Decentralised Utilities: Bridging the Rural Energy Gap in Emerging Markets

Nov 19, 2018

Source/author : UKaid & Shell Foundation & United State Agency International Development

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Over 1.1 billion people live without access to reliable and affordable access to energy. While the wealthiest can find ways to circumvent infrastructure limitations in developing countries, the burden of this energy market failure falls hardest on the most economically vulnerable. At Shell Foundation, we have been working to address this access to energy gap for nearly two decades; more recently in partnership with structured co-funding from the Department for International Development (DFID) in the UK and United States Agency for International Development (USAID). Our commitment to accessible energy has led us to support various energy solutions, including solar home systems (SHS) biomass cookstoves, powered agricultural assets, mini-grids and various financing intermediaries, improving the lives of over 60 million low-income people across Africa and Asia.

Over the past decade, we have seen the mini-grid sector slowly evolve to enable a more mature, decentralised utility model, which we believe will be transformative for energy access in emerging markets. Through this article would like to share our learnings to our partners in the sector who share our commitment to energy access. This article is the first in a series to explore the potential for decentralised utilities and the interventions needed to scale the sector and help solve the energy gap in the developing world.

Meeting the complete energy needs of low-income consumers is essential to unlocking the development potential of emerging markets

The link between energy access and development has been welldocumented - almost all countries with less than 2000 KWH per person are the bottom of the UN Human Development Index, reflecting the lowest composite life expectancy, education and per capita income indicators in the world. The energy access gap is most acute in Africa, where 650 million people are without electricity, with the continent losing 2-4% of GDP growth per annum due to power losses alone.

Off-grid solar products are one of the most significant innovations starting to fill the gap, with an estimated 130 million products sold globally to date (predominantly solar lanterns) .

We have supported four SHS pioneers and also supported the ecosystem through various market enablers, including financial intermediaries, last mile distribution and market associations.

Whilst the SHS industry has been revolutionary and will continue to play a leading role in meeting emerging market consumer energy needs, a SHS typically functions at loads up to 200W while local small businesses and commercial farms often require upwards of 500-1000W, respectively.


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