24 June, 2024 ARE article

Time to scale investments to address expanding electricity access gap

The world is facing a critical challenge: ensuring everyone has access to electricity by 2030, an objective outlined in Sustainable Development Goal 7 (SDG7). However, recent trends paint a concerning picture. According to the World Bank’s latest 2024 Tracking SDG7 Report, a slowdown of investments means that we are not on track to electrify the continent by 2030. Currently, 685 million people globally live without electricity, with another 1.5 billion living in weak grid areas – a figure which has gone up for the first time in decades.

It is estimated that 55% of these people are expected to be powered by distributed renewable energy (DRE) technologies by 2030. To achieve this clean energy transition, a global investment of USD 35 billion annually is needed until 2030. While this may seem significant, it’s a manageable amount – equivalent to 11% of Shell’s 2023 revenue.

Public-private collaboration: Key to unlocking investment in DRE

The rate of connections delivering access to clean and affordable electricity via DRE solutions must accelerate to put the world back on track to meet SDG7. The considerable capital required can only be leveraged through strong public-private collaboration. Tried-and-tested strategies to concretely advance on access to electricity (SDG7.1.1) include smart grants, blending instruments, capacity building, and market development programmes.

The recent ARE Energy Access Investment Forum (EAIF) 2024 showcased encouraging examples of this collaboration:

• The EU pledged EUR 4 million for developing renewable energy investment pipelines and a dedicated EUR 20 million facility for Nigeria, in addition to other funding programmes;
• The World Bank announced a EUR 700 million investment to expand access to clean energy in Nigeria, which will eventually unlock additional EUR 1 billion in private capital,
• ADA presented its Financial Innovation Tool (FIT), which supports to mini-grid operators.

Closely linked with finance is the impact of DRE solutions. ARE Members are deploying these solutions worldwide, creating significant benefits for both people and the planet. The impact of DRE projects extends far beyond providing electricity; they contribute substantially to socio-economic development by creating green jobs and accelerating climate action in emerging markets and partner countries like those in Europe.

DRE solutions are the cornerstone of sustainable and green economies, powering productive sectors such as agriculture, telecommunications, mining, and mobility. To better streamline impact monitoring and mobilise more catalytic capital, harmonised environmental, social and governance (ESG) monitoring and evaluation frameworks are needed. ARE is therefore keen to support efforts to harmonise ESG frameworks and impact measurement across the DRE sector.

ARE: Championing the DRE sector

ARE supports the global clean and just transition to green economies through distributed renewables and to make sure that DRE markets reach scale.

ARE does so by federating the entire value chain of the DRE industry, from investors to developers and technology providers. With over 200 members ranging from stand-alone solution providers to green mini-grid companies, more than 25 members active in DRE financing, and a growing network of regional experts. The Alliance is expanding both across private sector and in programmatic partnerships to address key market challenges. ARE also acts as a gateway to the industry for our numerous public sector partners with whom we work on the joint objective of achieving the clean and just energy transition.

Stay tuned for an exciting second half of the year as we launch new initiatives and intensify our efforts to fast-track the roll-out of DRE solutions. With ARE and its Members leading the charge, let’s take the chance to collaborate, and invest in the transformative power of DRE for a brighter, electrified future. Join us as a Member or become a Partner to be part of this united action.