28 of March 2018

Why we need a subsidized energy access for remote and poor households?

The off-grid industry has appeared as the perfect solution for providing power supply especially for remote and poor people. However, there are evidences that today in reality it cannot reach this target group with the existing models of distribution and financing.

The sale of solar systems via end-customer loans (pay-as-you-go / PAYG) proves to be an effective financing and sales instrument. But today's business strategies only reach a portion of the 1.2 billion people without electricity.

The "Off-Grid Solar Market Trends Report” from GOGLA found that the expectations regarding impacts are often not reached, and in particular the lowest-income population little benefited from the current commonly adopted PAYG approach.

Presumably, a purely profit-oriented approach is not enough to ensure "sustainable energy for all". A mix of for-profit and non-profit elements is needed - as it has been the case with traditional forms of energy supply for decades.

Unlike fossil fuels, it is the connection to the power grid that is here usually highly subsidized, but not the price of the purchased electricity. But even this approach does not provide a viable solution, because a) the expansion of the power grid in remote areas is unpayable, and b) even in urban and peri-urban regions, the price of electricity is often so high that people cannot afford it.

Kenya is an example of that, where the energy provider has had to admit that millions of households are connected to their electricity grid but consume little or no electricity because it is too expensive.

A possible new approach could be rather to apply the current approach to grid electricity to decentralized solar technology and to subsidize access to energy. Only that it is now just an access to the sun instead of access to the power grid: the purchase of a basic solar system (3 LED, mobile phone charging) is made possible for all households at a subsidized price.

Since the subsequently consumed electricity - in contrast to grid electricity - is generated free of charge, the heavy burden on households caused by increasing expenditure on fossil fuel or grid electricity is eliminated.

It is therefore time to redirect subsidies from old energy technologies to decentralized energy solutions. Then a reliable supply of electricity to the remote and poor areas would be possible.


Harald Schützeichel, Sun-Connect News Editor



ALER'S NOTE: For more information on how electricity subsidies are not reaching Sub-Saharan Africa households with the lowest income, have a look at Power for All latest research summary.