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Light at the end of the tunnel? Overcoming Africa’s rural energy challenge

2nd July 2015

Africa is in the grip of an energy crisis. That’s the central message of this year’s Africa Progress Panel (APP) Report, published last month. It’s hard to disagree. The disparity in access and affordability set out in the report underscores just how critical the challenge of powering Africa is for the continent. There’s no shortage of proposed solutions and ideas, but what we know for sure is that without a relentless commitment from governments to generating energy, the light at the end of the tunnel will remain just that. It’s going to take a new blend of private sector partnership and innovative, off-grid technology to reach the rural masses.   

Africa’s rural poor bear the brunt of the lack of energy.  The poorest fifth of Ugandans spend 16% of their income on dirty energy sources such as kerosene and firewood. For the richest Ugandans the figure is closer to 5%. The APP’s comparisons with Western countries are even more disheartening – a woman living in a village in northern Nigeria spends around 60 to 80 times per unit more for her energy in absolute terms than a resident of New York City or London.

While the cost of accessing poor quality energy is too high, the consequences of a lack of access to electricity are grim. The household air pollution caused by Africa’s reliance on dirty energy sources like firewood and charcoal kills 300,000 children under five each year. Not to mention the lack of access to reliable electricity that prevents kids from doing homework at night, hospitals from keeping essential medicines and businesses from taking off.

The urgency of the challenge is beyond doubt. Yet expensive new power plants and large grid projects will not solve Africa’s rural energy crisis any time soon, however important they are in the long-run. These catalytic projects often take 10 - 15 years to start supplying electricity. Then there’s the barrier of the prohibitive cost of new transmission lines to rural areas, which developers are keen to avoid. For example, it costs five times as much to electrify households in rural Tanzania than to connect urban customers in Dar es Salaam. And even if governments invest in grid expansion to cater for remote areas, most households of rural Kenya or Rwanda are simply unable to pay more than their entire month’s income to for a connection. If grid-based solutions are the only option for thousands of rural families and businesses, the wait for reliable, affordable energy could go on for decades.

In this context, renewable off-grid solutions, which can be quickly and cheaply deployed, could have an enormous impact.

Private sector partners, social entrepreneurs and nongovernmental organisations alike are lining up to help realise this potential. In 2015 alone, investors and development partners put US$42 million into off-grid solutions in developing countries, mostly in Africa. Through Power Africa’s ‘Beyond the Grid’ framework, 40 private sector investors have committed to invest over US$1 billion into off-grid and small-scale energy solutions.

This unparalleled level of technological innovation and international commitment to rural electrification solutions could be a game changer for Africa. But commitment from governments and smart policy choices are absolutely crucial. Leaders need to make rural electrification a priority and enhance their government’s capacity to meet ambitious national access targets. Creating dedicated rural electrification agencies and funds for example – as in Ghana and South Africa – can help ensure plans stay on track, even if governments change. Leaders must also put in place the regulatory frameworks to encourage investment and long term partnerships with private sector players. Senegal’s innovative concession system is a relevant case study. International donors helped the government offer up to 70% of the capital investment needed to meet rural electrification targets in different concession areas of the country. Encouraged by the government’s commitment and an exclusive right to generate and distribute electricity in a concession for 25 years, private suppliers stepped up to supply an additional share of the total required investment. The winning companies brought to the table much needed skills and new technologies, including new off-grid solutions. The concession programme has so far been a success, helping to increase Senegal’s rural electrification rate by 15% over a decade. Other more targeted policy frameworks can be put in place to help entice off-grid and renewable investors. The Botswanan government for example offers loans to help finance initial installations, while other countries have handed out import subsidies to help secure vital renewable energy components.  

Addressing these challenges is a key pillar of AGI’s work on Power Africa.

African governments looking to increase energy provision to rural areas already have several excellent examples to follow, as highlighted in the APP report. Ethiopia’s Ministry of Water and Energy has a plan which will deliver 150,000 solar home systems, 3,000 institutional solar PV and 3 million solar lanterns in rural areas of the country. Kenya’s government has capitalised on new public-private partnerships which make use of nascent technologies and business models. Through M-KOPA, Kenya innovatively combines solar and mobile technology by allowing customers to pay a small deposit for a solar home system and repay the balance in affordable ‘pay-as-you go’ instalments. Through credit guarantees and continued political support, the government of Rwanda has driven forward the Ignite Power initiative, which brings together several private companies and philanthropic organisations. By paying just US$1 a week, through a “rent-to-own” model, rural Rwandan households get access to a pre-paid system that can power four lights, a radio and television, and charge four cell phones. The government and its partners plan to deliver off-grid, solar technology through the initiative to an impressive 250,000 to 1 million households.

Africa’s off-grid revolution is underway but speed is of the essence for those living without electricity. Nearly 100 million Africans, or 26 million households are already enjoying the life-changing energy access which these sorts of solutions can offer. Through demonstrating strong leadership and setting the necessary foundations for new and exciting partnerships in off-grid energy provision, African leaders can begin to deliver energy access to those who need it most.

 

 Photography: SolarAid