce Global Tracking Framework Tier Based System) for about considerably their lighting expenditure (about $140 per {‡Óä«iÀVi˜Ìœv̅iVœÃÌÀiµÕˆÀi`vœÀ}Àˆ`iÝÌi˜Ãˆœ˜­ >À- year) and save up to 12 percent ($60) of their total income bon Tracker Initiative 2014b), making them cost effective simply by not using kerosene for lighting purposes (Harri- >˜`µÕˆVŽ̜ˆ“«i“i˜Ì܏Ṏœ˜Ã̜̅i>VViÃëÀœLi“ son et al. 2016). The BNEF estimates that for every $1 for basic energy services. spent on solar lighting, savings of $3.15 could be made, The cost of these systems has gone down in part thanks which may help to recover the upfront cost of the latter to the emergence of direct current (DC) end-use appli- within four months’ time. And ODI estimates that the pro- ances, where renewable energy-based off-grid solutions portion of household income spent on lighting as a per- are expanding rapidly. These appliances eliminate the centage of total income has dropped sharply in Kenya, need for inverters and reduce distribution losses, maximiz- Malawi, Uganda, Tanzania, and Zambia thanks to solar ing the use of limited output from small generation units. lighting (Figure 4.9). The increasing adoption of renewable energy off-grid In addition to considerably reducing the health hazards access systems can boost the demand for DC appliances, ˆ˜Ži`̜̅iÀˆÃŽœvwÀiÃ>˜`LÕÀ˜ÃœvV>˜`iÃ>˜`ŽiÀœÃi˜i helping reduce their cost (due to economies of scale-in- lamps, solar lighting has proven to help students in their duced market transformation) and opening new markets. education. In Kenya, Malawi, Tanzania, and Zambia, chil- With the rapidly decreasing costs of stand-alone/isolated dren are able to increase their study time from 1.7 hours to Ài˜iÜ>Lii˜iÀ}ÞÃÞÃÌi“Ã]VœÕ«i`܈̅i˜iÀ}ÞivwVˆi˜Ì 3.1 hours with brighter light form solar LED lamps (Africa appliances, renewable energy is no longer considered an Progress Panel, 2017). expensive option for access. If in 2009, solar lanterns could Solar lighting can be considered as one step up the VœÃÌ>ÓÕV…>Ãf{x]˜œÜ>`>ÞÃ܈̅…ˆ}…ivwVˆi˜VÞ  energy ladder for the off-grid population in Africa, Asia, “ CLEAN ENERGY” AND ENERGY A C C E SS 55 FIGURE 4.9 Many African households spend a lot ing Association 2015; Solar Aid 2015). India is the market less of total income due to solar lighting leader for solar lighting systems, with just under one mil- (Proportion of household income spending on lighting as a lion solar lanterns installed in the country by end-2014. percentage of total income in selected African countries) SHS have also gained in popularity, with systems rang- ing from pico-systems (1-10 W) to larger systems (up to 14% 250 W). Pico systems are best suited for lighting and pro- viding electricity to run mobile communications devices 12% and radios, while larger systems are used to power health centers, schools, and households. The largest market for 10% SHS is Bangladesh where, by 2015, an estimated 6 million SHS and kits had been installed, with 60,000 new house- 8% holds being connected to SHS every month (Rahaman Óä£x®°/…i“>ÀŽïÃ>ÃœµÕˆÌi>V̈Ûiˆ˜œÌ…iÀƂÈ>˜VœÕ˜- 6% tries—namely India, China and Nepal, which together account for 2 million installed systems (Ministry of Statistics 4% and Programme Implementation 2015). The African mar- ket is concentrated in East Africa. M-Kopa, an SHS com- 2% pany, has installed about 300,000 SHS in Kenya, Uganda, and Tanzania (M-KOPA 2016). 0% Solar kits are now an affordable alternative to SHS. In Kenya Malawi Uganda Tanzania Zambia fact, they are the portable version of a SHS that does not Before solar light After solar light ˜ii` >˜Þ È}˜ˆwV>˜Ì ˆ˜ÃÌ>>̈œ˜ œÀ Ài}Տ>À “>ˆ˜Ìi˜>˜Vi° These systems often sell for half the price of a traditional Source: Overseas Development Institute 2016; Africa Progress SHS and can power multiple lights, charging devices, and Panel 2017 small electrical appliances. Coupled with the explosive growth of companies sell- ing solar pico PV systems across Asia and Africa, is the level of investment in off-grid companies. Investment has increased considerably in recent years, reaching $276 mil- and Latin America, since it offers both the opportunity to lion in 2015 (Figure 4.10) (REN21 2016). The cumulative make savings to purchase other electrical appliances (tele- investment total since 2011 is $511 million (BNEF 2016). vision, radios, fans, and refrigerators) and the basis to upgrade toward larger systems such as solar home sys- tems. The cost of solar home systems together with a tele- CHALLENGES AND SCALING-UP OPTIONS vision a radio and two LED lights is around $350, down So what are the biggest obstacles that countries face in vÀœ“>LœÕÌf£]äääwÛiÞi>ÀÃ>}œ­" ]Óä£È®° introducing and scaling-up the share of renewables in Pico solar PV systems typically provide less than 10 energy use? Keep in mind that clean energy projects are watts of power and are primarily used for lighting or pow- characterized by high initial investment costs and substan- ering electrical appliances (like radios or mobile phones tial risks. The obstacles range from high fossil fuel subsidies (REN21 2016). They have developed rapidly in recent >˜`̅iˆ˜>`iµÕ>ÌiVœ““Õ˜ˆV>̈œ˜œv̅i>`Û>˜Ì>}iÃœv years, due to the less costly solar modules, the use of renewables to unclear government policies, a lack of good …ˆ}…ÞivwVˆi˜Ì ˆ}…̈˜}ÃÞÃÌi“Ã]>˜`̅ii“iÀ}i˜Vi w˜>˜Vˆ>œ«Ìˆœ˜Ã]>˜`˜œÌi˜œÕ}…Vœ““Õ˜ˆÌÞˆ˜ÛœÛi“i˜Ì° of innovative business models. Thus, possible solutions include the following: By mid-2015, about 44 million off-grid pico-solar prod- ucts were sold globally—representing a market of $300 Phase out fossil fuel subsidies. The problem is that these million annually—and by end-2015, about 70 countries subsidies distort the true costs of energy and encourage had some off-grid solar capacity installed, or programs in wasteful spending and increased emissions. They also place, to support off-grid solar applications. The largest present a barrier to scaling up clean energy by: (i) decreas- market for off-grid solar products is sub-Saharan Africa ing the costs of fossil fuel-powered electricity generation, (1.37 million units sold; Kenya and Tanzania are the lead- thereby blunting the cost competitiveness of renewables; ers), followed by South Asia (1.28 million units sold; India is (ii) creating an incumbent advantage that strengthens the the leader) (Bloomberg New Energy Finance 2016). position of fossil fuels in the electricity system; and (iii) cre- Solar lighting systems (solar lanterns) have seen the ating conditions that favor investments in fossil fuel-based greatest development in recent years—and they are now technologies over renewables. Fossil fuel subsidies were considerably cheaper than conventional kerosene-based estimated to be over $490 billion in 2014, compared with lighting systems (depending on existing subsidies). Solar subsidies of only $135 billion for renewables (IEA n.d.). Pol- lanterns, often priced as low as $10, provided lighting to ˆVÞ`iÈ}˜ŜՏ`w˜>˜Vˆ>Þ`ˆÃVœÕÀ>}iˆ˜ÛiÃ̓i˜ÌȘvœÃ- 28.5 million people across the African continent by end- sil fuels and nuclear, while also removing risk from 2014: in Kenya, these lanterns provided lighting to about investments in renewable energy. This is crucial for scaling 12 percent of the population, and in Tanzania’s Lake region, up renewables, which can help close the energy access about 50 percent of the population (Global Off-Grid Light- gap (REN21 2016). 56 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 4.10 Increasing amounts of money being invested in off-grid companies (Capital raised by off-grid companies in 2015 and share of Pay as You Go (PAYG) companies) US$ million US$276 million total in off-grid solar 80 companies in 2015 US$160million total in Pay-As-You-Go 60 companies in 2015 40 70 20 31.5 15 15 12.6 10.7 10 0 abo PAYG companies attracted aboutout 585 of the money m Off-Grid M-Kopa BBOXX Nova Fenix Mobisol Greenlight anies in 2016 raised by off-grid solar companies Electric Lumos International Planet Source: REN21/BNEF Better communicate advantages of renewables. Renew- stop-shop model—are now emerging as leading models ables are still less known and often suffer from a lack of and leading off-grid access developments. understanding about the full cost of a renewable systems, Li˜iwÌÃ] œ««œÀÌ՘ˆÌˆiÃ] >˜` V>«>LˆˆÌˆiÃp̅iÀiLÞ >V̈˜} Create a clear, stable, and transparent legal framework. If as a barrier to effective deployment of large shares of governments want to attract more private capital, they will renewables into the grid (Bridle et al. 2013). ˜ii`̜iÃÌ>LˆÃ…˜œÌœ˜Þw˜>˜Vˆ˜}“iV…>˜ˆÃ“ÃLÕÌ>Ãœ agreements through which the purchase of the power gen- Provide greater consistency in energy policy planning. erated is guaranteed for a long period of time and at an Renewable energy policy changes and uncertainties >}Àii`«ÀˆVi°ƂÃœ]«ÕLˆVÞÅ>Ài`>˜`ÃÌ>LiiiVÌÀˆwV>- ՘`iÀ“ˆ˜iˆ˜ÛiÃ̜ÀVœ˜w`i˜Vi]ˆ˜…ˆLˆÌˆ˜}ˆ˜ÛiÃ̓i˜Ì>˜` tion plans are fundamental. deployment in some markets. Investors consider all of these factors in their decision making, as do insurers Promote community participation and ownership. This is (demonstrated by the increasing presence of insurance ۈÌ> vœÀ œvv‡}Àˆ` iiVÌÀˆwV>̈œ˜ «Àœ}À>“à ˆ˜ «>À̈VՏ>À° Ƃ˜ addressing climate change risks). Likewise, policy makers underlying principle is that the renewable technology is not should think on a long-term basis in order to increase free-of-charge or unreasonably subsidized. Financial sup- investment in clean energy and advance the energy transi- port of renewable energy projects by communities allows tion in their countries. residents/owners to decide what technology to apply (such as solar PV, wind, or biomass) and how resultant energy ser- +ORTQXGƂPCPEKCNQRVKQPU*ÕLˆVw˜>˜Vi“iV…>˜ˆÃ“Ã>Ài vices are used; they are not passive consumers, but active needed to leverage private sector investment, overcome a participants and might even be energy producers. That >VŽœv«ÀˆÛ>Ìiw˜>˜Vˆ>ˆ˜ÃÌÀՓi˜ÌÃ]v>VˆˆÌ>Ìi…ˆ}…‡V>«>VˆÌÞ Ã>ˆ`]Vœ˜ÌÀˆLṎœ˜Ã`œ˜œÌ…>Ûi̜w˜>˜Vˆ>pVœ““Õ˜ˆÌˆià deployment, and mitigate risks. For example, they would and households can donate time (digging a canal), land be especially critical for deploying stand-alone systems, (donating land for the project site), or resources (wood for ܅ˆV…>ÀiœvÌi˜Vœ˜ÃÌÀ>ˆ˜i`LÞ>>VŽœv>Û>ˆ>Liw˜>˜Vˆ> distribution poles). As the World Bank has noted, “partici- resources, high up-front technology costs (including the pation of local communities, investors, and consumers in cost of connections), and reluctance by investors and deci- the design and delivery of energy services is essential”. sion makers. This problem is further exacerbated because the majority of people that lack energy access have limited Build local capacity. This is key to create self-sustaining w˜>˜Vˆ> “i>˜Ã ̜ «>Þ vœÀ i˜iÀ}Þ ÃiÀۈVià ­x* >˜` / Ài˜iÜ>Lii˜iÀ}Þ“>ÀŽiÌÃvœÀœvv‡}Àˆ`iiVÌÀˆwV>̈œ˜]܅ˆV… Óä£{®°/…ÕÃ]̅iÃÕVViÃÃœvÀÕÀ>iiVÌÀˆwV>̈œ˜ÀiµÕˆÀiÃ̅i do not depend on external support or international actors. ÕÃi œv > VÕÃ̜“ˆÃi` >˜` w˜>˜Vˆ>Þ ÃÕÃÌ>ˆ˜>Li LÕȘiÃà Selecting partners that already have networks in rural areas model (PWC Global Power & Utilities. 2016). and building the technical or managerial capacity of Since the 1990’s, innovative business models, often domestic companies and institutions is key. developed in collaboration with private industry, have opened up the off-grid market. Early models included Catalyze high-level support. High-ranking ministerial or micro-credit and fee for service. Innovative business mod- V>Lˆ˜iÌ œvwVià ˜ii` ̜ …i« «Àœ“œÌi ̅i ÃV>ˆ˜}‡Õ« œv els—such as the pay-as-you-go (PAYG) model or the one- renewables for access. This means raising awareness about “ CLEAN ENERGY” AND ENERGY A C C E SS 57 renewable energy solutions for increasing access, provid- U Ì«ÀiÛi˜ÌÃ̅iœ˜}‡À՘œVŽ‡ˆ˜œvˆ˜ivwVˆi˜Ì«Àœ`ÕVÌà ing training for current and future decision makers, and and appliances that may hamper the success of clean developing a “marketing strategy” by providing good energy and energy access initiatives (Pachauri et al. data, organizing market players, and outlining the driving 2012). forces that shape policy decisions. 7…i̅iÀ>VViÃÈÃ}Àˆ`‡Vœ˜˜iVÌi`œÀœvv‡}Àˆ`]i˜iÀ}Þivw- ciency offers a two-fold opportunity for improving delivery. ENERGY EFFICIENCY Þ ˆ˜VÀi>Ș} ̅i ivwVˆi˜VÞ œv «Àœ`ÕV̈œ˜] ÌÀ>˜Ã“ˆÃȜ˜] and distribution processes, it frees up energy resources, "˜ViœÛiÀœœŽi`]i˜iÀ}ÞivwVˆi˜VÞˆÃLiˆ˜}Ãii˜ˆ˜VÀi>Ã- thus acting as a “virtual power supply” (IEA 2015b). From ingly as a key tool in delivering modern and clean energy ̅i`i“>˜`È`i]i˜iÀ}ÞivwVˆi˜Ì>««ˆ>˜ViÃV>˜>VViiÀ- ÃiÀۈVið ˜iÀ}ÞivwVˆi˜VÞœvviÀÃ̅i՘ˆµÕiœ««œÀÌ՘ˆÌÞœv ate the diffusion of modern energy services (Table 4.2). enhancing the deployment of clean energy and pursuing energy access objectives. By end-2015, at least 146 coun- Moreover, from 2010–2015 the World Bank lent over ÌÀˆiÃ…>`i˜>VÌi`i˜iÀ}ÞivwVˆi˜VÞ«œˆVˆiÃ]܅ˆi>̏i>ÃÌ fx°ÓLˆˆœ˜vœÀi˜iÀ}ÞivwVˆi˜VÞ«ÀœiVÌÃ̅>ÌLÀœÕ}…ÌÃÕL- £ÓnVœÕ˜ÌÀˆiÃ…>`i˜iÀ}ÞivwVˆi˜VÞÌ>À}iÌð/…iÀi…>Ã>Ãœ ÃÌ>˜Ìˆ> >``ˆÌˆœ˜> Li˜iwÌÃ] À>˜}ˆ˜} vÀœ“ ˆ“«ÀœÛi` iiV- been a drop of more than 30 percent in the primary energy tricity transmission capacity to higher industrial productivity intensity between 1990 and 2014 (REN21 2016). and lower energy poverty. /…i>ÌÌÀ>V̈Ûi˜iÃÃœvi˜iÀ}ÞivwVˆi˜VÞ>Ài“>˜Þ\ By reducing the size of the energy supply infrastructure • It reduces peak loads, lowering the level of investment needed to provide a given level of energy services, energy ÀiµÕˆÀi`̜“iiÌ…ˆ}…‡i˜iÀ}Þ`i“>˜`>Ì«i>Ž…œÕÀð ivwVˆi˜VÞ“ˆÌˆ}>ÌiÃ̅iVœÃÌÃ>˜`̅i˜i}>̈ÛiÜVˆ>>˜` This reduction in demand allows more people to be environmental impacts from the energy supply. The bene- supplied with energy services with the same power pro- wÌÃœvi˜iÀ}ÞivwVˆi˜VÞ>ÀiÜi`œVՓi˜Ìi`ˆ˜ˆ˜`ÕÃÌÀˆ>- duction capacity. ˆâi` iVœ˜œ“ˆià >˜` iÝ«iÀˆi˜Vi ÃÕ}}iÃÌà ̅>Ì ivwVˆi˜VÞ V>˜Li>wÀÃ̇œÀ`iÀi˜iÀ}Þ>VViÃÃÀiÜÕÀVi°7…iÀiÛiÀ˜iÜ • It lowers energy costs, providing households with the i˜iÀ}ÞÃÕ««ˆiÃ>Ài˜ii`i`]i˜iÀ}ÞivwVˆi˜VÞpLœÌ…ÃÕ«- option to spend less on energy services or move up the ply and demand—can reduce the amount of investment energy ladder. needed. Wherever existing supplies fall short or are unduly • It reduces government expenditure on fossil fuels. iÝ«i˜ÃˆÛi]i˜iÀ}ÞivwVˆi˜VÞV>˜ˆ“«ÀœÛiÃÞÃÌi“Àiˆ>LˆˆÌÞ and performance, and reduce energy costs. TABLE 4.2 'PGTI[CEEGUUKPVGTXGPVKQPUCPFKPFKECVKXGGPGTI[GHƂEKGPE[DGPGƂVU The EA+EE Opportunity in Context ACCESS TIER TECHNOLOGY OR MODE OF DELIVERY ENERGY EFFICIENCY’S VALUE PROPOSITION TIER 1 -œ>À*œÀÌ>Li>˜ÌiÀ˜ÃÉ*ˆVœ*6  ˜iÀ}އivwVˆi˜Ìˆ}…Ìi“ˆÌ̈˜}`ˆœ`ií îÀ>`ˆV>ÞÀi`ÕVi̅i size and costs of the solar PV and batteries needed to provide service, making these technologies affordable for vast new market segments. 