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ELECTR ICITY ACCESS
b S TAT E O F E L E C T RI CI TY ACCES S R EPO RT | 2017

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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
> iii
>-}wV> iiwv iVV-iVi 
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
i`i Li  n
Future Outlook of Electricity Access 23
i} iii>iv iVVVVi  {

V 
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
>`}` >i` iVwV> 
ii}"vv` iVwV>-Vii 
>} iVVVVi*}>/>v>i  {
Conclusion 43
References 44

CHAPTER 4: Clean Energy and Electricity Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47


Introduction 47
,ii>Liv iVVVVi  {n
"vv`,ii>Li i}\V`  x
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>i}i>`-V>}"  xx
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iiwv
i> i} 

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CHAPTER 5: Emerging and Innovative Business and Delivery Models . . . . . . . . . . . . . .67


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ACKNOWLEDGMENTS

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-ii}
iii`Li7` >] i}-iV>>}ii>Vi*}>
-*/iiLivi-ii}>>v\

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Department for International DevelopmentUK Government (DFID)
Deutsche Gesellschaft fr Internationale Zusammenarbeit (GIZ)
`>`}V>"}>>"]
iiV> iii >
International Network on Gender and Sustainable Energy (ENERGIA)
Kreditanstalt fr Wiederaufbau (KfW)
Practical Action
Renewable Energy Policy Network for the 21st Century (REN21)
Sustainable Energy for All (SEforAll)
United Nations Foundation (UNF)
7` >7
World Health Organization (WHO)

Members of the Steering Committee ii`i }>Li>`


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Mr. Rohit Khanna (ESMAP Program Manager), oversaw the development of the State of
Electricity Access Report./iiVV>i>>i`Lvw i7` >>`
>*>i -*

The main contributing authors of the SEAR 2017 were: vw i] >*>i]
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Special FeaturesiiV`>i`Lvw i>`i>i`Liv}i>`


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Impact evaluation reportsiiV`>i`L >*>i -*>`iii`


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Substantive comments >}iViii`i`L7i`}i]>V



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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
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]>`]>Vi]i>]Vi>`]>>]>>]i ii>`] >]
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PREAMBLE

T
i7` > i}-iV>>}ii- The Report is organized as follows:
>Vi*}> -*Vi``ii}i
AN OVERVIEWvi>V`Vi`ii]
->iv iVVVVi,i- ,iV>
highlighting key messages.
>vi->>Li i}v- {i`}i
Hub activities. The SEAR is intended to complement the CHAPTER 1: The Case for Universal Electricity Access. The
L>/>V}>i/,iii]i wV>i`i>iii}>v-
 i /i >i] >` i iVi >Vi` >>Li`iii]>`i}i>>VVi
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- Li  i`V} i] } > `ii-
ress on the target of ensuring universal access to afford- i]>`Vi>}iVV}
>Li]i>Li]`iii}iViL
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
iiVV >VVi] }}} i V>i v i V>i}i
- ]i`i>>vi>viiVV
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-
>>   >` 7` >]   }i   ii
ing Report.
how countries can create a conducive environment for a
>v>iiiVV>VVi]Vi>ii} CHAPTER 3: Creating a Better Environment for Transfor-
wiVi]>`ii}}>`>ii- 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
 LiVi    }ii] `] i iiVwV> >` `ii} vv}` iiVwV>p
>i iV] V Vi }>>] >` >V- along with how to plan for a complementarity of grid and
tioners to develop interventions to close the electricity vv}`iiVV>}}V]i}-
access gap by integrating lessons learned from countries >]iVV>]>`w>V}v>V
>>ii>`i`iiVV>VVii>]
CHAPTER 4: Clean Energy and Electricity Access. This
with insights drawn from emerging innovative business
V>i `Vi i }wV> i > Vi> ii}p
and delivery models.
> ] ii>Li ii} >` ii} ivwViVp V`
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play in meeting the electricity access challenge. It focuses
tions:
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Why is electricity access critical for the achievement of i]>}i>`Vi>ii}V>i
the 2030 Agenda for Sustainable Development? `i `i ii} iVi i V] i i-
>L]>ii>>vi>i]>`>>iV
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 i `ii `i] w>V} iV>] >` V
>VVi]ii>Li]>`ii}ivwViV 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 FeaturesiiV`>i`Lvw i>`i>i`Liv}i>`


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Case studies iiV`>i`L >>,>> -*>`i>i`L-`>>


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Impact evaluation reportsiiV`>i`L >*>i -*>`iii`


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> iVv i}>` >ViL>*>VVi]7` >]VLv
--]->>] i]-`i> >iii]>`9>Li<>}

Substantive comments >}iViii`i`L7i`}i]>V



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`i`Li i}-iV>>}ii>Vi*}> -* -*>
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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
i`V>`iVV} -*v`i`L>>]>] i>] i>

]>`]>Vi]i>]Vi>`]>>]>>]i ii>`] >]
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7` >
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 /ii}v>LiiVwi`vii>>Viiii->>Li
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 >ViiiviiVwV>>VVi]L}`>`vv}`>i>v>Vi}
universal electricity accessbut 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
ii}ivwViVi>ivvi>ii`vViLiVi>i>LiiVV>VVi
expansionwith the emphasis on clean energy.

Emerging and innovative energy service delivery models offer unprecedented opportunities for private
iV`ivv}`iiVwV>>`>VVii>}i>iiVV>VVipLvVi
can create the necessary environment for them to be replicated and scaled up.

INTRODUCTION

W
>VViiiVV]i>>v 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
}i   } v> i}\  L- The State of Electricity Access Report (SEAR) 2017 begins
ii`>i>VViiiVV]>`{ with an examination of the critical role of energy toward
billion people still rely on solid fuels and kerosene for i>Viiivi- ]i`i>>v
V}>`i>} >`7` > ii i>viiVV>VVi]L>i`iiViL>
}wV>}iiVi`iV>`i]>Vi}i> />V}>i >> >`7` >]
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. iiv>>v>iiiVV>VVi]
 -iiLi ] i ->>Li i} v  Vi>ii}wiVi]>`ii}}
(SEforAll) initiative was launched with a call for: (i) universal and innovative service delivery models can accelerate
>VVi  `i ii} iVi  `Li i }L> progress on meeting the goals.
>iviiii}ivwViV>``Li 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- }viiVV>}]>V>>]}i`i]>i]
i>- ]V>i>vi}i`> i>]v`]>`>}VipV`}ii}iVip
v ->>Li iii] >`i`  -iiLi  V>i V>}i] ii} ivwViV] >` iL>i`
x>iV}>ii}>iv>Vv w>V}i>i>i`>ii`vii
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>>>i>>`iiiV>-  LiVi    }ii] `] i
lenges that the world faces. >iiV]VVi}>>]>`>Vi

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
>ii>`i`iiVV>VVii>]
FOR SUSTAINABLE DEVELOPMENT?
insights drawn from emerging innovative business and
`ii`i/i- ,}>i`>`wi> ii>>V]iiL>`>}iii
i\ that access to modern energy services is a necessary
iii v >i>} i >` L} >i`
Why is electricity access critical for achieving the 2030
i7ii}]V>i}}]v-
Agenda for Sustainable Development?
Li]  i iVV }] iVi i]
What is the status of electricity access? i>` ii] >`  > `iii
Sustainable energy is the seventh goal of the 17 UN Sus-
What are the challenges and drivers of transformative
>>Li iii>- ]>V>ii
electricity access?
>VVi  >vv`>Li] i>Li] >>Li >` `i
Why is it important to explore synergies between ac- ii}v>wi>}i`V>i>i>iiVi
Vi]ii>Li]>`ii}ivwViV can be designedsuch as boosting the share of renew-
able energy in the global energy mix and doubling the
What are the emerging and innovative business and
}L>>iviiii}ivwViV "
delivery models?
ii] ii} V> VLi  >Vi} i
/iiw`}viSEAR Report 2017 are that urgent i  -  }i "  ii v > -  >}i
measures are needed to speed up access to modern `V>i>ii}iViVi`x{i-
energy services or there will still be several countries in Vivi>}i]>}VV>v>Vi-
]-L->>>vV>]>}wV>i- ies to recognize the key interlinkages of energy and the
Vi>}i v i > }}   }` >` `i `iii >}i`> 6i>]  /] >}
vv}`>>ViLiVV>]Li>iLi 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
}]Vi]>i}V>}]i}>] SDGs. Studies of power outages indicate that lack of
and incentives. The good news is that lower costs for ii}`ii>`>v>>wiipv
ii>Liii}iV}i>`>`i>iii}ivw- i>i]  ] i 7` > ii -i
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 >LxiViv>>>ip>`}i>i>>>L
Vi>ii}p>]ii>Liii}>`ii} vii}>Liii>`iVi]L]
ivwViV/ii>>}}ivi>iiV- >`i`V>>Liiw>i``>i`ii
w>Viii]>}iVii>i  >``] >V v >VVi  `i ii} iiV>
place for investors to earn returns on their investments. }`iiVV>V>>V>iVV}]
while access to modern energy services can stimulate
growth and employment opportunities.

BOX O.1

Targets for Sustainable Development Goal 7

U ]iii>>VVi>vv`>Li]i>Li>``iii}iVi
U ]Vi>iL>>i>ivii>Liii}i}L>ii}
U ]`Lii}L>>iviiii}ivwViV
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V`}ii>Liii}]ii}ivwViV>`>`>Vi`>`Vi>ivviiV}]>`i
investment in energy infrastructure and clean energy technology
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iViv>`ii}Vi]>V>i>`iii`Vi]->>` ii}
->i]>`>`Vi``ii}Vi]>VV`>ViiiiVi}>v

-Vi\1 
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 ii}}i>iiVwV>i}ii-


have lower access to modern energy servicesa problem ` Vi]  i >}`i >} V`i>L
that is most pronounced in Sub-Saharan Africa and South >}Vi >]v>ViVi>i`L
>] ii > >}i >i v i > `ii`  iVi]iv>Vi>>vviVi`>>`
traditional biomass for cooking and heating and lacks ,>>]]>``>]v>ViiLn
access to electricity. Poor households lack the resources to iVi >`i i >]  ii] iVi `i
purchase modern energy services (especially when there is >>iLiiwviiVwV>V>Liii-
>ViVV>}iL>i`iii}Vi] timated if the endogeneity of a household is ignoredthat
>iiVVi>ii]i`>V} ] iiVwV> `i   >vviV Vi L Vi
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`i>i]}iVii`>ii-
v>}Vi/iii`i>i]i`i ing to get a connection as soon as the grid arrives
iViV}L>>`iii`V>]>` >V>viViVvii>ivL`i`]
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- Vi >V>`>
ing and phone charging). viii]iLiiiii}>`
>``]i`}`vi>`>`> V>iV>}iv`/iii}i>>
V} i` >i LiV  } ii v ` > VL]>}ii>i}iii}>i-
] V  >V>i`  } >i v > }ii}`V>`i]iV>i
>`L`]iiV>vi>`V`i>i V>}i V> ` i ` ii} ip>
the greatest exposure to this pollution. Access to modern iiii>iii]i>iii]>i>>>L
ii}iVi]ii}ivv>`>Vi`V- V>}i] >` ii>i Vi>i >vviV  >`
LVi}L>]}>V demand of energy. It is particularly challenging to esti-
i i v *] V> L>> i`Vi i }i mate future impacts of the energy sector on climate
costs to the household from diseases associated with high V>}i]>iv>V>iV}>-
levels of indoor air-pollution. Several studies estimating the >i]i}>v>Vi}i>>VVi`i
Liiw v iiVwV>  i`  > L- 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 electricityand the
`i>`vi>vviVi`>iVi`i>  }i >VVi`iwV Vi v iiVV >VV
ii]>iiii}ivi]`i>` vniVivi}L>`iwV}i"
vii}Vi>i]>`ii>} iii>`{]iiii>`>ViiiV-
have to account for spillover effects. wV>]i}L>iiVV`iwV`iV}v
]ii>i>iv>VVi`-  L   Lp>` i }L> iiVwV>
ern energy services to contribute to achieving the other >i } v  iVi  nxx iVi *}i
SDGs if interventions are designed to operationalize the  > iiVwV>  i`i]  i }L> >
linkages between electricity access and other sustainable iiVwV>>iVi>}viVi
`iiiV>i}ipV>i>]i`V>]v` 73 percent in 2014. Urban areas across the world are
iV] }i`i i>] i i`V] >` V>i already close to universal access at 97 percent. Although
change. L>>VVi>i>iii>iii>x
i>]  ii i> > > >Viii i
viewed against the rapid urbanization that has brought an
WHAT IS THE STATUS OF ELECTRICITY >``>Liii`Vi`}
ACCESS? this period.
 {]  L ii  i`  >VVi  } i i}] ii  >VVi  iiV-
iiVVp>L x iVi v i }L> >p tricity in the period 200014 has been remarkable in
and about 3.04 billion still relied on solid fuels and kero- ->}vxniVi]ii}
iivV}>`i>} >`7` > growth during the same period has been moderate: for
/i iiVV >VVi `iwV  ii} VVi- >>>`*>VwVviVi]``i >
>i`-L->>>vV>xiViv-L->>> >` vV>viVi]>iV>E
vV>>>`->iVi]vi` Caribbean (from 92 to 97 percent) and Sub-Saharan
L >>>`i*>VwVxiVi]>`>i- vV> v x  x iVi /i`  >
V>iVi>`i``i >>` vV>i- lacking access to electricity are rising in Sub-Saharan
Vi-L->>>vV>]iiv vV>]iiii`>i>VVi
`>i>VViiiVV]>`->]{ to electricity services. (Figure 0.3).
million people do not have access to electricity. How much improvement will be needed to get the
 i V ii] `> >i > > i i > world back on track? Progress has fallen consistently short
i` v i }L> `iwV   v iiVV] v i > } >i Vi ] i>} >
efforts in the remaining years will need to be stepped up to
0.9 percent for electricity (Figure O.4). At the regional
ii]>iV>] >>]>`->Li>Li
i>Vi>>VViL]>}V`v
FIGURE O.2 IPFKCJCUVJGYQTNFoUNCTIGUVGNGEVTKEKV[CEEGUUFGEKV V>}iiVV]V>}>-

6QREQWPVTKGUHQTCEEGUUFGEKVKPGNGEVTKEKV[ ] >`  > V>}i  V> }i >`
w>V> ii  Vi>} >VVi ii]
Access decit, 2014 Sub-Saharan Africa is falling behindcurrently growing at
India x{iVi>>>}>iii`i`n{iVi>-
Nigeria ally to reach universal access by 2030.
Ethiopia }i>VVi`iwV{viiVV>
Congo, Dem. Rep. ii}>]iiiVi`>}v
Bangladesh xLLLi>iiL>]iyiV}
Tanzania rural-urban migration. This implies that the number of rural
Uganda
households for which access needs to be created will sta-
Kenya
Li>`Liy>i`L>}}
Myanmar
urban connections may be perceived as lower cost and
Sudan
iivii>iii>>ViV]i
Mozambique
V>i}i iii` L L>  ii i}>
Madagascar
Korea, Dem. Peoples Rep.
>`w>V>Viiii>i>>VVi
Angola attained. A further challenge is presented by the recent
Niger spread of the rapid growth of households from devel-
Malawi i` Vi  `ii} Vi >`}i {]
Burkina Faso >`L]*ii]>`{
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>V}i`>`viiiii`v>Vi}
universal access to electricity provides a high-level esti-
0 50 100 150 200 250 300 >i v ii ii` v f{x L > i>] >}>
Source:  >`7` > >V> ii y > > i v > i>i` f
Note:/iiVi>VVvi>niVivi}L>>VVi`iwV 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: >>v >`7` >

