Countries afflicted by conflict and other forms of fragility are struggling to meet United Nations Sustainable Goal 7 on universal access to affordable and clean energy by 2030. This column reviews some of the key constraints on energy delivery, as well as common best practices in overcoming them.
There are a number of constraints that make it difficult to deliver sustainable energy in fragile and conflict-stricken countries, thereby hampering economic development. First, energy infrastructure is often a victim when violence breaks out: power plants may be set on fire, and transmission lines can be destroyed or cut off from population centers. For example, conflict in South Sudan since 2013 has led to the delay of several major hydro power projects on the Nile.
Second, a lack of domestic capital hinders investment in energy infrastructure: money is channeled towards addressing civil wars and other immediate challenges created by fragility, leading to a perpetual trap of underdevelopment. Third, conflicts prevent responsible investors from investing in energy infrastructure due to the risks of its destruction.
Policy tools for delivering energy in fragile countries
There are a number of policy tools that have worked in delivering renewable energy in fragile countries, including ‘pay as you go’ (PayGo), feed-in tariffs, and solar loans.
PayGo affords off-grid households and businesses an opportunity to access clean energy affordably through various arrangements. In some places, customers make a down-payment and there is a metering system installed with the solar system that deactivates when the payment runs out to give households and businesses the incentive to pay.
This arrangement overcomes the upfront costs that usually come with installing solar panels. The places that need this arrangement are households and businesses in fragile areas where there is no grid system in place.
In East Africa, M-Poka has assigned about 750,000 homes to the PayGo arrangement. While PayGo has been applied in many countries in Africa and beyond, Kenya and Tanzania constitute over 80% of PayGo sales. This is because mobile money payment technology is well established in this region. This suggests the need for other places to improve mobile money access as well as access to information. For fragile countries, mobile phone technologies typically remain and a model like this can therefore be applied if well planned.
A feed-in tariffs program provides incentives for rapid deployment of renewable energy technologies. The program provides production incentives for businesses and households to install their own power and get paid for every kilowatt hour they feed into the grid.
The program requires availability of a grid network, as well as laws to protect people’s investment, to provide safety standards, and to make specifications about the energy that a household or business can produce, and a guaranteed price for the producers.
This is effective in urban centers of fragile countries, where there is usually some level of grid infrastructure. If there is no grid, making grid development a priority is important in addition to enacting legislation to govern the program.
Several studies show that a feed-in tariff arrangement can effectively help in the installation of renewable energy technologies. The program can help in places where a distributed grid is the priority. It has been applied in both developing and developed countries. By 2011, more than half of 50 countries that were using feed-in-tariff programs were developing countries.
Affordable loans can help households to get access to energy. There are programs available where power producers form partnerships with banks to deliver energy to households. The companies install the power and are paid by banks that have accepted that they will take a monthly payment from the customers.
One such approach has been applied in Cameroon, Ethiopia, and Kenya, where an organization called Participatory Microfinance Group for Africa (PAMIGA) has developed what it calls a two-hand model to deliver access to energy in rural areas. PAMIGA paired two institutions in each context: a rural financial institution and a solar system provider. The former provides the loans and the latter provides quality solar technologies. In most cases, the financial institutions make direct payment to the solar providers for providing the equipment and installing the system. The clients then repay the loans to the financial institutions.
The value of this arrangement is that it provides the clients with high quality solar technologies, after-sale services, and warranty in an affordable way, which they could not otherwise achieve. The arrangement has led to improvements in the quality of lighting, and a reduction in energy expenditure as clients no longer need to buy kerosene or fuel for generators, or pay for generator repair. It has also led to a reduction in health problems associated with the use of kerosene and other dirty energy sources.
Fragile countries can adopt this approach or design similar loan arrangements to deliver energy. They can design such a loan arrangement with international development and humanitarian partners. Perhaps such partners can subsidize such loans to make them affordable as part of reaching the Sustainable Development Goals of achieving modern and clean forms of energy by 2030.
Fragile countries face high levels of energy poverty due to conflict and war. As a result, they cannot easily afford to develop an energy infrastructure that can deliver for all.
One of the key factors is the threat of destruction, which discourages investors from putting money into energy infrastructure. This suggests that the best option is to provide affordable off-grid power. This can be done through a number of innovative arrangements that are proving to be effective, including PayGo, feed-in tariffs, and affordable loans.
These solutions are important in these contexts because they overcome inherent challenges in fragile countries. For example, PayGo and loan arrangements help to reduce the capital costs of installing renewable energy technologies. Feed-in tariffs provide individual producers and household with production incentives. Partnerships with development and humanitarian institutions can help to implement these solutions to deliver energy to the poor in fragile countries.