6+'4 "vv‡Àˆ`-ÞÃÌi“à  ˜iÀ}އivwVˆi˜Ì>««ˆ>˜ViÃÀ>`ˆV>ÞÀi`ÕVii˜iÀ}ÞÃÕ««Þ˜ii`Ã] allowing a given off-grid system size to provide greater service and Ó>iÀ]“œÀi>vvœÀ`>LiÃÞÃÌi“Ã̜«ÀœÛˆ`iiµÕˆÛ>i˜ÌÃiÀۈVi°  ˆVÀœ‡>˜`ˆ˜ˆ‡Àˆ`à  ˜iÀ}އivwVˆi˜Ì>««ˆ>˜ViÃ>˜``iۈViÃV>˜ˆ˜VÀi>Ãi̅i˜Õ“LiÀ of connections a mini-grid can support, and can reduce a system’s V>«ˆÌ>VœÃÌÀiµÕˆÀi“i˜ÌÃ]«œÌi˜Ìˆ>Þˆ“«ÀœÛˆ˜}w˜>˜Vˆ>ۈ>LˆˆÌÞ°  ˜`ÕÃÌÀˆœÕÃÉ œ““Õ˜ˆÌÞ1Ãià ˜iÀ}ÞivwVˆi˜VÞÀi`ÕViÃ̅ii˜iÀ}ÞVœÃÌÃ>˜`ɜÀiÝÌi˜`Ã̅iÀ՘  time of motorized products such as mills, grinders, and pumps. vwVˆi˜Ì܏>À ÃÌÀiȉˆ}…ÌȘVÀi>Ãi«ÕLˆVÃ>viÌÞ>˜`v>VˆˆÌ>Ìi after dark commerce.    vwVˆi˜Ì܏>À«Õ“«ˆ˜}ÃÞÃÌi“ÃvœÀˆÀÀˆ}>̈œ˜…>ÛiLii˜vœÕ˜` “œÀiVœÃÌivviV̈Ûi̅>˜̅i>ÛiÀ>}iiiVÌÀˆV«Õ“«Ã° vwVˆi˜Ì “i`ˆV>>««ˆV>̈œ˜Ãœ«iÀ>Ìi“œÀiÀiˆ>LÞˆ˜՘`iÀ‡iiVÌÀˆwi` ÀÕÀ>Vˆ˜ˆVÃ]œÀÀiµÕˆÀiÓ>iÀ>˜`“œÀi>vvœÀ`>Liœvv‡}Àˆ` energy systems. TIER 5 Àˆ` iVÌÀˆwV>̈œ˜É*œÜiÀ -Õ««Þ‡>˜``i“>˜`‡Ãˆ`iivwVˆi˜VÞˆ“«ÀœÛi“i˜ÌÃV>˜i˜…>˜Vi  -iV̜À,ivœÀ“ «œÜiÀÃiV̜ÀÀiˆ>LˆˆÌÞ>˜`w˜>˜Vˆ>«iÀvœÀ“>˜ViƏœÜiÀˆ˜}«ÀˆVià  for consumers, and increasing likelihood of energy bills being «>ˆ`°˜ÃiV̜ÀÃ܈̅ÃÕLÈ`ˆâi`Ì>ÀˆvvÃ]ivwVˆi˜VÞV>˜œÜiÀ government costs. Note: SE4All has developed a multi-tier framework for global tracking of energy access. Tier 1 represents very low energy service and Tier 5 includes full grid connectivity with higher power appliances. 58 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 ˜iÀ}Þ ivwVˆi˜VÞ œ«Ìˆœ˜Ã vœÀ >VViÃà V>˜ Vœ“«i“i˜Ì the availability and reliability of energy service in an energy renewable energy as they permit greater levels of services constrained context”(Jordan et al. n.d.). for the same power levels. Possible options include LED Although the current world average for the electric ˆ}…̈˜} ̜ Ài«>Vi ˆ˜V>˜`iÃVi˜Ì >˜` y՜ÀiÃVi˜Ì >“«Ã] power transmission and distribution losses is estimated at …ˆ}…‡ivwVˆi˜VÞ >««ˆ>˜Vià ÃÕV… >à /6à >˜` v>˜Ã] …ˆ}…‡ 8 percent the amount tends varies widely across countries ivwVˆi˜VÞ“œÌœÀÃvœÀVœ““Õ˜ˆÌÞÃV>iˆ˜`ÕÃÌÀÞ>˜`>}ÀˆVՏ- and regions. While the OECD average is about 6-7 per- tural processing, and improved pumps—ideally paired cent, the average for the sub Saharan African region is with processes like drip irrigation that minimize water use. around 12 percent, compared to 15 percent for Latin These options typically have higher initial costs, but these America and the Caribbean, and 18 percent for South costs are offset by the lower costs of the smaller power Asia. Similarly, in Africa while countries like Mauritius, supply system (such as cheaper replacement items like South Africa, or Zambia enjoy electric power losses of less batteries). than 10 percent, others like Togo, Benin and Congo, have a high rate of power losses—87 percent, 61 percent, and 'HƂEKGPE[QPVJG5WRRN[5KFG 44 percent, respectively. On the supply side, the incentive structure—utilities and These losses mainly stem from technical losses, caused other grid-connected energy service providers typically LÞ ˆ˜ivwVˆi˜Ì iµÕˆ«“i˜Ì >˜` «œœÀ “>ˆ˜Ìi˜>˜Vi] >˜` earn revenue for each unit of energy sold (such as kilowatt non-technical loses, usually attributed to theft and the hours)—favors energy consumption and discourages underpricing of electricity. The result is an unstable, i˜iÀ}Þ ivwVˆi˜VÞ] `iëˆÌi ̅i >ÌÌiÀ½Ã ˆ“«œÀÌ>˜Vi ˆ˜ ̅i sub-optimal, power system that hurts end-users, often energy service business model. ˆ“«i`ˆ˜}̅i>LˆˆÌÞœvwÀ“Ã̜œ«iÀ>ÌiivwVˆi˜ÌÞ°Ì>Ãœ ƂÃ>L>VŽ}ÀœÕ˜`]«>«iÀvœÀ̅ˆÃÀi«œÀÌœ˜i˜iÀ}Þivw- can undercut economic and social development—by low- Vˆi˜VÞ«ÕÌÈÌ\º>À}i‡ÃV>i`i«œÞ“i˜Ìœv…ˆ}…ÞivwVˆi˜Ì ering enterprise productivity, employment, and competi- end-use products reduces peak demand, which in turn mit- ̈Ûi˜iÃÃ]>˜`VÀi>̈˜}È}˜ˆwV>˜ÌVœ˜ÃÌÀ>ˆ˜ÌÃœ˜iVœ˜œ“ˆV igates load shedding and the need for large new generat- activity and growth. ing supply investments. Reduction in peak demand can /…ÕÃ] ˆ˜VÀi>Ș} ̅i ivwVˆi˜VÞ œv «œÜiÀ ÌÀ>˜Ã“ˆÃȜ˜ reduce the need for spot generation and energy/fuel and distribution infrastructure is a key issue that needs to imports, which can be prohibitively expensive and can Li>``ÀiÃÃi`°ÌˆÃœvÌi˜ˆ˜Ži`̜̅i«œœÀw˜>˜Vˆ>«iÀvœÀ- Vœ“«ˆV>ÌiÃiV̜À>˜`ṎˆÌÞw˜>˜Vˆ>«>˜˜ˆ˜}°7ˆ`iÃV>i mance of utility companies, which limits the ability of coun- i˜iÀ}ÞivwVˆi˜VÞV>˜>Ãœˆ“«ÀœÛiÃiÀۈVi>˜`VÕÃ̜“iÀ ÌÀˆiÃ̜ˆ“«ÀœÛi̅iivwVˆi˜VÞœv̅iiiVÌÀˆVˆÌÞˆ˜vÀ>ÃÌÀÕVÌÕÀi° satisfaction, which, when coupled with the lower energy In many African countries, the high rate of grid loss and LˆÃ] ˆ“«ÀœÛi VÕÃ̜“iÀ «>ޓi˜Ì° -Õ««Þ‡Ãˆ`i ivwVˆi˜VÞ poor transmission and distribution networks has only gains—like grid rehabilitation in Brazil, China, India, Mex- >œÜi` vœÀ ̅i iiVÌÀˆwV>̈œ˜ œv ÕÀL>˜ >Ài>à œ˜Þ° œÀi- ico, and Vietnam (Box 4.2)—can enhance system reliability, over, the loss in power supply could have been utilized to ˆ“«ÀœÛi w˜>˜Vˆ> «iÀvœÀ“>˜Vi] >˜` i˜ÃÕÀi ̅>Ì “i}>- «ÀœÛˆ`i i˜iÀ}Þ >VViÃà ̜ “ˆˆœ˜Ã ܈̅œÕÌ >˜Þ È}˜ˆwV>˜Ì watts generated are megawatts sold—all of which improve investment in new power capacity (KPMG 2015). BOX 4.2 Renewable Technologies Come in Various Shapes and Sizes At utility scale, they provide electricity to meet the mini-grid can be a single power source—such as a diverse needs of grid-connected urban and rural cus- small hydropower plant, or a hybrid system with renew- tomers. Grid-connected clean energy technologies can able energy sources with batteries or a diesel genera- range from a few kilowatts of roof top solar photovolta- tor. In the Indonesian archipelago, many of the 6,000 ics (PV) systems connected to the low voltage distribu- inhabited islands are powered by diesel- or small tion network, to 10 to 1,000s of megawatts of large …Þ`Àœ‡“ˆ˜ˆ‡}Àˆ`ÃÆ ÀiVi˜ÌÞ ܓi >Ài Liˆ˜} ÀiÌÀœwÌÌi` centralized utility scale power plants. Examples include with solar PV systems to avoid high cost diesel fuel. hydropower, solar parks, wind farms, geothermal When communities are small or dispersed and elec- power plants, or biomass-fueled plants connected to tricity demand is limited, stand-alone systems—such as medium and high voltage substations. These utility solar home systems (SHS)—can be more cost effective, scale renewable energy plants are in place in Ethiopia, iëiVˆ>Þ܅i˜VœÕ«i`܈̅˜iÜLÕȘiÃÃ>˜`w˜>˜- i˜Þ>],Ü>˜`>]>˜`iÃi܅iÀi]«ÀœÛˆ`ˆ˜}LiÌÌiÀµÕ>- cial models. Increasingly, small PV systems, known as ity service to existing customers, as well as widening pico-solar systems (ranging from a few watts to tens of the reach of the grid to those previously without access. watts of solar PV) provide high value lighting and In “ˆ˜ˆ‡}Àˆ`Vœ˜w}ÕÀ>̈œ˜Ã]clean energy technolo- mobile phone services. gies can meet the needs of communities sooner than Source: SEAR Special Feature Paper on Energy Access: Food and waiting for grid extension. A clean energy technology Agriculture (Dubois et al. 2017) “ CLEAN ENERGY” AND ENERGY A C C E SS 59 Many countries have embarked on, or plan to under- ˜iÀ}ÞivwVˆi˜Ì>««ˆ>˜ViÃ…>Ûi…i«i`̜Ài`ÕVi̅i take, a grid loss reduction program that complements both i˜iÀ}Þ ˆ˜ÛiÃ̓i˜Ì VœÃÌà ÀiµÕˆÀi` ̜ ŽˆVŽ‡ÃÌ>ÀÌ i˜iÀ}Þ their energy access objective and their transition toward access programs. Shaving a single watt from an off-grid renewable energy—although large-scale loss-reduction appliance’s load results in lower initial solar package costs, ÃV…i“iÓ>ÞLiiÝ«i˜ÃˆÛi>˜`…i˜Vi`ˆvwVՏÌ̜w˜>˜Vi improved service, or both (Van Buskirk 2015). Similarly, by poorly performing utilities. Sierra Leone, as per its i˜iÀ}ÞivwVˆi˜VÞV>˜“>Ži>À}iÀœvv‡}Àˆ`܏>À…œ“iÃÞÃ- SE4ALL Action Agenda, plans to reduce its grid losses from tems more affordable (Figure 4.11). According to a recent 17 percent currently to 9 percent by 2020 by upgrading its analysis “the upfront cost of a typical off-grid energy sys- grid infrastructure, investing in low voltage distribution, tem can be reduced by as much as 50 percent if super-ef- and improving the monitoring of customer consumption to wVˆi˜Ì>««ˆ>˜ViÃ>˜`Àˆ}…̇Èâi`܏>À*6>˜`L>ÌÌiÀˆiÃ>Ài avoid non-technical losses (ECREEE 2015). India, with a ÕÃi`] ܅ˆi `iˆÛiÀˆ˜} iµÕˆÛ>i˜Ì œÀ }Ài>ÌiÀ i˜iÀ}Þ ÃiÀ- transmission and distribution loss of 23 percent, is increas- vice.” (Van Buskirk 2015). ing its efforts to reduce grid losses—in part through a /…ÕÃ]>`Û>˜ViȘi˜iÀ}އivwVˆi˜Ì`iۈViÃpˆ˜VÕ`ˆ˜} planned mandatory labelling of distribution transformers DC appliances as mentioned earlier — now allow house- (Mohan 2014). Rwanda, in line with its SE4ALL objectives, …œ`Ã̜Ài>«“œÀiLi˜iwÌÃ>˜`>Ì>œÜiÀVœÃÌvÀœ“̅i ÃiVÕÀi`w˜>˜Vˆ˜}œvfÓx“ˆˆœ˜ˆ˜Óä£xvÀœ“̅i ÕÀœ«i>˜ relatively small amounts of electricity available to them. Union to improve and upgrade its grid infrastructure to Instead of illuminating a single light bulb, CFLs and LED reduce its power loss from 23 percent to 17 percent in the lamps use provide more and better light and consumer coming years (Bateta 2015). less energy, leaving enough energy to power other elec- tronic devices such as fans and low-wattage TVs and appli- 'PGTI['HƂEKGPE[QPVJG&GOCPF5KFG ances, as Figure 4.12 shows. The success of off-grid technologies for providing energy œÀiœÛiÀ] ̅i «œÃˆÌˆÛi ˆ“«>VÌà œv ivwVˆi˜Ì ˆ}…̈˜} œ˜ access in recent years is largely attributable to the availabil- off-grid energy service markets need not remain limited to ˆÌÞ œv i˜iÀ}Þ ivwVˆi˜Ì >««ˆ>˜Við œÀ ˆ˜ÃÌ>˜Vi] ˆ˜ “>˜Þ lighting. The price and service impacts can be replicated for VœÕ˜ÌÀˆiÃ̅iÕÃiœv…ˆ}…ivwVˆi˜Ì >“«Ã…>Ãi˜>Li` other, more advanced, forms of energy service—such as the implementation of various modern lighting pro- refrigeration, telecommunications, and industrial appli- }À>““ià >˜` ˆ˜ˆÌˆ>̈Ûià ˆ˜ ÀÕÀ> >˜` iiVÌÀˆwi` >Ài>ð Ƃà ances. Off-grid solar LED street lighting provides commu- the Royal Swedish Academy of Sciences put it when nal lighting and promotes public safety and after-dark announcing the 2014 Nobel Prize in Physics: “The LED social and commercial activity. Similar to solar home sys- >“«…œ`Ã}Ài>Ì«Àœ“ˆÃivœÀˆ˜VÀi>Ș}̅iµÕ>ˆÌÞœvˆvi Ìi“Ã]̅iÕÃiœvivwVˆi˜Ì ÃÀi`ÕViÃ̅i˜ii`vœÀ“œÀi for over 1.5 billion people around the world who lack iÝ«i˜ÃˆÛi ܏>À *6 >˜` L>ÌÌiÀÞ Vœ˜w}ÕÀ>̈œ˜Ã° ՘ˆVˆ«> >VViÃÃ̜iiVÌÀˆVˆÌÞ}Àˆ`ð Õi̜œÜ«œÜiÀÀiµÕˆÀi“i˜ÌÃ] street lighting can account for 20 percent or more of a city’s it can be powered by cheap local solar power.” }Àˆ`‡Vœ˜˜iVÌi`iiVÌÀˆVœ>`°,iÌÀœwÌ̈˜}ÃÌÀiȉˆ}…ÌÃ܈̅ FIGURE 4.11.KPMKPIGPGTI[GHƂEKGPVCRRNKCPEGUCPFGPGTI[CEEGUUVJTQWIJENGCPGPGTI[ ENHANCED SERVICE MORE AFFORDABLE The same system paired with super- Appliances super-efficiency also An energy system with a efficient off-grid appliances providers enables much smaller, more 40 Wp solar panel and greatly enhanded energy services: affordable energy systems to 70 Ah battery will powe 70 Ah battery will powe provide equivalent and even • a 25 W incandescent light superior service. • 2 LED lighting fixtures bulb (250–400 lumens) (=900 lumens) for 5 hours/day • For example, a 10 Wp solar for 5 hours/day • a 13 W TV for 3.5 hours/day panel and a 2–5 Ah battery • a 6 W fan for 4 hours/day can power a LED lighting • a 1 W mobile phone charger fixture (200–300 lumens) for 4 hours/day up to 8 hours/day • a 1 W radio for 5 hours/day Source: Global LEAP Initiative. Analysis courtesy of Humboldt State University’s Schatz Energy Research Center. 60 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 4.12 Solar home systems increasingly offer more for less (Retail purchase price for three solar home systems that provide identical levels of service) SHS with Standard Appliances (2009) SHS with Standard Appliances (2014) SHS with Super-Efficient Appliances (2014) SHS with Super-Efficient Appliances (2017) $0 $200 $400 $600 $800 $1,000 $1,200 Retail price by component ($US) Lights Battery PV Balance of system Appliances Source: PHADKE 2015.  à V>˜ >V…ˆiÛi È}˜ˆwV>˜Ì i˜iÀ}Þ Ã>ۈ˜}à p Ài`ÕVˆ˜} Certainly, the global off-grid marketplace will need a energy supply constraints, freeing up energy for other uses, complementary, competitive marketplace of low-cost, and potentially improving grid reliability (Silverspring Net- i˜iÀ}އivwVˆi˜Ì]…ˆ}…µÕ>ˆÌÞ]>˜`Üi‡`iÈ}˜i`œvv‡}Àˆ` works n.d.). In Guadalajara, Mexico, energy savings from appliances. At this point, such a market does not exist, ÀiÌÀœwÌ̈˜}ÃÌÀiȉˆ}…ÌÃ܈̅ Ã…>Ïi`̜œÛiÀxä«iÀVi˜Ì due largely to a lack of familiarity with the off-grid market reduction in energy consumption (Makumbe et al. 2016). opportunity by appliance manufacturers, as well as the With the rapid development of the off-grid energy sec- ÀˆÃŽÃ>˜``ˆvwVՏ̈iÃœv“>ÀŽiÌi˜ÌÀÞ«iÀViˆÛi`LÞ̅œÃi ̜À]̅i՘Ì>««i`“>ÀŽiÌœv`ˆÀiVÌVÕÀÀi˜Ì­ ®i˜iÀ}Þivw- manufacturers. Moreover, off-grid companies are ill- cient appliances has received renewed interest. Under the iµÕˆ««i`̜`iÛiœ«œvv‡}Àˆ`>««Àœ«Àˆ>Ìi>««ˆ>˜ViÃœv traditional grid-connected model, alternating current (AC) ̅iˆÀœÜ˜]>˜`̅i“>ÀŽï˜vÀ>ÃÌÀÕVÌÕÀi̜iµÕˆ«œvv‡}Àˆ` power has become the norm. However, given that solar PV companies to source outstanding appliances is lacking. produce and batteries store DC power, it might be more Ƃ}>ˆ˜ÃÌ̅ˆÃL>VŽ`Àœ«]wÛiŽiÞV…>i˜}iÃÃÌ>˜`œÕÌ\ economical to use DC appliances. With DC appliances connected to off-grid energy systems, there is no need for Lowering tariff barriers. Developing countries often im- conversion between AC and DC. There is thus no need for «œÃi …ˆ}… ˆ“«œÀÌ `Ṏià œ˜ >««ˆ>˜Vià >˜` iµÕˆ«“i˜Ì] >˜ˆ˜ÛiÀÌiÀvœÀ̅iœvv‡}Àˆ`ÃÞÃÌi“>ÃÜi>Ã>È}˜ˆwV>˜Ì usually to protect domestic manufacturing, generate reve- `iVÀi>Ãiˆ˜iiVÌÀˆVˆÌޏœÃÃið˜>``ˆÌˆœ˜]܈̅̅iivwVˆi˜VÞ nue, or generate income from perceived luxury items (like gain from the use of DC appliances, the size of PV panels >ºÕÝÕÀÞÌ>Ý»®°,i`ÕVˆ˜}`ṎiÃvœÀ…ˆ}…‡µÕ>ˆÌÞ]…ˆ}…Þ‡iv- needed for a SHS and battery systems is considerably wVˆi˜Ì«Àœ`ÕVÌÃp«œÃÈLÞLi˜V…“>ÀŽi`>}>ˆ˜ÃÌ>˜ˆ˜ÌiÀ- reduced, resulting in a decline in the cost of off-grid energy national or regional standard—will lower downstream systems and dramatically increasing their affordability. The prices for these products and make them cost-competitive availability of DC appliances (namely DC television, radio, ܈̅ ˆ˜ivwVˆi˜Ì «Àœ`ÕVÌÃ] ˆ˜ ÌÕÀ˜] ëÕÀÀˆ˜} Õ«Ì>Ži >˜` fans, and refrigerators) could in the long run prove to be a >VViÃÃ̜Li˜iwÌíÃÕV…>ÏœÜiÀVœÃÌÃ>˜`Ài`ÕVi`œ>` major driver for the off-grid solar market. Already in 2015, shedding). more than 137,000 SHS together with DC appliances have been sold in East African countries (GOGLA 2016). 