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09.01.2018, GOGLA 

Policy and Regulatory Reform: The Key to Accelerating Access through Off-Grid Solar Market Growth

The off-grid solar sector has emerged rapidly over the last decade, with companies developing new technologies and business models all the time. Meanwhile, governments, aid agencies, investors and philanthropic foundations are becoming increasingly interested too. This has made the role of policy and regulation even more critical.

In 2016 the World Bank, in collaboration with SEforALL, ESMAP and the Climate Investment Funds, published the most comprehensive survey of policy and regulation for sustainable energy undertaken to date. The Regulatory Indicators for Sustainable Energy Global Scorecard for Policymakers (RISE) ranks 55 countries, where access deficits exist, on eight core indicators for energy access (Figure 1), as well as for renewable energy and energy efficiency (http://rise.esmap.org/) (1). These countries are almost all low-income countries in Sub-Saharan Africa and South Asia.

Figure 1: Average indicator scores on energy access - Source: RISE Database, World Bank, 2016

The scope of officially approved electrification plans is often limited. Only a few countries worldwide have electrification plans that include off-grid, community and productive load elements, as well as service quality standards. Encouragingly, consumer affordability is found to be less of a constraint than many policy makers have assumed in the past (2).

On almost all policy dimensions, Africa shows weaker policy frameworks than other access-deficit regions, particularly South Asia. However, examples of good practice can be found in every region of the world. For energy access, India, the Philippines, Kenya, Uganda, and Tanzania are the top five scorers. In Sub-Saharan Africa, the three East African countries lead, followed by South Africa, Cameroon and Senegal. In South Asia, Bangladesh, India, and Sri Lanka are top scorers. In East Asia and the Pacific, Cambodia and the Philippines are doing well in adopting good practices to scale-up energy access.

Countries are rated highly for frameworks for stand-alone, off-grid solar systems, if:

a. there is a national program to promote adoption of stand-alone technologies;

b. there are subsidies or duty exemptions in place;

c. there is no legal limit on the price stand-alone home system retailers and service providers can charge;

d. there is formal adoption of international quality standards and test methods (Figure 2).

Figure 2: 55 energy access countries answering yes to questions about framework for standalone solutions - Source: RISE Database, World Bank

Overall, four countries - Cambodia, Ghana, Kenya, and Uganda - stand out for exhibiting almost all the desirable characteristics for promotion of stand-alone systems. Bangladesh, Cameroon, the Democratic Republic of Congo, Ethiopia, India, Malawi, Myanmar, Nepal, Pakistan, South Africa, and Tanzania also score highly. However overall, just 44% of the 55 countries surveyed have defined and implemented a national program aimed at developing stand-alone systems.

RISE concludes that ‘stand-alone systems… offer an early opportunity for eight countries, because all have yet to establish a framework for off-grid electrification (South Sudan, Chad, Burundi, Central Africa Republic, Burkina Faso, Niger, Nigeria, Sudan). Top RISE scorers

do well across three energy supply solutions – grids, mini-grids and standalone systems, suggesting they are not being pursued as substitutes but rather as complements’.

These conclusions align with previous findings from the SEforALL Global Tracking Framework report, that ‘many low-access African countries have yet to create a supportive policy environment for energy access, in particular for off-grid solar home systems’, and ‘where many countries appear to lag is on the regulatory framework to support off-grid access through solar home systems and other distributed resources. Regulations that clarify market entry and exit, define minimum quality standards, and target subsidies and duty exemptions should be considered for supporting off-grid solutions and enabling countries to benefit from the plummeting costs of decentralised solutions based on solar photovoltaics’ (3).

 

1   Regulatory Indicators for Sustainable Energy: A Global Scorecard for Policy Makers, World Bank, 2016

2   “Electricity is considered affordable if annual expenditure on a basic allowance of 30 KwH per month for residential users at the prevailing retail price is at most 5% of gross national income (GNI) per household in the bottom 20% of the population. Electricity is considered unaffordable if costs surpass 10%. Despite widespread price concerns, the RISE indicator suggests that unaffordability may be less common than feared, with subsistence consumption costing less than 5% of GNI in 73% of surveyed countries in 2015”, Regulatory Indicators for Sustainable Energy, World Bank, 2015

3   SEforALL Global Tracking Framework: Progress Toward Sustainable Energy 2017, World Bank and International Energy Agency, 2017

 

 

Excerpt of: GOGLA, Providing Energy Access through Off-Grid Solar: Guidance for Governments, 2018.

 

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