Innovative approaches will be needed to resolve enduring challenges in meeting the unmet energy needs of people, especially in the developing world, in light of the global commitments made under SDG 7. For example, the time-honored approach to electrification of households and firms is through connections to a national grid. But this traditional model, because of its expensive and technically rigid nature, has been unable to provide access to 1.1 billion people across the world with a reliable supply of electricity, despite the impressive expansion in recent years in many low and middle-income countries. At the same time, national grids are often driven by fossil fuels making them unresponsive to concerns about climate change.
Contemporary experience across the world has shown that the off-grid solar sector (OGS) can serve as a viable and ecologically friendly supplement to a national grid in responding to the needs of unserved and underserved households and firms, especially in low-income communities. The most recent global evaluation suggests positive and enduring benefits. The sources used for this summary can be found here, here and here.
- In 2017, OGS provided improved electricity access to 360 million people and the expectation is that this will double over this decade. This means that the OGS can play an important role in supporting the attainment of SDG 7
- By encouraging households to switch from kerosene and other conventional fuels, OGS devices have led to an estimated savings of USD 5.2 billion
- 6 million tons of greenhouse gas emissions have been avoided using traditional fuels
- Providers of OGS devices have been a source of direct job creation in the formal economy. For example, in 2010, globally there were only 60 firms. By 2017, this has risen to 300
- The market for OGS is competitive, with the market concentration ratio falling from 50 percent of annual sales to approximately 30 percent between 201 and 2017
- OGS devices have indirectly supported an estimated 1.9 million people in income-generating activities by spawning new business and expanding existing business demonstrating an important link between formalization and electricity provision
- An estimated 45% of OGS users reported health benefits by reducing their reliance on kerosene
- These global benefits have been supported by a regional evaluation of several East African countries
- In terms of job creation, estimates based on the East African experience suggest 21 fulltime equivalent (FTE) jobs per 100 OGS devices sold, with 52 percent of these FTEs being undertaken by women and 50 percent in rural areas.
- Given that globally in 2017 an estimated 22.3 million devices were sold, the implied global job creation rate is 4.68 million that can be attributed to the OGS
- An evaluation from India suggests a higher degree of consumer satisfaction with OGS devices than with the national grid
There is, of course, the issue of the role of the private sector, the government and donors. Certainly, the private sector has been responsible for the direct provisioning of OGS devices, but this requires the support of the government. Increasingly, governments are aware of the role that OGS can play in supporting the unmet energy needs of households and firms. Hence, as in the case of Kenya, OGS has become a formal part of the national electrification strategy. The global industry association that represents firms in OGS has argued that perhaps one of the most effective ways in which governments can support the development of the off-grid solar energy is through the provision of fiscal incentives. If taxes and tariffs are either temporarily or permanently withdrawn from all OGS devices, there will be a significant drop in prices stimulating the expansion of OGS. In Kenya, for example, a reduction in the price of a solar lamp due to fiscal incentives by 43 percent can increase household uptake of OGS devices by 22 percent.
Finally, donors can play and have played, a supportive role, especially in low-income countries that are significantly reliant on development assistance. For example, the World Bank Group has been quite active in supporting the development of the off-grid energy market in 25 countries, mostly in Sub-Saharan Africa.