'CUKPIƂPCPEKCNEQPUVTCKPVU The procurement processes tend to favor products with the lowest initial price, despite .KPMKPI7R'PGTI['HƂEKGPE[CPF#EEGUU the fact that although many products with superior energy 7…>ÌV>˜Li`œ˜i̜LiÌÌiÀˆ˜ŽÕ«i˜iÀ}ÞivwVˆi˜VÞ>˜` performance have a higher up-front cost, they have a sig- access, given how important they are to each other? Off- ˜ˆwV>˜ÌÞœÜiÀˆvi‡VÞViVœÃÌ° grid energy access companies around the world are creat- ing a global market to reach billions of consumers—and Encouraging political and market champions. Econo- i˜iÀ}ÞivwVˆi˜VÞ՘`iÀ«ˆ˜Ã̅iˆÀÃÕVViÃȘ“iï˜}̅iÃi mies with energy access challenges often need a strong needs. Conversely, energy access markets hold the poten- >˜`ۜV>Vœ““Õ˜ˆÌÞœvivwVˆi˜VÞÃÌ>Ži…œ`iÀðƂ“>œÀ ̈>̜`ÀˆÛii˜iÀ}ÞivwVˆi˜VÞÌiV…˜œœ}Þ]“>ÀŽiÌ]>˜`«œ- L>ÀÀˆiÀˆÃ̅>ÌvÀiµÕi˜ÌÞ̅iÀiˆÃˆÌ̏iœÛiÀ>«LiÌÜii˜̅i icy to leapfrog longstanding challenges associated with «ÀœviÃȜ˜> Vœ““Õ˜ˆÌˆià ܅œ ܜÀŽ œ˜ i˜iÀ}Þ ivwVˆi˜VÞ i˜iÀ}ÞivwVˆi˜VÞ]՘œVŽˆ˜}՘̜`iVœ˜œ“ˆV>˜`i˜ÛˆÀœ˜- and energy access; energy access experts are not neces- “i˜Ì>Li˜iwÌÃ]>˜`ÌÀ>˜ÃvœÀ“ˆ˜}̅iÜ>Þ̅iܜÀ`Vœ˜- Ã>ÀˆÞi˜iÀ}ÞivwVˆi˜VÞiÝ«iÀÌÃ]>˜`ۈViÛiÀÃ>° sumes energy. “ CLEAN ENERGY” AND ENERGY A C C E SS 61 Enhancing visibility. It is tempting, and politically conve- ܅ˆi i˜iÀ}Þ ivwVˆi˜VÞ V>˜ Vœ˜ÌÀˆLÕÌi ̜ i˜iÀ}Þ ÃiVÕÀˆÌÞ nient, to just add more generation capacity. But the focus and enhance the reliability of supply, particularly in capaci- ˜ii`à ̜ Li œ˜ ˆ“«ÀœÛˆ˜} i˜iÀ}Þ ivwVˆi˜VÞ ̜ LœÃÌiÀ ÌއVœ˜ÃÌÀ>ˆ˜i` ÃÞÃÌi“ð œÀ ˆ˜ÃÌ>˜Vi] i˜iÀ}Þ ivwVˆi˜VÞ energy service and sector performance—which will have a measures in IEA member countries avoided at least 190 longer time horizon, even though it is less visible and ̜iœv«Àˆ“>ÀÞi˜iÀ}Þˆ“«œÀÌȘÓä£{]iµÕˆÛ>i˜Ì̜fnä …>À`iÀ̜µÕ>˜ÌˆvÞ° billion (IEA 2015b). The shift to clean energy also forces a “œÛi >Ü>Þ vÀœ“ i݈Ã̈˜}] œvÌi˜ ˆ˜ivwVˆi˜Ì ˆ˜vÀ>ÃÌÀÕVÌÕÀ> Creating self-sustaining markets. This is a major chal- systems, often resulting in improved energy security. The i˜}i}ˆÛi˜̅>̈ÌÀiµÕˆÀiÃ>iÛiœvˆ˜vÀ>ÃÌÀÕVÌÕÀi̅>̈à ÕÃiœvivwVˆi˜Ì>««ˆ>˜ViȘœÜˆ˜Vœ“i…œÕÃi…œ`ÃV>˜ often lacking in countries with low levels of access. But …>Ûi>È}˜ˆwV>˜Ìˆ“«>VÌLÞÀi`ÕVˆ˜}i˜iÀ}ÞLˆÃ]>˜`̅Õà ˆÌ ˆÃ ۈÌ> vœÀ i˜ÃÕÀˆ˜} µÕ>ˆÌÞ] ˜œÌ ̜ “i˜Ìˆœ˜ i˜vœÀVˆ˜} freeing up disposable income. It can also keep these standards. households within the consumption blocks for which tariffs The good news is that despite these challenges, and a are lower (e.g. social tariffs) (Sarkar and Subbiah, 2013). }i˜iÀ>>VŽœv«ÀˆœÀˆÌÞœ˜i˜iÀ}ÞivwVˆi˜VÞivvœÀÌÃ]̅iÀi are many examples of smart practices and effective mod- A more sustainable clean energy market. Linking off-grid iÃvœÀˆ˜VœÀ«œÀ>̈˜}i˜iÀ}ÞivwVˆi˜VÞˆ˜>VViÃÃ>V̈ۈ̈ið i˜iÀ}Þ ÃÞÃÌi“à ܈̅ i˜iÀ}Þ ivwVˆi˜VÞ VÀi>Ìià > ۈÀÌ՜Õà In recent years, a slate of high-impact programs have prior- circle for the clean energy market. As Figure 4.13 illus- itized a broader view on developing energy access mar- ÌÀ>ÌiÃ] i˜iÀ}Þ ivwVˆi˜Ì œvv‡}Àˆ` >««ˆ>˜Vià Vœ˜Ãˆ`iÀ>LÞ kets, looking at commercial investment and supply-chain reduce the price of off-grid energy systems needed to management, to policy reform, to consumer awareness. power them, thereby increasing the demand for the latter. Common to these efforts are: The savings made by households through the use of renewable energy off-grid systems allow households to • A thoughtful evaluation of their respective markets’ fun- move up the energy ladder, thereby increasing the demand damentals and barriers. vœÀi˜iÀ}ÞivwVˆi˜Ì>««ˆ>˜ViðƂÃ>ÀiÃՏÌœviVœ˜œ“ˆiÃœv • A nimble market-based approach to improving those scale, the price of those appliances decreases, making off- fundamentals and removing those barriers. grid energy more affordable. U Ƃ˜ >««ÀiVˆ>̈œ˜ œv ̅i ˆ“«œÀÌ>˜Vi œv «Àœ`ÕVÌ µÕ>ˆÌÞ More jobs and higher green growth. The more capital >˜`i˜iÀ}ÞivwVˆi˜VÞ̜ÃÕÃÌ>ˆ˜>Li“>ÀŽiÌ}ÀœÜ̅° intensive an energy technology or infrastructural system is, The new programs—such as Global LEAP (the Global the less embodied labor it has. That is why nuclear power Lighting and Energy Access Partnership)—will encourage and fossil-derived electricity, which are the very capital ̅i`iÛiœ«“i˜Ì]“>ÀŽï˜}]>˜`µÕˆVŽÕ«Ì>Žiœvi˜iÀ}Þ intense, cause net reductions in regional employment— ivwVˆi˜Ì]œvv‡}Àˆ`>««ˆ>˜Við ratepayers have to lower expenditures on other goods and ÃiÀۈVià ̜ w˜>˜Vi Vœ˜ÃÌÀÕV̈œ˜° ˜ Vœ˜ÌÀ>ÃÌ] Ài˜iÜ>Li energy, which is much less capital intensive, creates jobs. THE CO-BENEFITS OF CLEAN ENERGY In 2015, global gross employment in this sector rose by Historically, the reasons for investing in clean energy were an estimated 5 percent, reaching 8.1 million jobs (direct to increase security of supply, reduce greenhouse gas and indirect), with solar accounting for about half of them (GHG) emissions, and provide off-grid access to electricity. (Figure 4.14). The bulk of these jobs were in countries that Investment occurred despite the fact that electricity from >Ài“>œÀiµÕˆ«“i˜Ì“>˜Õv>VÌÕÀiÀÃ>˜`«Àœ`ÕViÀÃœvLˆœ- renewable resources was often more expensive than con- energy feedstock (such as China, the United States, Brazil, ventional generation, especially when technology costs India, and Germany) (REN21 2016). The jobs cover a wide were still high. range of occupations across the value chain—especially, in Today, the rationale for investing in clean energy tends manufacturing, construction and installations (MCI), and >Ãœ ˆ˜VÕ`ià ˆÌà ºVœ‡Li˜iwÌûp̅>Ì ˆÃ] ̅i «œÃˆÌˆÛi È`i operations and maintenance (O&M)—with big variations in ivviVÌÃ] ÃiVœ˜`>ÀÞ Li˜iwÌÃ] Vœ>ÌiÀ> Li˜iwÌÃ] œÀ >ÃÜVˆ- terms of job creation locally and in duration. For example, >Ìi`Li˜iwÌÃvÀœ“>«>À̈VՏ>À}Àii˜«œˆVÞœÀVi>˜i˜iÀ}Þ construction and installation created the most jobs, and ÃÞÃÌi“­ˆÞ>ÌÃՎ>>˜`<ÕÓ>˜Óä£ä®°/…iÃiLi˜iwÌÃV>˜ wind offshore jobs lasted the longest (Figure 4.15). be direct or indirect, as well as monetary or non-monetary, Looking ahead, a recent study by IRENA (2016), esti- >Ì…œÕ}…V…>i˜}iÃÀi“>ˆ˜ˆ˜µÕ>˜Ìˆvވ˜}̅i“° mates that global GDP would rise by 1.1 percent if the international community can meet the SE4All objective of Lower emissions and costs. Clean energy promotes avail- doubling the share of renewable energy in the energy mix ability, affordability, technology development, sustainabil- by 2030—thereby improving human well-being and wel- ity, and regulation (Sovacool 2011). Typically, an “optimiz- fare and contributing to the creation of some 16 million i`»iÛiœv`ˆÛiÀÈwV>̈œ˜ˆÃ>V…ˆiÛi`܅i˜`ˆvviÀi˜ÌÌÞ«ià additional jobs in the renewable energy sector (both direct of clean energy are promoted at once, or certain portfolios and indirect) (Ferroukhi et al. 2016). of energy systems are arranged to explicitly minimize risk Similarly, in terms of net effect—that is, jobs created in across the entire sector at the lowest cost. Many renewable ̅iÀi˜iÜ>Li>˜`i˜iÀ}ÞivwVˆi˜VÞÃiV̜ÀiÃÍœLÃ`ˆÃ- electricity systems can provide hedging against fossil fuel placed in the fossil fuel industry due to investment in clean price volatility and reduce GHG emissions to improve energy—it is estimated that in the short term in the Euro- stakeholder relations and revitalize rural areas (Pater 2006), pean Union, 1 job may be created per GWh of electricity 62 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 FIGURE 4.13 Virtuous circle for clean energy markets 2 Increasing demand for off-grid energy services More households demand energy to power improved, high-quality, off-grid appliances 1 3 Improvements in Energy becomes performance and more accessible availability of appliances Heightened demand Scaling market improves for energy helps off-grid affordability, efficiencies, businesses diversify revenue and value for money, streams and scale, improving making appliances more sector economics accessible 4 This increases the demand for off-grid appliances More households demand appliances to take advantage of improving energy access ecosystem Source: Global LEAP—The State of Global Off-grid Appliance Market, 2016 FIGURE 4.14 Solar and bioenergy create the most jobs (Jobs in renewable energy sector, 2015) Bioenergy (biomass, biofuels, biogas) Geothermal (biomass, biofuels, biogas) Hydropower (small-scale) Solar energy (solar, PV, CSP, solar heating/cooling) Wind power = 50,000 jobs World total: 8.1 million jobs Source: IRENA. saved or generated from clean energy sources (Blyth et al. ing more net jobs per dollar invested (ACEEE 2011). The 2014). India recently estimated that between 2011 and IEA calculates that the 15 percent reduction in energy con- 2014, some 24,000 full-time employment (FTE) jobs were sumption from 1995 to 2010 added 770,000 additional generated in the solar PV industry. If it is to achieve its 2022 œLÃpiµÕˆÛ>i˜Ì̜>ä°{{«iÀVi˜Ìˆ˜VÀi>Ãiˆ˜̅iœÛiÀ> target of 100 GW of solar, 1 million FTE may be created in employment rate, and $14 billion in additional annual the sector, highlighting the need to build local capacities, wages and salary incomes (Geller and Attali 2005). skills, and expertise in renewables (NRDC 2015). ˜ÛiÃ̓i˜Ìà ˆ˜ i˜iÀ}Þ ivwVˆi˜VÞ }i˜iÀ>Ìi œ««œÀÌ՘ˆ- Fewer climate change impacts, greater resilience, and ties in industries that are more labor intensive by produc- adaptive capacity. Reducing the energy intensity of agri- “ CLEAN ENERGY” AND ENERGY A C C E SS 63 FIGURE 4.15 Some renewable technologies create more jobs than others (Employment factors by renewable energy technology) CONSTRUCTION CONSTRUCTION + OPERATION + TIMES INSTALLATION MANUFACTURING MAINTENANCE FUEL SUPPLY Years Job years/ MW Job years/ MW Jobs/ MW Jobs/ PJ Hydropower Ó È £°x ä°£ Wind onshore Ó Ó°x È°£ ä°Ó Wind offshore { Ç°£ £ä°Ç ä°Ó Solar PV 1 9 11 0.2 Geothermal Ó È°n ΰ™ ä°{ Solar thermal Ó x°Î { ä°{ Ocean 3 9 1 0.3 Geothermal—heat 6.9 Solar—heat  Ç°{   Biomass Ó £{ Ó°™ £°x ÎÓ°Ó Biomass CHP  £x°x Ó°™ £°x ÎÓ°Î Source: IRENA. Note: MW stands for megawatt. culture through better irrigation and reduced fertilization services. Recent developments have dramatically altered V>˜>ÃœVÀi>Ìiv>À“ˆ˜}ÌiV…˜ˆµÕiÃ̅>Ì>Ài“œÀi`ÀœÕ}…Ì ̅iVœÃÌÃ]̅iÀˆÃŽ«ÀœwiÃ]>˜`̅i`ޘ>“ˆVÃœvˆ˜ÛiÃ̈˜}ˆ˜ Àiȏˆi˜Ì ­ Vœ˜œ“ˆÃÌ° Ó䣣®° ˜VÀi>Ș} ̅i ivwVˆi˜VÞ œv the renewable energy technologies, which are increasingly space cooling and heating can reduce electricity consump- becoming attractive business propositions for the private tion, while also making cooling more affordable for low- sector, governments, and consumers. er-income groups (Sovacool and Brown 2009). Decreasing Off-grid energy has instilled a new dynamic in energy exploration and drilling for fossil fuels can prevent GHG access and is proving to promote incremental shifts up the emissions from combustion, while diminishing the risk of oil energy ladder. Renewable based off-grid technologies— 눏Ã >˜` Vœ˜ÃiµÕi˜Ì ÃÌÀiÃà œ˜ iVœÃÞÃÌi“à ­>`>«Ì>̈œ˜® solar lighting products, SHS, and mini-grids—are no more ­œÃiÀ Óä£Ó®° ˜iÀ}Þ ivwVˆi˜VÞ «Àœ}À>“à V>˜ Ài`ÕVi considered as interim measures but rather a viable option energy use and cut consumers’ energy bills, translating into that has the ability to provide energy services across the }Ài>ÌiÀw˜>˜Vˆ>Àiȏˆi˜Vi̜vÕÌÕÀiŜVŽÃ­œÃiÀÓä£Ó® full range of energy access suiting the needs and income of households. -ÕLÃÌ>˜Ìˆ>`Àœ«Ãˆ˜iµÕˆ«“i˜Ì>˜`Vœ“«œ˜i˜Ì«ÀˆViÃ] CONCLUSION enhanced grid integration protocols, innovative off-grid The continued growth of renewable energy and energy business models, improvements in storage technologies, ivwVˆi˜VÞp`iëˆÌi̅iÌՓLˆ˜}«ÀˆViÃœvvœÃȏvÕiÃpˆÃ> and other developments are changing the energy land- clear indication that there is a global shift toward the adop- scape—with renewable energy emerging as an increas- tion of clean energy. Countries are rapidly developing their ingly important contributor in both on-grid and off-grid clean energy strategy, as illustrated by the number of power generation investments. SE4ALL Actions Plans developed and the commitments In addition to addressing the twin challenges of provid- made in their respective INDC’s. This stems from the ing modern energy services and mitigating climate change, increasing need to both tackle the issues of climate change Vi>˜ i˜iÀ}Þ “>Þ >Ãœ LÀˆ˜} È}˜ˆwV>˜Ì Vœ‡Li˜iwÌÃp and energy poverty, especially in developing countries. including emission reductions, cost savings, more jobs, It is clear that clean energy will thus play a very strong better health, and a lower risk of climate change. role in ensuring universal access to energy services. As Providing universal access for all involves a complete costs continue to come down rapidly, system innovations rethink of how energy is generated and used. Renewable œVVÕÀ]>˜`w˜>˜VˆiÀÃLiVœ“iiÛiÀ“œÀiVœ“vœÀÌ>Li܈̅ i˜iÀ}Þ>˜`i˜iÀ}ÞivwVˆi˜VÞœvviÀ̅i«iÀviVÌ“i`ˆÕ“vœÀ ̅i >ÃÃiÌ V>ÃÃ] Ài˜iÜ>Li i˜iÀ}Þ >˜` i˜iÀ}Þ ivwVˆi˜VÞ this rethinking and re-design of our energy system pro- measures will contribute to providing energy access to cess—essential for igniting the necessary innovations and more than 1 billion people currently lacking basic energy ̅iÀiµÕˆÀi`i˜ÛˆÀœ˜“i˜Ì̜Ì>VŽii˜iÀ}Þ«œÛiÀÌÞ° 64 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 REFERENCES 5P and GIFT. 2014. 4GVJKPMKPI4WTCN'NGEVTKƂECVKQP Presented at Global Ferroukhi, R., A. Lopez-Peña, G. Kieffer, D. Nagpal, D. Hawila, A. Khalid, Leaders Programme, December. Hong Kong & Lao PDR: UN ESCAP, L. El-Katiri, S. Vinci, Salvatore, and A. Fernandez. 2016. Renewable 5P, IREP & GIFT. 'PGTI[$GPGƂVU/GCUWTKPI6JG'EQPQOKEU. Abu Dhabi, UAE: IRENA. ACEEE. 2011. *QY&QGU'PGTI['HƂEKGPE[%TGCVG,QDU! Washington Geller, H. and S. Attali. 2005. 6JG'ZRGTKGPEGYKVJ'PGTI['HƂEKGPE[ DC: ACEEE. 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Doubling the Global Pace of Progress for Energy Patel, T. 2015. “Fossil Fuels Losing Cost Advantage Over Solar, Wind, vwVˆi˜VÞ\Ƃ««Þˆ˜}̅iºœœÀi½Ã>Ü»œv ˜iÀ}Þ vwVˆi˜VÞ̜ IEA Says.” Bloomberg, August. http://www.bloomberg.com/news/ Technology Innovation for Off-grid Applications. Berkley, CA: articles/2015-08-31/solar-wind-power-costs-drop-as-fossil-fuels-in- CLASP. crease-iea-says 7ˆi“>˜˜]°>˜` °iVœµÕi°Óä£x°SE4All High Impact Opportunity Pater, J. 2006. A Framework for Evaluating the Total Value Proposition of Clean Energy Mini-grids: Mapping of Clean Energy Mini-grid Clean Energy Technologies. Golden, CO: National Renewable Energy Support Providers and Programmes. Washington, DC: Sustainable Laboratory. http://www.nrel.gov/docs/fy06osti/38597.pdf Energy for All. Phadke, A.,l A., Jacobson, W. Park, L. Ga, R. Lee, P. Alstone, and A. Khare. 2015. Powering a Home with Just 25 Watts of Solar PV: Additional list of References: 5WRGT'HƂEKGPV#RRNKCPEGU%CP'PCDNG'ZRCPFGF'PGTI[#EEGUU http://www.worldbank.org/en/news/feature/2016/03/14/paneles- Using Off-Grid Solar Power Systems. Berkley, CA: Lawrence Berkley ܏>ÀiǏÕâ‡w˜>‡`i‡Ì՘i‡>̈˜œ>“iÀˆV> National Lab. Harrison, Kat, Andrew Scott and Ryan Hogarth (2016), Accelerating Phadke, Amol, et al.. 2016. “Potential to Reduce Costs and Subsidy access to electricity with off-grid solar: The impact of solar house- ,iµÕˆÀi“i˜ÌÃvœÀ-œ>À*Փ«-iÌÃLÞ“«ÀœÛˆ˜}̅iˆÀ ˜iÀ}Þ hold solutions, vwVˆi˜VÞ°»œÀ̅Vœ“ˆ˜}° Overseas Development Institute, London, https://www.odi.org/sites/ PWC (Power and Water Corporation). n.d. Solar/ Diesel Mini-grid œ`ˆ°œÀ}°ÕŽÉwiÃɜ`ˆ‡>ÃÃiÌÃÉ«ÕLˆV>̈œ˜Ã‡œ«ˆ˜ˆœ˜‡wiÃÉ£äÓә°«`v Handbook. Darwin, Australia. http://www.africaprogresspanel.org/wp-content/uploads/2017/03/ Powerhive. 2015. “Investment in renewable mini-grids marks major APP_Lights_Power_Action_Web_PDF.pdf milestone for energy access & low-carbon development in East Africa.” December. http://www.powerhive.com/investment-in-renew- Castellano, Antonio, and others (2015a), Brighter Africa: The growth able-mini-grids-marks-major-milestone-for-energy-access-low-carbon- potential of the Sub-Saharan electricity sector, McKinsey, http:// development-in-east-africa/ www.mckinsey. com/~/media/McKinsey/dotcom/client_service/ EPNG/PDFs/Brighter_Africa-The_growth_potential_of_the_ PWC Global Power & Utilities. 