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Why AfDB needs to prioritise decentralised energy solutions

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The move by the Africa Development Bank (AfDB) to prioritize energy access is to be applauded. Access to energy is a fundamental right, and it is the key to health, education and economic prosperity. We welcome the AfDB’s goal of providing energy solutions to 75 million people through decentralised, off-grid systems.

WWF believes that the 600 million people still without access to electricity in sub-Saharan Africa. need modern, affordable and reliable sustainable energy. This is their fundamental right and a prerequisite for economic prosperity in Africa. However, linking 130 million Africans to grids which are expensive, unreliable and inefficient might risk lock millions of people into out-dated and carbon-intensive forms of generation.

Energy access is not only about connections; it’s also about the steady supply of electrical services for households and improving people’s livelihoods. In Sub-Saharan Africa, grids often provide highly intermittent and uncertain supply, with many people in ‘grid-connected’ villages continuing to live in darkness or who switch to diesel generating sets much of the time.

Connection to unaffordable, unreliable infrastructure should not under any circumstances be equated to proving energy access. This is a fundamental flaw in energy planning where an inefficient centralized grid powered by fossil fuels, or mega dams causing biodiversity and habitat losses are still considered a major option for universal energy access.

Further, the cost of grid connection is a major barrier when it comes to majority of African countries: for example, a connection to Kenya’s central grid costs around US$400 per rural household,  or one-third of the average annual per capita income.

There is a need to recognize that “Grid for All” might not be the first answer to overcoming energy challenges in Africa. Looking at the scale of the challenge, sustainability, affordability and climate concerns should be the actual standards for deciding the energy mix.  The falling cost of renewable technologies is making them the technology of choice in some markets. The solutions lie in scaling up decentralized energy solutions like mini grids and distribution systems to provide a steady and reasonably priced supply of electricity, thus opening new opportunities for socioeconomic growth and sustainable development.

WWF is working in more than eight countries in the region, on both the policy front and on implementing energy access projects in local communities. We would like to see AFDB take the following steps to prioritise decentralised energy solutions:

1. Unlocking capital to accelerate deployment

To date, less than 10% of AfDB’s total energy finance has been directed to decentralised off-grid solutions. The International Energy Agency’s ‘Energy for ALL’ initiative suggests that, to achieve universal energy access, around 70% of available finance should be directed to the off-grid sector. This shows that AfDB should scale up its distributed renewable energy finance more than 10 times compared with 2017 levels.

2. Encouraging a new mindset among energy planners

As well as addressing financial barriers, AfDB should be playing a bigger role among its member countries in changing the mindset of their energy planners when it comes to the existing widespread perception that decentralised technologies are primarily a tool for poverty reduction. Studies have shown that off-grid solutions are the best way for energy-hungry Africa to meet its need for power while avoiding increases in carbon emissions.

AFDB and its member states need to mainstream off-grid renewable energy into regional, national and rural electrification strategies. This would create an institutional framework to support off-grid energy development at the local, national and regional levels.

AFDB also needs to ensure that there exists a platform with and among its member countries to ensure that key ministries and energy planners are aware of the opportunities and the pace of change in technologies and business models which have reduced the cost of off-grid energy solutions.

3. Broadening the investment universe

To deliver energy access at the speed and scale necessary, support needs to be directed towards both government and private sector-led efforts – and AfDB should support small off-grid producers in large numbers rather than making a relatively small number of investments in large power plants and infrastructure projects. AfDB needs to direct its resources not only to countries with existing infrastructure, but also towards member states with relatively lower access to energy, and with underdeveloped energy markets and private sectors.

4. Ensuring policy, regulatory and market reforms

The private sector will not invest without the right policy, regulatory and market conditions. The AfDB should therefore push for policy and regulatory reform, the introduction of tools to reduce currency exchange risk, efforts to increase consumer and political awareness, high product quality standards and import tariff reform. National-level policy measures such as feed-in-tariffs, net metering, subsidies, and rural electrification funds will help underpin off-grid solutions. At the same time, rural electrification funds need to support collaboration between private sector and mobile banking infrastructure, and leverage public private partnerships. This would help bring affordable energy solutions to communities, making them both designers and consumers of localized power.

At the same time, AfDB needs to use its relationships with local banks to encourage them to partner with off-grid investors and developers, helping to reduce the risks faced by the latter.

5. Encouraging collaboration

Successful off-grid deployment requires bringing together a number of partners. First, AFDB should encourage its member countries to engage in meaningful partnerships with civil society and private actors when developing energy plans or projects. This would result in an integrated resource planning approach that speeds the delivery of energy solutions to the poorest populations.

It should also support collaboration between project developers, investors, mobile telecommunications companies and providers of mobile banking infrastructure, working in partnership with public authorities. Off-grid electrification promises a substantial economic opportunity, but it requires the participation of a wide range of players.

6. Integrated solution to Achieve 5 Highs

In addition to electrification, off-grid energy development involves addressing the challenges of climate change, overcoming poverty, improving health and creating jobs. For instance, decentralized energy solutions would be instrumental in expanding rural health centres, improving agriculture and agri-food related activities, or reducing losses and increasing resilience to climate variability agricultural practice. Thus, Universal access to energy will be fundamental in achieving the other four highs of AfDB: Feed Africa, Industrialize Africa, Integrate Africa and Improve the quality of life for the people of Africa. Hence, energy is the binding force fundamental to achieving the targets of other priority areas.

Conclusion

Off-grid energy development can help Sub-Saharan Africa address the challenges of climate change, poverty, poor health and underemployment. Decentralised energy solutions could be instrumental in expanding rural health centres and improving agricultural productivity, helping Africa to industrialise, and in tapping the connectivity needed to integrate with the global economy.

As part of their current partnership, WWF will be walking together with AFDB and other partners on its goal to achieving universal access in Africa, earlier by 2015, so five years ahead of UN SDG 7. At the same time, the road map is to plan for 21st century solutions and not to move backwards! The ambition is to significantly live up by the spirit of the continental Agenda 2063, to build The Africa We Want!

Gaurav Dahal is Senior Advisor to WWF’s Global Energy Access Programme, based in Kathmandu. gaurav.dahal@wwfnepal.org

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