/i 7` > VVi ii `i `i 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
i>>VVii>VvxVi>}iiiVV
>VVi`iwV/iiViiyiV`vviiVi- 1.0
>>`}i}>>i>V>V]>`i Additional progress
can be used to give a global estimate of access investment required due to lag 0.1
since 2010: +0.1
ii` >`7` >]x/i`i]L>i` 0.8
i/i>i]>iViii
of access that would be used to meet the universal access
>}i] >` >i  `>>V>  >vviV i 0.6
VviiVwV>,i>V}i>>VVi>/i
(enough to light a few light bulbs and charge a mobile 0.82
iii`iiiivfxL>- 0.4 0.69
> V>]i>V}i>>VVi>
/ixv{}`i`iiiiv
0.51
fxL>>
0.2
 ] i> iiVV >VVi   Li i L
]i}ii>i>i>i7ii>L- 0.19
lion people in Sub Saharan Africa alone may gain electricity
>VVi L {] `i  > }] > i>i` 0.0
19902010 20102012 20122014 20142030
xiiii}>i>VVi  Historical Target rate
2014). One tool that would help facilitate the effort would reference
Li > i > v i>} i iiVV >VVi >}i] period
beyond the traditional binary metricswhich can be mis-
Source:  >`7` >
leading because they do not capture the multi-dimension-
>viiVV>VVi/i7` >>` -*>i
working with partners to promote broader adoption of the
i >i > i i } >v v
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? Vi]ii}iViV>Li`i`Lvv}`
]V>*6>iiV>`-
i>Vi>iLii}ii> ucts. These can be deployed faster and more simply than
vi>`ii>V>]>i}i]>`iV 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- >VVi7i}iiVii]ii`iVi
 > >i ii}i` > i >>] L>i>] >`   i ii` v i } Vi] ]
multilateral levels. >i}V>}]i}>]>`Vii>>i
 iiVV] ii} i `i>` Vi>i` L ii
Vi>i`>VViv>>V\}`iiVw-
V> `} ViV  L>] iL>] >` For rapid grid-based expansion, lessons from successful
>>i>>`vv}`iiVwV>}V- countries suggest the following main drivers: (i) there needs
iiV}`i]>i``iVi to be a sustained government commitment over a long
and systems at the household level. These two approaches i`viii`Li`i`V>i`
>i`vviiV>>iii]ii`vvii>- >]ii]>`i>`iiVwV>}>
`ii]>`i`vviiiV}i ii`Lii`V>Liw>V}iV>-
/ii>v>>iiVV}`]Vi port public sector programs and to attract private sector
Vi> i` v L>`i} >VVi] i >i>`i>i`Li>`i`ii
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`>>iiVVi``i] v}}`>iViV
urban areas. Although progress has also been made in without having to wait many years for the grid-based distri-
>>i>]iLi>i}>v>]LiV>i> L i  i>V `> Vi ii]
}` iiVwV> }> i ViV} >}i there are challenges to be met in order to ensure that mini-
Vii>ii}}`]ii>i> grids are the least-cost solution and continue to provide
>>]}ii]>`>}i> >vv`>LiiiVViViii}]>`>
the last to be connected. key risks are mitigated to offer viable business opportuni-
The biggest challenges to expanding grid-based elec- i } v ii ii >V>i` >`
wV>>`>VVi>ii>VvvwVi}ii> }>i>i]iiiiLi>`i>ii-
V>>V]  > >` `L v>V- ii  Vi V }` >vv >i > }i
i]i}Vv>>`ii>i>] >}`L>i`>vviii>}wV>L`
the inability of low income households to pay high con- i}`]V>i}i>v
iVV>}i]>`ii>w>V>>ivi- households.
ties. The investment needs for a program to expand
>VVi>>i>>i>}i]iiLiiVi
Where both grid and off-grid solutions are being devel-
>iiLivwViViVw>V>
oped, it is important to ensure complementarity of these
support. A very substantial barrier to household access is
i>i]vi}`i>Vii}`
i V v ViV  vV>] L`i` ViV-
iVi>i>]`i>`v}`iVi``iVi
VviiVii`iVVii
sharply and the investment in the stranded assets would
i]>`i`>i>iiviiv
LiViiVi>Li]i>LiViviV>Vi
iV>`>V>]iV`i]i>-
>``ii"vi]vv}`>i`ii-
}]>`iiV/iivii>i>V>}i`
oped in geographic areas far from the grid to provide
v>}`vwVvVii`
communities with electricity services sooner than the
afford the service.
}` />i i V>i v
>L`>] ii] > > ` L
Energy services can also be expanded using off-grid
/iiL>i>{i>]ii>>>Vv-
iiVwV>] V i V >i }` > 
icy on what to do when the grid reached the mini-grids.
}` iiVwV> "i >>V  }`p-
i>] i > > ii` L i i}>
>i`}v}ii>]`L]>}iv>Vi
issuing licenses to transform the mini-grids into distribu-
 > Vwi` }i}>V> >Vi /i >i >
tion utilitiesbut it underscores the need for planning
V>>>}i`]>ii>7v>i`V>>V-
upfront for the eventual arrival of the grid to give inves-
]ii>i`>`]>`ii>>i>v
iVw`iVi`ii}`>>`
xii>`i>>VV}`p
remote areas. The study recommends four options for
>i]V>i>}i>7v
when the grid arrives:
V>>V]>i>}iii]>`Vi}>>`v
nii Small Power Distributor (SPD) Option where the Small
viiV>Liii`Lvvi`ii Power Producer (SPP) operating a mini-grid converts to
Lii>Li`]>*6]L>VL]>` 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- ii>Lii>`vi`ii}Vix


ty to the operator of the national grid but no longer to >i` >  `iii` Vi i} ivwViV
its local customers. >`iV}i`Vi`i}v}L>w>ii}
demand by almost two thirds (0.7 percent increase as
U "iii-**i`L}`
i`ii`iV>`i>i>}iiVi/
to the national grid operator or other entity designated
} > Lii `i L }wV> i`V  i
by the regulator and receives compensation for the sale
Vvii>Li{xii`>Vv-
of the assets.
`V} L>i>` i v i`i> > > f
Combined SPP and SPD Option where the SPP 7p>`vfx7pV>i`
converts to an SPD and also maintains a backup >Lf7vVi>Vi7`>`
generator as a supply source to the main grid and re- >*6Viii]>`}iV>Vi
tail customers. Viiii>}ifnvi`]>`
fnvV>i>*6
>vi>}Vi]ii>Vi
As renewable energyVi}>ii]
i}iV}`iiiiVV]ii
grid integration is emerging as a key issue to accommo-
L>  ii > >i>]  > VivviVi >i
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-
elswhich 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-
}V>i>Vi>`ipwii>]
structure in many countries was built on the basis of
  >``] v iiVV >VVi }>  Li
controllable energy sources and organized around the
>v>i]iV>>iii`Li>`-
generation-transmission-distribution model. The good
`ViiviiVViVip`iwi`>>}V>]
i>ii>Liii}iV}i>iyiLi]
ViV>]>``>>Vi>iiiiVV
`>] >` V> Li i`  > Vw}>]
services as direct inputs to the production of goods or pro-
ranging from those that are grid-connected to those that
viVi 1 * -x
ii>
are off-grid.
>`6i,>>`ii>i>]V>ivi
}`>iii}}>>i>ivVivviVi
inhabited by low-income households and lack electricity
>`i>LiiiVwV>v>>i>}i"
]>>iii>``Vi
iVi` > i` v > ii >`
i ii v iiVV  >`i >>>Li  i V>i]
achieving universal access by 2030 will be targeted to
Vii>>ipV>v>V>vVw-
}`]i>>iiViV-
nance and vocational trainingmay be needed to both
ing from renewable energy generation. Hybridization of
>iiLiiwviiVV}>>`i
}`Vi>}>]iiV>Vi
long-term sustainability.
that have been powering exiting mini-grids with diesel.
]iiV}}>i>VV>i
ii]ii>}iiVi>i
`iV`i    >>  i> >VVi] >-
the use of renewables and decrease the share of diesel
>Li }ii Vi  Li ii>] >
V ` >  ii} i> }`
VVi`6i> ">Li>}
can also contribute to the socioeconomic development
modern energy provision part of a broader vision of social
v > i} i`i `} L>V ii} iVi
and economic transformation. In many countries with low
}} >` i V>}}] i V> vi `Vi
iiviiVwV>>VVi]iii`L}`>`
>Vi V > }] }] >` Vi}
off-grid solutionssupported by an enabling environment
A recent comparison of diesel and hybridized mini-grids
i}Vi]]>i}V>}]i}-
>iiivV>]>]>`>iV>]i`
>]>`Vii
i>>}>}}viVi]`ii`-
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
V`} >`i>i Vi >` i}>] >V v
RENEWABLES, AND ENERGY EFFICIENCY?
proven business models for commercial roll-out (notably
ii} i }L> >}i v iiVV >VVi i v V> i] >` >V v >VVi  }i
>Vi} i *> }iii }> v } }L> w>Vi >Vi>iVi`ii}
>}  Li
  ii > > v >` grid policies to address these problems. India has released
Vi> ii}p> ] ii>Li ii} >` ii} > `>v >> V v  >` V }`] V] v
ivwViV-vii>Liii}iV}i >`i`]  Vi>i i i v>i >` i-
}}>>iVi`ii`>i]ii} i v `ii} x7 V>>V i i V}
in the global economy is starting to decouple from ener- `iV>`i i> i} ,i}>
 >
}i>i` V>L i] >  i >` v Vii`*ii >vV>`}ii>i]`Li]
ii}ivwVii>i>`iV}i >` i iiVVpi w >i V>  i>
-Vi ] i ` > >``i` i ii>Li 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
x > Vi> V>>V] i ii  7i>}i
x vii i S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2017

BOX O.2

Vietnams National Drive to Achieve Universal Electricity Access

6i>iiiVi`i>i>ii}V> iV` ii ii>}i` v i] Vi >`


Vii]i}>vi>>VViiiVV local governments.
>Vi>LiiiViviV>}V`/ ii]ii>>>`ivvLiiii>Vi>`i
Vi]ii]ii`}>`>`>}- >>L v i iiVwV> ivv   i` ]
ii>v>>i>`ViViVii >i`LiiiviVV>>
circumstances change. >` vvii` } i] >` i i i>Li` ii
{]i6i>>i`i>>VVi`i] ``>ivwViiiiViiw>V>i}
iiVwV> >i >  { iVi] V>>Li  i i>i i /i Lii >i] iivi] i`
>VVi>ivii>iiVwi`VivV> ] >>Li>i]>i}ii`vVi}
i>i>`i`iVi]>`L]>in iVi>>`LiVV>>`w>V>>L>`-
iVi/`>]i6i>ii>iivLi- >]i`ii`V>iiVwV>iiiV-
iwviiVV]>>VVi>iiiVi `>i`>}i>`ii>V>i`
6i>iViVVi>Li}>>V> viiiii>>LLi`Li>>] 6 
iiVwV>>>V]L>i>}i>>Vi 7i>iiiv6i>iiVwV>>>V
iiiii>>ivv>i{q]i >ii6i>]ii>iii>iiV-
goal was to trigger fast access expansion by empowering wV>ivv\
communities and local authorities to build their own systems.
U 6i>>>Vii`i>>VViiiVV>}i
}>i]i>i>>`iVi>]
`ii}ii>i}ViiiV-
V]>vvii>`ii}>>iV>>}
wV>] >`  }i  i> >` i iVi>
`iVi>i` >>V]  > i i` i v i
change course.
>> 6 ]V>i}iiVVL
these newly created mini-distribution entities. This was a Fast progress and a record fund mobilization was possible
i`viiiv>iiVwV>]i>i} L>}iiVwV>>>>]i}>}}Vi-
v{iViiViiii>p>i> >]i}>]>`V>}ii]>}>V-
munities.
U >}i>>ivV>Vi]
FIGURE O.5 'NGEVTKECVKQP$GEQOGUC0CVKQPCN2TKQTKV[ >ii>}`i>`>`>}i>v

8KGVPCO*QWUGJQNF'NGEVTKECVKQP4CVG i>V>}>pi>Vii]iiV-
wV>vv
100%
U /i>`ivvLiiiii`>`>>LviiVw-
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
iiVwV>}>
40% Take off
phase U iVwV> }> `  >i > i iii v
20% i>>w>V>>L

0% Source:- ,
>i-`\6i>>>iiVwV>}>]v-
1994 1996 1998 2000 2002 2004 2006 2008 2010 2013 coming.

i]  i >` `iVi>} V v >` The stand-alone electricity product market is expand-
>i>i` ii>Li ii} i] ii>Li }>`]>` >}>,ii>Vi>ii>i
energy is no longer an expensive solution for electricity v V> `V  } v fxx  
>VVi -> >i] > Li i V>}i] >` {  f{ L  { L>] i  
certain solar home systems can provide Tier 13 energy households are now powered by solar home systems
iVi>iiL>/>V}>i/i >i` >` n  i` >i i` L > V>i
-ivLiii{>`iViviVii` `i]>VV`}, i>i*V>
v }` ii -> `] > >i > V>] *6 ipV V> `i i >  >
V > ` i x  > } Liiw} of power and are primarily used for lighting or powering
iii]i>i>f>}V> electrical appliances (like radios or mobile phones)
ivV>v>i>i>>i>}ivf>>]- >i`iii`>`iVii>]`iiv>
ply by not using kerosene for lighting purposes. Vi v > `i] i i v } ivwVi  
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 * , {

}}i]>`iii}iViv>iL- i ii >VVi   Li Vi>i`  w>V> V-


ness models. straints that tend to favor products with the lowest initial
So what are the biggest obstacles that countries face in V] ii } > `V  i ii}
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 v V  > >V v i> Liii vi>
viL`i]i>`i>iVV>vi>`>- communities engaged on electricity access and on energy
>}ivii>Li]Vi>}iiVi]>>Vv ivwViV >`  > >V v vV  i i> ii}
}`w>V>]>`vwViVi- iV]viLiV>ivVVi>-
i>i]iiL>ViV>Li>i>i`L ing increased grid generation capacity.
the creation of a pro-renewables policy and long-term gov- i ] ii >i > i>i v > >VVi
iiVip>`v>i]>- >` ivviVi `i v V>} ii} ivwViV
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
i} ivwViV] Vi ii`]  Li} ii ViV>>`V>>>}ii]Viv]
increasingly as a tool in delivering modern and clean and consumer awareness. One relatively simple way to
ii} iVi  i`Vi i V v ii} ] i ivwViV  } `L >vi]
iivi >} >VVi i >vv`>Li  i>i] which are an integral part of every grid. Transformers are
ii} ivwVi } i} ``i   >`V> >}L>>`i``V]>`>i>`iii`>`
i`Vi i i >` V v i > *6 >` L>ii `ii} iVi V`} >]
>] `>]
ii`i`  `i iVi] >} ii iV}i iV]>`6i>>iiiii}i-
>vv`>Liv>i>ii}i i`x]> formance standards or labels in place that regulate or
i>{Vi>`i>Vi`ii}ivwViVVi] v>V>i i >> v }ivwVi >vi
i>i>nVi>`ii}ivwViV>}i 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>`i}ii}ivwViVv>}>L}- 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
`i  >>Vi >` ii i`  i >- i>>>Lvii}ivwVi>>Vi>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:*>`i]i>x

>Viiiv}ivwVi >> WHAT ARE THE EMERGING AND INNOVA-


enabled the implementation of various modern lighting TIVE BUSINESS AND DELIVERY MODELS?
}> >` >i  > >` iiVwi` >i> 
the Royal Swedish Academy of Sciences put it when >vVvii>iiVV>VViii
>V} i { Li *i  *V\ /i   `>  i>V} ii }  ii >i>] L  
>`}i>ivVi>}i>vvi increasingly clear that the traditional approach to electric-
v i x L ii >` i `  >V }`iivwVi`L>i`iiv
>VViiiVV}` iiiii] iiVVi}wV>viiL
it can be powered by cheap local solar power. i]>`iViVVii>i>pV
i}ivwVi>>Vi>iii`i`Vii demand less electricityare high. Consumers cannot
ii} ii V ii`  V> iiVV >vv`>}ivV]>L>ViiV>Li
access programs. Shaving a single watt from an off-grid >Vii`  i > ii`i` i`]    
>>Vi>`ii>>>V>}iV] vi>Li1iVi]v}`iiVV-
i` iVi]  L 6>  x ->] tems has been based on funding allocations from public
ii}ivwViVV>>i>}ivv}`>i- }>]L>>V>>Li
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 >V>>i]Lii>i>-
i`Vi`L>V>xiViviivwVi>- ited number of successful installations. Experience from
>Vi >` }i` > *6 >` L>ii >i i`] such approaches to energy service delivery suggest that
i `ii} i>i  }i>i ii} iVi the best models have a number of common features (Table
6>  x /] >`>Vi  ii}ivwVi "\V`i>vi`i>`]ii]>`iV-
`iVi>i`i>iLiiwv vV>Vi]V`}i`ii>
the relatively small amounts of electricity available to them. Li >i i  } >i >}
i>`v>}>}i}LL]
->`  iiV>]vi}ii>`i
lamps use provide more and better light and consumer >iiViVi`i>`>`>>v
iii}]i>}i}ii}iiiiV- >i`>VV>V`VViv]
V`iViV>v>>`>>}i/6>`>- sustainable clean energy solutions.
ances (Figure O.7). />>>] " >wi>V>i>iiVwV>-
]Vi>>Vi>ii}>>}i ii>}]ViVqV-
in ensuring universal access to energy services. Plummet- tomers. The overall goal is to electrify 1 million people in
}Vvii>Liii}iV}i>`>`i>i i>]>Lx]i`pVi>>
ii} ivwViV i>i vvi > ii` - Liii  >` ii} i V>i >i]  
nity for countries to think differently and be creative about `iii>L>`>`i i>]>*i]
electricity access expansion. a developer of solar micro-grids and commercial off-grid
i]>`ii`iiV]V`}>}i
`i]>Lii]>``i`vi`
OVE RVIE W xxi

/ii >V> V`i ii V }`]  i *9 `i V> >i i v  >>Vi 
i`ii>i>ViVii w>V}iiiVi\
vi i> /i ii i} iV >i Lii i-
ii`  >i  Vi] i >}i iiV U `iwiviiviViViVii-
V> i>]V>V>iL>>i iiiiv]L>iii>vi
and as an off-taker (with a PPA) from the micro-grid system. ability to use it. Payments are typically made on the
*>>}*9`i>iLiViVi>} basis of when the consumer needs power and can af-
attractive in many markets. This is based upon experience ford it.
}}i} >] ii `i V> V`  ii The consumer eventually owns the system after paying
>i]ii>VivviVi>`>iii}- off the principal of the system costand the consumer
iLi>w>Vi`i>>Vi>vv`>Li  >i `Vii >i] V>  > `>]
V}vi>}iVi>>`i>ii ii]L>iiLiiL}>V>
iivii*9>V>iii w>V}>>}ii
`iii}iVi>>Vi>i>]
 i> ] Vi Vi i`}  iii] }}L>>7` >>v>i>i`>
V>`i]L>ii]>`i>ii}iVi ii >i  *9 V>i   Vi] > v
*`i >i Vii`  vvi > >vi >i i- them in Africa. They use existing mobile payment systems
Vi]Vi>i}}>i>ii`i- V>VV>`vviiViV
iLiiwv
tem continuing to function. Vi>i`>vv`>L]Vi>i`Vw`iVii`-