2016. Electricity beyond the grid: sub-Saharan_electricity_sector.ashx Accelerating access to sustainable power for all. https://www.pwc. com/gx/en/energy-utilities-mining/pdf/electricity-beyond-grid.pdf https://rmi.org/Content/Files/SEED_Energy_Within_Reach_Rocky- MountainInstitute.pdf ,>…>“>˜]*°Óä£x°º >˜}>`iÅ>ˆ“Ã̜LiܜÀ`½Ã¼wÀÃÌ܏>À˜>̈œ˜]½» Reuters, January. http://in.reuters.com/article/bangladesh-so- …ÌÌ«Ã\ÉÉÜÜÜ°}œ}>°œÀ}ÉÈÌiÃÉÜÜÜ°}œ}>°œÀ}ÉwiÃÉ`œVՓi˜Ìi˜É lar-idINKBN0KY0O220150125 supporting_paper_eac_tariff_exemptions_.pdf Randall, T. 2015. “Fossil Fuels Just Lost the Race Against Renewables.” *œÜiÀˆ˜}>œ“i܈̅ÕÃÌÓx7>ÌÌÃœv-œ>À*6\-Õ«iÀ‡ vwVˆi˜Ì Bloomberg, April. http://www.bloomberg.com/news/arti- Appliances Can Enable Expanded Energy Access Using Off-Grid cles/2015-04-14/fossil-fuels-just-lost-the-race-against-renewables Solar Power Systems REN 21. 2016a. 10 years of Renewable Energy Progress: The First http://balancingact-africa.com/news/broadcast-en/39164/m-kopa- Decade: 2004-2014. Paris, France: REN Secretariat. sells-30000-solar-tvs-in-kenya-and-looks-to-add-internet-access- expanding-to-uganda-and-tanzania REN 21. 2016b. Renewables 2016: Global Status Report. Paris, France: REN Secratariat. http://www.azuri-technologies.com/news/azuri-partners-with-zuku- launches-solar-powered-paygo-tv-and-satellite-service SE4All (Sustainable Energy for All). 2015. “Billions of dollars mobilised under the Sustainable Energy for All.” Website. http://www.se4all. https://medium.com/global-entrepreneurship-summit/want-to-end- org/2015_05_20_billions-of-dollars-mobilised-towards-goal-of-sus- poverty-start-with-electricity-5ff448a03d6c tainable-energy-for-all http://www.plugintheworld.com/mobisol/product/ CHAPTER 5 EMERGING AND INNOVATIVE BUSINESS AND DELIVERY MODELS KEY MESSAGES • The need to balance return-on-investment with customer affordability is increasingly recognized by emerging energy service delivery mechanisms. Public sector support is often necessary to offset upfront private investment VœÃÌȘV>«ˆÌ>‡ˆ˜Ìi˜ÃˆÛiÀi˜iÜ>Lii˜iÀ}ÞÌiV…˜œœ}Þ>˜`̜>ÌÌÀ>VÌ̅iw˜>˜ViÀiµÕˆÀi`vœÀ՘ˆÛiÀÃ>>VViÃÃ̜ modern energy services. • Emphasis on appropriate policy measures is an essential requirement for continued innovation and scale-up— enabling a clear framework for regulation and legislation that facilitates the providers of effective and sustainable delivery models. Lack of policy creates too much uncertainty and, therefore, risk that deters private investors. • Clear grid expansion plans must be available to suppliers of alternative off-grid options in order to effectively integrate the roles of grid and off-grid solutions. Provisions and processes are also necessary for the circumstances where the national grid is extended to areas that have previously been provided with off-grid connections. • Training for local service providers is essential to build long-term supply and support structures, but also to allow delivery mechanisms for energy service to be effectively adapted to the unique local conditions. Such capacity building will also contribute to local job creation, economic uplifting, and consequently indirect market creation. • Emerging and innovative energy service delivery mechanisms are encouraging. If countries could create the necessary environment for them to be replicated and scaled up, countries could accelerate efforts to achieve universal access to modern energy services. INTRODUCTION W hat are the emerging and innovative business the majority of new electricity connections in developing and delivery models? A major focus of the countries will be most cost-effective through decentral- international effort to ensure universal access to ized systems—there has been an increasing focus on new electricity these days is reaching people living in remote `iˆÛiÀÞ “œ`iÃ vœÀ ÀÕÀ> iiVÌÀˆwV>̈œ˜ ­ Ƃ Ó䣣®° /…i areas in developing countries, but it is increasingly clear associated remote-energy-access initiatives for clean that the traditional approach to electricity grid extension energy have not yet created fully receptive market condi- ܈ ˜œÌ ÃÕvwVi° /…i ÌÞ«ˆV> ṎˆÌއL>Ãi`] Vi˜ÌÀ>ˆâi` tions for private investment, but many new approaches >««Àœ>V… ̜ }Àˆ` iÝÌi˜Ãˆœ˜ ˆ˜ÛœÛià È}˜ˆwV>˜Ì Õ«vÀœ˜Ì are being implemented and may provide the foundation ˆ˜ÛiÃ̓i˜Ìˆ˜ˆ˜vÀ>ÃÌÀÕVÌÕÀi̜`iˆÛiÀ̅i«œÜiÀÀiµÕˆÀi` for future scale-up. by customers, whose level of consumption will provide a Until recently, support for non-grid electricity systems payback for the utility over an acceptable timeframe. But has been based upon funding allocations from public pro- the connection costs to remote areas—which demand less grams. But this approach is not sustainable. Based on the electricity—are much higher. Typically, these customers }ÀœÜˆ˜}iÝ«iÀˆi˜ViœvÀÕÀ>iiVÌÀˆwV>̈œ˜]̅iÀi>Ài}œœ` cannot afford large upfront costs, so payback can only be prospects for private sector business applications, though achieved over an extended period, or is simply not feasi- still not many successful installations. Grid-expansion Li°/…ÕÃ]ˆ˜˜œÛ>̈Ûi`iˆÛiÀÞ“iV…>˜ˆÃ“Ã>ÀiÀiµÕˆÀi`vœÀ ivvœÀÌÃ܈ViÀÌ>ˆ˜ÞVœ˜Ìˆ˜Õi̜`À>Üœ˜«ÕLˆVw˜>˜Vi>˜` sustainable electricity supply to remote areas. must be planned in a way that the grid will provide a ser- There are already a range of options for remote electri- vice to customers who are located where the grid can be wV>̈œ˜̅>Ì“>Þ…>Ûi̅i«œÌi˜Ìˆ>vœÀÃV>i‡Õ«>˜`ÃÕÃ- cost-effective. For off-grid applications, there is an urgent tainability. Following the International Energy Agency’s need for more pragmatic business models that can achieve (IEA) World Energy Outlook in 2011—which stated that ̅iÃÕÃÌ>ˆ˜>Liˆ“«>VÌÀiµÕˆÀi`° 67 68 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 ƂÌÌÀ>V̈˜}«ÀˆÛ>Ìiw˜>˜Vi̜>˜ÞÛi˜ÌÕÀi܈̅…ˆ}…«iÀ- For mini-grids, the unknown probability of future grid ceived risk will always be a challenge. But the good news integration is a critical factor. Several mini-grids develop- is that there are a growing number of energy access activi- ers, including PowerGen, Husk Power Systems, and SunE- ties with private sector involvement—such as the UN `ˆÃœ˜ Àœ˜ÌˆiÀ *œÜiÀ] …>Ûi ˆ`i˜Ìˆwi` ̅ˆÃ >à > `iVˆÃˆÛi Foundation Energy Access Practitioners Network , SE4All’s business issue. The case of India is often highlighted, Clean Energy Mini-Grid (CEMG) High Impact Opportunity where the state electricity distribution companies (dis- (HIO) , the U.S. Power Africa initiative , and the Alliance for coms) act with little regard to mini-grid developers and do ,ÕÀ> iVÌÀˆwV>̈œ˜­Ƃ, ®°ƂÃ>ÀiÃՏÌ]˜iÜ`iˆÛiÀÞ“œ`iÃ not publicize in advance any plans for developing exten- are being developed and adapted to local conditions, sions to the central grid. Investors have proposed several although these adaptations inevitably increase the cost of solutions to safeguard investments in distributed, mini-grid replication and scale-up. solutions. These include: (i) allowing mini-grids to feed The bottom line is that there are still few examples of power into a central grid at a fair feed-in tariff; (ii) permit- commercially viable installations, which offers an enor- ting discoms to enter into power purchase agreements mous market opportunity for private sector suppliers, with with the mini-grid providers; and (iii) allowing the central continued help from public funding sources. This chapter grid utility to purchase the mini-grid upon interconnection outlines the main risks and challenges perceived by inves- subject to a set minimum return on investment, rather than tors and highlights examples of new delivery models that negotiating a feed-in-tariff or purchase power agreement are being implemented—including consideration of the (PPA) (Jha 2015). w˜>˜Vˆ˜} “iV…>˜ˆÃ“à ˆ˜ÌÀœ`ÕVi`] >˜` …œÜ «œˆVÞ >˜` Another policy issue is duty exemption. Some govern- regulation and incentives are affecting their development. ments have reduced or abolished customs duties for com- The chapter concludes that the best innovative energy ser- ponents being imported for mini-grid projects, in light of vice delivery models include several factors: (i) consider- ̅i ÜVˆ> }>ˆ˜Ã vÀœ“ ÀÕÀ> iiVÌÀˆwV>̈œ˜ ̅ÀœÕ}… “ˆ˜ˆ‡ ation of the demands, interests, and restrictions of local grids. But in practice, developers have found that negoti- customers, including the desire to pay with mobile pay- >̈˜}̅i`ÕÌÞiÝi“«Ìˆœ˜V>ÀÀˆiÃÈ}˜ˆwV>˜ÌÀˆÃŽ>˜`…ˆ}… ments systems; (ii) strong partnerships along the entire transaction costs, discouraging them from even trying in supply chain, from the government and utilities to private some cases. sector service providers; and (iii) adaptation of market However, the key challenge centers on the need for dynamics to local conditions to support successful, sustain- >VViÃÈLi w˜>˜Vˆ˜} “œ`iÃp܅ˆV… >Ài ÃÌ>À̈˜} ̜ Li able clean energy solutions. >՘V…i`ˆ˜̅ivœÀ“œv˜iÜw˜>˜Vi>˜`ˆ˜ÛiÃ̓i˜ÌVœ“- panies that focus on mini-grids and solar home systems ­--®° /…iÃi wÀ“Ã] > iÃÌ>LˆÃ…i` ܈̅ˆ˜ ̅i «>ÃÌ viÜ HOW INVESTORS PERCEIVE RISKS AND Þi>ÀÃ]«ÀœÛˆ`iÃiÛiÀ>“i>˜Ãœvw˜>˜Vˆ>ÃÕ««œÀÌ]ˆ˜VÕ`- CHALLENGES ing early-stage corporate investment, working capital, The creation of appropriate market conditions for new asset management, portfolio aggregation, and securitiza- `iˆÛiÀÞ“œ`iÃÀiµÕˆÀiÃ>À>˜}iœvÃÌi«Ã̜…i«>``ÀiÃà ̈œ˜° /…ˆÃ ˆ˜VÀi>Ãi` V>«>VˆÌÞ vœÀ w˜>˜Vˆ> “>˜>}i“i˜Ì the risks perceived by investors. The prospect of invest- when dealing with remote customers has seen rapid ment in often unfamiliar technology in unknown locations growth in the SHS sector, with great potential also recog- ܈̅՘ViÀÌ>ˆ˜Ài}Տ>̜ÀÞÀiµÕˆÀi“i˜ÌÃ>˜`>˜՘v>“ˆˆ>À nized for mini-grids. Business models should therefore VÕÃ̜“iÀL>ÃiVÀi>ÌiÃ>ÀˆÃŽ«Àœwi̅>Ìȓ«Þ`œiØœÌ >Ü>ÞÃVœ˜Ãˆ`iÀ«œˆVÞ>˜`w˜>˜Vˆ>v>V̜ÀÃ]>˜`ÀiVœ}˜ˆâi compare favourably with other opportunities that may be the link between the two. And the government should not >Û>ˆ>Li̜ˆ˜ÛiÃ̜Àð/…ÕÃ]>V̈œ˜ˆÃÀiµÕˆÀi`̜>``ÀiÃà only allay investor concerns about the level of risk but also the unfamiliarity of investors with energy access initia- `iˆÛiÀ œ˜}iÀ‡ÌiÀ“ Li˜iwÌà ­ˆ˜VÕ`ˆ˜} œÜiÀ ÌiV…˜œœ}Þ ̈ÛiÃ]܅ˆV…ܜՏ`…i«>ÌÌÀ>VÌ̅i˜iViÃÃ>ÀÞw˜>˜Viœ˜ import duties and VAT). terms that can allow affordable repayments by the target Decentralized electricity options can be successfully end-users. applied in many different locations worldwide, providing œÀˆ˜ÛiÃ̜ÀÃ]Vœ˜w`i˜Viˆ˜̅iÃÌ>LˆˆÌÞœv“>ÀŽiÌVœ˜- that the necessary policy framework is in place. As indi- `ˆÌˆœ˜ÃˆÃ«>À>“œÕ˜Ì̜ÃiVÕÀi̅iˆÀÀiµÕˆÀi`ÀiÌÕÀ˜Ã]ÕÃÕ- cated in Chapter 1 of this report, it is also important to >Þ ÀiµÕˆÀˆ˜} ܓi iۈ`i˜Vi œv > ÃÕ««œÀ̈Ûi «œˆVÞ ˆ˜Ìi}À>Ìii˜iÀ}Þ>VViÃÃivvœÀÌÃ܈̅ˆ˜œÌ…iÀÃiV̜À‡Ã«iVˆwV framework. One of the key factors any investor takes into policies in order to leverage the inter-dependence. It is account is the payback period. For rural energy supplies, ܈`iÞ >}Àii` LÞ ˆ˜ÛiÃ̜Àà ̅>Ì ̅i ëiVˆwVà >Ài ˜œÌ >à there are likely to be high upfront costs and customers with important as simply having a policy that is clear and actu- low levels of income, suggesting that affordable repay- ally put into practice. ments must be extended over a longer timeframe than One way to offset the investment risk is to allocate ˜œÀ“>vœÀȓˆ>Àw˜>˜Vˆ>˜ii`ð,i`ÕVˆ˜}̅i«iÀViˆÛi` short-term public sector funding. This can enable project ÀˆÃŽœv«>ޓi˜Ì`iv>ՏÌ̅iÀivœÀiÀiµÕˆÀiÃܓiViÀÌ>ˆ˜ÌÞ developers to offset upfront development costs and over the future business environment. The lack of such demonstrate innovative business frameworks for success- V>ÀˆÌÞvœÀÀÕÀ>iiVÌÀˆwV>̈œ˜Vœ˜`ˆÌˆœ˜Ãˆ˜i݈Ã̈˜}«œˆVވà ful and sustainable future operation. Recognizing the need often an unsurmountable barrier for any business seeking for such early-stage support, a range of international ̜>ÌÌÀ>VÌw˜>˜VivœÀÀÕÀ>i˜iÀ}Þ>««ˆV>̈œ˜Ãˆ˜`iÛiœ«- development organizations are active in facilitating the ing countries. establishment of new delivery models that are based on grid-connected or off-grid renewable energy technolo- EMERGING AND INNOVAT IVE BUSINESS AND DELIVERY MO DE L S 69 gies. These programs can offer welcome support for included a wide range of support measures (Walters 2015). potential project developers and help to attract longer Government or development program intervention is usu- term private investment. >Þiۈ`i˜Ì]>ÃÜi>ÃÌÀ>ˆ˜ˆ˜}vœÀœV>“ˆVÀœw˜>˜Viˆ˜Ã̈- This type of public sector subsidy is widely acknowl- tutions on underwriting, installation, and service, and a edged as being helpful, but many developers have found ÃÌÀœ˜} }ÀœÕ˜` «ÀiÃi˜Vi ܈̅ Ìi>“à œv œ>˜ œvwViÀà >˜` ̅>̈̈ÃÛiÀÞ`ˆvwVՏÌ̜>VViÃð/…>̈Ã܅Þܓi“ˆ˜ˆ‡}Àˆ` technicians. Some form of direct subsidy is also often companies are proposing other frameworks that could be ÀiµÕˆÀi`°˜̅iV>Ãiœv "]VÕÃ̜“iÀÃ…>`>VViÃÃ̜ more streamlined and effective: government grants that reduced the SHS price, especially œÜ‡ˆ˜Vœ“iœ˜iÃ]vœÀ܅œ“̅i}À>˜ÌœvvÃiÌ>È}˜ˆwV>˜Ì U œÛiÀ˜“i˜Ì ÃÕLÈ`ˆià ̜ ̅i ˆ˜Ã̈ÌṎœ˜ w˜>˜Vˆ˜} ̅i proportion of the cost of smaller systems. debt for mini-grid projects, which would reduce the Getting these pieces to fall into place is a challenge developer’s transaction costs. The subsidy could be that not every market has overcome, and as a result, there used in different ways, from increasing the amount of are still major challenges to the continued sustainability of credit available for a given project, to mitigating cur- these systems. Even in those countries (such as Bangla- rency risk, to reducing interest rates and decreasing the desh) that have achieved good SHS installation rates, a cost of capital. number of tasks must be undertaken to ensure any further • Performance based operating subsidies, which would market expansion, including: (i) developing a competitive help mitigate customer revenue risk. low-cost SHS manufacturing industry locally to reduce `i«i˜`i˜Viœ˜ˆ“«œÀÌÃÆ­ˆˆ®`iÛiœ«ˆ˜}>˜`i˜ÃÕÀˆ˜}µÕ>- • Risk-adjusted capex and operating subsidies, poten- ity standards for these systems; and (iii) creating more sus- ̈>ÞL>Ãi`œ˜ˆ˜`ˆÛˆ`Õ>VÕÃ̜“iÀ "ÃVœÀiiµÕˆÛ>- tainable business models (Smart-Villages 2015). lents. A risk-adjusted connection subsidy or ongoing One key factor for success in supplying capital-inten- payment subsidy could function in a way similar to ÈÛiiµÕˆ«“i˜Ì̜>“>ÀŽiÌ܈̅ˆ“ˆÌi`«>ÞL>VŽV>«>VˆÌÞ low-income housing subsidies. ˆÃ>}œœ`w˜>˜Vˆ>“œ`i°Ƃ««Àœ>V…iÃÛ>ÀÞ]LÕÌVœ“«>˜ˆià To date there have been few examples of such facilities typically raise some capital from sources that do not being made available, although public sector funders are demand fully commercial returns (such as public sector increasingly aware of the need to address this constraint. funders or philanthropic/impact investors) to act as a credit cushion against which they can gear up additional com- mercial capital. Some examples of companies raising funds /#4-'65$75+0'55/1&'.5#0& ̜w˜>˜Vi̅iˆÀ«>˜ÃvœÀÃV>iÕ«ˆ˜ƂvÀˆV>ˆ˜VÕ`i‡"*Ƃ TECHNOLOGY in Kenya, Mobisol in Tanzania and Rwanda, and Nova The options for energy access expansion need to be tar- Lumos in Nigeria and Guinea (Table 5.1). geted at appropriate markets. In general, the three areas Another key success factor is the establishment of sus- of stand-alone systems, mini-grids, and grid extension are tainable retail, distribution, and servicing channels. For segregated and serviced by different groups of