Achieving universal access is not only about funding initial connections – it also requires ensuring that electricity services remain reliable, affordable and sustainable over time. Households must be able to pay for ongoing consumption to fully benefit from electricity access and to increase electricity consumption, moving from basic lighting to productive and income-generating uses. In many cases, this can require additional financial support, either by reducing the cost of electricity access projects, or by providing financial support to consumers directly. The pathway to universal access laid out under the IEA Accelerating Clean Cooking and Electricity Services Scenario (ACCESS) considers what are the most costeffective technologies for communities, but investment numbers in the scenario do not include financial support necessary to ensure affordability. Below we explore the size of this affordability gap per technology, based on the pathway laid out in the ACCESS, and analyse the impact of interventions in financing and capital costs on affordability.
There are also certain communities that risk not having equal opportunities to benefit from electricity access. Special attention also needs to be paid to vulnerable communities – those based in some of the most complex situations on the continent, such as fragile and conflict prone states, informal settlements, displacement settings or small islands – who are often left behind in financing discussions. Equally, women-led businesses currently struggle to access finance, preventing their ability to scale up productive uses of energy. This chapter explores these issues, ending with a summary of where concessional finance can play the most impactful role to reach affordable and equitable universal access.
Affordability gap for on-grid and decentralised solutions
Analysis of affordability for on-grid and decentralised electricity under the ACCESS based on least-cost modelling and actual subsidised tariffs, shows that access to electricity remains unaffordable for most of the population. The basic bundle is unaffordable for 16 million people expected to gain access via the grid, more than 5%, and 200 million people expected to gain access via decentralised solutions, around 60%. This is equivalent to 40% of households that do not yet have access to electricity. The affordability gap is greater for the essential bundle. It remains unaffordable for 70 million people expected to gain access via the grid, around 25%, and 315 million people expected to gain access via decentralised solutions, more than 90%. This is equivalent to 65% of householdsthat do not yet have access to electricity.
Grid electricity solutions benefit from subsidies that are applied to national tariffs. In countries such as Zambia and Angola, national average electricity tariffs are approximately USD 0.020 per kilowatt hour (kWh). These subsidised rates significantly reduce the affordability gap for households connected to the national grid, enabling broader access to electricity services. The impact of these subsidies becomes particularly evident when comparing the populations that can afford the maximum electricity bundles.
With subsidies, nearly the entire grid-connected population in these countries could afford the essential and extended bundles, underscoring the critical role of tariff policy and targeted subsidies in shaping electricity access outcomes. However, just because these solutions are affordable does not mean they will be bankable: current tariff structures do not allow cost recovery for most grid extensions. This highlights the inherent tension in tariff policy to both provide an affordable service and support the financial health of utilities, and by extension alleviate government debt levels.
In many areas the least-cost option for electricity access is off-grid solutions, particularly in parts of Central and East Africa, where electricity tariffs remain prohibitively high for a significant portion of the population. In these areas, the difference between the tariff for the essential bundle and what 50% of the population can afford can exceed USD 10 per month, presenting a substantial barrier to electricity access. This level of expenditure is far beyond what many low-income households can sustain, underscoring the urgent need for financial interventions and robust state support to bridge the gap.
Reducing the cost of electricity access
To close the affordability gap, households would need an additional USD 2.3 billion annually in financial support to make the basic bundle affordable, which is equivalent to 3% of total energy investment in sub-Saharan Africa in 2025. Of that, around USD 2.1 billion would be directed to households gaining access via SHS, USD 120 million to households gaining access via mini-grids and the remaining USD 45 million to households gaining access via grids. To expand usage to the extended bundle, the affordability gap increases to USD 10 billion – equivalent to 15% of total energy investment in sub-Saharan Africa in 2025. Of that, around USD 6 billion would be directed to households gaining access via SHS, USD 4.5 billion to households gaining access via mini-grids and the remaining USD 500 million to households gaining access via grids.
The final subsidy depends on factorssuch astechnology choice, household income levels and the cost of developing projects. There are several approaches to closing the affordability gap:
- Reducing financing costs: electricity access projects are capital-intensive, which means the cost of capital can have a major impact on overall electricity access project costs. Reducing the cost of capital can reduce costs to consumers and increase the number of projects that would be considered bankable.
- Applying supply-side subsidies: supply-side subsidies provide financial support to electricity suppliers to lower the cost of producing and/or distributing electricity, ultimately reducing costs for consumers. Common examples include government funding for rural grid expansion or grants and results-based finance programmes for decentralised solution developers.
- Using demand-side subsidies: demand-side subsidies describe financial support to reduce the upfront or ongoing costs of electricity for consumers. The most common demand-side subsidies in electricity access are reduced connection charges, lifeline tariffs, voucher or coupon schemes, or zero-interest financing for off-grid appliances.
An ideal solution involves some combination of all three. This requires collaboration between domestic governments, particularly in relation to tariff schemes, international donors, who are likely to be the main providers of grants, and electricity suppliers, who are the main interface with consumers.
Excerpt of: Financing Electricity Access in Africa (IEA 2025)