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Energy and Climate Change

Decentralised electrification systems are key to electricity access in Africa

Newsitem | 22-05-2017

More than 600 million people in Sub-Saharan Africa have no access to electricity. Furthermore, millions of people live in areas too remote from the existing grid to be connected at reasonable cost. Decentralised electricity systems, including mini-grids and stand-alone systems, thus play a vital role in achieving universal electricity access. International development cooperation can help strengthen the national enabling environment and support local market development for decentralised electricity production. Furthermore, international climate finance could be better targeted to smaller-scale decentralised electricity projects.

This is concluded by PBL Netherlands Environmental Assessment Agency in their report Towards universal electricity access in Sub-Saharan Africa. In this report, PBL analyses the technology and investment requirements for achieving universal electricity access in Sub-Saharan Africa. With the adoption of the UN Sustainable Development Goals (SDGs), the global community has committed to achieving universal electricity access by 2030.

Additional annual investment requirements of USD 9–33 billion

It is estimated that, up to 2030, around USD 15–19 billion per year will be invested in production capacity and transmission and distribution infrastructure in Sub-Saharan Africa, and that 530 to 600 million additional people will have gained access to electricity by 2030. However, without explicit new and additional policies, between 350 and 600 million people will still have no access to electricity by 2030, 90% of whom living in rural areas.

Achieving universal electricity access requires further expansion of generation capacity and transmission and distribution networks. The preferred electrification system (grid-based or decentralised) depends highly on the expected level of electricity consumption of households gaining access for the first time. In sparsely populated remote rural areas with low electricity demand, decentralised systems, mini-grids or stand-alone systems, are generally more cost effective. Depending on the expected electricity demand, additional annual investment requirements to achieve SDG target on electricity access  are estimated at between USD 9 and 33 billion.

More than finance alone

Energy providers that focus on off-grid electrification face a number of barriers, including the lack of a level-playing field with on-grid technologies, high risk perception, low returns on investment and high transaction costs. These barriers cannot be removed by increased financing alone. International development cooperation could contribute by supporting market development for off-grid systems, targeting international climate financing to decentralised electricity projects, and help strengthen the national enabling environment to incentivise decentralised energy access.

Impact on climate change is negligible

Households connected for the first time are likely to have relatively low electricity consumption levels. Furthermore, around half of the projected growth in electricity production between 2010 and 2030 will come from renewable energy sources. Therefore, the increase in CO2 emissions and related climate change that would result from achieving universal electricity access is negligible.

Global coordinated climate policy may stimulate renewable energy deployment

A large part of electricity generation capacity and transmission and distribution networks in Sub-Saharan Africa — both centralised and decentralised — still needs to be built. This not only comes with challenges, but also provides the opportunity of building a renewable electricity system.