suppliers. companies involved with the supply of electricity genera- tion systems for individual households in remote areas, Markets Serviced by Stand-Alone Systems these channels can be almost as costly to develop and Solar home systems and small-scale solar lights have been “>ˆ˜Ì>ˆ˜ >à ̅i iµÕˆ«“i˜Ì ˆÌÃiv° /…ˆÃ iÝ«>ˆ˜Ã ܅Þ ̅i promoted for decades as solutions to energy poverty in «ÀˆViÃœviµÕˆ«“i˜Ìˆ˜ÀÕÀ>>Ài>Ã>ÀiÕÃÕ>ÞÜi>LœÛi developing countries. Since the 1980s, companies like the international wholesale norms. System suppliers have -œÕ∘>̈˜Ƃ“iÀˆV>]“ˆVÀœw˜>˜Viˆ˜Ã̈ÌṎœ˜Ãˆ˜ƂÈ>ˆŽi different strategies to address this market. Some compa- SEEDS, and the Indian Renewable Energy Development nies (such as M-KOPA, Mobisol, Off Grid Electric) have Agency Ltd. (IREDA) have offered consumers credit to built up their own distribution channels, while others have w˜>˜Vi ̅iÃi ÃÞÃÌi“ð /…ˆÃ “œ`i œv VœÕ«ˆ˜} “ˆVÀœw- partnered with mobile phone companies to adapt existing nance with renewable energy technology became known distribution channels (such as Lumos in Nigeria linking with as “energy lending,” was designed to increase access to MTN). Either way, effective distribution channels cannot be modern energy services. built overnight, and they are a key constraint on how Yet despite the rapid and steady decline in the cost of µÕˆVŽÞVœ“«>˜ˆiÃV>˜ÃV>i‡Õ«° ̅iÃi܏>ÀÃÞÃÌi“Ã]Vœ˜ÃՓiÀÃÃ̈v>Vi̅iw˜>˜Vˆ>…ÕÀ`i Solar PV systems are the most common power source of high upfront costs. As the CEO of Azuri, Simon Brans- for such individual stand-alone electricity supplies, but the wi`‡>À̅ …>à ÃÌ>Ìi`] º> ÌÞ«ˆV> ÀÕÀ> v>À“iÀ ܅œ i>À˜Ã rate of expansion depends upon customer access to $2-3 per day would struggle to pay outright for a basic $70 w˜>˜Vi°/…iœvv‡}Àˆ`܏>À“>ÀŽïëÀœiVÌi`̜}ÀœÜvÀœ“ solar home system.” In addition, these consumers often about $540 million in 2014 to $2 billion by 2024—with incur a small ongoing cost related to candles for lighting Africa and South Asia the major markets. Access to dispos- and local vendors for batteries and cell phone charging. able cash income, credit worthiness of the borrower, and What would it take to create a viable new market? The availability of credit facilities are factors that determine the answer lies with a broad enabling environment. Energy success of this model (Navigant Research 2014). lending has seen the adoption of millions of solar home Pay-as-you-go (PAYG) models have become increas- systems (SHS) throughout the world—such as through ingly attractive in many markets. This is based upon expe-  "ˆ˜ >˜}>`iÅ]܅ˆV…w˜>˜Vi`>̏i>ÃÌΓˆˆœ˜ÃÞÃ- rience suggesting that, even under local conditions in tems as of 2014)—but examples of success have inevitably remote markets, the key to a cost-effective stand-alone 70 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 TABLE 5.1 Recent capital raising by off-grid electricity companies in Africa COMPANY GEOGRAPHICAL FOCUS DATE AMOUNT KEY SOURCES M-KOPA East Africa, esp. Kenya Dec-15 $15m High Net Worth Feb-15 $12.45m Institutional impact, Dec-13 $20m philanthropic investors Azuri Technologies Sub-Saharan Africa Jul-13 US AID DIV (Development Innovation Ventures) grant Feb-13 $13m Barclays working capital loan œÛ‡£Ó µÕˆÌÞ]`iLÌE}À>˜ÌÃpi>`6 ˆ˜ÛiÃ̜À IP Group Plc Off Grid Electric Tanzania, Rwanda Oct-15 $25m DBL Partners Dec-14 $16m SolarCity Early-14 $7m Other institutional and impact investors Mobisol Tanzania, Rwanda Jul-15 €10.7m DEG (loan) Other funding: European Development Fund, Africa Energy Challenge Fund Nova Lumos Nigeria, Guinea Oct-15 $15m OPIC (loan) Other funding: Israel Cleantech Ventures LœÝ i˜Þ>],Ü>˜`>]1}>˜`> >À‡£x fΓ *ÀˆÛ>ÌiiµÕˆÌÞ­ˆ˜V° >“Lœœˆ˜>˜Vi® Nov-13 $1.9m Other funding: Khosla Impact, DOEN Foundation Fenix International East Africa Jan-15 $12.6m Corporate: GDF Suez, Schneider Electric, Orange Other funding: VC, Impact investors Greenlight Planet 40 countries; mostly Feb-15 $10m Fidelity Growth Partners Asia and Africa Apr-12 $4m Bamboo Finance Started in India i˜iÀ}Þ ÃÞÃÌi“ LÕȘiÃà ˆÃ > w˜>˜Vi “œ`i ̅>Ì “>ÌV…ià payment has not been made. Under the ownership model, affordable pricing for the target consumers with an ade- the system will automatically unlock permanently once the µÕ>Ìi ÀiÌÕÀ˜ œ˜ ˆ˜ÛiÃ̓i˜Ì vœÀ ̅i ÃÕ««ˆiÀ° *Ƃ9 ܏>À user has paid off the full amount of the loan. Also in both companies seek to provide energy services at a price point models, users usually make an upfront payment to cover ̅>̈ÏiÃÃ̅>˜]œÀiµÕ>̜]Vœ˜ÃՓiÀýVÕÀÀi˜Ìëi˜`ˆ˜} ˆ˜ÃÌ>>̈œ˜VœÃÌÃ>˜`̜Ài`ÕVi̅iw˜>˜Vˆ>ÀˆÃŽiÝ«œÃÕÀi œ˜ ŽiÀœÃi˜i] V>˜`iÃ] L>ÌÌiÀˆiÃ] >˜` œÌ…iÀ œÜ‡µÕ>ˆÌÞ of the provider. i˜iÀ}ÞÃiÀۈVið*ÀœÛˆ`iÀÃ>Àiˆ˜Vi˜ÌˆÛˆâi`̜œvviÀµÕ>ˆÌÞ *Ƃ9w˜>˜ViˆÃµÕˆVŽÞLiVœ“ˆ˜}>ÃÕVViÃÜÀ̜i˜iÀ}Þ after sales service, since a user’s ongoing payments are lending for solar power in developing countries (Box 5.1). tied to the system continuing to function. This is due to early experience of successful implementa- PAYG providers can take one of two approaches to tion, showing very high rates of growth. Lighting Global (a w˜>˜Vˆ˜}̅iÃÞÃÌi“̜̅iVœ˜ÃՓiÀ\ World Bank platform) has estimated that there are 32 PAYG companies in 30 countries, many of them in Africa (Global U Ƃ˜ ˆ˜`iw˜ˆÌi vii vœÀ ÃiÀۈVi ˆ˜ ܅ˆV… ̅i Vœ˜ÃՓiÀ Lighting, 2014). They use existing mobile payment sys- never owns the system itself, but rather merely pays for Ìi“ÃœÀÃVÀ>ÌV…V>À`ÃvœÀviiVœiV̈œ˜° œ˜ÃՓiÀÃLi˜iwÌ the ability to use it. Payments are typically made on the vÀœ“ ˆ˜VÀi>Ãi` >vvœÀ`>LˆˆÌÞ] ˆ˜VÀi>Ãi` Vœ˜w`i˜Vi ˆ˜ ̅i basis of when the consumer needs power and can product, and access to maintenance services. For the sup- afford it. plier, PAYG lowers the transaction costs without the need • The consumer eventually owns the system after paying vœÀ>È}˜ˆwV>˜ÌÀÕÀ>w˜>˜Vˆ>ˆ˜vÀ>ÃÌÀÕVÌÕÀi]>˜`ˆÌÀi`ÕVià off the principal of the system cost—and the consumer the cost and risk of doing business. M-KOPA Solar is an must make discrete payments, typically on a daily, œvÌi˜‡VˆÌi`iÝ>“«iœv>wÀ“܈̅}œœ`iÝ«iÀˆi˜ViœvÃÕV- weekly, or monthly basis (thereby resembling a typical cessful PAYG applications, having connected more than w˜>˜Vˆ˜}>ÀÀ>˜}i“i˜Ì®° 330,000 homes in Kenya, Tanzania, and Uganda to solar power with over 500 new homes being added every day With either approach, the system “locks” to prevent con- (Economist 2016). ÃՓ«Ìˆœ˜ˆv̅iÕÃiÀÀ՘ÃœÕÌœvVÀi`ˆÌœÀˆv̅iw˜>˜Vˆ˜} EMERGING AND INNOVAT IVE BUSINESS AND DELIVERY MO DE L S 71 Markets Serviced by Mini-Grids Companies large and small, new and old, are using a It is widely believed that mini-grids will play an essential wide range of different business models in an attempt to role in meeting the goal of electricity access for all (SE4All release the full mini-grid market potential. Recognizing 2015). Mini-grids can be a viable and cost effective route the cost-effectiveness of delivering power through mini- ̜ iiVÌÀˆwV>̈œ˜ ܅iÀi ̅i `ˆÃÌ>˜Vi vÀœ“ ̅i }Àˆ` ˆÃ ̜œ grids, numerous private sector players have sought to large and the population density too low to economically capture the massive opportunity inherent in providing justify a grid connection. Mini-grids provide an enhanced access to electricity. Many different approaches have service level compared with individual household systems been formulated to address the diversity of consumer and, depending upon local resources and technologies ability to pay, consumer location, policy and regulatory employed, can be comparable to a well-functioning grid. i˜ÛˆÀœ˜“i˜ÌÃ]>˜`>Û>ˆ>Liw˜>˜Vˆ˜}vœÕ˜`̅ÀœÕ}…œÕÌ However, despite advances in technology, and associated the world. These experiences, even those that are unsuc- cost reductions, the pace at which clean energy mini-grids cessful, can offer lessons for future mini-grid market >ÀiLiˆ˜}`iÛiœ«i`>˜`w˜>˜Vi`Ài“>ˆ˜ÃϜÜ`Õi̜> development. range of barriers (see Chapter 3). The rationale articulated by mini-grid developers for High upfront costs and long-term payback are particu- focusing their efforts on these systems, rather than stand- >ÀV…>i˜}iÃvœÀ“ˆ˜ˆ‡}Àˆ`ÃLÕȘiÃÃið/…iÃÌ>ÌÕõ՜œv alone applications, is driven by a “bet on the future.” supplier load control and monthly tariffs for mini-grid sys- Developers are assuming that individuals in communities Ìi“à ˆ˜…ˆLˆÌà ̅i µÕ>ˆÌÞ œv ÃiÀۈVi >˜` >˜Þ «œÌi˜Ìˆ> vœÀ ­Ü…ˆV… ̜}i̅iÀ V>˜ VÀi>Ìi È}˜ˆwV>˜Ì œV> iVœ˜œ“ˆiî w˜>˜Vˆ> ÃÕÃÌ>ˆ˜>LˆˆÌÞ° œÜiÛiÀ] ÀiVi˜Ì ÌiV…˜œœ}Þ ˆ˜˜œ- will eventually be able to afford TVs, radios, refrigerators, Û>̈œ˜Ãœ˜“iÌiÀˆ˜}>˜`Vœ˜ÌÀœ«ÀœViÃÃiÃLÞwÀ“íÃÕV… and other appliances in their houses. They will also start to as Powerhive, SteamaCo, SparkMeter, and Inensus) are invest in so-called “productive uses”—the engines of i˜>Lˆ˜}iµÕˆ«“i˜Ì̜Li`œÜ˜Ãˆâi`]̅iÀiLÞVÕÌ̈˜}̅i small businesses. On this basis, the demand for electricity costs of providing small village-scale grids. New innova- to power all the associated devices will clearly grow sig- tions are enabling pre-payment, mobile payments, load ˜ˆwV>˜ÌÞˆ˜̅ivÕÌÕÀi°/…ˆÃ܈µÕˆVŽÞÃÕÀ«>ÃÃ̅iV>«>V- limits, and remote monitoring and control to improve mini- ity that can be offered by stand-alone systems but is grid operations. ՘ˆŽiÞ̜Ài>V…̅i̅ÀiŜ`ÀiµÕˆÀi`̜ÕÃ̈vÞvՏ}Àˆ` /…iVœÃÌœv`>Ì>}>̅iÀˆ˜}ÀiµÕˆÀi`̜iÃÌ>LˆÃ…vÕÌÕÀi iÝÌi˜Ãˆœ˜ vœÀ ܓi ̈“i ­ÃÕvwVˆi˜Ì vœÀ >˜ >VVi«Ì>Li mini-grid markets has also been reduced through access return on investment). to GIS (geographic information system) data on handheld As many developers are discovering, access to 24/7 devices that can be used by local staff. This has helped to ºœ˜`i“>˜`»iiVÌÀˆVˆÌÞœv՘ˆ“ˆÌi`µÕ>˜ÌˆÌˆiÈ؜̘iV- œÜiÀ̅iiÛiœvÕ«vÀœ˜Ìˆ˜ÛiÃ̓i˜ÌÀiµÕˆÀi`vœÀ«ÀœiVÌ essarily aligned with the realities at both the local and development, facilitating broader aggregation options. ˜>̈œ˜> iÛi° *ÀœiVÌ `iÛiœ«iÀà …>Ûi ˆ`i˜Ìˆwi` ÃiÛiÀ> The pooling of contacts from individual households or ëiVˆwVL>ÀÀˆiÀÃ]ˆ˜VÕ`ˆ˜}\ small businesses in a rural community, while maintaining • Numerous cases of time-consuming or expensive cus- transparent supporting data, is a key ingredient for recently ̜“ëÀœViÃÃiÃ̅>Ì>ÀivÀiµÕi˜ÌÞ`ˆvwVՏÌ̜˜>ۈ}>Ìi° established businesses in developing countries. This has triggered the beginnings of scale-up by a number of • Local politics: i˜iÀ}Þ Vœ“«>˜ˆià >˜` w˜>˜Vˆ˜} œÀ}>˜ˆâ>̈œ˜Ã ̅>Ì >Ài – One developer cancelled a project in India because dealing with such mini-grid applications. the two opposing clans in the village made clear However, for sustainable scale-up, the mini-grids deliv- that if the solar PV plant was in the other clan’s terri- iÀÞ“œ`i“ÕÃÌÀiyiVÌVœ˜ÃՓiÀ«ÀiviÀi˜ViÃ>˜`ˆ˜VÕ`i tory, they would sabotage it. >˜>««Àœ«Àˆ>Ìiw˜>˜Vˆ˜}“iV…>˜ˆÃ“°ƂÃ܈̅}Àˆ`iÝÌi˜- – Several projects falling into disrepair as a result of sion, the mini-grids model is not constrained by any need communities’ expectations of the impending arrival vœÀVœ˜ÃՓiÀÃ̜…>Ûiw˜>˜Vˆ>V>«ˆÌ>>Û>ˆ>Li°˜ÃÌi>`] of the central grid created by empty promises of the upfront investment is made by the supply company local politicians. and is recovered through sales of electricity. Debt and iµÕˆÌÞ w˜>˜Vˆ˜} ˆÃ }i˜iÀ>Þ vÀœ“ «ÀˆÛ>Ìi ÜÕÀViÃ] œvÌi˜ U 1˜Üˆˆ˜}˜iÃÃœvw˜>˜VˆiÀÃ̜«ÀœÛˆ`iiÛiÃœvv՘`ˆ˜} with some funding from credit or technical assistance facil- on the necessary terms to make projects viable. ities set up by donors. But an evaluation of seven micro- Unlike the perspective held by large companies in the grids by the UN Foundation noted that crucial to the energy access space, small developers report that the big- success of a micro-grid business was keeping customers }iÃÌL>ÀÀˆiÀ̜ÃV>iˆÃw˜>˜Vˆ˜}° “iÀ}ˆ˜}`iˆÛiÀÞ“œ`iÃ Ã>̈Ãwi` ̅ÀœÕ}… ÃiÀۈVi >˜` Àiˆ>LˆˆÌÞ ­-V…˜ˆÌâiÀ Óä£{®° must take account of experience to date, which has con- Տ ÀiÛi˜Õi VœiV̈œ˜ >Ãœ ÀiµÕˆÀià >««Àœ«Àˆ>Ìi Ì>Àˆvv cluded that: design, tariff collection mechanisms, maintenance and contractor performance, theft management, marketing/ • Achieving scale and cost-effectiveness is the key chal- promotion for demand growth, load limits, and local train- lenge that will determine how well new delivery models ing and institutionalization. Addressing all of these factors can help to bring universal access to energy by 2030. is crucial to business success in remote areas, and the lack • Demonstration of the commercial viability for remote of such multi-faceted approaches helps to explain the slow energy access solutions is a key target. rate of market development. 72 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 BOX 5.1 Replicating East Africa’s Pay-as-You-Go Success Story East Africa—and in particular, Kenya—has a long history of build- ÕVÌÃ]܅ˆV……>ÛiµÕˆVŽÞˆ˜Ìi}À>Ìi`Vi«…œ˜iV…>À}ˆ˜}V>«>Lˆˆ- ing off-grid solar markets. In Kenya, the market for solar PV sys- ties. Kenya is also the birth place of mobile money. The mobile tems began back in the mid-1980s, and by the early 2000s, some platform M-Pesa (“M” for mobile, “Pesa” for money) was 30,000 systems were being installed per year—most of them launched by the Kenyan telecom company Safaricom in 2007 through an unsubsidized free market. Solar was then (and is now >˜` µÕˆVŽÞ LiV>“i > ÃÌ>˜`>À` «>ÌvœÀ“ vœÀ w˜>˜Vˆ> ÌÀ>˜Ã>V- again) the most common source of electricity connections in rural tions. Today, East Africa accounts for 34 percent of all registered Kenya. However, the solar home systems were relatively expen- mobile accounts globally. The high GSM coverage, variety of ÈÛi] >˜` ܈̅œÕÌ ̅i ˆ˜ÛœÛi“i˜Ì œv “ˆVÀœ‡w˜>˜Vi ˆ˜Ã̈ÌṎœ˜Ã] smart-metering technologies, and fast spread of mobile money which were driving off-grid solar market expansion in Asia, the gave rise to the pay-as-you-go (PAYG) business model—together market remained very shallow. In addition, there were concerns overcoming the main affordability constraint for solar home sys- >LœÕÌ̅iµÕ>ˆÌÞœv̅iÃÞÃÌi“Ș̅i“>ÀŽiÌ° tems (SHS) by allowing customers to pay in small increments. It is But in 2010, the market got a new impetus when a new gen- estimated that by end 2016, there were about 700,000 systems eration of pico-PV products emerged—driven by technology installed on the PAYG platform in Kenya alone. advancements (such as new LED lighting, falling solar PV prices, Although the PAYG business model is still very new, and differ- and improved energy storage technologies like lithium-ion bat- ent companies are exploring variations of this business model, teries). Supported by the World Bank Group Lighting Africa pro- certain trends are emerging (based on interviews carried out for }À>“] ܅ˆV… ˆ˜ÌÀœ`ÕVi` µÕ>ˆÌÞ ÃÌ>˜`>À`à >˜` «ÀœÛˆ`i` i>ÀÞ ̅i- Ƃ,V>ÃiÃÌÕ`Þˆ˜̅iwÀÃ̵Õ>ÀÌiÀœvÓä£È® market support, off-grid solar product sales in Kenya and neigh- boring East African countries exploded—reaching almost 2 mil- lion in Sub-Saharan Africa in 2016, with Kenya accounting for FIGURE B5.1.1 Kenya leads the way in Africa’s off-grid almost half (Figure B5.1.1). This growth was supported by a solar product sales v>ۜÀ>Li wÃV> «œˆVÞ] >à ܏>À «Àœ`ÕVÌà Li˜iwÌÌi` vÀœ“ ̅i 1HHITKFUQNCTRTQFWEVUUCNGUKP55#ƂTUVJCNH East Africa Community’s customs duty and VAT exemptions. Total Sub-Saharan Africa 1,956,810 Plus, the East African countries rank well on a favorable general Kenya 