Paris, 4 June 2018 - This year’s Renewables 2018 Global Status Report GSR reveals two realities: one in which a revolution in the power sector is driving rapid change towards a renewable energy future, and another in which the overall transition is not advancing with the speed needed. A closer look at Chapter 4: Distributed Renewables for Energy Access, where ARE was a lead topical contributor amongst other partners, acknowledges a slow but positive global outlook for energy access in developing countries.

Distributed renewables for energy access (DREA) systems are renewable-based systems (stand-alone and off-grid systems as well as mini-grids) that generate and distribute energy independently of a centralised electricity grid. DREA systems provide a wide range of services – including lighting, operation of appliances, cooking, heating and cooling – in both urban and rural areas of the developing world. 6% of new electricity connections worldwide between 2012 and 2016 were provided by off-grid and mini-grid renewable energy systems. In some countries, DREA technologies play a key role in fulfilling the energy needs and enabling the livelihoods of millions of people living in rural and remote parts of the world.

In 2017, off-grid distributed renewable systems attracted strong interest from governments and international organisations that are striving to improve energy access. The PAYG model for small solar systems, enabled by the emergence of mobile technology, has become one of the dominant business models. This, combined with the reduction in solar PV costs, has enabled the rapid spread of DREA into new markets, particularly in sub-Saharan Africa. DREA systems are emerging as the least expensive and fastest option for providing energy access to many remote rural populations. However, reaching energy access goals requires the necessary enabling environment in terms of legal and regulatory frameworks, appropriate financing mechanisms and sufficient overall investment, as well as strong partnerships between public and private actors.

Key highlights:

Overview of Energy Access

Approximately 1.06 billion people (about 14% of the global population) lived without electricity in 2016, about 125 million fewer people than in 2014.

Technologies & Markets

People in rural and remote regions generally acquire improved access to energy in three ways: through household-level use of isolated devices and systems that generate electricity and/or heat; through systems such as mini-grids that are village-wide or regional and that connect multiple users; and through grid extension, where the grid is extended beyond urban and peri-urban areas.

Investment & Financing

DREA systems attracted some USD 922 million in investment between 2012 and 2017, with a large portion of this for solar PV. In 2017, off-grid solar companies raised USD 284 million, a decrease of 10% from the USD 317 million raised in 2016. PAYG companies attracted nearly all of the investment. As of the end of 2017, the PAYG solar PV companies had raised an estimated USD 263 million, an increase of 18% from 2016.

DREA companies attracted funding in 2017 from various sources, including development finance institutions (DFIs), impact investors, investment funds, foundations, commercial finance and crowdfunding platforms. Impact investors (USD 139 million) and DFIs (USD 71 million) accounted for nearly 75% of the financing secured by off-grid solar companies in 2017.

Business Models

In recent years, innovative business models have been used to scale up energy access delivery strategies. A shift has occurred from the donor/government-driven model to a private sector model, where private firms lease or sell an electricity generating system and supply energy to consumers who pay for the service provided. These business models have enabled the commercialisation of affordable and reliable products, helped overcome market failures and increased the viability of providing services to the off-grid and poor populations that lack access to energy.

Policy Developments

Although much progress has been made in many regions of the world to increase energy access through the use of DREA systems, the lack of appropriate policy support and an enabling environment is often seen as one of the key challenges impeding growth of the sector. For example, some 70% of Africa’s least-electrified countriesi have not yet established a proper enabling environment including the right policies, institutions, strategic planning, regulations and incentives to support energy access.

Moreover, fewer than 50% of the 55 countries defined as access-deficit have implemented national programmes for the deployment of stand-alone solar systems.

Policies supporting the growth of DREA systems can be classified in five broad categories:

  •  Reduce import duties and tariffs on renewable energy products
  •  Support the availability of local finance through loans, grants and microfinance
  •  Establish energy access targets and national commitments
  •  Establish rural electrification plans or programmes incorporating DREA
  •  Provide regulatory support such as established procedures for mini-grid operators or the adoption of quality standards for products and services.

In 2017, several countries adopted policy measures to create the appropriate enabling environment for DREA deployment and increased rates of energy access.

International Initiatives & Programmes

Numerous international actors and donors continued to be committed to deploying DREA systems in 2017. For example, in 2017 SEforALL launched a people-centred accelerator that aims to advance gender equality, social inclusion and women’s empowerment in the sustainable energy sector.

 

Source: http://www.ren21.net/gsr-2018/chapters/chapter_04/chapter_04/