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The Dirty Footprint of the Broken Grid: Impacts of Fossil Fuel Back-up

About 1.5 billion people around the world live day-to-day with “broken” electricity grids and experience blackouts for hundreds and sometimes thousands of hours a year. For this population, reliance on distributed diesel and gasoline backup generators, or BUGS, is a common stopgap measure. These generators are deployed across the globe on a large scale both on- and off-grid, at homes, businesses, and industrial sites. They support access to energy but come with significant costs.

The goal of this research project is to estimate the scale and impacts of generators serving energy access needs within developing regions of the world. With a broad geographic scope, including 167 developing countries (excluding China), the coverage represents 94 percent of the population living in low- and middle-income regions of the world.. We develop and use a modeling framework using the best available data for each country to estimate the size and composition of the fleet of generators, operational time, fuel consumption, and financial, health, and climate impacts. The estimates are designed to help clarify the opportunity in developing countries for clean technologies such as solar and storage (solar + storage) to replace generators, and to avoid these costs and impacts.

 

Major Findings

  1. The fleet of generators in the developing countries modeled serves 20 to 30 million sites with an installed capacity of 350 to 500 gigawatts (GW), equivalent to 700 to 1000 large coal power stations. The fleet has a replacement value of $70 billion and about $7 billion in annual equipment investment. Over 75 percent of the sites where generators are deployed are “grid-connected.”
     
  2. Backup generators are a major source of electricity access in some developing regions, providing 9 percent of the electricity consumed in Sub-Saharan Africa, and 2 percent in South Asia. In western Africa, generators account for over 40 percent of the electricity consumed annually. This requires considerable quantities of fossil fuel; 20 percent of the gasoline and diesel consumed in Sub-Saharan Africa is burned for electricity generation. In regions where generators are a predominant source of energy access, spending on fuel can be equivalent to or higher than the total national spending on the grid.
     
  3. Electricity from backup generators is expensive, with $28 billion to $50 billion spent by generator users on fuel each year. This corresponds to an average service cost of $0.30/kWh for the fuel alone (ranging from $0.20/kWh to $0.60/kWh depending on generator size and fuel type), usually much higher than the cost of grid-based energy ($0.10–0.30 / kWh) and on par with current estimates of the levelized cost of solar + storage. Operations and maintenance costs for generators could add an additional 10 percent to 20 percent to fuel service costs.
     
  4. Backup generators are a significant source of air pollutants that negatively impacts health and the environment. As a pollution source, generators are often hidden from policymakers since their fuel consumption may be lumped in with the transport sector in official statistics. Generators consume the same fuels and also emit the same pollutants as cars and trucks, except they are used in closer proximity to people’s homes and businesses.

 

Overall, our results indicate a significant opportunity to reduce costs and negative health and environmental externalities by replacing diesel and gasoline generators. To follow through, it is important to develop both the technology and business model solutions needed and to improve the understanding of generator impacts in local contexts. The local realities of the solar industry, grid reliability, fossil fuel competitiveness, and the utility and regulatory approach to distributed generation are among the important factors.

 

Excerpt of the new IFC-study: The Dirty Footprint of the Broken Grid: The Impacts of Fossil Fuel Back-up Generators in Developing Countries, September 2019.

Download the full document here.