561,604 business environment (as in the Doing Business survey), along 231,097 with a favorable off-grid renewable business (for example, Cli- Ethiopia mateScope and RISE). Uganda 190,725 The parallel telecom/IT revolution has added another dimen- Tanzania 187,694 sion to this growth. The rapid spread of mobile phones in rural areas became one of the key drivers of demand for solar PV prod- Source: GOGLA. • There are already a wide range of implementation lem, and thereby maintain system reliability, mini-grid examples from which many lessons (good and bad) can operators have tried numerous methods to limit consumer be learned. load. Typically, this includes: U Ƃ>««ˆV>̈œ˜Ã>Ài`ˆvviÀi˜Ì]“>Žˆ˜}̅i““œÀi`ˆvw- • Customer contracts or agreements wherein the cus- cult to replicate directly. tomer agrees to limit their load by, for example, not installing more than the agreed upon number of outlets • A key barrier is the business model—there are few suc- œÀˆ}…ÌwÝÌÕÀiÃ]œÀ˜œÌÕȘ}…ˆ}…‡Vœ˜ÃՓ«Ìˆœ˜>««ˆ- ViÃÃià ܈̅œÕÌ œ˜}‡ÌiÀ“ «ÕLˆV w˜>˜Vi] ̅œÕ}… ̅ˆÃ ances such as incandescent light bulbs or resistive heat- can be limited to a single contribution at the outset of ing devices (like irons and cookers). any new development. • Installation of Miniature Circuit Breakers (MCBs) or Elec- The combination of barriers, and uncertainty over best tronic Load Controllers/Electronic Control Units (ELCs/ practice, means that no clear approach has yet been ECUs) on customer connections. These devices set a `iw˜i`̜i˜ÃÕÀi̅iÃÕÃÌ>ˆ˜>Li>««ˆV>̈œ˜œv“ˆ˜ˆ‡}Àˆ`ð wÝi` ˆ“ˆÌ œ˜ Vœ˜ÃՓiÀ Vœ˜ÃՓ«Ìˆœ˜ ̅>Ì V>˜˜œÌ Li Pre-payment alone (such as the PAYG model used success- exceeded as long as they are wired into the circuit. vՏÞ ܈̅ ÃÌ>˜`‡>œ˜i ÃÞÃÌi“î ˆÃ ˆ˜ÃÕvwVˆi˜Ì ̜ ܏Ûi ̅i «ÀœLi“Ãv>Vi`LÞ“ˆ˜ˆ‡}Àˆ`œ«iÀ>̜Àðˆ˜ˆ‡}Àˆ`ÃLÞ`iw- Neither solution has been found to be effective over time. nition are extremely capacity constrained—they are char- Customer agreements are easily violated in the absence of acterized by just one generation source. As a result, they a strong enforcement mechanism. MCBs and ELCs are eas- are extremely susceptible to brownouts (periods of low ily bypassed. The result can be seen as a “tragedy of the voltage that cause lights to dim and other appliances to commons,” evidenced by mini-grids as disparate as those in not function properly) or even blackouts. Both conditions Haiti, India, Malaysia, and throughout Sub-Saharan Africa. are a result of a total system load that strains the output There are clearly a wide range of barriers to the success- capacity of the generation source. To address this prob- ful application of mini-grids in remote areas but, despite EMERGING AND INNOVAT IVE BUSINESS AND DELIVERY MO DE L S 73 • Off-grid energy companies are moving from cash-sales to • New entrants are less vertically integrated than the early PAYG. The interviewed businesses currently report on aver- entrants. /…i wÀÃÌ *Ƃ9 «ˆœ˜iiÀà …>Ûi ÌÞ«ˆV>Þ Lii˜ ÛiÀ̈- age a 50-50 split between cash sales and PAYG. However, cally integrated companies controlling all aspects of the value ̅iÞ vœÀiV>ÃÌ > È}˜ˆwV>˜ÌÞ …ˆ}…iÀ }ÀœÜ̅ œv *Ƃ9 ­“i`ˆ>˜ chain—from design and manufacturing of PAYG hardware and growth of 300%), which will irrefutably shift the balance in software platforms to system integration, distribution, market- favor of PAYG. ing, consumer awareness, and sales. The vertical integration of early PAYG companies was to some extent a necessity as • Consumer demand for larger systems is rising. In the early the market was new and companies offering specialized busi- years, most PAYG companies focused on launching basic ser- ness-to-business services did not exist. But now there is a vice products, offering lighting and cell phone charging (typi- growing number of specialized companies offering value cally corresponding to SE4ALL Tier 1). Today, 85% of the chain services for PAYG. This reduces entry costs for new companies interviewed either currently integrate a TV in the PAYG companies, which can focus on their business model system or plan to introduce it in near future (products typically and relationship with customers, instead of building technol- corresponding to SE4ALL Tier 2). ogy and systems. • Rent to Own is becoming the predominant PAYG service model. The market research and companies’ experience have Overall, the interviewed companies and investors appear to be revealed that East African customers prefer owning the sys- optimistic about the transferability of the model to other geogra- tem rather than renting or leasing them perpetually, regard- «…ˆið/…ˆÃœ«Ìˆ“ˆÃ“Ãii“Ã̜LiÕÃ̈wi`LÞ̅iÀiVi˜Ìi“iÀ- less of the automatic upgrades typically offered under the gence of PAYG companies in other countries in Sub-Saharan perpetual lease. Of the interviewed companies, over 90% ƂvÀˆV>­ÃÕV…>à ˆ}iÀˆ>]…>˜>] œÌi`½ۜˆÀi]>˜`œâ>“LˆµÕi®° operate under a rent-to-own service model. œÜiÛiÀ]̅i«>Viœv«Àœ}ÀiÃÈψŽiÞ̜Liˆ˜yÕi˜Vi`LÞ̅i presence or absence of the factors behind the East African suc- • GSM integration and mobile money are becoming standard ViÃðœÀ˜œÜ]ˆÌ>««i>ÀÃ̅>Ì̅iVœÕ˜ÌÀˆiÓœÃ̏ˆŽiÞ̜Li˜iwÌ features. Payments with mobile money, such as M-pesa in >Ài ̅œÃi ܈̅ > >À}i ՘iiVÌÀˆwi` «œ«Õ>̈œ˜] “œLˆi “œ˜iÞ Kenya, tend to be more reliable, easier for the customer to platforms, consumer knowledge of solar products, and a friendly make, and faster for the company to receive. As a result, the œvv‡}Àˆ`LÕȘiÃÃi˜ÛˆÀœ˜“i˜Ì­ˆ˜VÕ`ˆ˜}̅iwÃV>Ài}ˆ“i®° majority of PAYG companies are relying on mobile money transactions. SEAR Case Study, Forthcoming. these challenges, progress is being made. Ongoing con- Markets Serviced by Grid Extension cerns include the need for continued government support Only 30 percent of the population in Sub-Saharan Africa, for mini-grids in areas where there is no grid expansion and 60 percent in South-East Asia, are connected to an «>˜˜i`vœÀ̅ivœÀiÃii>LivÕÌÕÀi]w˜>˜Vˆ>L>ÀÀˆiÀÃ]>˜` electricity grid (IFC 2012). Even when such grid electricity affordable tariffs for rural consumers. However, the sector is is available, the service experienced by many consumers is still growing rather than retreating. Unlike the historic ÛiÀÞ ՘Àiˆ>Li ܈̅ ˆ˜Vœ˜ÃˆÃÌi˜Ì ÃÕ««Þ >˜` vÀiµÕi˜Ì course of private sector participation in the power sector in power outages. As a result, many users, particularly busi- `iÛiœ«ˆ˜}VœÕ˜ÌÀˆiÃp܅iÀi«Àœ}ÀiÃÃÜ>ÃÕÃÕ>Þ`iw˜i` nesses, must also invest in a back-up generation facility, by centralized agreement with the national utility— mini- ܅ˆV… ˆÃ œvÌi˜ `ˆiÃi‡«œÜiÀi`] ˆ˜ivwVˆi˜Ì >˜` ̅iÀivœÀi grid companies recognize that success entails reaching a costly, as well as damaging to the environment. What is very large number of individual customers, and they are needed are innovative delivery models to enable grid working to implement business models that can provide extension to become a cost-effective option in the future. acceptable returns under these conditions. The large number of potential grid users (usually in A wide range of providers have attempted to introduce urban or per-urban areas) who currently rely on alternative business models for the sustainable supply, maintenance, electricity generation facilities represent a key target mar- and operation of clean energy mini-grids in developing ket for local utilities. However, there are two key barriers countries. There is still no single approach that is recog- that make it tougher to expand to low-income communi- nized as the best option –although effectively responding ̈iÃ\ ivviV̈Ûi ÀœÕÌià vœÀ «>ޓi˜Ì >˜` œ«iÀ>̈œ˜> ivw- ̜ œV> Vœ˜`ˆÌˆœ˜Ã ˆÃ > ŽiÞ ÀiµÕˆÀi“i˜Ì vœÀ ÃÕVViÃà >˜` ciency. These issues are compounded for utilities that demands tailored solutions. There are, however, common would like to extend their services to more rural areas, but vi>ÌÕÀià ̅>Ì V>˜ Li ˆ`i˜Ìˆwi` LÞ iÝ>“ˆ˜ˆ˜} `ˆvviÀi˜Ì prospective solutions are constrained by policy restric- examples of current business applications from 10 of the ̈œ˜ÃpÃÕV…>ÃwÝi`Ì>ÀˆvvÃÌÀÕVÌÕÀiÃ̅>Ì>Ài՘Ài«ÀiÃi˜Ì>- leading operators (Table 5.2). tive of the increased costs of supply. 74 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 TABLE 5.2 A big array of emerging delivery models for mini grids COMPANY CURRENT ENERGY SIZE OUTREACH TARGET COUNTRIES SOURCE RANGE FOCUS/INNOVATION E.ON 7 systems, 1m people Tanzania Solar, bio- 6–12kW Standardisation for scale; {ÓäVÕÃ̜“iÀà ˆ˜£äÞi>Àà `ˆiÃi ÃÌ>LˆÃ…ÌÀ>VŽÀiVœÀ`vœÀw˜>˜Vi Cellphone payment GHAM POWER 3 micro-grids >100 micro- Nepal Solar 1–10kW PPA with N-cell (telecoms) for grids in 10 years reduced risk revenue stream Rent-to-own agreements HUSK POWER 15,000 house- 75,000 India Biomass, 15–250kW Accept >5 year payback holds, several households, Tanzania Solar (biomass); Targeting 8-10 year loans 100 businesses 10,000 20kW (solar) Rural empowerment businesses, 3-year expansion plan 125 agro units Inclusive business model INENSUS Supports mini-grid development in Senegal Solar, wind 5–10kW Low-cost smartcard meter Africa with related management Sale of “electricity blocks” systems and consultancy “MicroPowerEconomy” delivery ÃÞÃÌi“pyi݈LiÌ>ÀˆvvÃE“ˆVÀœ‡ credit M-KOPA 340,000 +500 homes/day Kenya, Solar 5–20W PAYG business model homes Tanzania, Small SHS, LEDs & mobile (Mar 16) Uganda, phone charging services POWERGEN 20+ mini-grids 50 mini-grids in Kenya & Solar 1–6kW Mini-grids compatible with (RENEWABLE 2016 Tanzania, central grid standards ENERGY) Zambia POWERHIVE 4 sites, 1500 100 villages Kenya, Solar ~20kW Integrated tech system; people (~300 Philippines Mobile money networks for connections) (Africa/Asia pre-payment expansion) Dedicated software – predict revenue streams; RUAHA POWER 1 pilot project 100 projects Tanzania Solar, biomass 300kW Business model without subsidies (JV with Husk Build Own Operate model Power) Pre-payment meters -*Ƃ, / , Î >À̅ë>ÀŽ œwÝi`Ì>À}iÌ ƂÈ>]ƂvÀˆV>] -iÀۈVivœÀ> äqxää7 iÌiÀˆ˜}܈̅“œLˆi«>ޓi˜Ì mini-grids in Latin America types of mini system Haiti -grids Cloud-based software “Gateway” usage dbase SUNEDISON* Pilots (with 20m customers India, Tanzania Solar 1–5kW Set own tariffs; partners— in 5 years Aim for standard banking terms ˜œÌœÜ˜i`® ̜w˜>˜Vi«ÀœiVÌà I-՘ `ˆÃœ˜]œ˜Vi̅iv>ÃÌiÃ̇}ÀœÜˆ˜}1°-°Ài˜iÜ>Lii˜iÀ}ÞVœ“«>˜Þ]wi`vœÀL>˜ŽÀÕ«ÌVÞ«ÀœÌiV̈œ˜œ˜Ƃ«ÀˆÓ£]Óä£È° /…i }œœ` ˜iÜà ˆÃ ̅>Ì ̅i Û>Õi œv yi݈Li «>ޓi˜Ì national utility) under a power purchase contract at a com- options are increasingly being recognized and have been petitively awarded or negotiated price, or feed-in-tariff successfully introduced in some larger developing econo- agreed in advance. Another business model for grid exten- mies (like Brazil and India). Typical routes to successful sion can be effective when the grid reaches a community w˜>˜Vˆ>“œ`iÃ…>Ûiˆ˜VÕ`i`̅iˆ˜ÃÌ>>̈œ˜œv«Ài«>Þ- containing households that already have individual sys- “i˜Ì “iÌiÀÃ] «ÀœÛˆ`ˆ˜} «>ޓi˜Ì yi݈LˆˆÌÞ] >˜` œvviÀˆ˜} tems supplying electricity from renewable energy, most w˜>˜Vˆ>ˆ˜Vi˜ÌˆÛiÃ̜Vœ˜ÃՓiÀÃÕȘ}i}>Vœ˜˜iV̈œ˜Ã° often from solar power. The building owners can then sell But payment facilities can only be effective if the supply of electricity back to the utility on a net metered basis. iiVÌÀˆVˆÌÞˆÃÃÕvwVˆi˜ÌÞÀiˆ>Li°/…ÕÃ]œV>ṎˆÌˆiØii`̜ In the on-grid power sector, successfully developing LiVœ“i“œÀiivwVˆi˜Ì]܅ˆV…܈“i>˜`iÛiœ«ˆ˜}“œÀi new infrastructure relies on effective partnerships between appropriate business models, infrastructure, and local >œv̅iŽiÞÃÌ>Ži…œ`iÀÃ]܅ˆV…ÀiµÕˆÀiÏi˜}̅Þ˜i}œÌˆ- capacity building. ation. The incumbent utilities, the different layers of gov- /…i w˜>˜Vˆ> “œ`i }œÛiÀ˜ˆ˜} ̅i ÃÕ««Þ œv Vi>˜ ernment, the host communities and households, and energy to any existing grid is often the determining factor «ÀˆÛ>ÌiÃiV̜ÀwÀ“ÓÕÃÌ>ˆ`i˜ÌˆvÞVœ““œ˜ˆ˜ÌiÀiÃÌÃ>˜` vœÀ ÃÕVViÃð /…ˆÃ ˆ˜iۈÌ>LÞ ÀiµÕˆÀià > L>>˜Vi LiÌÜii˜ complimentary inputs that bring added value from their VÕÃ̜“iÀ>vvœÀ`>LˆˆÌÞ>˜`ÃÕvwVˆi˜Ì“>À}ˆ˜ÃvœÀ̅iˆ˜ÛiÃ- perspectives. For grid extension to remote communities, ̜À° "˜i œ«Ìˆœ˜ ˆÃ vœÀ > «ÀˆÛ>Ìi Vœ“«>˜Þ ̜ w˜>˜Vi >˜` the needs and priorities of all of these players can often supply renewable electricity to the grid-owner (usually the only be aligned following extended interaction over a long EMERGING AND INNOVAT IVE BUSINESS AND DELIVERY MO DE L S 75 timeframe. And once the agreement to initiate is reached, good partnerships between all relevant stakeholders. But there are inevitably differences and tensions that emerge the way in which this takes place will be particular to coun- with respect to ongoing operations, maintenance, and ÌÀˆiýëiVˆwVVˆÀVՓÃÌ>˜ViÃ]`iÛiœ«“i˜Ì˜ii`Ã]>˜`VՏ- pricing levels. Cost-effective grid extension to remote tural norms. What is key is that the programs and strategies locations can therefore become an insurmountable chal- ˆ˜VÕ`i ˆ˜Ã̈ÌṎœ˜>] ÌiV…˜ˆV>] iVœ˜œ“ˆV] >˜` w˜>˜Vˆ> i˜}i]܈̅`ˆvviÀi˜ÌÃÌ>Ži…œ`iÀÃœ˜ÞÃ>̈Ãwi`܈̅`ˆvviÀ- design and implementation arrangements that ensure ent solutions geared more toward their individual needs. ̅iˆÀivwVˆi˜ÌiÝiVṎœ˜>˜`̅iˆÀw˜>˜Vˆ>>˜`œ«iÀ>̈œ˜> As a result, the best way for developing countries to sustainability. >V…ˆiÛiw˜>˜Vˆ>ÞÃÕÃÌ>ˆ˜>Li}Àˆ`iÝÌi˜Ãˆœ˜ˆÃ̜i˜VœÕÀ- Increasingly, operators in the off-grid market are deal- age private sector suppliers to participate. In many coun- ing strategically with a set of factors that are opening space tries, the national grid operator struggles to maintain the for business—notably, (i) thinking broader than energy; (ii) existing structure to a standard that can provide a satisfac- ÃiiŽˆ˜}>“ˆÝœv«ÕLˆV>˜`«ÀˆÛ>Ìiw˜>˜ViÆ­ˆˆˆ®Vœ“Lˆ˜ˆ˜} tory service at acceptable cost—primarily due to limited investment with assistance; (iv) dealing with affordability w˜>˜Vˆ> ÀiÜÕÀVið ˆÛi˜ ̅>Ì ̅i i݈Ã̈˜} >ÀÀ>˜}i“i˜Ì issues in context; (v) engaging with consumers; and (vi) œvÌi˜ˆ˜ÛœÛiÃ>È}˜ˆwV>˜Ì}œÛiÀ˜“i˜ÌÃÕLÈ`Þ]̅i«ÀœÃ- providing after-sales service. pect of grid extension represents a future drain on public funds. Involving the private sector can introduce greater Thinking Broader than Energy ivwVˆi˜VˆiÃ>˜`˜iÜLÕȘiÃÓœ`iÃ̅>Ìi˜>Li̅i}Àˆ` For PAYG providers, future opportunities lie well beyond to be connected to areas that may otherwise seem unvi- energy. If they can effectively address the immediate chal- >Li°œÜiÛiÀ]˜iÜ>««Àœ>V…iÃÀiµÕˆÀiÃÕvwVˆi˜Ìyi݈LˆˆÌÞ lenges and scale up their energy business, they will be able in the governing policy frameworks. This will mean revised ̜`iÛiœ«“iV…>˜ˆÃ“Ã̜“>˜>}i>˜œ˜}œˆ˜}w˜>˜Vˆ˜} tariff structures, appropriate policies to allow grid connec- relationship with lower-income customers that are the tion to informal settlements, and incentives to offset hardest to serve. Once established, there is virtually no upfront investment costs. limit to the products and services that might be offered Take the case of Tata Power Delhi Distribution Limited through this distribution channel, with existing customers (TPDDL), which illustrates how the private sector’s drive for Liˆ˜}iÃÃVœÃ̏Þ̜ÃiÀÛi]>˜`̅iÀivœÀi“œÀi«ÀœwÌ>Li° ivwVˆi˜VÞ>˜`ˆÌÃ>LˆˆÌÞ̜ˆ˜˜œÛ>ÌiV>˜ÌÕÀ˜œÃǓ>Žˆ˜} 1«œ˜Vœ“«ïœ˜œv>w˜>˜Vi`i˜iÀ}Þ«ÕÀV…>Ãi]VÕÃ̜“- VÕÃ̜“iÀà ˆ˜ «œœÀ ˜iˆ}…LœÀ…œœ`à ˆ˜Ìœ «ÀœwÌ Vi˜ÌiÀÃp iÀà `œ “œÀi ̅>˜ >VµÕˆÀi > ܏>À ՘ˆÌ] ̅iÞ >Ãœ LՈ` > ܅ˆi`iˆÛiÀˆ˜}ˆ“«œÀÌ>˜ÌiVœ˜œ“ˆVLi˜iwÌÃvœÀ̅i«œœÀ positive credit history and access an ideal form of collat- (Box 5.2). This was done through a smart adaptation of a iÀ>]܅ˆV…̅iÞV>˜̅i˜Àiw˜>˜Vi° LÕȘiÃÓœ`i]܅ˆV…«ÕÌVÕÃ̜“iÀ˜ii`ȘwÀÃÌ«>Vi] There is potential for some providers to make the tran- and an emphasis on engaging and building trust with the È̈œ˜ vÀœ“ i˜iÀ}Þ Vœ“«>˜Þ ̜ >ÃÃiÌ w˜>˜Vi Vœ“«>˜Þ° communities. The government, including the regulator, M-KOPA, for example, now offers a self-described “double ÃÕ««œÀÌi` ̅ˆÃ ˆ˜˜œÛ>̈œ˜ >˜` >œÜi` “œ`ˆwV>̈œ˜Ã œv dividend”: (i) the money saved on kerosene when custom- the existing regulatory regime to account for the special ers start paying for their initial solar unit; and (ii) the ability characteristics of slum areas. ̜ºÀi‡w˜>˜Vi̅i՘ˆÌ]œ˜ViˆÌ…>ÃLii˜«>ˆ`œvv]>˜`Ì>Ži Business model innovation is critical if grid extension is cash out (to a mobile wallet) or purchase another product to provide a means for increasing the rate of electricity or service on credit”(M-KOPA 2015). M-KOPA offers access in developing countries. The mismatch between w˜>˜Vˆ˜}œ˜ˆÌi“ÃÃÕV…>ÃvÕi‡ivwVˆi˜ÌVœœŽÃ̜ÛiÃ]Ü>ÌiÀ grid expansion costs and affordability to low-income cus- tanks, bicycles, and smartphones, and it has set up a trial tomers needs to be addressed. However, the way in which «Àœ}À>“ˆ˜܅ˆV…VÕÃ̜“iÀÃV>˜`ˆÀiVÌ̅iV>ÅvÀœ“Àiw- ̅ˆÃÌ>Žië>Vi܈Li«>À̈VՏ>À̜i>V…VœÕ˜ÌÀÞ½ÃëiVˆwV nancing toward school fees. The combination of a produc- circumstances, development needs, and cultural norms. tive and desirable commodity (energy), digital payments These conditions, particularly in countries with dispersed linked to PAYG technology, and robust service/distribution populations, present a major challenge to national electric- networks makes off-grid solar an ideal entry point for scal- ity providers in developing countries. Even with the best >LiVœ˜ÃՓiÀw˜>˜Vˆ˜}° ÕÌV>Ṏœ˜“ÕÃÌLiÌ>Ži˜\Vœ˜- ˆ˜Ìi˜Ìˆœ˜Ã]˜iÜ“œ`iÃ>ÀiœvÌi˜ˆ˜ÃÕvwVˆi˜Ì̜ÕÃ̈vÞvÕÀ- ÃՓiÀw˜>˜Vˆ˜}ˆÃ>«œÜiÀvՏ̜œ]>˜`ˆÌˆÃ>«œÌi˜Ìˆ>Þ ther investment in grid extension. This suggests that, par- dangerous one. Responsible lenders and diligent regula- ticularly in Africa, alternatives to further grid coverage ̜ÀÓÕÃÌܜÀŽ̜}i̅iÀ̜i˜ÃÕÀi̅>Ìw˜>˜ViˆÃÕÃi`̜ need to be developed—as Kenya showed in its Last Mile improve development outcomes, not merely to push prod- Connectivity Program (Box 5.3). uct sales. /…iÀi ˆÃ ë>Vi vœÀ vÕÀ̅iÀ i˜iÀ}އw˜>˜Vi ˆ˜˜œÛ>̈œ˜° *>À̘iÀň«Ã ܈̅ œV> w˜>˜Vˆ> ˆ˜Ã̈ÌṎœ˜Ã VœÕ` LÀˆ˜} OPPORTUNITIES FOR BUSINESS IN >``ˆÌˆœ˜> w˜>˜Vˆ> ÃiÀۈVià ̜ VÕÃ̜“iÀà ̅>Ì ÜiÀi ՘̈ THE OFF-GRID MARKET? recently unbanked, while lowering the cost of capital and What are the opportunities for business in the off-grid mar- foreign exchange risk for energy companies. Alternatively, Ži̶ /…iÀi >Ài > À>˜}i œv v>V̜Àà ̅>Ì V>˜ Li ˆ`i˜Ìˆwi` energy companies could follow the lead of durable goods using the experience of rural energy applications to date retailers in Latin America, some of which have transitioned that together form a critical foundation for any successful into full-service retail banks (Winiecki 2015). If PAYG solar intervention. A common underlying theme is that the suc- companies can accurately assess the risk of lending to cessful development of new business relies on establishing unbanked customers while expanding PAYG solar offer- 76 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 BOX 5.2 5NWO'NGEVTKƂECVKQPKP0GY&GNJK#2TKXCVG7VKNKV[#RRTQCEJ Tata Power Delhi Distribution Limited (TPDDL) is a joint venture • New connections should be affordable. TPDDL under- between Tata Power and the Delhi government, with the major- stood that the upfront payment of $60 for obtaining a new ity stake being held by Tata Power (51 percent). Since 2002, it connection was a challenge. Thus, they advocated with the has distributed electricity in the north and northwest parts of regulator to reduce the cost of a new connection to $25, Delhi, serving a populace of 6 million—including about 1 mil- with upfront payment of only about $5.83, the rest being lion households across 860 slums in urban Delhi. paid in monthly instalments. Billing dates were matched with When TPDDL took over the distribution assets of the former salary/wage dates and varied for different slum clusters as state-owned utility in 2002, only about 5 percent of slum house- agreed upon in consultation with the communities. Some holds had legal connections, and the overall technical and com- customers were also allowed to pay their electricity bills in mercial losses were over 90 percent. The infrastructure was in a easier installments based on individual household circum- dilapidated state, there were no meters, and stealing was com- stances and agreed upon by the TPDDL staff. “Any Time monplace. Legalizing connections in slum areas was a part of Payment Machines” were installed at various locations for TPDDL’s overall drive to reduce losses. After reducing overall easy bill payments, saving travel costs for slum customers. aggregate technical and commercial (AT&C) losses from 53 per- • #FFKVKQPCNDGPGƂVUNKPMGFVQNGICNEQPPGEVKQPU Having an cent in 2002 to 15 percent in 2009, TPDDL began to target individual meter with a proper paper bill not only provided a losses in slum areas. Recognizing that the regularization of slum sense of pride for slum customers but also gave them a doc- Vœ˜˜iV̈œ˜ÃܜՏ`ÀiµÕˆÀi>ëiVˆ>ºœÕÌœv̅iLœÝ»>««Àœ>V…] ument — their electricity bill — to avail various services pro- it created a new Special Consumer Group (SCG). The group got vided by TPDDL’s CSR initiatives and other government w˜>˜Vˆ>>˜`…Õ“>˜ÀiÜÕÀViÃvÀœ“̅iVœ“«>˜Þ̜Vœ“iÕ« agencies, including TPDDL’s programs on medical health, with a plan to legally connect slum consumers, reduce AT&C vocational training, educational help for children and access losses, and generate revenue. to safe drinking water. TPDDL also provided legal customers The SCG began its engagement with slum communities by with accidental insurance coverage. The premium for this wÀÃÌ ÌÀވ˜} ̜ ՘`iÀÃÌ>˜` ̅iˆÀ ˜ii`à >˜` …œÜ iiVÌÀˆVˆÌÞ V>˜ insurance policy was being paid by TPDDL, and was a big help them meet those needs. From this engagement, TPDDL driver for households to apply for new connections. was gradually able to devise a new approach, anchored in the following principles: • Community members are business partners. TPDDL appointed women who were part of their CSR literacy cen- • Electricity is not a starting point for engaging slum dwell- ters as “Brand Ambassadors” to raise awareness about the ers. TPDDL carried out a survey to better understand slum Li˜iwÌÃœvi}>Vœ˜˜iV̈œ˜Ã>˜`…i«v>VˆˆÌ>Ìi˜iÜVœ˜˜iV- dwellers’ needs. Understanding that electricity was not the tions and bill payments. They also teamed up with the local …ˆ}…iÃ̘ii`]ˆÌÃÌ>ÀÌi`i˜}>}ˆ˜}wÀÃÌ̅ÀœÕ}…ˆÌà œÀ«œÀ>Ìi community leaders to be their “Franchisees” by creating Social Responsibility (CSR) program to accommodate the ˆ˜Vi˜ÌˆÛiÃvœÀ̅i“̜ˆ˜VÀi>ÃiVœiV̈œ˜ivwVˆi˜VÞ°˜yÕi˜- most pressing needs of slum dwellers. These CSR activities tial community leaders were appointed as Pradhans, to help provided TPDDL with a strong foothold in the community TPDDL resolve disputes and pave the way for franchisees and helped them create a trustworthy name for their com- and brand ambassadors to operate in the area. «>˜Þ]ÃiÌ̈˜}̅iÃÌ>}ivœÀÏՓiiVÌÀˆwV>̈œ˜° • Slum consumers must be treated with respect. The TPDDL The efforts to win the hearts of slum dwellers paid off. The num- treated slum customers on par with their other urban house- ber of legal customers located in slum clusters doubled from …œ`VÕÃ̜“iÀÃ>˜`«ÀœÛˆ`i`̅i“܈̅̅iÃ>“iµÕ>ˆÌÞœv 93,000 in 2009 to 175,000 in 2015. Revenues from the slum supply and customer service. The company’s electricity bill areas increased from $3 million in 2009-10 to $18 million in has become a form of an identity card, allowing TPDDL slum 2014-15. The technical and commercial losses were reduced customers to avail themselves of other services provided by vÀœ“Èn«iÀVi˜Ì̜>LœÕÌÓΫiÀVi˜Ì]>˜`VœiV̈œ˜ivwVˆi˜VÞ TPDDL or the government. increased from 67 percent to 98 percent. In addition, CSR efforts have led to improvements in the living condition of • Getting an electricity connection should be easy. One of 140,000 families and have provided livelihood opportunities to ̅iLˆ}}iÃÌ…ÕÀ`iÃ̜i}>ˆâˆ˜}Vœ˜˜iV̈œ˜ÃÜ>Ã̅iÀiµÕˆÀi- young men and women. ment of a land title to prove tenancy. To overcome this chal- /…ÕÃ]/* …>ëÀœÛi˜̅>ÌÏՓiiVÌÀˆwV>̈œ˜V>˜Li> i˜}i]/* «Àœ«œÃi`>vw`>ۈÌÃÈ}˜i`LÞÏՓVÕÃ̜“iÀà «ÀœwÌ>LiÛi˜ÌÕÀi°Ì…>ØœÌÌÀi>Ìi`̅ˆÃ>úV…>ÀˆÌ>LiܜÀŽ» waiving TPDDL’s responsibility in case of any slum demolition but as a successful business model to bring down technical and œÀi}>>V̈œ˜LÞ̅i}œÛiÀ˜“i˜Ì°-ÕV…>˜>vw`>ۈÌܜՏ`Li commercial losses and increase revenue generation in the used in place of land titles to get an electricity connection. In slums—treating slum dwellers as valued customers. It has been addition, by holding camps for new connections in slum >܈˜‡Üˆ˜ÈÌÕ>̈œ˜]Li˜iwÌ̈˜}LœÌ…̅iÏՓ«œ«Õ>̈œ˜>˜` areas and helping people with the paper work, TPDDL proac- the company. tively reached out to these communities rather than wait for ̅i“̜Vœ“i̜̅iˆÀœvwVið/…ˆÃ˜œÌœ˜ÞÀi`ÕVi`“iÌiÀ Sear Case Study forthcoming. installation time but also encouraged more households to seek legalized connections. EMERGING AND INNOVAT IVE BUSINESS AND DELIVERY MO DE L S 77 BOX 5.3 Kenya’s Powerful Last Mile Connectivity Program i˜Þ> ˆÃ i“LÀ>Vˆ˜} iiVÌÀˆwV>̈œ˜ >à > y>}ň« access in grid connected areas. Since Kenya’s grid is endeavor, with a focus on the distribution sector almost exclusively concentrated in the central corridor, reaching all Kenyans with energy services by 2020. It where there is the highest population density, this has already emerged as a star in achieving progress approach is considered the least cost way of harness- œ˜iiVÌÀˆwV>̈œ˜p}ÀœÜˆ˜}vÀœ“ÓΫiÀVi˜Ìˆ˜Óää™ ing economies of scale in network design with a poten- to about 50 percent in 2016 (Figure B5.3.1)—under- tial of reaching about 70-80 percent of consumers. pinned by huge investments across the sector value Kenya is also leading the way on how to balance a chain. Today, there are about 5 million Kenya Power À>«ˆ`Þ}ÀœÜˆ˜}iiVÌÀˆwV>̈œ˜«Àœ}À>“܈̅Vœ˜ÃՓiÀ and Lighting Company (KPLC) consumers, with more >vvœÀ`>LˆˆÌÞ ˆ˜ > w˜>˜Vˆ>Þ ÃÕÃÌ>ˆ˜>Li “>˜˜iÀ° /…i than 1 million consumers added annually in the past LMCP design encompasses a substantial decrease in two years. the connection fee charged to household customers— /…i}œÛiÀ˜“i˜Ì½Ã«Àˆ“>ÀÞ}Àˆ``i˜ÃˆwV>̈œ˜Ûi…ˆ- from KES 35,000 ($343) to KES 15,000 ($147) (to be cle—the Last Mile Connectivity Program (LMCP)— paid in instalments). However, such consumer connec- seeks to connect all consumers within 600 meters of a ̈œ˜ V…>À}ià >Ài ˆ˜ÃÕvwVˆi˜Ì ̜ VœÛiÀ ̅i Vœ˜˜iV̈œ˜ costs (of $1,000/connection) borne by KPLC. These transformer. It is supported by close to $700 million in new households are overwhelmingly low volume con- `œ˜œÀ ÀiÜÕÀVià ­ˆ˜VÕ`ˆ˜} ̅i 7œÀ` >˜Ž‡w˜>˜Vi` Kenya Electricity Modernization Project) to speed up sumers paying a lifeline tariff and are cross-subsidized Lޜ̅iÀVœ˜ÃՓiÀȘ* ½ÃœÛiÀ>ÀiÛi˜ÕiÀiµÕˆÀi- ment to ERC. Initially, KPLC shouldered the gap with FIGURE B5.3.1. Reaching out to all Kenyans commercial loans, but this imposed an (KPLC customer connections, in millions) increasing burden on the utility’s w˜>˜Við /…iÀi ˆÃ ˜œÜ > Ìܜ «Àœ˜}i` KPLC Customer (in millions) 35% 30% approach: (i) in 2015, a World Bank 14% 19% Guarantee supported KPLC to restruc- 16% 20% ture $500 million of short-term expen- sive commercial debt into a long-term maturity loan; and (ii) concessional debt by the donors to the government is 2009/10 20010/11 2011/12 2012/13 20013/14 2014/15 2015/16 Liˆ˜}œ˜‡}À>˜Ìi`̜* vœÀiiVÌÀˆw- cation purposes, thereby keeping the Source: KPLC debt off KPLC’s books. ings to whole countries or regions, they will have built the potential market for energy supplies in remote areas will ºwÀÃÌ ÃV>>Li “œ`i vœÀ «ÀœÛˆ`ˆ˜} >ÃÃiÌ w˜>˜Vˆ˜} ̜ be a critical factor. Thus, much work on this issue is being unbanked consumers” (Winiecki 2015). PAYG companies undertaken by a wide range of stakeholders (including ser- have leveraged multiple innovations to reach their custom- ۈVi«ÀœÛˆ`iÀÃ]w˜>˜VˆiÀÃ]>˜`>V>`i“ˆVî°ƂÃ>Ü>ÞÃ]܅i˜ ers. How they evolve from here will determine their ulti- faced with new approaches for any business, the greatest mate success (CGAP 2016) risk and potential reward will be linked to the front-runners. But there needs to be greater efforts to raise awareness of Seeking a Mix of Public and Private Finance ÃÕV…w˜>˜Vˆ˜}v>VˆˆÌˆiÃ̜i˜ÃÕÀi̅>ÌÃÕV…i>`ˆ˜}«ÀœiVÌ Due to the capital-intensive nature of investments in developers can access the latest tools available. In this i˜iÀ}Þ>VViÃÃ]`iLÌw˜>˜Vˆ˜}ˆÃVÀˆÌˆV>°ˆ˜ˆ‡}Àˆ`«ÀœiVÌ way, the developers of new delivery models can consider `iÛiœ«iÀÃÀiµÕˆÀi«ÀœiVÌw˜>˜Vi̜VœÛiÀ̅i…ˆ}…ˆ˜ˆ- ̅i >ÌiÃÌ w˜>˜Vˆ> œ«Ìˆœ˜Ã >˜` ÕÃi œÀ >`>«Ì ̅œÃi ̅>Ì tial cost of building out their grid infrastructure—like gen- best match local conditions. eration and distribution systems—and PAYG solar «ÀœÛˆ`iÀÃÀiµÕˆÀi`iL̈˜̅ivœÀ“œvܜÀŽˆ˜}V>«ˆÌ>̜ Combining Investment with Assistance w˜>˜Vi ̅iˆÀ ˆ˜Ûi˜ÌœÀÞ° iÜ w˜>˜Vˆ> wÀ“à >Ài LÀˆ˜}ˆ˜} 7…ˆi w˜>˜Vˆ> ÃÕ««œÀÌ ˆÃ > ˜iViÃÃ>ÀÞ ˆ˜}Ài`ˆi˜Ì vœÀ ÃÕV- innovations to the market for energy access to facilitate cess, well-informed investors recognize the value of offer- ̅i yœÜ œv `iLÌ ̜ “ˆ˜ˆ‡}Àˆ` «ÀœiVÌà >˜` *Ƃ9 ܏>À ing something additional to address the risks presented by companies alike (Box 5.4). new technology, markets, and business models. Thus, /…iÃiw˜>˜Vˆ˜}“iV…>˜ˆÃ“Ã܈`À>“>̈V>ÞÀiۈÃi̅i ˆ˜˜œÛ>̈Ûi w˜>˜VˆiÀà >Ài ˆ˜VÀi>Ș}Þ “>Žˆ˜} > Vœ““ˆÌ- risk perspective of investors considering support for rural ment to focus on the energy access sector, in effect, energy applications, along with offering excellent opportu- acknowledging the need for accompanying services. The nities for preparing innovative business models. It is well- ՘ˆµÕi V…>i˜}ià >˜` ՘`iÛiœ«i` ˜>ÌÕÀi œv «ÀœÛˆ`ˆ˜} Ž˜œÜ˜ ̅>Ì ̅i w˜>˜Vˆ> “iV…>˜ˆÃ“ ÕÃi` ̜ >``ÀiÃà > access to energy for low-income households and busi- 78 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 BOX 5.4 How Financial Firms Can Support Innovation in the Off-Grid Marketplace Persistent Energy Capital. Ƃ 1°-°‡-܈Ãà LœṎµÕi CrossBoundary Energy. ºƂvÀˆV>½ÃwÀÃÌ`i`ˆV>Ìi`v՘` investment bank focused on off-grid renewable energy for commercial and industrial solar” is also working the business estimates that there will be $2-3 billion of ÃÌ>˜`>À`ˆâ>̈œ˜܏Ṏœ˜]LṎ˜̅iëiVˆwVVœ˜ÌiÝÌœv receivables held by energy access businesses by 2020 solar installers and project developers for commercial °*iÀÈÃÌi˜Ì ˜iÀ}Þ >«ˆÌ>ˆÃÌ>Žˆ˜}>՘ˆµÕi>««Àœ>V… and industrial installations in Africa. CrossBoundary’s ̜ “iiÌ ̅i ܜÀŽˆ˜} V>«ˆÌ> ˜ii`à ̜ vՏw ̅iÃi target system size is between 50 kW and 5MW, and it receivables. In December 2015, it launched a securiti- ˆÃ LÀˆ˜}ˆ˜} **Ƃà ̜ ̅ˆÃ ՘`iÀ‡w˜>˜Vi` >˜` }ÀœÜˆ˜} zation