TABLE O.1 An array of emerging delivery models for mini-grids

CURRENT ENERGY
COMPANY OUTREACH TARGET COUNTRIES SOURCE SIZE RANGE FOCUS/INNOVATION

"  i] ii />>> ->]L q7 ->`>`>vV>i


 {Vi i>  `ii  >L>ViV`vw>Vi
Cellphone payment
*"7 , V}` V}` i> -> q7 ** ViiiVv
in 10 years reduced risk revenue stream
Rent-to-own agreements
1-*"7 , x]i x]i `> >] xqx7 VVixi>>L>V
 `]ii> `]] />>> -> L> />}i}nqi>>
 Lii Lii]   7> ,>iii
  x>}    i>i>>
Inclusive business model
 -1- -}``iii -ii}> ->]7` xq7 V>V>`ii
in Africa with related management Sale of electricity blocks
 i>`V>V   
 V*i V`ii
ipyiLi>vvEV
credit
"* {] xi i>]/>>>] -> xq7 *9Li`i
 i> `> 1}>`>]   ->--] ELii
charging services
*"7 ,  }` x}` i>E -> q7 }`V>LiVi>
, 7     />>>]   }`>`>`
,9   <>L>
*"7 ,6  {i]x >}i i>] -> H7 i}>i`iVi
 iiH  *i   Liii
 ViV  vV>>   vi>i
expansion) Dedicated softwarepredict
iiii>
,1*"7 , iV iV />>> ->]L> 7 i`iL`i
 6     `""i>i`i
Power) Pre-payment meters
-*, / ,  >> wi`>}i >]vV>] -iViv qx7 ii}Li>i
 }`  >iV> >iv  i
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

V]>`>VVi>i>ViiViii] MOVING FORWARD


*9ii>>VViii`v>
}wV>>w>V>v>Vi]>`i`Vii `ii}Vi]>`>}`Lii
V>`v`}Li"*->>vi i`> >>V v } L> i`]
Vi`i>iv>w}`iiiVivVViv whose number is likely to rise faster than population growth
*9>V>]>}ViVi`i>] because of large rural-urban migration and the downward
ii>]/>>>]>`1}>`>>i i`i`iii]>>VLi
ixiiLi}>``i`ii`> V vwVivii}i}>vi>>VVi`-
ern energy services by 2030. Developing countries will also
Vi>}]i>ivv}`>i>i`i>- need to use mini-grids and off-grid supply to provide access
ing strategically with a set of factors that are opening space iiiii`]i}L>>
vLip>L]}L>`i>ii} predicted to remain roughly constant during this period.
ii}>vLV>`>iw>ViVL} }`>`vv}`ii}>i
ii  >>Vi  `i>}  >vv`>L iiiV} >` v>  V] LiV>i v iV}
i  Vi  i}>}}  Vi >`  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 i>]>>``L>i`}ii>
w>V}`ipV>i>}Li>Vi`i are approaching parity with traditional hydrocarbon-based
vviw>Vi>`iiV>i>vV generation. The very high on-grid distribution costs associ-
}`>`>ii--/iiw] ated with connecting remote households in areas of low
> i>Li`  i > vi i>] `i ii> population density will mean that few of these households
i>vw>V>]V`}i>>}iV>i will be able to afford grid-connectionunless there are
ii]}V>>]>i>>}ii]v subsidies available to cover a large fraction of these costs.
>}}i}>] >` iV> "i >  vvi i Even schemes of spreading repayment of such charges
investment risk that arises in this sector has been to allo- iii>i>>iiLiw>V>>Li-
V>iiLVv`}/>iV`ii- out subsidies.
opers to offset upfront development costs. Recognizing ii]ii>Vi}`]
iii`vVi>>}i]>>}ivi>- }`>`vv}`iiVVii>i
tional development organizations is active in facilitating through a number of channels: (i) a long-term commitment
ii>Livi`ii`iii]V by the government to the goal of reaching universal
L`i>i`vwV>VVi>`iv>i>i >VVi  i Vi> v  >` i}> 
Li} i` > V` Li i ivviVi] V`} v>V>iii>vivvii}>`
iv>ViL>i`L`i]>`>`i`L`i iiii`i`]iw>V>iii-
for capital and operating expenditures. `>iV>>vv`>VVi]wi`Vi
]ii}}>`>iii}iVi`ii 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>vViVi>iiiVi>iiv vices goal can be expected in the coming years with the
iLiiV>i`>`V>i`]iV`>VVii- 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. }`iiVVi> VVvV-
tries succeed in creating the enabling environment to
de-risk and to attract the much-needed private sector
investments.
OVERVIE W xxiii

REFERENCES
>V],]>`> i}] VV >`i]-]->>`],>`  >i
>`*i,i`Vi>i,ii7` >] 7 iiwv,> iVwV>
7>}]
Evidence from India. Policy Research Working Paper
x]7` >]7>}]

>`}i] iL>{]{7i-`Li7i`
About the Rapid Growth in Global Households. www. >]-]>`,>>iiVwV>iv>i
V>LV}{`V}i` improving? Non-experimental evidence from rural
LLnn >V]i>\V*i>,i* V
Vi\>LiVi`i
>`L]] *ii]>`>}{}
{n*,>i{n`v
term dynamics of household size and their environmental
implications. Population and Environment. *>`i]]]>VL]7*>]>],ii]*i]
>`>ixPowering a Home with Just 25 Watts

ii>]>`6i>}`7\
v->*6\-i vwVi>Vi
> >Li
Productive Uses of Electricity in Tanzania. IIED Working
Expanded Energy Access Using Off-Grid Solar Power
*>i ]`
Systems. ii]
\>iVi ii >>>L
VvV>1}}i`"VLi
*ii]]
6>Vi]>`>`vv` i
European Union Energy Initiative Partnership Dialogue ,> i\V>v>Vi>`i iVwV>
Facility (EUEI PDF). 2011. Productive Use of Energy-PRO- Trap. World Development\n
1- >>v iVwV>*>Vi<
-]x/i,iv*`Vi1iv iVV
Eschborn.
,> iii\
>i-`v8i/>>`>
European Union Energy Initiative Partnership Dialogue >iv>6>}i]6i>`ii`i
>V1 * , {`*V/ -`*iV-*
iV*>i
\ii*>`Vi,iVi
/iiL>] ]
i>Vi]/->L>>>]>`
/}`*V/-i{ `v
Vi{i 1\->*i
i]"}i,}i] i`]" >` *`Vi>``
> ii iVwV>>`
Energy Access and Electricity Planning. Special Feature Renewable Energy in Africa. Directions in Development.
Paper Contribution to SEAR. 7` >
i>> i}}iV ]{vV> i} 1 ->>Li iii>->>Li
Outlook: A Focus on Energy Prospects in Sub-Saharan iiii`}i*>v\
Africa. Organisation for Economic Co-operation and >>Li`iii}`}
iii]*>
6> ],x L}iL>*>Viv*}i
i>> i}}iV>`7` >] v i} vwViV\}ii>v
Sustainable Energy for All 2017-Progress toward i} vwViV/iV}>v"vv}`
->>Li i}7` >]7>}
V> ii]
\
-*
>`i]-]  >i]>`->>`7iv>i 6i>] i}>`i- 
Li
>Vv,> iVwV>\*>i >>> SEAR.
v6i>Economic Development and Cultural
7` >>` {->>Li i}v
Change \xq
q{\L>/>V}>i7>}]

\7` >\`>`iinx
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 womens empowermentbefore 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.
>}  vwVipiii v >i>} - /i V>i w` > >} v i> >VVi
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
>VViivviiViVwVVi`i 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 ]`Lii}L>>iviiii}ivwViV
By 2030, enhance international cooperation to facilitate access to clean energy research and technology,
V`}ii>Liii}]ii}ivwViV>`>`>Vi`>`Vi>ivviiV}]>`i
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-
ii}iivw>V>iVi>i>iVV> `iViVyV}ii}>`}ii>
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
,`}i i > ] }wV> > v >i >i 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>viV>>>i]>`V>`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).
>Lii``ViV]V`}ii` *i >}i >i i>i`  >i > }wV>
to generate energy through biofuels. 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. `ii>iLiiwviV>i`Vi
power shortagessuch as more generation or transmis-
sion capacity, pricing schemes to reduce peak loads, or
HOW IS ELECTRICITY RELATED TO i ii }>`i > i i > v
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
-i    ii`  L i `> -
production time lost per year, and as a result, busi-
Vii>``Vi}`]ii]>`iVi
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-
wV> v iVV Vi >` i` >`  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).
]>ivwVi]>>VViw>Vi]>i]>
At the macroeconomic level, the proportion of GDP
>i>] iV}] >` > >wi` vVi  >
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. iVi>`i>Li>i`V>>` i}>iv>Vv}>`}i`V>>v>Vi>`vv>V>}


ivi}i>}iv> `i>i`V>

GOAL 5. Vii}i`ii>>`ii>i>`}
 ii>VViii}V>i>`}i}i`ii>]vii}
womens 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`Vii>>`>}Vi


 VViii}VV>v>i`Vi}viL{
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
>i-
* V >``V>iV`}>``i}ivwVi
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
ivwViV>ii}>

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
iVi]>>L>>}ivi]VL>`iiwV>] i>V>`V>}i>`i]>`V>i>``iiwV>>`
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. *ii>Viv>`ViViiv>>Li VVivviiVi>V>Lii>V>ivVyV>`


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
ii}ivwViV>``i>`>>}ii>`ii>V *}
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
Vi>ii>>`>vv>Viii
Lack of access to modern energy services is correlated to
>V>i`>i`Vi>/ii>}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 . Caldern and Servn (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-
i>,ii`>>>`}i
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 Vi>i  > /i >}i VL >
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-
>] i v>} > > iLi v > 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,
iVi>}iiVivwVi]vVi-
and perpetuating the lack of access to modern energy
Vi>}i  ii `i  > >`  iVi>}i
>iii>>``]ii}wV>
>`i>
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,
i>i]iLiiwi}viiVV>VVi>
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
}]>iviiivwViviiiii
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
ivwVi>>Vi]>i`iv
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 IndicatorsPoverty 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 employmentnota-
supporting value-adding activitiesfacilitating the accu- bly through higher household employment following
mulation of surpluses or savings that will enhance nutri- iiVwV> ii] i `vvi `ii`} 
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
-ii>`ii>}iLiiwviiVwV> no change for men (Grogan and Sadanad 2013). Similar
i`>Lii}}i>iiVwV>- 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-
vLiiwvi`>`>Lii>`i sis is needed to understand the different results (Bacon
et al. 2013). Several studies have estimated the effects of and Kojima 2016).
iiVwV>  i` Vip ii`i  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
iivii}ii`
percent in total income (Khandker et al. 2013). Consump-
 ii > Vi>i` }wV>  i `i 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
ii]iVi`i>iLiiwviiV-
sources (such as coal and oil) can have an impact on
wV>V>Liii>i`vii`}iivi
iVV}>`Lii]ii
iiVwV>>v>i`}i`/iiiV-
wV>>v>i`>Lii`}ip> Substitution effect: Constraints in energy availability
]iiVwV>`i>vviVViLVi can lead to substitution through increased labor and
can also determine whether or not a household is electri- vice-versa.
wi`}iVii`>ii}}i>
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 countrys level of
prefer to provide electricity to higher-income communi-
development (CDC 2016).
ties. These effects lead to an overestimation of the effects
viiVwV>Vi]>`i>i`L>i>- 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- wV>Li`i`iV>>Vi]i-
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'NGEVTKECVKQP$GPGVUKP4WTCN.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
>Liiv`iii``ii>Vi>`iV]ii>iii`
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 Banks
Energy Sector Management Program (ESMAP) in 15 provinces, covering the countrys 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: `iiVwV>>ii`iV>>ViLn
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-
wV>pxiVivi>`iVivi
EXPOSURE TO ELECTRONIC MEDIA: ` iiVwV> Vi>i i}  >` L i` iLi L
>Lii`>]>`>V}v/6L>i`>`iiVwV>>Vi>ii
use of mobile phone for conducting income-generating activitiesby 9.7 percentage points.
WOMENS TIME USE: Grid access increases womens 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
}>`iViLi`iLi>i>>iv}`iiVwV>i>i]
completion of secondary schooling increases by 3.6 percentage points for men and 3.4 percentage points for
iLiV>iv}`iiVwV>
In sum, about 25 percent of households in rural Lao PDR do not have a grid connection. So, expanding the grid
}`i`>i>`iLiiw]i}i}>VV`>iLi`ViV
has its own problemsnamely, outages and blackoutsalthough these can be resolved by increasing genera-
V>>V]vV`>>Vi>Liii`

Source: SEAR Impact Evaluation Forthcoming.

/WNVKRNGJGCNVJDGPGVUECPDGCEJKGXGF 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
ii}i>i`i> vi>`ivwViiV- 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>`>>}}>Vi>i`Liwi>`
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- } > }} v Vv>Li }i `}]
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 ii} >> ] V V> >i > }wV>
reduced. Increasing access to modern heating services impact on learning outcomes, while reducing risks to chil-
and replacing polluting and dangerous kerosene lamps drens 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
i}>vviii>LiiwLi} contribute to improving basic amenities in schools (such as
Vi> >i  >` } v` > >` 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-
>i}]>`>ii>i>`wV>` dance and reduce dropout rates (Bacolod and Tobias
V>iv`>>`}V} 2006). Lighting allows schools to run in the evening to
and refrigeration (IEA and World Bank 2015). (See SEARs 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). i-`i>`i>i}}>i>>
Further, reliable energy access in health facilities can stay at school to complete homework. Electricity facilitates
}wV>i>Vii>V>i\ access to information and communication technologies
(ICTs), improving learning experience through audiovisual
Without energy, many life-saving interventions cannot
i>V}>`>`iiV>iV]V-
be undertaken, and essential medical devices and
i]>`ViViii-`iV>i>Vi
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
}` iiVwV> Vi>i` ` i  i ii}
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
V} iVwV>Liiwvi`V>>Vi
skilled health workers (especially in rural areas), and
are also evident from the solar home system program in
providing faster emergency response, including for
> >ii]V>i`}`Liiw]--Lii-
childbirth deliveries. Every day, some 800 women die
wii>iq-->`> >Vi>i
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 ii  Li i}  yiVi i ii`>i 
number of successful childbirth deliveries, especially at long-term educational outcomes (SEAR Impact Evaluation,
night. Forthcoming).
VViiiVVV>>Vi>iiiv>-
Electricity access also enables mobile-health applica-
wi` i>Vi  > >i> ,> iiVwV>] >V-
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-
}] i} i`V> ii] >` Vi>} 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 i `i >i  > iiVwV>
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 ,>>`>]iiii}wV>Vi>i
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
i}wV>]>`V>>>iVi>i`iv (0.3 years for boys and 0.5 years for girls) (Khandker et al.
education, encouraging school attendance and reducing 6i>]iiii}wV>Vi>ii
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 i i > i >i] i >i  Liiw i
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 womens time allocation as they
ing higher completion rates and lower absenteeism in give up time-consuming drudgery and are engaged into
iiiVwi`V-`>]/>>>]i>>` more productive and satisfying activities. According to
the Philippines (Goodwin 2013; Kirubi et al. 2009; Valerio - ,>V >>w`}ii ]i
2014). grid connected households in rural Lao PDR spend more
time in income generating activities than their counterparts
Womens empowerment can be enhanced  }` i` i iVwV>] }` >VVi
In terms of womens empowerment, access to affordable increases womens 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,
i > >V> ViV} wi`] viV} because of SHS, women spend up to 62 minutes more
>i] >` Vi} v`  > vwi` } 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 worlds energy systemas
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
->`i]   Vi>} ivwViV >` `V] 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. }] iVV `iii] >` ii} ivwViV
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 > v vi] >` > Vi>i Vi}ii>} 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 povertydriving
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 iV]  ii>Li ii} >` ii} 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 worlds 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
>ii}`ViyiViivii] 32 percent increase in the New Policies Scenario and 12
increasing the likelihood of adoption and continued use percent in the 450 Scenarioin 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). SEARs 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 GranniesWomen 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 Sisters last In India, the Barefoot College in Rajasthan provides training to
mile distribution network taps into the potential of womens 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 citywhich would leave the commu-
to their rural communitys doorsteps. In 2016, an independent nity without someone to maintain solar panels and lampsas
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 LiV>}]>iiV>>>`yiVii
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
VLi  i` i>}] }> Vw`iVi] w>V> 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 Vi  `>Vi >}i >i v >`> L-
NPSor 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- }ii}ivwViVi> iii]i
jections is the one of the 450 scenario, these results are study assumes 420kWh of yearly electricity consump-
also based on IEAs 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
>Liii>Vv>iiVwV>Vi-
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 futureespecially in the case of large, long-
>` x } v ]  V`ii` vwVi  ii
i`] >` }i V>> V V > V>wi`
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- >V/iV>`Liiwviiii>i>
V>iviwiii}V}>i]V> outweigh the direct costs of building and operating spe-
vehicles and household appliances (Wolfram et al. 2012). VwV ii} iV}i] L >i i `vwV  >i
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 SEARs 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-beingwhile 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 womens empowerment. For those rea-
>v i V> v i i`V  vi sons, it is essential that the international community take
energy consumption and related CO2 emissions (Wolfram i}i>iV>VVi>i>V>
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 `i}i`>>>iiyiViii>V>>V
the scale of the challenge (Bazilian et al. 2012) and lead to nature within context. Moreover, dealing with the chal-
>`i>iVi>`iV}i >>>`*ii 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
`>i iii  `i i>Li >` >vv`>Li
energy to a large population without access, and facilitate
economic expansion of emerging economies. But on the
other hand, there is a pressing need to limit global warm-
ing to an average level of increase of 2C relative to pre-in-
dustrial levelswhich implies deep cuts in emissions
12 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17

