Tuesday, 24 May 2016

Current approaches to offgrid electricity need to be changed to achieve universal access to electricity

PricewaterhouseCoopers LLP (PwC)

The PwC report - Electricity beyond the grid: accelerating access to sustainable power for all - says a new approach is needed
JOHANNESBURG, South Africa, May 24, 2016/ --
  • PwC report says new renewable off-grid technologies, in combination with innovative business models and mobile payment systems hold the key to rural electrification.
  • New approaches to beyond the grid electrification need to be adapted to achieve the UN 2030 target of electricity for all.
  • Policymakers need to get out of a top-down mindset and support the role that a range of renewable energy off-grid technologies and new business models can play.
  • Advanced renewable technologies and storage solutions could also threaten the existing business models of power utilities across the African continent in the future.
Energy transformation means the time is right for policymakers to reappraise their approach to energy access, according to a new report from PwC (www.PwC.com). On current trends(1), two-thirds of the world’s population will remain without electricity by 2030, which is the target year to achieve the newly agreed post-2015 UN Sustainable Development Goal of universal access to energy. The PwC report - Electricity beyond the grid: accelerating access to sustainable power for all - says a new approach is needed that better recognises the part that off-grid technology can play.

John Gibbs, Africa Deals Power & Utility Lead, PwC, said: “For the millions of people who don’t currently have access to electricity, the old assumption that they will have to wait for grid extensions is being turned on its head by new technological possibilities. 634 million people without electricity are in Africa. Faster progress is needed, and we believe it can be achieved if national energy policies adopt a more comprehensive approach to energy access, embracing the new starting points for energy provided by standalone renewable technology and mini-grids.”

Current electrification strategies tend to focus on national grid extension plans. Instead, Georg Baecker, senior manager and energy policy and regulation expert, PwC said: “Policymakers need to embrace the new renewable off-grid technologies and innovative business models. The combination of centralised top-down grid extension with decentralised demand-driven bottom-up strategies, in the form of mini grids and especially standalone solutions, will speed up the increase in electrification levels.”

The report foresees a major transformation of the electricity sector in the period ahead. Angeli Hoekstra, Power & Utility Specialist for PwC Africa, pointed out: “‘All or nothing’ approaches that focus primarily on the national grid are increasingly out of step to what is now possible in power technology. Advances in technology are rapidly changing the options available beyond the grid. Falling solar technology costs have spurred the growth of standalone home systems and are changing the economics of mini-grid systems. Battery storage technology is fast evolving to the point where it is going to play a significant role in utility-scale solar power storage and is beginning to feature in smaller-scale off-grid solutions. Together with access to mobile technology and mobile payment systems for microloans, a new era has arrived for beyond the grid electrification.”

The PwC report sets out five recommendations for accelerating the increase of electrification:
  1. Develop an integrated energy access plan and map – so that everyone can plan with more certainty for either off-grid or grid extension solutions.
  2. Create an enabling environment for off-grid development - including clearer criteria for mini-grid development, support for skills and training and more supportive regulation to allow private players to unlock the off-grid market potential.
  3. Recognise the value of and promote the growth of mobile infrastructure, microloans and payment solutions in supporting energy access - mobile infrastructure is proving crucial in the take-up of standalone home systems, giving providers a low-cost channel for customer relations and an ability to automatically manage non-payment.
  4. Establish an off-grid innovation and development fund - a highly visible development and innovation fund can play an important part in spurring off-grid growth in each country.
  5. Have a high-level energy access champion that can drive results – to cut through bottlenecks and monitor results.
Based on the technological advances in off-grid systems and battery storage, a decrease in their prices and an increase in energy efficient appliances, Hoekstra also says that there will be a real future threat for the current established integrated Power Utilities, especially the ones without a reliable supply of electricity. They will need to adapt their business models or due to an increase in embedded generation and subsequent customers going off-grid, they will face a major challenge ahead in their future sustainability.

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