Just as CV19 is re-shaping the wider social and economic context, it is also transforming the energy access landscape. Progress towards universal energy access is being severely disrupted by CV1919. In the short-term, households and other customers have less money for modern energy and cannot reach points of sale for off-grid solar, cook-stoves and fuel, even if they can afford them. Off-grid energy companies are similarly struggling to access supplies or to reach customers; commission-based employees are unable to earn a living wage; and with customers unable to afford products, the financial viability of many companies (across the full range from small off-grid and minigrid companies to large utilities) is threatened. 69% of Global Distributors Collective members have reported reduced sales and 17% have ceased operations altogether. 85% of off-grid energy companies will struggle to survive for more than 5 months13, putting some 370,000 jobs at risk.
Even after the immediate effects of CV19 have ebbed, these impacts will carry over into shrunken markets, with customers having less money to spend in a globally depressed economy, fewer companies and those which survive having less funds to invest. Prospects for international investment in energy infrastructure in developing countries, particularly by China in Africa, must also be in doubt.
Glimpses of light
Despite these dark clouds over energy access, there are some glimpses of light. One result of the pandemic has been a very welcome increase in focus on electrification of health facilities (and to a lesser extent WASH and communications infrastructure) with increasing recognition of the importance of energy to treat patients, support children’s education, pump clean water, and for people to access information and of the extent of the lack of energy access. We must ensure that that these needs are not addressed in isolation. Instead health facility electrification should be leveraged to support electrification of the wider communities in which they sit. This will require integrated planning and development of inclusive models through which investment in energy for health, WASH and communications facilities can enable wider community access.
With oil prices ~2/3rds of pre-CV19 levels and not expected to recover to where they were before the pandemic for several years, it will be more difficult for renewable modern energy to compete with fossil-based alternatives, particularly when users are facing falls in income and more precarious livelihoods. However, it also provides an opportunity for fossil fuel subsidies to be reduced and/or transferred to renewable off-grid energy options.
Off-grid energy sector crucial for a fast economic recovery
As CV19 (we hope) recedes, economic recovery will become the priority and the question will be how to stimulate this recovery by using public investment to create employment, incomes and demand, while also developing infrastructure and human capacity to support longer-term growth.
Off-grid energy access provides an excellent means of achieving these objectives. An estimated 25 jobs are created for every 1000 customers with a minigrid connection or solar home system (SHS) – this implies that bringing electricity to the 789 million people who currently lack it could create some 4.4 million jobs. In addition to employment directly in the off-grid energy sector, jobs would also be created further up the supply chain (in manufacturing and assembly of equipment) and in service providers , and through “induced” jobs created as a result of additional demand for other goods and services by the incomes of those directly employed – taken together these might be expected to generate ~7-8 times as many jobs as those created directly.
The off-grid energy sector needs to make the case to include modern energy for poor people in government stimulus packages, on the basis that it will provide employment (especially for young people and women); can be deployed rapidly; will support productive uses and economic growth; improves health and resilience; and reduces carbon emissions. Developing countries, whose resources have been depleted by lower revenues; the urgent need to strengthen weak health systems; capital outflows; weakening currencies and higher borrowing costs, will need support from the international community for this investment.
Excerpt of: Beyond a New Normal: The energy access landscape after Covid-19, Practical Action, 2020.
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