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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 electricitywith 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
->]Vi>VV}vniVivi}L>>VVi`iwV{
Latin America and the Caribbean, East Asia, and South Asia will be able to reach universal access to electricity
by 2030assuming conditions of constant growth in electricity, constant growth in population, and no major
V>}iV>}iLii>VViw>V>ii
U ii]ii`Liii>Vip>-L->>>vV>p>}wV>iVi>}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}L>>iviiii}ivwViV>` `wi>`iVvivvi
double the share of renewable energy in the global energy. electricity access is measuredfocusing on the Multi-Tier
9i`ii}wV>}iiVi`iV>`i]>Vi- 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
}L> iiVV >VVi `iwV > `iVi` Vi ]
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-
V>iviV>i}i]>iiyiV>V`iw ple still lived without access to electricityabout three
viiVV>VVi>`iii>ip>]i- times the population of the United States (Figure 2.1). The
ability, affordability, and duration. iiVwV> >i >` }L> > nx iVi]  
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 waythat 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- >i}>L>]iiiVV>VVi`iwVii-
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 }L>>VVi`iwVpiipvip
electricity access, as presented in the Global Tracking do not have access to electricity) and South Asia (32 per-
>i /] V `iwi `V> v >V} cent343 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[CEEGUUFGEKVU
Between 2000 and 2014, Morocco and Bangladesh were
among the fastest growers in terms of improving the electri-
Electricity Access Decit 2014
wV>>VVi>i}ix]>``>>`
>ii
Others 3% East Asia & >}iVii}iLiviiVwi`
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'NGEVTKECVKQP2TQITCO
South In 1990, 49 percent of Moroccos 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%
iiL>i`>VVi]>>i`>iiVw-
cation program.
The big push began in 1996, when the government
Source: Data from IEA and World Bank 2017.
>Vi`iL>,> iVwV>*}>
> * ,]  i >>  "vwVi >> i
lElectricit [ONE]) responsible for implementation. The
program was aimed at providing electricity access to all
rural households, using least-cost technologies. The ONE
}i iVwV>>i>i`i>Vi}\
i>i`>,> iVwV>>i*>`iii
37.6 percent in Sub-Saharan Africa, 80 percent in South
i > ii ii`  i>V {] >}i
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 FGEKV 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
`iwV]vi`L }i>x]>`
villages were connected to the central grid, decentralized
Ethiopia (71 million) (Figure 2.2)and the 20 highest
iiVwV> i ii > >i`  i ii
>VVi`iwVVi>i>VVvniViv
local demand at least cost (IsDB 2013). Funding came from
i }L> `iwV /i >VVi `iwV  ii}
local communities (20 percent of the connection cost),
rural, at about 87 percent.
LiiwV>i`>LxiVi]>`i" 
>L xx iVip>` V> Vi >` Liiw-
Trends in Access to Electricity
V>i`ii>i`>vvV>}iiwi
Global Trends: Between 2000 and 2014, there were
to seven years. Pre-paid meters were also provided to help
>`>ViiiVwV>]i}L>iiVV`iwV
consumers monitor consumption and facilitate payment
declining from 1.3 billion to 1.06 billion. At the same time,
(IsDB 2013; George 2002).
i}L>iiVwV>>iiviVinxx
Three main principles contributed to the rapid rural
percentcovering additional 1.4 billion people (Figure 2.3),
iiVwV>VV\>Vi>>`>V}
mostly in urban areas.
political commitment to follow the plan; (ii) an institutional
*}i>iiVwV>i`iVi]
framework leveraging the strength of the utility and includ-
rising from 63 to 73 percent of the rural population in 2014
} >> >` i>> >V >`  > w>V}
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
> w>V>  }>>` >` >v>> 
at 97 percent. Although urban access rates have increased
>>i}iivL>iiVwV>
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 Moroccos high GDP (compared to Sub-Saharan Africa
brought an additional 1.6 billion people into the worlds
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 200014 has been remark-
percentan additional 57 million people (IEA and World
able in South Asia (rising from 57.2 to 80 percent), South
> p`i L > >> vv}` iiVwV>
Asia (from 57.2 to 80 percent), and Middle East and North
}> > `i` iVV> >` w>V} 
Africa (from 90.9 to 97 percent). Trends in population lack-
v i ->`ii i > { ,> iiVwV> >
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-
i>v}`L>i`iiVV]w>Vi`Li
tricity services. (Figure 2.4)
T H E STAT US OF ENERGY A C C E SS 19

FIGURE 2.2 +PFKCJCUVJGYQTNFoUNCTIGUVGPGTI[FGEKVU FIGURE 2.3: 'NGEVTKECVKQPTKUKPIGURGEKCNN[KP



6QREQWPVTKGUHQTCEEGUUFGEKVKPGNGEVTKEKV[  urban areas
(Trend in population with access for total, urban and rural
Access decit, 2014 population 20002014)
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. Peoples 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: /iiVi>VVvi>niVivi}L>>VVi`iwV

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 worlds developing regions stands at 863 million and is iii>Li>vv`i}iiLiiwViVi>i
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 >`iiiL>i`L}>`vwVViV
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. >V>`>V> >>}ii ii i`   ivwVi >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
 iiVwV> i>`i` >V ognizing that informal communities and
developing countries in the 20th cen- 90 residents were far more marginal than
]iiVwV>Li}>>>> 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
>vivwi]i>i>`i- 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 >  iiVwV>   >]
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 ,> iVwV> >`  L i i> ] i
growers in access to electricity >Vi v iiVwV> >  v> i} `ii
(Incremental percentage point in access to electricity, 2000-2014) 400,000500,000 connections per year), costs were in-
Vi>}] >` vwVi }ii> ii`  vii
>}>iq{
power outages.
Micronesia, Fed. Sts. 1.8 ]>ivvw`>iVivviVi-
Morocco 1.9 tion for remote householdsone that complemented grid
Cape Verde 2.0 extensionsBangladeshs 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
>>V]ii>}}i}iiVivVw>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
i iVV>] ViV>] >` w>V> >` i` >-
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 communitys basic needs (such as street and secu-
Vi>}iviV>iiiii>i`viiVwV>-
rity lighting, and electrifying essential facilities like shared
tion were applied.
latrines).
1  >L>] i 7` > vV> iVwV> >i
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
>`iiVViviiVwV>}>
>i`-
risks from electrocution.
ies on Indias TPDDL, LIGHT (Brazil), EPM (Colombia), AES (Brazil),
and Kenya Power (KP) were produced. The World Banks GPOBAs 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 regions 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 i`iivwVi/viiiiVVvi
mode,. In cases studied, such as that of Indias 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-
nitiesin 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, grids unreliability. Initial subsidies were phased out as
IDCOL, provided training in technology, supplier-selec- rural household income increased, and unit cost was
]>`>vi>iiVi>vvii`iw>V}> reduced thanks to economies of scale, PV panel price
a 6-9 percent interest rate over a 5-7 year repayment i`V] >` ivwViV ii " > `i
i`]Vi>>>iwi` 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
`i }LiViiivvii`Vw>Vi>] >V>Liivv}`iiVwV>>i/i
with a 1015 percent down payment and an interest rate include: (i) strong pre-existing network of competitive MFIs
of 1215 percent over a 23 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 purchasealthough 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 Bangladeshs 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: ->`iii>{

V> >` w>V}  >i`  i > ticularly in the past decade, to increasing electricity access
>L>>`>`i>iVi>>ii>` (Banerjee et al. 2015). In 2005, it launched the Indias rural
Vw`iVi] V > vii` } Viii iiVwV>}>]i,>>`>ii6`-
i`>V>>}>`>i>>>>Vi karan Yojana (RGGVY), with the aim of electrifying all vil-
lages and habitations with more than 100 people, installing
Indias Energy Sector Reforms and Rural small generators and distribution networks where grid
'NGEVTKECVKQP2TQITCO 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 ii` L i ,ii 6>}i iVwV> ,6 
{]`>iiVwV>>ii>Vi`iVi] program, which is being implemented by the Ministry of
from 60 percent in 2000with 70 percent of the newly New and Renewable Energy (MNRE).
iiVwi` > i`i`  > >i>] iyiV} In 2014, around 264 million people, or 20 percent of
L i V vV  > iiVwV> >` i Indias population, remain without access to electricity. In
relative saturation already achieved in urban areas. By L>>i>]iiVwV>>i>iV}i>ii-
2012, the national electricity grid reached 92 percent of ii] L i > v iVi i> i ii]
Indias 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 accessthe biggest `iw>Vi`>`i>Liv>Vi`}iiV-
absolute increase globally. Vi>}ii]>}>vwViiii
The energy sector reforms were initiated in the early i> v > i`  iVi > w>V> -
1990s, with the unbundling of the State Electricity Boards tainable electricity distribution system. Exacerbating mat-
aimed at forming separate companies for various opera- ii`vwVvV}iiVV>>ii
tions (such as generation, transmission, and distribution) ensuring household affordability. Thus, solutions are need-
and privatizing the distribution companies. In the late i`  i>` iiVV >VVi  w>V> iLi
1990s, central and state level regulators were introduced. ways that encourage investment in the operation and
]ii iVVV]Vv>V>i`>y 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
> >`i>i > >` > v iiVV  %JKPCoU$QVVQOWR#RRTQCEJVQ'NGEVTKECVKQP
(Krishnaswamy 2010). Over the past 50 years, China has succeeded in providing
V>] `> > iiVwV> Vi >i access to electricity to 900 million peoplewith 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 }ii > i>i` iiVwV>   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 2030increasingly 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 `iwV > `  n  ii]  v > > Yet universal access to modern energy services is still
population of 1.3 billion (Bhattacharyya and Ohiare 2012). i`>Vi>>>`ii>Vii>`
Nonetheless, rural electricity consumption per capita in access more rapidly than demographic growth. Universal
2008 was just 30 percent of Chinas average electricity con- >VViiiVVii>ii}i>>>Viv
sumption, suggesting that the rural electricity market has growth of 161 million people from 2014 through 2030.
not reached saturation. } i >VVi `iwV  { > ii}

>>ii`>L>>ViiVw- 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).
 >V V Vi>i` > > iiVwV> V- 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
 > iiVwV> ii >` i>] 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 >`>V>}iV>}i>`w>V>
>`vv}`p>iiVwV>i} investments to increase access (Figure 2.8). However,
three modes of delivery: local grids, central grid, and a Sub-Saharan Africa is falling behindcurrently 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 > w}i Li` L i    ]  
water bureaus or small hydropower companies, responsi- V>>Li i>i v Vi w>V} i` >`
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`vf{xL>i>]>}>>V>iiy
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 Banks Access Investment Model provides
shops selling directly to installers, and retailers selling rather detailed bottom-up estimates of the cost of reach-
`iVi`i -*/iV}V>yi- ing universal access in each of 15 countries with large
bility has allowed local resource utilization and avoided iiVV>VVi`iwV/iiyiV`vviiVi-
i}iVv`vwVV> ulation and geography across countries as well as local

> > iiVwi` ii >i> } > >i` 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
]i/ iVwV>*}>>>Vi`
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 201030. But because
0.0
progress has fallen consistently short of this rate since 2010, 19902010 20102012 20122014 20142030
efforts in the remaining years need to be stepped up to 0.9 Historical Target rate
percentage points. reference
period
Under the IEAs 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>Viv>>`>viiVV
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 Li> v - {  i>i >VVi >V wi i
i Li} i i >` wi Li} i }i >`
i} >Li V>>V] >>>L] i>L] >]
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 20002014 Projected rate 20142030 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
>]>`>V>}iV>}i>`w>V>iiVi>i 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 ViVwV i>V >}i v i> >VVi]
VviiVwV>,i>V}i>>VVi>/i which account for a countrys initial conditions and the
(enough to light a few light bulbs and charge a mobile timeframe for achieving targets.
iii ` ii ii v fx L 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.
>VVi > /i x v { }` i ` ii 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
leveleither 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

i] iiVV >VVi  `iwi` >` i>i`  v>vv/i]V`Li>i>{
binary indicatorsthat 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
/>>V>>i>>LiwivvL>>V}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 35 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
i`i>i>Livi] Vi > >i } >VVi `iwV /i i 
but they fail to capture the multi-dimensionality of elec- help policymakers determine gaps in the performance of
tricity accessand thus misrepresent the scale of the the energy supply, identify types of interventions and
challenge. For electricity, they do not provide any insight w>V> ii iii ii`] >` i i
i>]i>L]>vv`>L]i}>v> 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 15) 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 metricswhich 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
  ii ii`  Li iiVwi` v { 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
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2014. Power for all : electricity access challenge in India. 'NGEVTKECVKQPKP+PFKC#2TQITGUU4GRQTV#PCPCN[UKUQH
Washington, DC: World Bank. ITQWPFTGCNKVKGUQHGNGEVTKECVKQPYKVJTGEKRGUHQT
accelerated progress. New Delhi, India: Vasudha
Bhattacharyya, S., and S. Ohiare. 2012. The Chinese Foundation.
GNGEVTKEKV[CEEGUUOQFGNHQTTWTCNGNGEVTKECVKQP
approach,experience and lessons for others. Energy Lighting Global. 2016. Off-Grid Solar Market Trends Report
Policy 49: 676687. 2016. Washington, DC: Bloomberg New Energy Finance
and Lighting Global.
>]-x/i->
>>}>*w
Poor Africans. Bloomberg Businessweek, December 02. Niez, A. 2010. %QORCTCVKXG5VWF[QP4WTCN'NGEVTKECVKQP
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. }>>`>`/ >v>>1i`>iiVwV>-


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
117144. (WIREs) Energy and Environment 5(2): 155168.

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, <ivw]  >]
<>}>`6V] ]Rural
Washington, DC. GNGEVTKECVKQPKP%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>`*>,> iVwV>
>\
History and Institution. China & World Economy 14(1):
EUEI (European Union Energy Initiative). 2011. Productive 7184.
7UGQH'PGTI[t241&75'#/CPWCNHQT'NGEVTKECVKQP
Practitioners. Germany: European Union Energy Initiative. ->`ii]<] ,>>], >]>`,-{
Scaling Up Access to Electricity: The Case of Bangla-
____. 2015. .QY%QUV)TKF'NGEVTKECVKQP6GEJPQNQIKGU desh. Live Wire note series, no. 2014/21, World Bank
#*CPFDQQMHQT'NGEVTKECVKQP2TCEVKVKQPGTU. Germany: Group, Washington, DC.
European Union Energy Initiative.
Shyu, C. 2010. Renewable Energy Policy in remote rural
George, G. 2002. Electrifying Rural Morocco. Transmission areas of Western China: Implementation and socio-
& Distribution World, Jan 1. http://tdworld.com/archive/ GEQPQOKEDGPGVU. PhD thesis, University of Bonn.
electrifying-rural-morocco.
UNDP (United Nations Development Programme). 2011.
IEA (International Energy Agency). 2013. World Energy Universal Energy Access. Fast Facts. New York: UNDP.
Outlook 2013. Paris, France: International Energy Agency.
World Bank. 2013. Sustainable Energy for All: Global
____. 2014. Africa Energy Outlook: A Focus on Energy Tracking Framework Report. Washington, DC: World
Prospects in Sub-Saharan Africa. Paris, France: Interna- Bank.
tional Energy Agency.
____. 2015. $G[QPF%QPPGEVKQPU'PGTI[#EEGUU4GFGPGF.
____. 2015a. India Energy Outlook: World Energy Outlook Washington, DC: World Bank.
Special Report. Paris, France: International Energy
Agency. ____. 2014. Rise Readiness for Investment in Sustainable
Energy A Tool For Policymakers. Washington, DC: World
____. 2015b. World Energy Outlook 2015. Paris, France: Bank.
International Energy Agency.
World Bank and IEA. 2013. Sustainable Energy for All
IRENA (International Renewable Energy Agency). 2015. 20132014: Global Tracking Framework. Washington,
Off-Grid Renewable Energy Systems: Status and DC: World Bank.
Methodological Issues. Abu Dhabi, United Arab
Emirates: IRENA. ____. 2015. Sustainable Energy for All 2015Progress
Toward Sustainable Energy. Washington, DC: World Bank.
IsDB (Islamic development Bank). 2013. From darkness to
light: rural electricity in Morocco. Isdb success story WHO (World Health Organization). 2014. WHO Guidelines
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Geneva, Switzerland: WHO.
9>}
>>iiVwV>>`i
reduction. Energy Policy 31: 28395.
28 S TAT E O F E N
L EECTR
RGYI CI
ACCES
TY ACCES
S R EPO
S RRT
EPO |RT 2 0|1 72 0 17
CHAPTER 3
CREATING A BETTER ENVIRONMENT FOR
TRANSFORMATIVE ELECTRICITY ACCESS

