Building Resilience to the Next Pandemic: The “Power” of sub-Saharan Africa’s Off-grid Electricity SectorOn 13.07.2020 by Churchill Omondi Agutu
By Churchill Agutu
Churchill Agutu is a PhD candidate carrying out research with the Energy Politics Group in collaboration with the Kigali Collaborative Research Centre (KCRC) under ETH Zurich’s ETH for Development (ETH4D) Scholarship. His research focuses on energy policy and finance and its influence on electrification in Sub-Saharan Africa.
In the wake of the current global pandemic, building resilience to future pandemics will be on the minds of many policymakers going forward. For sub-Saharan Africa, linking electrification with essential services such as healthcare, clean water and sanitation, could do double duty by expanding electricity access and making these countries more resilient to COVID-19.
The past months have shown that many countries worldwide were not prepared to effectively deal with a global pandemic. Many countries in sub-Saharan Africa (SSA) do not have access to reliable and affordable electricity, putting them in the most vulnerable position, as basic electricity-enabled services, which could significantly ease the process of providing healthcare, clean water and sanitation, are unavailable. Connecting customer-hungry off-grid electrification companies with electricity-hungry essential services, creates the impetus to not only accelerate the move toward meeting the Sustainable Development Goals (SDGs), but also to build resilience to future pandemics in rural areas.
Over the last decade, governments in SSA have increasingly looked to the off-grid electricity sector to electrify regions that may not be connected to the grid in the near future. Serving individual households primarily, however, has not enabled off-grid businesses to flourish — the sector is even at risk of stagnating as investments in the sector slow down as a result of the pandemic.
For mini-grid (MG) companies, electricity demand forecasting in unelectrified areas remains a significant challenge. MGs are capital intensive and need to be appropriately sized to optimize utilisation. Thus, companies are always in search of a stable and predictable consumer and anxious for opportunities to provide valuable energy services to larger customers. This includes identifying potential customer value-added energy services for productive energy uses, appliance financing to stimulate electricity demand and also potential energy service business models, such as water distribution and purification amongst others. Solar Home System (SHS) companies are also exploring new markets to serve as some countries begin to saturate.
In speaking to public and private sector experts in East Africa, it is clear that: 1) off-grid electricity companies are hungry for larger consumers to serve, and 2) there are potential low hanging fruits in this sector that policymakers can leverage, not only to expand access to electricity, but also to provide better healthcare and sanitation services.
Low hanging fruit 1: Electrifying healthcare services
This hunger for new customers creates an opportunity for the provision of electricity services that serve the people, the public sector and the private sector. For instance, access to affordable and reliable healthcare remains a challenge in many SSA countries, yet electricity-enabled services such as refrigeration, laboratory machinery, and other potentially life-saving medical equipment could be the difference between life and death for patients, particularly in the midst of pandemic. In fact, a study of 11 major SSA countries found that roughly 1 in 4 health facilities had no access to electricity, even though healthcare facilities would be ideal customers, with high and constant electricity demand. This electricity consumption pattern makes healthcare facilities a market that presents fewer system utilisation challenges for MGs and could allow them to electrify households nearby.
Low hanging fruit 2: Electrifying clean water distribution
Electricity can also enable clean water distribution in rural areas. Access to clean water is vital for SSA countries, where approximately 315,000 children die each year from unsafe water-related diseases and poor sanitation. Further, access to the water itself remains a challenge as women and children bear the brunt of having to travel long distances to fetch water for domestic use, averaging as much as 6km on a daily basis. One can imagine how this will change due to climate change, which is increasing the likelihood of drought. The absence of accessible, clean water has only made responding to COVID-19 more difficult, as frequent handwashing has become more urgent in order to minimize the risk of catching the disease. Opportunities for piping water from existing water sources, as well as pumping groundwater (to varied scales) for domestic and agricultural uses are available for exploration.
In this case, SHS companies may be particularly suited to find a win-win situation. For example, they are in a great position to test their lease-to-own business models to provide clean water. Prepaid clean water outlets are another potential idea that could be explored. In Uganda, for example, the Buikwe district government worked with a Uganda-based NGO (Water Mission) and the Icelandic government to construct boreholes and piping water systems powered by solar energy, with water outlets in 39 villages (dubbed water ATMs) reaching 45,000 people. These outlets enable access to clean drinking water for which residents pay a fixed price per jerican (ca. 20L). Using digital water payment and monitoring systems, the residents purchase credits, which can then be used to pay for water. Such business models can offer added convenience and reliability for users in situations where water is scarce and provide additional consumer demand for SHS companies constantly in need of expanding their consumer base.
Policymakers are the key to bridging these gaps
Although the world is still in COVID-19 crisis mode, policymakers can begin to find ways to bridge this energy service gap by engaging with the private sector and development institutions to map out specific healthcare, sanitation and water distribution services that require electricity access. The private sector is in a position to provide insight into what the value-added services to the customer are that can generate revenue and therefore provide a business case for electricity service provision for these essential services. Deliberate consideration of these services allows for questions to be raised around the risks to the private sector, as well as the required financing, and questions about the potential for these services to overcome challenges faced by the public sector in providing access to healthcare, clean water and sanitation.
For example, while these low hanging fruits could provide potential sources of consumer demand for off-grid companies, there remain barriers on the ground that policymakers can address that could facilitate connections between water, sanitation, and healthcare services and off-grid electrification companies. For instance, affordability still remains a challenge in most rural areas. Healthcare centres remain underfunded and may not be able to afford to pay for better energy services. In this case, policymakers can explore the possibility of subsidising project developers to provide healthcare energy services. Removing this barrier would not only reduce the cost of electricity services, but also facilitate the provision of improved healthcare services. Further, deliberately linking these types of services gives the policymaker an opportunity to incentivise the energy company to develop tailor-made business models and products that can serve these markets.
Policymakers are in a position to safeguard rural economies against future pandemics through the services enabled by the off-grid electricity sector. However, intentionally taking steps toward connecting these dots must be thoroughly examined. It is high time policymakers thought about it, as it opens up new ways of thinking about service provision and energy access in Sub-Saharan African countries.
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Suggested citation: Agutu, Churchill Omondi. “Building Resilience to the Next Pandemic: The “Power” of the sub-Saharan Africa’s Off-grid Electricity Sector”, Energy Blog @ ETH Zurich, ETH Zurich, July 14, 2020, https://blogs.ethz.ch/energy/africa-off-grid/