Designing a new architecture for universal electricity access in Africa

More than half a billion people live without electricity in sub-Saharan Africa – 85 percent of all those in the world who lack access – and despite an intensification of effort, population growth still outpaces new connections.

Affordable, sustained access for the next waves – to reach people with fewer resources and who live in more remote rural areas – won’t be achieved using only today’s models of traditional grid extensions or privately developed distributed renewable infrastructure.

Structuring for the Last Mile: Financing the Next Era of African Electrification offers a deep analysis of the electrification sector today, and sets out a practical blueprint for a new approach.

Drawing on decades of evidence from regulators, developers, utilities and financiers, the report argues that universal electricity access in Africa requires a new architecture that finances service delivery rather than hardware deployment, gives operators clear service obligations and allocates risk to those in the public and private sectors who are best placed to carry it.

This report is essential reading for policymakers, businesses, financiers and development partners focused on closing sub-Saharan Africa’s electricity gap.

KEY FINDINGS AT A GLANCE

Part I: The Current Landscape

• The next wave of customers is structurally harder and costlier to reach.
• African utilities recover 80 cents for every dollar of operating costs and debt service, creating a cycle of service degradation.
• Volume-driven incentives for pay-as-you-go solar have generated unsustainable credit practices, while lack of maintenance means as much as three-quarters of solar energy kits are in disrepair.
• Isolated grid extensions and standalone solar have failed to achieve the route density to make after-sales service and collections viable.
• Private capital costs roughly twice infrastructure-grade financing because risks are loaded onto operators who are least able to bear them

Part II: The Next Wave of Rural Electrification

• A new approach can take the best lessons of infrastructure finance and blend them with the capabilities and costs of mature distributed energy solutions.
• Governments assigning operators exclusive service territories with clear universal coverage obligations can unlock economies of scale and attract infrastructure-grade finance.
• Fully funding the cost of service – for example with revenue settlement mechanisms to bridge the gap between regulated tariffs and the full cost of service – can make rural concessions bankable.
• Real examples like Zambia show how this approach can help achieve universal, adequate, sustained access at the national scale, within current funding structures.

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Download Part I

DownIoad Part II