KEY MESSAGES
U VVivV>iv>v>iiiVV>VVi]LVw>V}>>i`>>ii>
>}iv}`L>i`iiVwV>}>
Best practices for successful grid-based implementation include: sustained government commitment, dedicated
]i`V>Liw>V}iV>]i>Vi>iii>vv`>L>`>>L]>`
iiVwV>}>>w>L>`ivV>>`iVV>v>
Mini-grids can supply grid-quality power to communities quickly, but they must address challengessuch 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 i>iiV>>Vi>}iw>V}}`ii]iiLiVii
place to allow investors to make returns on their investment.
U i>V>}>VViyiVi`LVi]VV>V>ivi}i}>iiVi>`
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- }`  `] w>  `i i } 
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 communitys goal of universal access
GRID AND OFF-GRID:
to modern energy servicesas spelled out in the Sustain-
TWO COMPLEMENTARY TRACKS TO
able Energy for All (SE4ALL) initiative and the UNs 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 }`L>i` iiVwV>] ii i }`  ii`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 }`iiVwV>Li>L}ViiV
exists, the evidence points to some facilitative ingredients or mini-grid systems, or using isolated devices and systems
that are foundationalincluding 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 i>i`V>>iii]>`iiiVwVi
help energy planners, policy makers, and other stakehold- of customers and population densities (Table 3.1).
iw`>Vi>iiii`i`i>L}ii
It begins with a discussion of the two complementary )TKF GNGEVTKECVKQP The expansion of national electricity
tracks to universal access to modern energy servicesgrid grids is the conventional method of expanding access to
based and off-gridfollowed 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
i}>V>` i>x>iii {>iii >iii
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
iiii` v`> v`>`i` />`v`>
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- ii ii  vwVi `i>` } i `>
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
ViVi`>i}>v>]LiV>i>iiVwV>
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
>> iiVwV> }> 
i]
>] iV] 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 GNGEVTKECVKQP Energy services can also be sources with batteries or a diesel generator.
i>`i` } vv}` iiVwV>] V i 7iVw}i`i]>`V}`V>
V>i}`>}`iiVwV> 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
>}i] >` V  > Vwi` }i-
islands are powered by diesel- or small hydro- mini-grids;
}>V>Vi/}`iw>]ii}`>i
>`>vi>iiwi`>*6i>`
high-cost diesel fuel. In the Maldives, about 200 inhab-
ited islands and all resort islands are powered by diesel
FIGURE 3.1 #DKIRWUJKPGNGEVTKECVKQPUKPEG
mini-grids. Plus, some of these are being converted into
(Incremental increases in grid electricity access, 19902010)
solar-PV-diesel mini-grids, as part of the governments
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
Vi  `iV Vi` Vw}>] i `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 19902000 product market has been expanding rapidlyand 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 i  i i >i >` > V-
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
i*>VwV]i`>ViLiii>`>`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
wii>]i>V>i>}`
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 countrys
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}`>ii>i`iwi`iV>i}i
mitment of utilities to provide electricity access to rural
i>`iiVVvi}`]>}}vvwVi
Vi]>`i>iiiVwV>>}]}
power generation capacity to high customer connection
investment cost for providing electricity connection due to
charges (Barnes, 2007; Bazilian et al, 2010; World Bank,
i>i`iVV>iVwV>v>`]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).
>`  >V v w>V}   >i ViV
+PUWHEKGPV 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 serviceswith power shortages costing Africa 2-4 per chargesand 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>}i > ii vii v] >}  `vwV v 
`iwV>iVi]*>>ii{iVi 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
ii i iiVV `iwV > x{ /7 >` i i where electricity rates are low, power utilities tend to have
`iwV>{7{qx

Poor transmission and distribution infrastructure. Many


decades of under-investment, poor governance in the
ii}iV]>`]iV>i]VyV>`V>] FIGURE 3.2 Sub-Saharan Africa has highest rates and poorest service
>i>i}i`iiiv>`i>i>
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 Africas
Connection charge for grid electricitylowest rating (US$)

Vi>} `i>` v i  ii }wV> >` 400 Kenya


sustained expansion of the generation capacityat a rate
of 7,000 MW each yearas well as transmission and distri- 350 Rwanda
L i /  iiVi`  ii L}
about $41 billionroughly 6.4 percent of the regions 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
i} v>Vi] i>} > }i w>V} }> 
power sector expansion. 200 Zambia

High costs of supplying consumers in rural and remote 150 Benin


communities. Many rural communities are characterized Uganda Cote dIvoire
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
remotenessand 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

iVV>>`w>V>iv>ViL> 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
`i>`i>i]i>Li]>`>vv`>LiiiVVi- 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, />]>iiVwV>>i`>}>>
many countries have pursued energy sector reforms initia- commitment to integrated rural development, gender,
tives aimed at improving utility performance issues, but i] >` V> i>
iVi i > p>` >
the results have been mixed. In a recent paper on the high level of government commitment was also observed
w>V> >L v i   -L->>> vV> in China (Han et al, 2014) and Brazil (Jannuzzi and Golden-
Vi]>v`>Vi>`>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-
}]w>V}]i}>}]ii}]>`}
Principles for Model Grid Expansion Efforts iiVwV>}>>i>vi>ivVVi-
Despite these many challenges to expand grid-based ful programs. According to Howells, 2015, the principal
electricity, many countries have managed, or are manag- iv>}viiVwV>Vi>i}
ing, to implement successful programsincluding 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, Rwandas leap from single-digit to
States, South Africa, and Vietnam. Lessons learned do not `Li`} iiVwV> >i] >}  ] -
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   V>}i v >} iiVwV> 
develop and implement successful programs. are responsible for determining what technological
approaches are applicable and cost-effectivefor exam-
Government support and commitment. The rollout of a i] ii   VivviVi  i>` iiVwV>
>}iV>i}`L>i`iiVwV>}>>Vi with the grid, or to consider off-grid solutions such as mini-
>>iiii}ii>`>i`}i- 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 ,> iiVwV> V> Li `i>i L `vvii
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 >i`>}wV>ii>`}iiVV>VVi
6i>]i}VViv>iiVwV> numerous countries (like Lao PDR, Mexico, Thailand, and
program was part of the broader Doi Moi, economic reno- />] >i >` `iVi>i` iiVwV> V>-
vation reforms launched in 1986 (Box 3.2). These reforms nies played an important role in others (like Chile). Several

BOX 3.1

754WTCN'NGEVTKECVKQP6TCPUHQTOGF5QEKGV[

V>]ivii>`>iiiVivV>>v>iiiVwV>v>V-
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>iii>vv`iiVV">]x]i,> iVwV>`>>Vi>i`
as part of President Roosevelts New Deal Program. He believed that if private enterprise could not supply electric
power to the people, then it was the governments duty to do so.
,>iiVwV>>L>i`iLiiv>>vv`>LiiiVV`ii>`>`v}>`
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
v>iiiviiVVi>i>`iv>`Vw>V}>>`i>>>Li
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

Vietnams National Drive to Achieve Universal Electricity Access

Vietnams 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 countrys starting condition. This >>LviiiVwV>ivvi`]>
commitment, however, needs to go hand in hand with a willing- i`LiiiviVV>>>`v-
ness to learn from past mistakes and correct ones course when fered high losses, and the newly established entities did not
circumstances change. >ivwViiiiViiw>V>i}i>i
In 1994, when Vietnam started its universal access drive, its i/iLii>i]iivi]i`>>L-
iiVwV> >i >  { iVi] V>>Li  i i>i]>i}ii`vVi}iVi>-
>VVi>ivii>iiVwi`VivV> ]  >` L iVV> >` w>V> >L >`>] i
the rate had jumped to 61 percent, and by 2002, it was over 80 `ii`V>iiVwV>iiiV`>i`
percent. Today, the Vietnamese population enjoys the full ben- larger units and their operators corporatized; most of them
iwviiVV]>>VVi>iiiVi were eventually absorbed by the national utility, EVN.
Vietnams secret to success was not betting on a particular 7i>iiiv6i>iiVwV>>>V
iiVwV>>>V]L>i>}i>>Vi >ii6i>]ii>iii>iiV-
evolve over time. In the initial take-off phase (1994-97), the wV>ivv\
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 governments unwavering commitment to electri-
>i]i>i>>`iVi>]V]>vv wV>] >`  }i  i> >` i iVi>
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
L>}iiVwV>>>>]i}>}}Vi-
created mini-distribution entities. This was a period of extremely
tral, regional, and local government, along with rural com-
v>iiVwV>]i>i}v{iVi
munities.
percent in just three yearsas well as record investments lever-
Fast progress is not just a matter of political commitment, it
>ii>}`i>`>`>}i>v
FIGURE B3.2.1 'NGEVTKECVKQP4CVGKP8KGVPCO the participating populationwhen rural income rose, elec-
wV>vv
100%
U /i>`ivvLiiiii`>`>>LviiVw-
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
iiVwV>}>
40% Take off
phase U iVwV> }> `  >i > i iii v
20% i>>w>V>>L

0% Source: - ,
>i-`\6i>>>iiVwV>}>]-
1994 1996 1998 2000 2002 2004 2006 2008 2010 2013 coming.

countries have adopted the cooperative approach derived >>i`>}iii>i>ii`vwV


from the US experience (like Bangladesh, Costa Rica, and provide services and implement regulation. Regulation of
i*i-ii>iVi>i`,> iVw- >iiVwV>ViiVVivv>`>i
cation Agencies (REAs) to manage multi-year earmarked ii>>v>>}wi`Vi>i`viiVVi-
iVi>iiVwV>iVi>] 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.
>VV>i` L > > iiVwV> v` ,  >  `i>i > V>>V  > ii`  i-
managed jointly or by a separate entity. ment a successful access program. As indicated by the
->i}>viiVwV>i>>>- SEAR Special Feature Paper on The Power of Human Cap-
i-VViviiVwV>viii>i>`- 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 iV}]w>Vi]>`V>i`i-V>}
iiVwV>] V  V>>Vii` L  iii  i>i}iv>VViii}ii>`vviii-
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'NGEVTKECVKQP4CVGU

]iiiiViiiiVwV> get in 2012, rising further to XX percent by 2015 (Fig-


rates were still in single digits, but by 2012, this num- i  ,*>i`>>iiVwV>>}i
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 V>v>i>i}vvv}`iiVwV>-
an undisputed winner, having demonstrated the fast- tion, mirroring the coordinated approach applied to
iiiVwV>}i the grid rolloutbut with greater emphasis on lever-
>] iiVwV> }i >  i v> aging private sector investments. The bottom line is
iii>`n],>`>iiVwV>>i that better planning, coordination, and new technical
}iviViiVipiiVw- 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.
iiVwV>ivvii]i>ViVi` Rwandas 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- V>i  iiVwV> >i /i i v>V Li`
}  iVi iiVwV> >i L  / Rwandas success are: (i) a strong focus on implemen-
approach was underpinned by: (i) an ambitious, yet tation common target and monitoring system for all
ii>Li iiVwV> >}i  > }i>> development partners, and adherence to the agreed
least cost plan; (ii) an investment prospectus to rally iiVwV>>}iii>`i>`-
i}>`iw>Vi>`>V`>- 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
>>]>`w>Vi`Li` connection for the utility.
i`],>`>iiVwV>>ii
V]ii} ,*iViiiVwV>>-

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: RwandaSector-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 PCPEKPI OGEJCPKUOU Financing mecha-
proper human resources, accompanying and adapting the    iiVwV> v > >` iL>
Vii`LiV}]w>Vi]>`V] Vi > `ii`}  i iiVwV>
}iV>Lii>i`>ivwVi>`ivviV- >>V >`i` 7i > iiVwV>  `i-
i] i>Li >` ii} } >} >v>- taken by the national utility, resources are channeled
i V>}i v >VVi  ii} `ii`] >`i>i }iLiiwviVp>
human resources are essential for planning, implementing, iVivV>i>`Vi>}]w>Vi]i`i-
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'NGEVTKECVKQP

CHINA: Strong state support and the ability to SOUTH AFRICA:-Vi]iiVwV>`ii


engage the local communities to create local i}>i` >> iVwV> *}> >
infrastructure have contributed to the success of Lii w>Vi` L i >i L`}i }

>i>iViiiVwV>`v -">}iiiVwV>}>
> iiVwV> >i yi` v i Vi> V`Liivw>Vi`]LiV>i>>i>
and local governments, with local residents even was unlikely, prompting the state to take responsi-
>V>} /i `iVi>i` iiVwV>  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>>iV>Li>>>Li`i>i
government. funding of the program.
BRAZIL:-ii>}>]`vviiw>V} INDIA: 1`ii,>>`,> iVwV>
structures, have contributed to Brazils high rates *}>]>Vi`x]iiiVwV>>i
viiVwV>/iiiVwV>}>*," 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) `iii/ii>>}wV>V>>L-
were funded by the federal governmentwith the `vvv}`iiVwV>iV
states contributing about 10 percent of the cost. Source: Bhattacharyya 2013.

2008). Over the years, China, Brazil, South Africa, and India Vi]ivviVi]>`i>Li >i]7` >]
have successfully dedicated public funding to support 2010; World Bank 2011; World Bank IEG, 2015). Many
iiVwV>]>}i>V>>i>>V countries have provided subsidies to support initial capital
(Box 3.4). Vv>iiVwV>v>Vi/iiL`i
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
>>`w>V>>L>`wV>>vv`>Lv 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- i >i] >` wii> }>Vi i`  > }ii
able to potential customers, they will not connect to the }>i,> iVwV> >`]Vi}i`
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>yiVi>i]Vi}wi
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- `iwi`>iVViViVi>`
 v `} >vv`>Li >i >` vwVi Vi the existent grid. Some connection cost subsidy programs
for the service provider, and also funding for the invest- >i `i}i` > iL>i` w>V}  L>i`
ment subsidy (IDB,2015). In Chile, the last mile in rural aid (OBA), meaning that subsidy payments are based on
iiVwV>  Li} >Vii` L V>} > `ii`i iwV> v ] vi iii` V-
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-
> iii v i iVi `i >  vwVi  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,
`i>>iiVwV>i>ii Uganda, Zambia, Liberia, Ghana, Mali, Senegal, Bangla-
ivvL`p>`iiL`iLiivw- 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
7i}`L>i`iiVwV>>>i>i>
}wV> L` `i`  }`] i >vv
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-
}`]>ivvi>i>v}}`>-
mitted, such as in Tanzania or Bangladesh, political realities
iViV>}>
may prevent charging a vastly different tariff. In Bangla-
many years for the distribution network to reach distant
`i]i>vvviw>`ii}`->`-
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>i>vii,> iVwV> >`, 
are the biggest challenges? They cover a wide range of
set up its own diesel generation mini-grid on the same
w>V>]iVV>]i}>]>`Vi
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 lifeknown 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-
`ii`>`iiii>`i>iViV grid service area, even if the network is built for grid-com-
patibility, the investment in generation assets may not be
Regulatory uncertainties. i`i >` i ii recoverable. Thus, policies to permit recovering the invest-
i}>Vi>`ii>`w>Vi ment are needed and some countries have made such
grids and provide services over the long term. Larger mini- provisions.
}`iii}>i`>i`i
electricity services, authorize concessions, adopt tariff set- Management and operations capabilities. The mini-grid
ting rules and tariff approval procedures, and to establish >iiVVLi]>`>V]iiV>>Li
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- `vwVw`>`i>iiV>
grid development (Box 3.6).

BOX 3.5

Rwandas 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 `iiii`iii>vvV>V>i\
Utilities Regulatory Agency (RURA) issued its Regula- the reasonable costs of operating the grid, including
i}i-wi`Vi}>iv depreciation charges and fuel costs if any, plus; (ii) a
,> iVwV>  ,>`> /ii i}> i>>Liiiiwi`>ivi}ii-
support the governments 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
n " i w>V> `i] i}} ii- L`i}>iVii`iVwV>vi-
i ,>`> i` L < >` w>Vi` L ` 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.
vVi}i>wV>,1,Vi>- Sources: Rwanda Utilities Regulatory Agency, Regulation No.
}] wi` i}>  > v }` ,  7-,1,x i} i -wi` Vi}
with capacities of 100 to 1,000 kW and small mini-grids >iv,> iVwV>,>`>
\>wi>``V,1,-wi`Vi}
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). ,> iVwV>L`>>`}` iii]
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}>`Li}>`i`>`wi`

 >Li>V>`>vv`>Li>>`>`->`>``>``ii>]iVi>]>`
ViV>>v>V>iiViV>`>VV>iL}

 ii}>i}`i}>>i>Li`>iiVwV>>}iV>vvi}>`L`ii
to account for local circumstances.
TECHNICAL  ,
 iVi>ii>`>VV>i}vi}`i`}>i>`ii}vi
>`iii
Adding batteries to hybrid power systems that have variable renewable energy ensures that electric power is
>>>Li>`V>`iviiV>`>}i>L
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.
 "vvi}iw>V>ivvL`i]>]}>]>`iiii>Liii}
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.
  >>iVi>v`ViiVViViiiViiiw>V>>L]
-
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 ii}iiii>vviiVwV>
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
ii]>L>}>wiL>i`}``ii`i>
i`]>v>V>i`w>V}v>}iV>i
year-round availability of fuel at an acceptable price. Thus,
iiVV>`iii
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 i iVV >Vi } iiVV> i-
wV> v > }` >`  w>V> >L  ment. This region has up to 800 micro-entrepreneurs
anchor customers and productive loadsespecially 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
>`vi>i>`iw>V>i> >i> v V] i}>] iVV>] >` w>V> />Li
>Viii>ii -*n/> 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
>v}`ii>``iwV>vvv}`iiV- its local customers.
wV>iii}>ViiV>>-
Buyout Option where the SPP sells its distribution grid
} w>Vi  iV>}i >i iV i> 
to the national grid operator or other entity designated
Liiw v > i>Li >` i`V>Li w>V> 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.
}i>ii]6 *`iwiiv-
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
iiVV>}i>iiL}
ii vwVi > ii} iVi] `i}
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-
>Li w>V}  Vi i>>] >i>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>i`  v > iiVwV>  `iii i
Off-Grid Electricity Solutions.
cost optimal way of providing high levels of electricity
>Vi>iiviiVwV>>VVi]
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-
>>V}iVviiVwV> ii
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
} L >i v  V] i>Li iiVV
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
52kWhcompared 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 utilitiesbut it underscores the
Providing High Levels of Electricity Access
need for planning upfront for the eventual arrival of the
/ii>VVw}>v}`]V}`]>`>`
}`  }i i i Vw`iVi  `ii
alone technologies to meet two rural (50 and 150 kWh/
grids in rural and remote areas. The study recommends
V>>i>>`iL>iiVwV>>}i7
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 >`>iiiVwV>/iV>}iiV}v
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



2QRWNCVKQPDCUGFHQTFKHHGTGPVTWTCNGNGEVTKECVKQPVCTIGVU
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 3.31RVKOCNGNGEVTKECVKQPOKZKP'VJKQRKC

A. Higher target B. Lower target

Source: Authors 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: Authors 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`LiiiVwi`v}`ii>`
vision, the cost per unit is reduced in rural areas. With }`iV}iiiVLiiiiVwV>
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`L>`>ii`ii]*6
V>iiVwV>>}i 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>>ViV V` Li i`  `ii iVwV -
tors, electricity costs are high. But if the PV market ciesranging from state-led deployment to facilitation of
LiVi i y`]  i }ii i v>V>i market development. At this point, Ethiopia is undergoing
ii]iVv>iiVwV>`}w- 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: Authors calculation based on Mentis et al 2016 b.


Note: iv>i\*>>i>`ViVi`i}`}`ViVi`>`ii>iiiVwi`L>`>i`ii
,}>i\*>>i>`ViVi`i}`}`ViVi`>`ii>iiiVwi`L>`>i`ii>`*6>

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
`iwi` > >}V>] ViV>] >` `> >V-
national projection of other (bulk) demand growth (based
i>iiiiVViVi>`iVi
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,
i`>}i>>}viiVwV>iV
hydropower is expected to form the foundation for Ethio-
to generate spontaneous positive effects in rural areas
pias 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-
i>v`ViiV`}\`iwV>
i`iiivV`i>`>}i>iv>>
of the productive activities taking place in a project area
}>/i`i>i>iiiVwi`i`
and the supporting sectors; (ii) assessment of the poten-
meet their demand target of 150kWh per capita in rural
> VL v iiVV  i `iwi` >Vi
areas and 300kWh per capita in urban areas.
and sectors; (iii) technical and economic feasibility and
Results show that generation investment is dominated
iV>>L`ivi`iwi`>Vi>`
L`}i>i]>}i>ii`v
(iv) a targeted promotion campaign to potential users
ip>}ii>i}wV>iii
about the gains from the use of electricity for a new pro-
V>>Vii`viiVwV>`V>i`>i`i
duction process involving various stakeholders (such as
in Figure 3.6 panel B). But if trade in Africa is to reach its
iiVV iVi `i] ii >v>Vi]
cost optimal potential, Ethiopia will need to join a number
w>V> ] ii> V> }ii ii
vVi>}ii>i}wV>>iviiVV-
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-
`Vv>Li]>i>>Vi}>iivw-
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
Cte dIvoire

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 authors calculation based on Mentis et al 2016 b.

improving the revenues of distribution companies small businesses through NGOs and developed a market-
iiL i>V} i iVV v iiVwV>  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
i>i]>`iw>V>i>>Viii> enterprises and 22,000 new jobs in food and beverages,
ii -*n light engineering, textile, wood products, rice mills and
 `i>] i > iiVwV> }> 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- *i]i -VVi>i`>>iiVw-
wV> }> /i iV vVi`  i>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:  >i  i iVwV>  i> 
>``iiv}i\
U }i `V >` i` > i` ivw-
ciency of land preparation, planting, cultivation, What do people want energy for?
irrigation, and harvesting. U 7Vivii>ii`
What can people afford?
Lower food losses through improvements in pro-
What about the capacity to run and maintain the
Vi}] `} Lii > >` > v
systems?
`V]i}ii>`ivv>ii}
supported cooking, heating, storage, preservation, For poor farmers to reach these goals and achieve
 >v>  }i > `Vp }iVi]iiii`Li>i`>
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 producethere 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
ii>iiViii`L>>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
`Vi i v iiVV >` i> LiiwV>i 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
i` i  > iiVwV>  >
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
`iwi>`>i>>>LiLii]i-
and dressmakers, food stands and restaurants, hair-
>i`V>y]>>i`iw>Lvii
dressers and barbershops, carpentry, goldsmith, laun-
and electricity infrastructure investments, and created
dry, etc.
  Li] ii i] >` Vi v
w>Vi>`>} U ii  iiVV V> Liiw   v
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
>ii`Vi]>`>ii`iLiiw-
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
`iwi`Li
helped electricity access in Sub-Saharan Africa and Asia.
Revenue: Annual receipt from the sale of all prod-
U i>]Li>w`>>VViiiV- ucts and services of the enterprise;
tricity extends operating hours of businesses and lon-
q *w\>iVivi>iv>`V
ger hours for households to produce hand-made
and services of the entity minus total operating
}`>w`>>VViiiVVi>Lii
costs; and,
i v iiVV ii >`  L > >`
micro-enterprises thereby improving their productivity q *w>}*,\*w>>iVi>}ivii-
(100200 percent depending on the task at hand) and enue.
the revenue of the enterprises (2070 percent, depend-  >v`>}`iiVwV>>iiiii
ing on the product made). v ViV>  > Vi>i i w L { i-
CR EAT ING A BET T ER ENVIRONMENT FOR T RANSFORMAT IVE ENERGY A C C E SS 43

Vi>`w>}L>LiVi>}i CONCLUSION
v`>iii]}`iiVwV>Vi>i
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
LxxiVi]>`wLiVi
}wV>V>i}i]L>i>`]>Vi>i
(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
ii]i>i`iwi`i>V>`Vi>V- 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
L`i>>Vvw>Vi/]`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- iVw>V}
tricity access initiativesan approach that both maximizes
iLiiwvi>VVi>i>`i}i
sustainability.
44 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17

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Distributed Generation. New York: Springer.
46 S TAT E O F E N E RGY ACCES S R EPO RT | 2017
CHAPTER 4
CLEAN ENERGY AND ELECTRICITY ACCESS

KEY MESSAGES
U /iVviiVVvii>Liii}>`iVi>i`}wV>i>xi>]LiV}Vi>}
ViiVi>ii}Vi }i>ivi}`yiLii`>i`
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
>VVi}iw>Vi6>LiVv>i>i>}iii`]>`>Vi>i>Vi}
good progress.
U i}ivwViVV>i`Viiiiviiii`Vi>iiiVV>VVi>`>Vii
i`i>Lv>i}vi>`iivivwVi>>ViV>}wV>
reduce the barrier of upfront costs for clean energy technology.
U ,i`VvVvii>Liii}iV}i>`>`>iii}ivwViVi>ivvi>ii`
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
>VVi] ii>Li] >` ii} ivwViV 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 ii]viwi]iiii>Lii
ii >` i ` >` i Lii iVV and fuel investment in developing countries surpassed
`iii }}ii` >i i  i>`  > }wV> 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
ii}p>]ii>Liii}>`ii}ivwViVp in reaching universal energy access by 2030 as envisioned
if we are to also achieve the Paris Agreements 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- i}ivwViVi>i>`iV}i>i>
rooming across the globe at an unprecedented rate, while ii`iVi>i}L>w>ii}`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- `} i }  w> V   iVi]
 v ii} ivwViV i>i >` iV}i   rather than the past decades 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 /V>iiiLiiwvVi>ii}viiV-


>i i i > `iV>`i  >``] ii} ivwViV V >VVi] V > iVi >` }wV> V `iVi
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- ii} >` ii} ivwViV V> i `i `i
sions, as of end-2014 (IEA 2015b). Investments in such ii} iVi V] i>L] >vi] >` >  Vp
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 i >`i>i w>Vi  >` Vi> }ii
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 levelsin both developed and ii} ivwViV] i Vi>  }ii Vi]
developing countries, with 2015 featuring many high-pro- LV w>Vi iV> >` >i >>Li
wi>}iii>`>Vii\ 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
>Liii}>`>`>Viii}ivwViV
,ii>Liii}iV}i>iyiLi]`>]>`
Adoption by the UN General Assembly of a dedicated V>Lii`>Vw}>]>}}vi
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 Changes (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-
ii} ivwViV } i i`i` >> torsincluding 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- >VViw>V}]ii}iV>`ii>V-
tioned renewable energy, and 167 countries mentioned cerns, growing demand for energy in developing and
ii}ivwViV-iViVi`iv- emerging economies, and the need for access to modern
ing fossil fuel subsidies. ii}
ii]i>ivLVi>i`>`
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. ii} ii i> v i i wi i>pVi i
level of what Germany achieved in its record years of
Pledges by over 100 banks from 42 countries to invest
solar investment.
iii}ivwViViV

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 sourcesuch 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 `}` iVi i >i Li} iwi`
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 systemssuch
scale renewable energy plants are in place in Ethiopia, as solar home systems (SHS)can be more cost effec-
i>],>`>]>`iiii]`}Lii>- tive, especially when coupled with new business and
ity service to existing customers, as well as widening w>V>`iVi>}]>*6i]
the reach of the grid to those previously without access. as pico-solar systems (ranging from a few watts to tens
}`Vw}>]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
>i]iViViw>i`v`}vii and $0.05/kWh for wind, which is a substantial decline in
solar power plants with a combined capacity of 102 V>iw`
megawattsthe largest-ever private sector-led solar The cost of producing electricity (LCOE) from solar
iV  i ``i >]  wi i >}iV>i >``>`iVi>i`}wV>i>xi>]
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 Thailanddeveloping 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
mentare 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
>ii>Liii}i>]i>}>L
impact on the power sectors 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- fnx7iw>vvxfn7iiV-
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
ii} iVi `i  }wV> i`Vi` iV} Finance (BNEF). Meanwhile, the LCOEs for combined
costshelped by better procurement practices and incen- cycle gas turbine (CCGT) in Europe increased from $103/
iVi>LiiwviVi>i`Vii- 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`V>7i}>i`i`i}Viiii around $80-100/MWh (in the United Arab Emirates, Jor-
developing countriesincluding India, Egypt, Brazil, and dan, South Africa, and some U.S. states (IEA 2015c). Fur-
South Africahave 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 withor
Africa has successfully tendered 7GW of renewable energy even lower thanthe 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%
VVi}>LiviVi>ii}iVwVvi1i`->i] i]>`>
load factor is 85 percent load factor; CO2 price of $30/ton.

wV> `iVi>i iiVi` v i iV}i L ]`ii>Li`VV>}i]


2025 (Scott 2015). >}`>Livii`Vi`Lii-
As renewable energy continues to gather momentum logical events like droughts (IEARETD 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
}wV> >i v i v >>Li ii>Li yvii}]vi>i>`vi
sourceswith Denmark leading the pack at about 50 per- to the grid; (ii) the establishment of a smart grid to improve
centand 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 costfor 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,
generationtransmissiondistribution 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
Vi>i i yiL v i i
i  i (CAPEX) for pumped hydro storage is estimated at $1,170/
and less developed power systems have the opportunity, 7 >` i  >  LiiwV > i V-
to plan, design, and build, from the outset, energy systems pared to other options (Figure 4.4) (IEA 2014). In Europe,
>` }` > i}>i i yiL VVi >` 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
i`i>`>>}iiiV>pV>w>V>
Flexible power plants. Power plants need to vary their incentives and behavioral change through educationto
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 > iL i }i LiiwV iv>Vi
> >i i  yiLi > >` i i> V (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
UVQTCIGHQTKPETGCUKPIGZKDKNKV[ renewable) types.

$GPGVUEQUVUTCVKQQHUGNGEVGFGZKDKNKV[QRVKQPU }`>iii>`>>}ivyiL>`
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
}`v>Vi>`i>`iii`}i{
1.0 The Rocky Mountain Institute (RMI) estimates that mini
grids are the least cost option for household consump-
0.5 tionbetween 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
costif 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
>`i>LiiiVwV>v>>i>}ix/i  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 dont 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 }`}L}>`Vi`v}>wV>vL>
`iiL>i`}`>ii>}]>}w- residues. Indias 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 Philippiness population can best be served using mini-
and 450 buildings (homes, schools, and a healthcare facil- }`-``x
>wi`x>in>}ii>i
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 states Smart Power
U   ] />>> iii` i w v 
v,> iii}>]w>Vi`Li,Vivi-
solar/diesel mini grids to be installed over the next two
i`>7i>>`iVix
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).
`ii`LiV>i}i]V`}>`i>i-
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 >Vv>VVi}iw>Vi*7
L>*iE
governments 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 chargingusing kerosene lamps, kero-
percent of the countrys 51 MW installed capacity is from ii}ii>]V>`i]>`V>L>ii>>iivw-
micro-hydro systems, with about 20 percent of its unelectri- cient and damaging to both human health and the
wi`>>}>VViVi>iiVV environment as well as being safety hazards. Renewable

TABLE 4.1 Renewables offer a wide range of energy services for productive uses

2QRWNCVKQPDCUGFHQTFKHHGTGPVTWTCNGNGEVTKECVKQPVCTIGVU
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
i} *`Vviwi`vii` >]>i>
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 availablenotably 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  > } Liiw} i   ii] i-
SHS can provide Tier 13 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
{iViviVii`v}`ii
>- 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-
>`Viii>VViLi 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, i`ivwi>`LvV>`i>`iii
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
ii>Liii}i]Vi`ii}ivwVi 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
V>V>f{x]>`>}ivwViV  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
x/i>i>i>Vii>V-
6% triesnamely 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` > }wV> >>  i}> >i>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
v>Lf]wii>>}" ] 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 >`i>`i>iVV>vi>`>>}iv
years, due to the less costly solar modules, the use of renewables to unclear government policies, a lack of good
}ivwVi }}i]>`iii}iVi w>V>]>`i}Vii
of innovative business models. Thus, possible solutions include the following:
By mid-2015, about 44 million off-grid pico-solar prod-
ucts were sold globallyrepresenting a market of $300 Phase out fossil fuel subsidies. The problem is that these
million annuallyand 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 yearsand 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 V`i}`w>V>`V>}iiiv-
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 Tanzanias 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
aboout 585 of the money
PAYG companies attracted about 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 modelare 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,
Liiw] i] >` V>>LipiiL >V} 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`i>Lw>V}iV>L>
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 >}ii`Vi]LV>i`>`>LiiiVwV>-
`iiiVw`iVi]L}ii>` 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 > v vv}` iiVwV> }>  >V> 
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-
+ORTQXGPCPEKCNQRVKQPU*LVw>ViiV>>i 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
>Vv>iw>V>i]v>V>i}V>>V >`]VL`>iw>V>pVi
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
V>iviV>i`L>>Vv>>>Liw>V> 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>V> i>  > v ii} iVi x* >` / ii>Liii}>ivvv}`iiVwV>]V
{/]iVViv>iiVwV>iii do not depend on external support or international actors.
i v > Vi` >` w>V> >>Li Li 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 1990s, 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>Li vwVi ii`  i i i V>} v
elssuch 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 iii}VvivwVi`V


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.
7ii>VVi}`ViVi`vv}`]ii}ivw-
ciency offers a two-fold opportunity for improving delivery.
ENERGY EFFICIENCY  Vi>} i ivwViV v `V] >]
and distribution processes, it frees up energy resources,
"Viii`]ii}ivwViVLi}iiVi>-
thus acting as a virtual power supply (IEA 2015b). From
ingly as a key tool in delivering modern and clean energy
i`i>``i]ii}ivwVi>>ViV>>VVii-
iVi i}ivwViVvviiiv
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 20102015 the World Bank lent over
i>`i>Vi`ii}ivwViVVi]i>i>
fxLvii}ivwViViV>L}L-
nVi>`ii}ivwViV>}i/ii>>
>> >``> Liiw] >}} v i` iiV-
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>>Viivii}ivwViV>i>\
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
ii`ii}ii}`i>`>i> ivwViV}>iiV>`ii}>iV>>`
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- wvii}ivwViV>ii`Vii``>-
duction capacity. i` iVi >` iiiVi }}i > ivwViV
V>Li>w`iii}>VViiVi7iiii
It lowers energy costs, providing households with the
ii}i>iii`i`]ii}ivwViVpL-
option to spend less on energy services or move up the
ply and demandcan reduce the amount of investment
energy ladder.
needed. Wherever existing supplies fall short or are unduly
It reduces government expenditure on fossil fuels. iii]ii}ivwViVV>iii>L
and performance, and reduce energy costs.

