Paris, 18 June 2019 -  Evidence drawn from this year’s Renewables 2019 Global Status Report clearly indicates that renewable power is "here to stay". However, new bolder policy decisions are needed across all sectors of energy end-use to make our energy systems sustainable. The report finds that there has been significant progress in renewables uptake, energy efficiency and energy access, and it states that the world needs to speed up if it is to meet the targets of the Paris Agreement and Sustainable Development Goal 7. A closer look at Chapter 4: Distributed Renewables for Energy Access, where ARE was a lead topical contributor amongst other partners, acknowledges a concentrated but positive global outlook for energy access in developing countries.

Distributed renewables for energy access (DREA) systems continue to play an important role in providing access to modern energy services to households in remote areas of developing and emerging economies. Already, an estimated 5% of the population in Africa and 2% of the population in Asia – or nearly 150 million people across these two regions – benefit from energy access through off-grid solar systems. Building on the momentum of the past five years, DREA systems are increasingly being used to provide access to electricity. In 2017, more than 122 million people obtained access mainly through off-grid solar systems, and the off-grid electricity access sector attracted a record USD 512 million of corporate-level investment in 2018, up 22% from the previous year. Development finance institutions also increased their support to DREA in 2018, directing some 7% of their total investment in energy projects to off-grid systems. However, finance for energy access decreased in 2018 for the second year running and remains far behind the estimated amounts needed to reach universal access to electricity and clean cooking.

Key highlights:

Overview of Energy Access:

In 2017, about 122 million people worldwide gained access to electricity, reducing the global population without electricity access to below the 1 billion mark.

Technologies & Markets:

Distributed renewable energy systems such as mini-grids and off-grid solutions are the most cost-effective means for providing electricity access in rural and remote regions, yet there is no one-size-fits-all solution for bringing modern energy services to the millions of people worldwide who lack access to them. Underserved populations can be provided with electricity through grid extension and connections, off-grid devices and systems such as mini-grids. 

The market for off-grid solar systems has grown exponentially over the past decade, with estimated sales reaching 23.5 million in 2018, up from only 0.9 million in 2010.

Business Models:

The success of DREA systems in recent years is due in part to innovative business models that have made many of the systems more affordable than fossil fuel-based solutions such as diesel generators and kerosene lighting. In countries with a relatively high penetration of mobile money, the PAYG model has been a key enabler of the mainstreaming of off-grid solar systems. Productive use is especially important with mini-grid applications, as these grids can be scaled to optimise both the load on the grid and the revenue of the operator. To develop new productive uses and sustain existing ones, mini-grid companies are increasingly providing finance to facilitate the adoption of productive applications, to train users on how to operate the machines and appliances, and to extend support to the productive microenterprises to ensure their long-term viability. As the off-grid energy sector matures and as competition increases, many PAYG companies are reviewing their business models to either sell additional services to their customers or target new customers.

Policy Developments:

As part of efforts to provide access to modern energy for rural populations, an increasing number of countries are turning their attention to distributed renewable energy technologies and are introducing specific policy measures to promote them. One of the more common types of policy measures is to include DREA in national strategies and commitments. In 2018, several countries integrated DREA in their rural electrification strategies and plans.

Governments are taking an active part in rural electrification by:

  • Including DREA in national strategies and commitments - i.e. tendering and selection procedures. 
  • Developing specific regulatory support and rules for DREA systems - regulation defining the different classes of micro-grids, the types of generation that they can use, and the role of utilities and municipalities in overseeing them.
  • Adopting specific incentives to create a more supportive and enabling environment for DREA - i.e. import tax exemptions for renewable equipment.

Investment & Financing:

The year 2018 set another record for energy access investment, with an estimated USD 512 million in corporate-level investment flowing into off-grid electricity access companies – a 22% increase from the USD 418 million invested in 2017. Since 2010, the bulk of the investment has been directed towards off-grid electricity companies operating in Africa. Investment continued to flow to DREA start-ups involved in providing electricity access. Off-grid electricity start-ups (including off-grid solar and mini-grid companies) raised an estimated USD 389 million in 2018, a 2% increase from the USD 381 million raised the previous year. Investment in the sector was driven mainly by the stable growth of off-grid solar start-ups, particularly PAYG companies.

International Initiatives & Programmes

International actors and donors continued to support the deployment of DREA systems in 2018 by providing finance and technical assistance but also by facilitating partnerships and organising networking and advocacy events. Furthermore, Several initiatives and programmes are targeting the promotion of appliances that are specifically designed to be powered by off-grid systems and that in many cases can generate income for end-users.