The Rise of Distributed Energy Access
To quote my friend Jose Briano from ENZEN: “Electrification is probably the single most important means of empowering a group of people to leverage their wits and own means to progress. Access to education and information, commercial and industrial enterprise, security and civic participation, sustainable farming practices and basic services are all enabled by electricity.” The importance of giving universal access to affordable, reliable, sustainable and modern energy is underscored by SDG 7. This is to be achieved by 2030.
However, the world is currently not on track to hit this target. The latest indicators show that as of 2017, 840 million people are still without electricity. Based on current projections and considering population growth, 680 million people will remain without access by 2030.[1] 30% of the challenge comes from just three countries: India, Nigeria and the Democratic Republic of Congo.
Figure from the report “Energy Access, Data and Digital Solutions” by TFE Energy (link)
In the past, electrification was primarily achieved by expanding centralized grid infrastructure. Now, however, as distributed generation technologies have become competitive in many situations, they are seen as a core and necessary element of many countries’ electrification strategies. This is a function of falling technology costs (especially of solar modules and batteries), of the maturation of the distributed energy industry and its business models, and of the benefits of digitalization explained in our report (link). It is also due to the fact that the remaining unelectrified populations are often those hardest to reach by traditional means.
Figure from the report “Energy Access, Data and Digital Solutions” by TFE Energy (link)
Determining the most cost-effective electricity supply option depends on the size, density, and remoteness of settlements, on the required service level and on expected energy demand, as well as on terrain features and the condition of the main grid. Grid electricity is often the lowest cost option when settlements are large and dense, when the local economy and energy demand are strong, and when the terrain is easily accessible and contiguous. As communities become smaller and more sparsely populated, their local economies weaker and terrain more complex, the cost of extending the grid rises rapidly. The decentralized approach — mini-grids and OGS — is explicitly designed to avoid building costly infrastructure across large distances. Ideally, the provision of the least cost, robust service would be the yardstick for determining the best electrification approach, but the reality is often more complex. Importantly, while the fundamental capital expenditure (CAPEX) for main grid technology remains more or less constant, the CAPEX for distributed solutions — OGS and mini-grids — is continuously falling. Our Village Data Analytics tool helps determine how best to electrify off-grid areas. It looks at the supply/cost side and at the potential energy demand.
– Tobias Engelmeier
You can download the full report on how data and digital solutions impact global energy access investment here.
[1] The World Bank, Tracking SDG 7: The Energy Progress Report, 2019 (link)