TABLE 4.2 'PGTI[CEEGUUKPVGTXGPVKQPUCPFKPFKECVKXGGPGTI[GHEKGPE[DGPGVU


The EA+EE Opportunity in Context
ACCESS TIER TECHNOLOGY OR MODE OF DELIVERY ENERGY EFFICIENCYS VALUE PROPOSITION

TIER 1 ->*>Li>i*V*6
 i}ivwVi}i}``i >`V>i`Vii
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`-i  i}ivwVi>>Vi>`V>i`Viii}ii`]

allowing a given off-grid system size to provide greater service and
>i]i>vv`>Lii`ii>iiVi
 V>``  i}ivwVi>>Vi>``iViV>Vi>iiLi

of connections a mini-grid can support, and can reduce a systems
V>>Viii]i>}w>V>>L
 `
1i  i}ivwViVi`Viiii}V>`ii`i
time of motorized products such as mills, grinders, and pumps.
vwVi> ii}Vi>iLV>vi>`v>V>i
after dark commerce.
   vwVi>}iv}>>iLiiv`

iVivviVi>i>i>}iiiVV vwVi
i`V>>V>i>iii>L`iiiVwi`
>VV]ii>i>`i>vv`>Livv}`
energy systems.
TIER 5 ` iVwV>*i ->``i>``iivwViViiV>i>Vi
 -iV,iv iiVi>L>`w>V>iv>Vii}Vi
for consumers, and increasing likelihood of energy bills being
>`iVL`i`>vv]ivwViVV>i
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

i} ivwViV  v >VVi V> Vii 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
}}  i>Vi V>`iVi >` yiVi >] power transmission and distribution losses is estimated at
}ivwViV >>Vi V > /6 >` v>] } 8 percent the amount tends varies widely across countries
ivwViVvVV>i`>`>}V- and regions. While the OECD average is about 6-7 per-
tural processing, and improved pumpsideally 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 losses87 percent, 61 percent, and
'HEKGPE[QPVJG5WRRN[5KFG 44 percent, respectively.
On the supply side, the incentive structureutilities and These losses mainly stem from technical losses, caused
other grid-connected energy service providers typically L ivwVi ii >`  >i>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,
ii} ivwViV] `ii i >i >Vi  i sub-optimal, power system that hurts end-users, often
energy service business model. i`}i>Lvwi>iivwVi>
>L>V}`]>iviii}ivw- can undercut economic and social developmentby low-
ViV\>}iV>i`iiv}ivwVi ering enterprise productivity, employment, and competi-
end-use products reduces peak demand, which in turn mit- ii]>`Vi>}}wV>V>iVV
igates load shedding and the need for large new generat- activity and growth.
ing supply investments. Reduction in peak demand can /] Vi>} i ivwViV v i >
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>``ii`vii`iw>V>iv-
VV>iiV>`w>V>>}7`iV>i mance of utility companies, which limits the ability of coun-
ii}ivwViVV>>iiVi>`Vi iiiivwViVviiiVVv>Vi
satisfaction, which, when coupled with the lower energy In many African countries, the high rate of grid loss and
L] i Vi >i -`i ivwViV poor transmission and distribution networks has only
gainslike grid rehabilitation in Brazil, China, India, Mex- >i` v i iiVwV> v L> >i>  i-
ico, and Vietnam (Box 4.2)can enhance system reliability, over, the loss in power supply could have been utilized to
i w>V> iv>Vi] >` ii > i}>- `i ii} >VVi    > }wV>
watts generated are megawatts soldall 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 sourcesuch 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 `}` iVi i >i Li} iwi`
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 systemssuch 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, iiV>iVi`iLi>`w>-
i>],>`>]>`iiii]`}Lii>- 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 }`Vw}>]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- i}ivwVi>>Vi>iii`i`Vii


take, a grid loss reduction program that complements both ii} ii V ii`  V> ii}
their energy access objective and their transition toward access programs. Shaving a single watt from an off-grid
renewable energyalthough large-scale loss-reduction appliances load results in lower initial solar package costs,
Vii>Liiii>`iVi`vwVw>Vi improved service, or both (Van Buskirk 2015). Similarly,
by poorly performing utilities. Sierra Leone, as per its ii}ivwViVV>>i>}ivv}`>i-
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 wVi>>Vi>`}i`>*6>`L>ii>i
avoid non-technical losses (ECREEE 2015). India, with a i`] i `ii} i>i  }i>i ii} i-
transmission and distribution loss of 23 percent, is increas- vice. (Van Buskirk 2015).
ing its efforts to reduce grid lossesin part through a /]>`>Viii}ivwVi`iVipV`}
planned mandatory labelling of distribution transformers DC appliances as mentioned earlier now allow house-
(Mohan 2014). Rwanda, in line with its SE4ALL objectives, `i>iLiiw>`>>iVvi
iVi`w>V}vfxxvi 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['HEKGPE[QPVJG&GOCPF5KFG ances, as Figure 4.12 shows.
The success of off-grid technologies for providing energy ii] i i >V v ivwVi }} 
access in recent years is largely attributable to the availabil- off-grid energy service markets need not remain limited to
 v ii} ivwVi >>Vi  >Vi]  > lighting. The price and service impacts can be replicated for
Viiiv}ivwVi >>i>Li` other, more advanced, forms of energy servicesuch as
the implementation of various modern lighting pro- refrigeration, telecommunications, and industrial appli-
}>i >` >i  > >` iiVwi` >i>  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-
>`}i>ivVi>}i>vvi i]iivivwVi i`Viiii`vi
for over 1.5 billion people around the world who lack iii > *6 >` L>i Vw}> V>
>VViiiVV}` iiiii] street lighting can account for 20 percent or more of a citys
it can be powered by cheap local solar power. }`ViVi`iiVV>`,iw}ii}

FIGURE 4.11.KPMKPIGPGTI[GHEKGPVCRRNKCPEGUCPFGPGTI[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 (250400 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 25 Ah battery
a 6 W fan for 4 hours/day can power a LED lighting
a 1 W mobile phone charger fixture (200300 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 Universitys 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.

  V> >Vii }wV> ii} >} p i`V} 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- ii}ivwVi]}>]>`i`i}i`vv}`
works n.d.). In Guadalajara, Mexico, energy savings from appliances. At this point, such a market does not exist,
iw}ii} >i`ixiVi 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- >``vwViv>iiiVii`Li
]i>i`>iv`iVVi
ii}ivw- manufacturers. Moreover, off-grid companies are ill-
cient appliances has received renewed interest. Under the ii``iivv}`>>i>>Viv
traditional grid-connected model, alternating current (AC) i]>`i>iv>Viivv}`
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 }>L>V`]wiiV>i}i>`\
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 i }  `i  >>Vi >` ii]
>iivivv}`i>i>>}wV> usually to protect domestic manufacturing, generate reve-
`iVi>iiiVVi>``]iivwViV nue, or generate income from perceived luxury items (like
gain from the use of DC appliances, the size of PV panels >>,i`V}`iv}>]}iv-
needed for a SHS and battery systems is considerably wVi`VpLLiV>i`>}>>i-
reduced, resulting in a decline in the cost of off-grid energy national or regional standardwill 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,  ivwVi `V]  ] } >i >`
fans, and refrigerators) could in the long run prove to be a >VViLiiwV>iV>`i`Vi`>`
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). 'CUKPIPCPEKCNEQPUVTCKPVUThe procurement processes
tend to favor products with the lowest initial price, despite
.KPMKPI7R'PGTI['HEKGPE[CPF#EEGUU the fact that although many products with superior energy
7>V>Li`iLiiii}ivwViV>` performance have a higher up-front cost, they have a sig-
access, given how important they are to each other? Off- wV>iviVViV
grid energy access companies around the world are creat-
ing a global market to reach billions of consumersand Encouraging political and market champions. Econo-
ii}ivwViV`iiVViii}ii mies with energy access challenges often need a strong
needs. Conversely, energy access markets hold the poten- >`V>VvivwViV>i`i>
>`iii}ivwViViV}]>i]>`- L>i>viiiiii>Liiii
icy to leapfrog longstanding challenges associated with vi> Vi    ii} ivwViV
ii}ivwViV]V}`iVV>`i- and energy access; energy access experts are not neces-
i>Liiw]>`>v}i>i`V- >ii}ivwViVii]>`Vii>
sumes energy.
CLEAN ENERGY AND ENERGY A C C E SS 61

Enhancing visibility. It is tempting, and politically conve- i ii} ivwViV V> VLi  ii} iV
nient, to just add more generation capacity. But the focus and enhance the reliability of supply, particularly in capaci-
ii`  Li  } ii} ivwViV  Li V>i` i  >Vi] ii} ivwViV
energy service and sector performancewhich will have a measures in IEA member countries avoided at least 190
longer time horizon, even though it is less visible and iv>ii}{]i>ifn
>`i>v billion (IEA 2015b). The shift to clean energy also forces a
i >> v i}] vi ivwVi v>V>
Creating self-sustaining markets. This is a major chal- systems, often resulting in improved energy security. The
i}i}i>ii>iivv>Vi> ivivwVi>>ViVii`V>
often lacking in countries with low levels of access. But >i>}wV>>VLi`V}ii}L]>`
  > v i} >]   i ivV} 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).
}ii>>Vvii}ivwViVivv]ii
are many examples of smart practices and effective mod- A more sustainable clean energy market. Linking off-grid
ivV>}ii}ivwViV>VVi>Vi ii} i  ii} ivwViV Vi>i > 
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- >i] ii} ivwVi vv}` >>Vi V`i>L
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.
vii}ivwVi>>Vi>iviViv
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  >iV> v i >Vi v `V >
More jobs and higher green growth. The more capital
>`ii}ivwViV>>Li>i}
intensive an energy technology or infrastructural system is,
The new programssuch 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`iii]>i}]>`V>ivii} intense, cause net reductions in regional employment
ivwVi]vv}`>>Vi ratepayers have to lower expenditures on other goods and
iVi  w>Vi VV  V>] ii>Li
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 >i>ii>v>Vi>``VivL-
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 chainespecially, in
Today, the rationale for investing in clean energy tends manufacturing, construction and installations (MCI), and
> V`i  VLiiwp> ] i i `i operations and maintenance (O&M)with big variations in
ivviV] iV`> Liiw] V>i> Liiw]  >V- terms of job creation locally and in duration. For example,
>i`Liiwv>>V>}iiVVi>ii} construction and installation created the most jobs, and
i>>>`<>/iiLiiwV> 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-
>}V>i}ii>>v}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 2030thereby 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`iiv`iwV>>Vii`i`vviii 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 effectthat is, jobs created in
across the entire sector at the lowest cost. Many renewable iii>Li>`ii}ivwViViViL`-
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 energyit 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 LEAPThe 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 Lpi>i>{{iViVi>iii>
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).
ii  ii} ivwViV }ii>i - 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   x 

Wind onshore  x  

Wind offshore {   

Solar PV 1 9 11 0.2

Geothermal  n  {

Solar thermal  x { {

Ocean 3 9 1 0.3

Geothermalheat 6.9

Solarheat  {  

Biomass  {  x

Biomass CHP  xx  x

Source: IRENA.
Note: MW stands for megawatt.

culture through better irrigation and reduced fertilization services. Recent developments have dramatically altered
V>>Vi>iv>}iVi>>ii`} iV]iwi]>`i`>Vvi}
ii V  Vi>} i ivwViV v 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
 >` Vii i  iVi >`>> solar lighting products, SHS, and mini-gridsare no more
i  i} ivwViV }> V> i`Vi 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
}i>iw>V>iiViviVi full range of energy access suiting the needs and income
of households.
-L>>`ii>`ViVi]
CONCLUSION enhanced grid integration protocols, innovative off-grid
The continued growth of renewable energy and energy business models, improvements in storage technologies,
ivwViVp`iiiL}Vivvvip> and other developments are changing the energy land-
clear indication that there is a global shift toward the adop- scapewith 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 INDCs. This stems from the ing modern energy services and mitigating climate change,
increasing need to both tackle the issues of climate change Vi> ii} > > L} }wV> VLiiwp
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
VV]>`w>ViLiViiiiVv>Li ii}>`ii}ivwViVvviiiviVi`v
i >i V>] ii>Li ii} >` ii} ivwViV this rethinking and re-design of our energy system pro-
measures will contribute to providing energy access to cessessential for igniting the necessary innovations and
more than 1 billion people currently lacking basic energy iii`ii>Viii}i
64 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17

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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
,>>>]*x >}>`i>Li`w>>]
Reuters, January. http://in.reuters.com/article/bangladesh-so- \}}>}i}}>}wi`Vii
lar-idINKBN0KY0O220150125 supporting_paper_eac_tariff_exemptions_.pdf
Randall, T. 2015. Fossil Fuels Just Lost the Race Against Renewables. *i}>ix7>v->*6\-i vwVi
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
VV>>iiii>Liii}iV}>`>>Viw>Viii`vi>>VVi
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 systemsthere has been an increasing focus on new
electricity these days is reaching people living in remote `ii `i v > iiVwV>    /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-
  vwVi /i V> L>i`] Vi>i` tions for private investment, but many new approaches
>>V  }` ii i }wV> v are being implemented and may provide the foundation
iiv>Vi`iiiiii` 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 areaswhich demand less grams. But this approach is not sustainable. Based on the
electricityare much higher. Typically, these customers }}iiiViv>iiVwV>]ii>i}`
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
Li/]>i`iiiV>>iii`v ivvVi>Vi`>LVw>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>>>>iii>vV>i>`- cost-effective. For off-grid applications, there is an urgent
tainability. Following the International Energy Agencys need for more pragmatic business models that can achieve
(IEA) World Energy Outlook in 2011which stated that i>>Li>Vii`

67
68 S TAT E O F E L E CTR I CI TY ACCES S R EPO RT | 2 0 17

>V}>iw>Vi>ii}i- 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 involvementsuch as the UN ` i *i] >i `iwi`  > > `iVi
Foundation Energy Access Practitioners Network , SE4Alls 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
,> iVwV>, >i]i`ii`i 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 implementedincluding consideration of the (PPA) (Jha 2015).
w>V} iV> `Vi`] >`  V >` 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 V> }> v > iiVwV> }
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`iiV>i}wV>>`}
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- >VViLi w>V} `ipV >i >}  Li
able clean energy solutions. >Vi`ivviw>Vi>`iiV-
panies that focus on mini-grids and solar home systems
-- /ii w] > i>Li`  i > vi
HOW INVESTORS PERCEIVE RISKS AND i>]`iii>i>vw>V>]V`-
CHALLENGES ing early-stage corporate investment, working capital,
The creation of appropriate market conditions for new asset management, portfolio aggregation, and securitiza-
`ii`iii>>}ivii>``i  / Vi>i` V>>V v w>V> >>}ii
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-
Vi>i}>iii>`>v>> nized for mini-grids. Business models should therefore
ViL>iVi>i>wi>`i >>V`iV>`w>V>v>V]>`iV}i
compare favourably with other opportunities that may be the link between the two. And the government should not
>>>Lii/]>Vii`>``i only allay investor concerns about the level of risk but also
the unfamiliarity of investors with energy access initia- `ii }ii Liiw V`} i iV}
i]V`i>>ViiVi>w>Vi 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
i]Vw`iVii>Lv>iV- that the necessary policy framework is in place. As indi-
`>>iViiii`i]- cated in Chapter 1 of this report, it is also important to
> i} i i`iVi v > i V i}>iii}>VViivviiViVwV
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 >}ii` L i > i iVwV >i  >
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
>v>w>V>ii`,i`V}iiVii` short-term public sector funding. This can enable project
v>i`iv>iiviiiiVi> developers to offset upfront development costs and
over the future business environment. The lack of such demonstrate innovative business frameworks for success-
V>v>iiVwV>V`i}V 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
>>Vw>Viv>ii}>V>`ii- 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. >i`i]>i>>}vV>Vw>Vi-
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 } }` iiVi  i> v > vwVi >`
>i`vwV>VVi/>i}` technicians. Some form of direct subsidy is also often
companies are proposing other frameworks that could be ii`iV>iv
"]Vi>`>VVi
more streamlined and effective: government grants that reduced the SHS price, especially
Vii]vi}>vvi>}wV>
U ii L`i  i  w>V} 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
developers 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
`ii`iVi`ii}>`i}>-
Risk-adjusted capex and operating subsidies, poten-
ity standards for these systems; and (iii) creating more sus-
>L>i```>Vi
"Vii>-
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
iii>>ii`>L>VV>>V
low-income housing subsidies.
>}`w>V>`i>Vi>]LV>i
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>Vii>vV>ivV>V`i"*
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 >> > i ii iv / i>  i
promoted for decades as solutions to energy poverty in Vivii>>i>>i>i>Li
developing countries. Since the 1980s, companies like the international wholesale norms. System suppliers have
->iV>]Vw>Vi>i 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 ii i / `i v V} Vw- 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 VV>iV>V>i
ii>i]Viv>Viiw>V>`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`> > >i`] > V> > v>i  i> rate of expansion depends upon customer access to
$2-3 per day would struggle to pay outright for a basic $70 w>Vi/ivv}`>>iiVi`}v
solar home system. In addition, these consumers often about $540 million in 2014 to $2 billion by 2024with
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 worldsuch as through ingly attractive in many markets. This is based upon expe-

