On 19 April, the Climate Parliament organised a parliamentary roundtable on investment in minigrids for rural electrification, in collaboration with the United Nations Industrial Development Organization (UNIDO) and with the support of the European Commission (DG INTPA). Nicola Bugatti, a key expert on rural electrification at the EU Global Technical Assistance Facility (TAF) for Sustainable Energy, first answered questions from Léa Hillaireau, Policy Coordinator at the Climate Parliament, and then debated with parliamentarians from Benin, Burkina Faso, Djibouti, the Democratic Republic of the Congo and Senegal.
According to the latest Tracking SDG7: The Energy Progress Report, published in June 2021 by the International Energy Agency, the number of people still without access to electricity has fallen dramatically over the past decade, thanks to the implementation of Sustainable Development Goal 7 (SDG7): to ensure access to affordable, reliable, sustainable and modern energy for all. While close to 1.2 billion people were without electricity in 2010, this figure had dropped to 759 million in 2019. The development of off-grid solutions has enabled real progress in expanding access to electricity in rural areas. Renewable energy has played a key role in this expansion, particularly in Sub-Saharan Africa where solar resources are abundant. While that same report is pessimistic about achieving universal energy access by 2030, our expert and parliamentarians believe that a significant acceleration of public and private investment should enable several countries to reach their national targets.
Nicola stressed the importance of policies and regulations that are favourable for investment, as well as a strong institutional framework that allows the private sector to get involved. According to him, parliamentarians can intervene in three key areas: making sovereign decisions on the remuneration of electricity services, promoting competitive and transparent tenders to bring down costs, and developing plans and strategies based on geographical information. He argued that universal access to electricity can only be achieved by diversifying the choices of technology and working with all options, mini-grids and other off-grid systems, as well as extensions of the national grids. We must identify the best solution for each city and village and optimise resources through a case-by-case preliminary analysis. Burkina Faso, which has made great progress on rural electrification in recent years, has studied and identified the best possible combinations of technologies to decide on its investments, and built networks better adapted to local circumstances.
Many parliamentarians asked questions about access to finance. Once the regulatory and institutional frameworks are in place, the major challenge is to identify the actors capable of investing the necessary capital for the effective implementation of projects. Nicola recommended using packages that include not only government grants, but also financial instruments to de-risk investments such as credit lines or guarantees, in order to encourage private sector involvement.
Nicola also discussed the two types of models adopted by countries to leverage investment in mini-grids. Some countries, like Ghana, opted for a model where the investment is entirely public, and only maintenance operations are managed by the private sector through business contracts. The main challenge of this model is mobilising public investment in the first place. The second model, chosen by a majority of countries, is that of public-private partnerships (PPPs). The strategy adopted by Sierra Leone was to launch a first phase of fully public investment, followed by a second phase of competitive bidding for the private sector. This method allows the risks to be distributed among the actors who are best placed to handle them, while keeping the distribution networks under public ownership.
Although Africa is responsible for only 4% of global CO2 emissions, Nicola Bugatti stressed that renewable energy offers many other benefits for developing countries beyond the climate argument. Renewable energy provides a means of adaptation for populations suffering from the effects of global warming, it allows for greater energy independence and reliability of supply, and it reduces energy costs. Improved access to electricity can also promote the transition from polluting activities. In rural areas, many households rely on burning firewood and charcoal for cooking, contributing to deforestation and air pollution. According to the World Health Organisation, every year more than 3.8 million people, the majority of whom are women and children, die prematurely from diseases directly linked to these polluting cooking practices, even though many innovative solutions exist to cook with renewable energy. Finally, by extending access to electricity in areas that are deprived of it, mini-grids also make it possible to develop new income-generating economic activities. As some parliamentarians pointed out, a certain amount of income is needed to be able to pay for the electricity one consumes. Promoting a rural electrification trajectory that also supports the economic and social development of the population is therefore a key issue. Investing in access to energy means investing in the economic development of one's country, its industrialisation, and an overall increase in income for the population and for the State.