of customer receivables called “Distributed sector under its SolarAfrica platform. PPAs are already Energy Asset Receivables”, or “DEARs”. This approach Üi‡Õ˜`iÀÃ̜œ`>˜`܈`iÞÕÃi`w˜>˜Vˆ>>}Àii“i˜Ìà will be piloted using the receivables of PAYG solar pro- for renewable and non-renewable projects, from small- viders in Kenya, issued by a special purpose vehicle, scale residential installations to the largest generation with additional projects soon after. The aim is “to projects. By developing standard terms and structure, develop a low risk debt instrument that will become it hopes to offer a “PPA in a box” solution to further standardized and rated by rating agencies so that reduce transaction costs to increase installers’ and ˆ˜ÛiÃ̜Àà V>˜ Vœ˜w`i˜ÌÞ ˆ˜ÛiÃÌ >VÀœÃà ̅i i˜iÀ}Þ investors’ capacity to realize projects. In Nairobi, it access sector.” Such an approach touches upon other enabled the Garden City Mall to contract with a solar crucial factors for the investment of debt into the sec- developer for 858 kW of PV for a carport, paid over 12 tor that have been barriers to date, including the lack years, with no upfront cost. œvi˜`ˆ˜}LޏœV>w˜>˜Vˆ>ˆ˜Ã̈ÌṎœ˜Ã]>˜`̅i>VŽœv SunFarmer. Like CrossBoundary, SunFarmer is focused VÀi`ˆÌÀ>̈˜}>˜`µÕ>˜ÌˆÌ>̈ÛiÀˆÃŽ>ÃÃiÃÓi˜Ìœvi˜`‡ on the institutional, commercial, and industrial market user customers. for solar power, using long-term debt and PPAs – Lendable. A U.S. company that aims to build technol- rather than the PAYG solar or mini-grid market. In addi- œ}Þ>˜`w˜>˜Vˆ>«Àœ`ÕVÌÃ̜>ÌÌÀ>V̈“«>V̈˜ÛiÃ̜Àà tion to reducing transaction costs through deal ˆÃ >``ÀiÃȘ} ̅i w˜>˜Vˆ> L>ÀÀˆiÀà vœÀ i˜iÀ}Þ >VViÃà ÃÌ>˜`>À`ˆâ>̈œ˜]̅i1°-°Vœ“«>˜Þ­Ü…œÃiwÀÃÌ«ÀœiVÌ companies through its Lendable Risk Engine. This tool was in Nepal) hopes to encourage local banks to begin applies statistical analysis to data, which is provided by i˜`ˆ˜}̜̅iÃi«ÀœiVÌÃLÞ“ˆÌˆ}>̈˜}ÀˆÃŽ]LœÌ…w˜>˜- the originators of receivables, to calculate portfolio risk cially and technically. Financially, it structures credit for investors. Another barrier to lending in the sector is i˜…>˜Vi“i˜ÌψŽiVœ>ÌiÀ>ÃÕ««œÀÌ>˜`wÀÃ̏œÃÃV>«- the transaction cost associated with deals. Lendable, ital for the lender. Technically, it provides its due dili- along with others, is looking to solve this problem gence services “to ensure good design, commissioning, through deal standardization and platforms for invest- and the existence of after-sales monitoring and sup- ment. Their Lendable Marketplace “offers aggregated port.” It has also developed a real-time remote moni- receivables across multiple originators, off the shelf toring platform called EnergyX to monitor system and standard documentation, and transaction capabil- performance over time. ities through existing SPEs and local service provid- iÀð» /…i Vœ“«>˜Þ iÝ«iVÌà ̜ ÌÀ>˜Ã>VÌ ˆÌà wÀÃÌ ̅Àii deals in 2016. nesses in developing countries underscores the need for nies and providing them with somewhat generic support this specialization. There are many government grant facil- (like workshops and templates). While helpful, the latter ities, private grant competitions, foundations, family approach is limited compared to the thousands of hours œvwViÃ] >˜` ˆ˜VÕL>̜Àà ̅>Ì œvviÀ LÀœ>` w˜>˜Vˆ> ÃÕ««œÀÌ that Factor(E) (a U.S.-based company) offers in advisory for early-stage ventures, but few have the domain knowl- support to their portfolio companies post-investment. This edge to accompany their investment with more than just involvement has facilitated access to key partners in target dollars. Early stage energy access companies are either markets, and it has helped provide follow-on investment to pioneering new technology, new markets, new business those portfolio companies that are ready for growth follow- models, or a combination of these, which means that they ing Factor(E)’s seed-stage engagement. ÀiµÕˆÀiÃÕ««œÀÌ>VÀœÃÃ>܈`iÀ>˜}iœv>V̈ۈÌÞ° Schneider Energy Access Ventures (EAV) recognizes Factor(E) Ventures uses customized engagements with this need in their portfolio companies and takes a similar ˆÌëœÀÌvœˆœVœ“«>˜ˆiÃ̅>Ì>``ÀiÃÃ̅i՘ˆµÕiÌiV…˜ˆV> approach. In addition to its investment, which its distribute or commercial aspects of the company that needs to be in the range of $250,000 to $4 million across multiple de-risked. This contrasts with other investment models rounds, the French company believes that providing tech- that are based on hosting a “cohort” of early stage compa- nical assistance is critical to the success of their ventures. EMERGING AND INNOVAT IVE BUSINESS AND DELIVERY MO DE L S 79 Under an agreement with Schneider Electric, EAV can Engaging with consumers ÀiµÕiÃÌ Õ« ̜ £]äää “>˜‡`>Þà œv «Àœ‡Lœ˜œ ܜÀŽ vÀœ“ There is a basic condition for any successful business any- Schneider employees per year for its portfolio companies. where in the world—know your customer! It is often stated It can also access facilities and systems—such as overseas that all locations for non-grid energy applications are differ- manufacturing plants or accounting systems—to acceler- ent, with local resources, practices, priority needs, and tra- ate the organizational development and maturity of their ditional customs all varying between different communities. portfolio companies. /…i܏Ṏœ˜ˆÃœvÌi˜µÕœÌi`>Ã>ºLœÌ̜“‡Õ«»>««Àœ>V…ˆ˜ ˜ ŜÀÌ] > “ˆÝ œv «ÕLˆV >˜` «ÀˆÛ>Ìi ÃiV̜À w˜>˜Vi ˆÃ ̅iVœ˜ÌiÝÌœvÀÕÀ>`iÛiœ«“i˜Ì°˜v>VÌ]̅ˆÃÀiµÕˆÀi“i˜Ì ÀiµÕˆÀi` ̜ iÃÌ>LˆÃ…] “>ˆ˜Ì>ˆ˜] >˜` }ÀœÜ ̅i “>ÀŽiÌ ˆ˜ is no different in rural Africa and is well-recognized by those remote areas for clean energy applications. Energy access companies that are making advances in this area. can be seen as a public sector obligation and therefore a Provision for such consumer engagement must be }œÛiÀ˜“i˜Ì œÀ `œ˜œÀ Vœ˜ÌÀˆLṎœ˜ ˆÃ ÕÃ̈wi` ̜ œvvÃiÌ included in any business model aiming to address energy Õ«vÀœ˜ÌVœÃÌð ÕÌ«ÀˆÛ>ÌiÃiV̜Àw˜>˜Vi“ÕÃÌLi>Û>ˆ>Li access in developing countries. Similar to the establish- to cover the full costs of operation, maintenance, and rein- “i˜Ì œv Ã>ià Ìi>“à >˜` ëiVˆ> w˜>˜Vˆ˜} >ÀÀ>˜}i“i˜Ìà vestment in capital. found in OECD countries for the adoption of residential rooftop solar PV by providers like SolarCity and SunRun, Dealing with Affordability Issues in Context PAYG companies working in Africa are building out vast *Ƃ9Vœ“«>˜ˆiÃ՘`iÀÃVœÀi˜œÌœ˜Þ̅iLi˜iwÌÃœvÕȘ} wi`‡L>Ãi`Ã>iÃÌi>“Ș>``ˆÌˆœ˜̜̅iˆÀÜ«…ˆÃ̈V>Ìi` ̅iˆÀ«Àœ`ÕVÌÃpˆ“«ÀœÛi“i˜ÌÃ̜…i>Ì…]Ã>viÌÞ]>˜`µÕ>- /‡L>Ãi`w˜>˜Vˆ˜}V>«>LˆˆÌˆið/…iÃi`ˆÃÌÀˆLÕ̜ÀÃ]ˆ˜VÕ`- ˆÌÞœvˆ}…ÌpLÕÌ>Ãœ̅iÈ}˜ˆwV>˜ÌÃ>ۈ˜}ȘiÝ«i˜`ˆÌÕÀià ing market leaders Off-Grid Electric and M-KOPA, employ that customers can recoup. M-KOPA estimates that a typi- a variety of strategies to drive sales—such as door to door V>VÕÃ̜“iÀ܈Ã>ÛifÇx䈘̅iwÀÃÌvœÕÀÞi>ÀÃœvÕȘ} sales, local events, and community meetings. The value of one of its systems. Relative to the approximate $1,100 it close interaction with the target market is well understood. estimates consumers to have spent on kerosene and bat- However, ensuring consumer engagement in remote teries in that time, this represents a saving of nearly 70 rural areas is complicated by the high level of aware- percent (Faris 2015) ˜iÃÇÀ>ˆÃˆ˜}ÀiµÕˆÀi`̜ˆ˜vœÀ“«œÌi˜Ìˆ>VÕÃ̜“iÀÃœv̅i To ensure affordability, there is a clear need to allow options available. As a result, providers too often impose customer payback over an extended period. The duration externally designed interventions rather than responding and monthly cost of payback must be set at a level that can to customer preferences. The “bottom-up” approach is LiÕÃ̈wi`̜̅iVÕÃ̜“iÀ]>ÃÜi>ÃLiˆ˜}ÃÕvwVˆi˜ÌvœÀ standard business practice worldwide and must be imple- the provider to recoup the cost of its assets. Marketing this mented in order for any company to provide customers balance in a way that attracts the interest of target custom- with sustainable energy access. ers is a feature of most PAYG companies. For example, Azuri’s PayGo rent-to-own model is promoted as allowing Providing After-Sales Service consumers to spread the cost of ownership of a solar home Emerging delivery models for remote energy supplies are system across a period of 18 months. now placing a much greater value on customer service and There is also an inevitable trade-off between the level retention. This is enhanced by the long-term payback of upfront costs and the duration of customer payments. «iÀˆœ`̅>̈ÜvÌi˜ÀiµÕˆÀi`>˜`“ÕÃÌLiivviV̈ÛiÞ“>˜- Off-grid Electric (OGE) prides itself on offering what it aged by the supplier. Historically, recognition of the describes as the lowest down payment and lowest ongo- end-user’s needs, interests, and values has not been a pri- ing payment price point in the industry. However, the cus- ority for energy access initiatives in developing countries. tomer pays for the system as a service over a 10-year These have generally been driven by donor funding, so period. OGE sees this as comparable to a utility model, the customer for the service provider has been the funder >˜` ˆ˜VÕ`ià œ˜}œˆ˜} µÕ>ˆÌÞ >ÃÃÕÀ>˜Vi œÛiÀ ̅i i˜ÌˆÀi rather than the householders who are expected to use the contract period. This contrasts with the rent-to-own systems installed. But addressing these energy needs model, where the customer achieves full payment for the through private business is leading to greater recognition system over a much shorter period, but will then have to of the end-user as the customer. VœÛiÀ “>ˆ˜Ìi˜>˜Vi iÝ«i˜Ãià >˜` iµÕˆ«“i˜Ì Ài«>Vi- ˜ÃÕvwVˆi˜Ì >vÌiÀ‡Ã>ià ÃiÀۈVi ÀiÃՏÌà ˆ˜ ÃÞÃÌi“ v>ˆÕÀi] ment costs. market spoilage, and the unsustainable operation of small- Introducing appropriate tariff policies (at the national scale rural energy businesses. The PAYG business model or local level) is another way to address this challenging improves outcomes for consumers not only because it ˆÃÃÕiœvL>>˜Vˆ˜}>vvœÀ`>LˆˆÌÞ>˜`ÃÕvwVˆi˜ÌÀiÛi˜Õi̜ ˆ˜VÀi>Ãià >`œ«Ìˆœ˜ ̅ÀœÕ}… w˜>˜Vˆ> >VViÃÃ] LÕÌ >Ãœ maintain the operational sustainability of the system. Past because it can provide better after-sales service. Unlike analysis by the World Bank (in 2008) indicated that poor cash sales and energy lending models, PAYG providers are consumers are willing to pay for electricity and often at strongly incentivized to ensure a reliable system operation levels that are higher than the long-term cost of supply, on an ongoing basis. Under a standard payback business “>Žˆ˜} > w˜>˜Vˆ>Þ ÃÕÃÌ>ˆ˜>Li “œ`i «œÃÈLi° Ƃ model, consumers will not continue to make payments to well-designed tariff policy will ensure the poorest con- use the system if the system is not functioning. sumers can afford to meet their basic needs, while col- Leading companies in the PAYG solar space are partic- iV̈˜} ÃÕvwVˆi˜Ì œÛiÀ> ÀiÛi˜Õi ̜ >œÜ œ«iÀ>̈œ˜> ularly proactive about after-sales service. For example, sustainability (WBCSD 2012). M-KOPA has integrated a SIM card into its systems— 80 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17 enabling it to not only process customer payments via CONCLUSION mobile money and automatically “unlock” systems when Despite increasing efforts to develop commercially viable appropriate but also remotely monitor the health of its cus- operations for the sustainable expansion of clean energy tomers’ systems. As a recent Bloomberg Businessweek technology applications in remote areas, there are still very article noted: “Workers at its call center can already pull up few delivery models that have been successful at scale. This graphs showing how a customer’s battery is charging and presents an enormous market opportunity for private sec- `ˆÃV…>À}ˆ˜}]>œÜˆ˜}̅i“̜ëœÌ`Õ`Ã̜iˆÌ…iÀwÝœÀ̜ tor suppliers, though the continued involvement of public swap. They can also look at the performance of the solar v՘`ˆ˜}ÜÕÀViÃ܈LiÀiµÕˆÀi`̜LՈ`LÕȘiÃÓœ`iÃ panels over time, detecting when a panel has been that are feasible under local conditions with an acceptable mounted on the wrong side of a roof or if it’s gathered dust level of risk to investors. The public/private economic and needs to be wiped clean”(Faris 2015). This proactive “œ`i ̅>Ì ܈ Li ÀiµÕˆÀi` “ÕÃÌ Ì>Ži vՏ >VVœÕ˜Ì œv approach to customer service is revolutionary in the con- broader needs, such as links to policy, integrated technol- text of energy access. ogy applications, and the building of local capacity to Another option for remote monitoring capabilities is to ensure cost-effective local support structures. Partnerships intelligently manage a user’s system based on usage pat- with local stakeholders—including government, utilities, terns and weather analysis. This is the approach adopted the host communities and households, and private sector LÞ ƂâÕÀˆ° Ƃà ƂâÕÀˆ " -ˆ“œ˜ À>˜Ãwi`‡>À̅ …>à wÀ“à >œ˜} ̅i ÃÕ««Þ V…>ˆ˜p>Ài ˜iViÃÃ>ÀÞ vœÀ ̅i ÃÕV- described: “In the rainy season, solar home systems have cessful development of any new energy access business. to be effectively over-sized to deal with the poor weather, Based on the innovative energy service delivery models meaning they either need to be more expensive all year that are currently emerging, there are several common fac- round, or that they perform less well at times, to the point tors that must be taken into account to achieve positive, that consumers may have to revert to traditional energy sustainable results. First, there is a need for different sources.” In response to this problem, Azuri is using an approaches in different locations, although the broad prin- internally developed enabling technology called Home- Vˆ«ià vœÀ ÃÕVViÃà V>˜ Li ˆ`i˜Ìˆwi`] ̅iÀiLÞ œvviÀˆ˜} > Smart™ to improve system performance by dynamically framework for effective market development. Second, adjusting the brightness of the system’s lights according to }Ài>ÌiÀVœ˜Ãˆ`iÀ>̈œ˜“ÕÃÌLi}ˆÛi˜˜œÌœ˜Þ̜̅iw˜>˜- the available power. This eliminates the cost of over-sizing cial model but also the demands, interests, and restrictions the system, while enhancing the customer experience. œvœV>VÕÃ̜“iÀÃp܈̅“œLˆi«>ޓi˜ÌÃÞÃÌi“ÃÀiµÕˆÀi` iëˆÌi ̅i iۈ`i˜Ì Li˜iwÌÃ] œ˜}iÀ‡ÌiÀ“ VÕÃ̜“iÀ to provide customer convenience. Third, strong partner- interaction is often not a familiar process in rural areas of ships must be developed along the entire supply chain, developing countries, so training to build local skills and from the government and utilities that set the context, to awareness must be factored in to any delivery model. the private sector service providers, to the communities Local management and operation of an energy access and households that represent the demand. Market dynam- business is necessary to achieve cost-effective long-term ics are as apparent in developing countries as elsewhere, ÃiÀۈVi`iˆÛiÀÞ°˜ÌiÀ˜>̈œ˜>VœœÀ`ˆ˜>̈œ˜V>˜LiÕÃ̈wi` but they must be carefully adapted to local conditions to to initiate any such intervention, but is usually not viable support successful, sustainable, clean energy solutions. after this start-up period. Thus, building local capacity to support longer-term business operation and develop- ment must be a priority. 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