" >}>`i]Vw>Vi`>i>- 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
]`iLE}>pi>`6
i
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
L i>],>`>]1}>`> >x f *>iiV >L>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

ii} i Li  > w>Vi `i > >Vi 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
>i i  ii v i i *9 > 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
>i>]i>]ViVii`} >>V>`i`Viiw>V>ii
 iii] V>`i] L>ii] >` i > of the provider.
ii}iVi*`i>iVii`vvi> *9w>ViVLiV}>VViii}
after sales service, since a users 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>V}iiiVi\ World Bank platform) has estimated that there are 32 PAYG
companies in 30 countries, many of them in Africa (Global
U  `iwi vii v iVi  V i Vi
Lighting, 2014). They use existing mobile payment sys-
never owns the system itself, but rather merely pays for
iV>VV>`vviiViV
iLiiw
the ability to use it. Payments are typically made on the
v Vi>i` >vv`>L] Vi>i` Vw`iVi  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 v>}wV>>w>V>v>Vi]>`i`Vi
off the principal of the system costand the consumer the cost and risk of doing business. M-KOPA Solar is an
must make discrete payments, typically on a daily, viVi`i>iv>w}`iiiVivV-
weekly, or monthly basis (thereby resembling a typical cessful PAYG applications, having connected more than
w>V}>>}ii 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).
viivVi`viw>V}
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-
 iiVwV> ii i `>Vi v i }`   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. ii]>`>>>Liw>V}v`}
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
>iLi}`iii`>`w>Vi`i>`i> 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-
>V>i}iv}`Lii/i>v 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
i L i > v iVi >` > i> v V }ii V> Vi>i }wV> V> iVi
w>V> >>L ii] iVi iV} - will eventually be able to afford TVs, radios, refrigerators,
>ii}>`VViiLwV and other appliances in their houses. They will also start to
as Powerhive, SteamaCo, SparkMeter, and Inensus) are invest in so-called productive usesthe engines of
i>L}iiLi`i`]iiLV}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 wV>ivi/V>iV>>V-
limits, and remote monitoring and control to improve mini- ity that can be offered by stand-alone systems but is
grid operations. ii>Vii`ii`vv}`
/iVv`>>}>i}ii`i>Lvi ii v i i vwVi v > >VVi>Li
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 `i>`iiVVvi`>iiV-
iiiivviiii`viV essarily aligned with the realities at both the local and
development, facilitating broader aggregation options. >> ii *iV `iii >i `iwi` ii>
The pooling of contacts from individual households or iVwVL>i]V`}\
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
Vii>>ivii`vwV>}>i
established businesses in developing countries. This has
triggered the beginnings of scale-up by a number of Local politics:
ii} V>i >` w>V} }>> > >i 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 clans terri-
i`iiyiVViiviiVi>`V`i tory, they would sabotage it.
>>>iw>V}iV>}`ii- 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
vVi>iw>V>V>>>>>Lii>`] 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
i w>V}  }ii> v >i Vi] vi U 1}ivw>Vi`iiivv`}
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 }iL>iV>iw>V} i}}`ii`i
>wi` } iVi >` i>L -Vi { must take account of experience to date, which has con-
 iii ViV > ii >>i >vv 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 Africas Pay-as-You-Go Success Story

East Africaand in particular, Kenyahas a long history of build- V]V>iVi}>i`ViiV>}}V>>L-


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 yearmost of them launched by the Kenyan telecom company Safaricom in 2007
through an unsubsidized free market. Solar was then (and is now >` V LiV>i > >`>` >v v w>V> >>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
i] >`  i ii v Vw>Vi ] 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 modeltogether
market remained very shallow. In addition, there were concerns overcoming the main affordability constraint for solar home sys-
>Li>viii>i 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 emergeddriven 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
}>] V `Vi` > >`>` >` `i` i> i- ,V>i`iw>iv
market support, off-grid solar product sales in Kenya and neigh-
boring East African countries explodedreaching almost 2 mil-
lion in Sub-Saharan Africa in 2016, with Kenya accounting for FIGURE B5.1.1 Kenya leads the way in Africas off-grid
almost half (Figure B5.1.1). This growth was supported by a solar product sales
v>>Li wV> V] > > `V Liiwi` v i
1HHITKFUQNCTRTQFWEVUUCNGUKP55#TUVJCNH
East Africa Communitys 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 >V>>i`vvii]>}ii`vw- 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 modelthere are few suc-
}wi]}}V>-
Vii  }i LV w>Vi] } 
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
`iwi`iii>>Li>V>v}`
wi`   Vi V > V> Li
Pre-payment alone (such as the PAYG model used success-
exceeded as long as they are wired into the circuit.
v  >`>i i  vwVi  i i
Liv>Vi`L}`i>}`L`iw- Neither solution has been found to be effective over time.
nition are extremely capacity constrainedthey 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 w *9 ii >i V> Lii i-
age a 50-50 split between cash sales and PAYG. However, cally integrated companies controlling all aspects of the value
i viV> > }wV> }i } v *9 i`> chainfrom 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- i/iiLiwi`LiiViii-
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% vV>V> }i>]>>]
i`i]>`>Li
operate under a rent-to-own service model. ii]i>Viv}iiLiyiVi`Li
presence or absence of the factors behind the East African suc-
GSM integration and mobile money are becoming standard
Vi]>i>>iViiLiiw
features. Payments with mobile money, such as M-pesa in
>i i  > >}i iiVwi` >] Li i
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
vv}`LiiiV`}iwV>i}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`viviii>Livi]w>V>L>i]>` 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 i i>Li  Vi  >` vii
course of private sector participation in the power sector in power outages. As a result, many users, particularly busi-
`ii}Vipii}i>>`iwi` nesses, must also invest in a back-up generation facility,
by centralized agreement with the national utility mini- V  vi `iiii`] ivwVi >` iivi
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 i\ ivviVi i v >i >` i>> ivw-
 V> V`  > i iii v VVi >` 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>i > V> Li `iwi` L i>} `vvii prospective solutions are constrained by policy restric-
examples of current business applications from 10 of the pV>wi`>vvVi>>iiii>-
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- 612kW Standardisation for scale;
{Vi i> `ii >L>ViV`vw>Vi
Cellphone payment
GHAM POWER 3 micro-grids >100 micro- Nepal Solar 110kW 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, 15250kW 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 510kW Low-cost smartcard meter
Africa with related management Sale of electricity blocks
systems and consultancy MicroPowerEconomy delivery
ipyiLi>vvEV
credit
M-KOPA 340,000 +500 homes/day Kenya, Solar 520W 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 16kW 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
-*, / ,  >> wi`>}i >]vV>] -iViv> qx7 ii}Li>i
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 15kW Set own tariffs;
partners in 5 years Aim for standard banking terms
i` w>ViiV
I- `]Viiv>i}}1-ii>Liii}V>]wi`vL>ViV]

/i }` i  > i >i v yiLi >i 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>V>`i>iV`i`i>>vi>- containing households that already have individual sys-
i ii] `} >i yiL] >` vvi} tems supplying electricity from renewable energy, most
w>V>ViiVi}i}>ViV 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.
iiVVvwVii>Li/]V>iii` In the on-grid power sector, successfully developing
LiViiivwVi]Vi>`ii}i new infrastructure relies on effective partnerships between
appropriate business models, infrastructure, and local >vii>i`i]Viii}i}-
capacity building. ation. The incumbent utilities, the different layers of gov-
/i w>V> `i }i} i  v Vi> ernment, the host communities and households, and
energy to any existing grid is often the determining factor >iiVw>`ivVii>`
v VVi / i>L ii > L>>Vi Liii complimentary inputs that bring added value from their
Vi>vv`>L>`vwVi>}vii- perspectives. For grid extension to remote communities,
 "i   v > >i V>  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 iiVwVVV>Vi]`iiiii`]>`V-
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- V`i >] iVV>] iVV] >` w>V>
i}i]`vvii>i`i>wi``vvi- design and implementation arrangements that ensure
ent solutions geared more toward their individual needs. iivwViiiV>`iw>V>>`i>>
As a result, the best way for developing countries to sustainability.
>Viiw>V>>>Li}`iiiV- 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 businessnotably, (i) thinking broader than energy; (ii)
existing structure to a standard that can provide a satisfac- ii}>vLV>`>iw>ViVL}
tory service at acceptable costprimarily due to limited investment with assistance; (iv) dealing with affordability
w>V> iVi i > i i} >>}ii issues in context; (v) engaging with consumers; and (vi)
vii>}wV>}iiL`]i- 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
ivwViVi>`iLi`i>i>Lii}` 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-
>Liii]i>>ViiivwViyiL lenges and scale up their energy business, they will be able
in the governing policy frameworks. This will mean revised `iiiV>>>}i>}}w>V}
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 sectors drive for Li}iVii]>`iiviiw>Li
ivwViV>`>L>iV>>} 1Viv>w>Vi`ii}V>i]V-
Vi   i}L`  w Viip i ` i > >Vi > > ] i > L` >
i`ii}>iVVLiiwvi positive credit history and access an ideal form of collat-
(Box 5.2). This was done through a smart adaptation of a i>]ViV>iiw>Vi
Li`i]VViii`w>Vi] There is potential for some providers to make the tran-
and an emphasis on engaging and building trust with the  v ii} V>  >i w>Vi V>
communities. The government, including the regulator, M-KOPA, for example, now offers a self-described double
i`  > >` >i` `wV> v 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. iw>Vii]Vi>Lii>`vv]>`>i
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>V}iV>viivwViVi]>i
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 }>VViV>`iViV>viw-
>i>ViLi>V>i>VViVwV 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 >LiViw>V} V>Li>i\V-
i]i`i>ivivwVivv- iw>V}>iv]>`>i>
ther investment in grid extension. This suggests that, par- dangerous one. Responsible lenders and diligent regula-
ticularly in Africa, alternatives to further grid coverage }iiii>w>Vii`
need to be developedas Kenya showed in its Last Mile improve development outcomes, not merely to push prod-
Connectivity Program (Box 5.3). uct sales.
/ii  >Vi v vi ii}w>Vi >
*>i  V> w>V>  V` L}
OPPORTUNITIES FOR BUSINESS IN >``> w>V> iVi  Vi > ii 
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,
i /ii >i > >}i v v>V > V> Li `iwi` 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'NGEVTKECVKQPKP0GY&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 millionincluding 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
TPDDLs 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- #FFKVKQPCNDGPGVUNKPMGFVQNGICNEQPPGEVKQPU 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-
ViV`ii>iV>viL>>V] ument their electricity bill to avail various services pro-
it created a new Special Consumer Group (SCG). The group got vided by TPDDLs CSR initiatives and other government
w>V>>`>iViviV>Vi agencies, including TPDDLs 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
w }  `i>` i ii` >`  iiVV 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
Liiwvi}>ViV>`iv>V>iiViV-
dwellers needs. Understanding that electricity was not the
tions and bill payments. They also teamed up with the local
}iii`]>i`i}>}}w}
>i
community leaders to be their Franchisees by creating
Social Responsibility (CSR) program to accommodate the
ViiviVi>iViVivwViVyi-
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.
>]i}i>}iviiVwV>
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
`Vi>``i`ii>i>v 93,000 in 2009 to 175,000 in 2015. Revenues from the slum
supply and customer service. The companys 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 vniVi>LiVi]>`ViVivwViV
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
iL}}i`ii}>}ViV>iii-
young men and women.
ment of a land title to prove tenancy. To overcome this chal-
/]/* >i>iiVwV>V>Li>
i}i]/* i`>vw`>}i`LVi
w>Liii>i>i`>V>>Li
waiving TPDDLs responsibility in case of any slum demolition
but as a successful business model to bring down technical and
i}>>VLi}ii-V>>vw`>`Li
commercial losses and increase revenue generation in the
used in place of land titles to get an electricity connection. In
slumstreating slum dwellers as valued customers. It has been
addition, by holding camps for new connections in slum
>>]Liiw}Li>>`
areas and helping people with the paper work, TPDDL proac-
the company.
tively reached out to these communities rather than wait for
iViivwVi/i`Vi`ii 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

Kenyas Powerful Last Mile Connectivity Program

i>  iL>V} iiVwV> > > y>} access in grid connected areas. Since Kenyas 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-
iiVwV>p}}viVi 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 >`}}iiVwV>}>Vi
and Lighting Company (KPLC) consumers, with more >vv`>L  > w>V> >>Li >i /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}ii>}``iwV>i- from KES 35,000 ($343) to KES 15,000 ($147) (to be
clethe Last Mile Connectivity Program (LMCP) paid in instalments). However, such consumer connec-
seeks to connect all consumers within 600 meters of a  V>}i >i vwVi  Vi i ViV
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-
` iVi V`} i 7` >w>Vi`
Kenya Electricity Modernization Project) to speed up sumers paying a lifeline tariff and are cross-subsidized
LiVi*
i>iiiii-
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 utilitys
w>Vi /ii   >  }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 Li}}>i`*
viiVw-
cation purposes, thereby keeping the
Source: KPLC debt off KPLCs books.

ings to whole countries or regions, they will have built the potential market for energy supplies in remote areas will
w V>>Li `i v `} >i w>V}  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- Vi`i]w>Vi]>`>V>`iV>>]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 Vw>V}v>Viii>Vi>`}iV
Due to the capital-intensive nature of investments in developers can access the latest tools available. In this
ii}>VVi]`iLw>V}VV>}`iV way, the developers of new delivery models can consider
`iiiiiiVw>ViVii}- i >i w>V>  >` i  >`> i >
tial cost of building out their grid infrastructurelike gen- best match local conditions.
eration and distribution systemsand PAYG solar
`iii`iLivv}V>> Combining Investment with Assistance
w>Vi i i i w>V> w >i L}} 7i w>V>   > iVi> }i`i v V-
innovations to the market for energy access to facilitate cess, well-informed investors recognize the value of offer-
i y v `iL  }` iV >` *9 > ing something additional to address the risks presented by
companies alike (Box 5.4). new technology, markets, and business models. Thus,
/iiw>V}iV>`>>V>iii >i w>Vi >i Vi>} >} > V-
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- i V>i}i >` `iii` >i v `}
 > i w>V> iV> i`  >``i > 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.  1-- Li CrossBoundary Energy. vV>w`i`V>i`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 >`>`>]LiiVwVViv
receivables held by energy access businesses by 2020 solar installers and project developers for commercial
*ii i}
>>>}>i>>V and industrial installations in Africa. CrossBoundarys
 ii i } V>> ii`  vw ii target system size is between 50 kW and 5MW, and it
receivables. In December 2015, it launched a securiti-  L}} **   `iw>Vi` >` }}
zation of customer receivables called Distributed sector under its SolarAfrica platform. PPAs are already
Energy Asset Receivables, or DEARs. This approach i`i`>``ii`w>V>>}iii
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
i V> Vw`i i >V i ii} 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.
vi`}LV>w>V>]>`i>Vv
SunFarmer. Like CrossBoundary, SunFarmer is focused
Vi`>}>`>>i>iivi`
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-
}>`w>V>`V>>V>Vi tion to reducing transaction costs through deal
 >``i} i w>V> L>i v ii} >VVi >`>`>]i1-V>iwiV
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`}iiiVL}>}]Lw>-
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>ViiiV>i>>`wV>-
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-
i /i V> iiV  >>V  w ii
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
vwVi] >` VL> > vvi L>` w>V>  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.
ii>V>`i>}iv>V Schneider Energy Access Ventures (EAV) recognizes
Factor(E) Ventures uses customized engagements with this need in their portfolio companies and takes a similar
vV>i>>``iiiiVV> 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
ii   ] >`> v L  v There is a basic condition for any successful business any-
Schneider employees per year for its portfolio companies. where in the worldknow your customer! It is often stated
It can also access facilities and systemssuch as overseas that all locations for non-grid energy applications are differ-
manufacturing plants or accounting systemsto 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. /ivii`>>L>>V
 ] >  v LV >` >i iV w>Vi  iViv>`iiiv>V]iii
ii`  i>L] >>] >` } i >i  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
}ii  ` VL  wi`  vvi included in any business model aiming to address energy
vV >iiVw>ViLi>>>Li access in developing countries. Similar to the establish-
to cover the full costs of operation, maintenance, and rein- i v >i i> >` iV> w>V} >>}ii
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
*9V>i`iViiLiiwv} wi`L>i`>ii>>``iV>i`
i`Vpiii>]>vi]>`>- /L>i`w>V}V>>Li/ii`L]V`-
v}pL>i}wV>>}ii`i 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 salessuch as door to door
V>Vi>ifxiwvi>v} 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) i>}ii`vi>Vivi
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
Liwi`iVi]>i>Li}vwViv 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,
Azuris 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. i`>viii`>`LiivviVi>-
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-users 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
>` V`i }} > >>Vi i i ii 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.
Vi >i>Vi iii >` ii i>Vi- vwVi >vi>i iVi i  i v>i]
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
ivL>>V}>vv`>L>`vwViiii Vi>i >` } w>V> >VVi] L >
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
>} > w>V> >>Li `i Li  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-
iV} vwVi i> iii  > i>> 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 customers battery is charging and
presents an enormous market opportunity for private sec-
`V>}}]>}i``iiw
tor suppliers, though the continued involvement of public
swap. They can also look at the performance of the solar
v`}ViLiii`L`Li`i
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 its gathered dust
level of risk to investors. The public/private economic
and needs to be wiped clean(Faris 2015). This proactive
`i >  Li ii`  >i v >VV v
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 users system based on usage pat-
with local stakeholdersincluding government, utilities,
terns and weather analysis. This is the approach adopted
the host communities and households, and private sector
L   
" - >wi`> >
w >} i  V>p>i iVi> v i V-
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-
Vi v VVi V> Li `iwi`] iiL vvi} >
Smart to improve system performance by dynamically
framework for effective market development. Second,
adjusting the brightness of the systems lights according to
}i>iV`i>Li}iiw>-
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.
vV>VipLi>iiii`
ii i i`i Liiw] }ii Vi
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,
iVi`iii>>V`>V>Liwi`
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.
EMERGING AND INNOVAT IVE BUSINESS AND DELIVERY MO DE L S 81

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SPECIAL FEATURES
To download the State of Electricity Access Report,
overview, and Special Features, visit:
http://esmap.org/SEAR