As 1.3 billion people lack access to electricity globally, the challenge of ensuring universal electricity access in accordance with the Sustainable Energy for All initiative remains herculean. This chapter maps policy linkages, identifies the gaps in policies and recommends options for developing the enabling environment. The chapter suggests that the policy environment governing electricity access at present is weak and that improvements are required to deliver a sustainable outcome. Although grid extension remains the preferred mode of electrification in many countries, it is not the least-cost option in remote areas where decentralized off-grid solutions may be required. Successful promotion of off-grid solutions would require a clear regulatory environment, a non-discriminatory support mechanism for various stages of a project, financing options, policy co-ordination and linkage with other economic activities for rural development. The chapter concludes that capacity remains weak and non-transparent policy lobbying can distort the development of an enabling environment.
TopIntroduction
The Sustainable Energy for All initiative of the Secretary General of the United Nations (UN) in 2012 has crystallized the global attention on the energy access challenge. It is estimated that about 1.3 billion people in the World in 2012 did not have access to electricity and 2.6 billion did not have access to clean cooking energies (WEO, 2014). South Asia and Sub-Saharan Africa contribute the lion’s share of non-electrified population. Out of 1.3 billion without access to electricity, around 1.1 billion people lived in rural areas, making this a predominantly rural challenge. As lack of access to energy in general and electricity in particular deprives the population of the opportunity to carry out activities to meet their essential needs, energy poverty creates developmental impediments through economic and human development challenges, thereby hindering sustainable development of any country. This is supported by the observation that a generally improving human development index and higher incomes of countries are found with better energy access. Accordingly, the Sustainable Development Goals, consisting of 17 goals and 169 targets, adopted in September 2015 have included access to affordable, reliable, sustainable and modern energy for all as one of the targets to be achieved by 2030.
A critical review of electrification experience (Bhattacharyya, 2012; Alstone et al., 2015) suggests that grid extension has been pursued as the favored approach to electrification and connected billions of people with relatively low cost energy. However, in all successful cases the state has generally funded the electrification investments. In addition, subsidized tariffs are also provided in many cases to allow consumers to use a minimum amount of electricity and even cross-subsidies between different consumer categories are used to support rural electrification. However, the misdirected use of subsidy instruments has created financial distress for utilities and the governments, while the benefit has missed the targeted population. Moreover, the narrow focus on grid extension did not often result in poverty alleviation or economic development of rural areas through linkages with productive and income generating activities and the quality of supply remained poor with rural areas hardly receiving reliable and on-demand electricity supply. Accordingly, sustainability of energy access remains doubtful because of the failure to meet present needs, inability to contribute to economic development, and continued damage to the environment due to reliance on polluting energy sources.
Moreover, the central grid is unlikely to reach many unelectrified areas for a number of reasons:
- 1.
The capital cost of grid extension is often much higher than the states or utilities can afford;
- 2.
Managing a rapid grid extension in countries with a very low electrification rate will be practically challenging and unrealistic; and
- 3.
Financial viability of such projects remains doubtful due to socio-economic conditions, and cost recovery issues.
Where grid extension is not feasible, decentralised off-grid solutions such as solar home systems and local mini-grids can be used. But the promotion of these solutions has suffered due to the perception of “inferior” or “temporary” nature of the solution, high cost, limited use and a step-motherly support system. Yet, (International Energy Agency & the World Bank, 2014) indicates that to achieve the universal electrification objective by the year 2030, off-grid options would have to play a significant role, with 60% of the unelectrified rural areas gaining an off-grid solution in the form of local grids or stand-alone solutions. The report estimates that an investment of $890 billion will be required between 2011 and 2030 and the business-as-usual rate of investment will not be sufficient to ensure universal electrification by 2030. Clearly then an enabling business environment has to be created to unlock the decentralized electrification opportunities.