To meet the SDG target of universal access to electricity and regain the lost momentum, off-grid solutions must be embraced in the short term
Worldwide demand and consumption of electricity reduced during the lockdown majorly due to reduced economic activities and manufacturing.Reduced electricity consumption and considerations in tariff caused setbacks on the supply side. The International Finance Cooperation (IFC), in its report, mentions that several power distribution companies have ended contracts with the power generation companies due to reduced electricity demand and consumption along with the inability to pay by the consumers and social considerations. In India, the reduced demand from high-paying customers during the lockdown negatively affected the distribution company’s outstanding dues. The lockdown, to some extent, limited the bill collection processes all over the world, especially in rural locations. For example, meter reading and paying and collection of bills physically was restricted during lockdown. Apart from the setbacks faced by users and suppliers of electricity, the governments also had to slow down their initiatives towards improving access to electricity to address the public health crisis. For example, the Government of Bangladesh had to divert significant fund from TR-Kabita programme (which aims to improve electricity access at last mile using solar off-grid technologies) to reduce impacts of COVID-19 and the Amphan cyclone. In addition, the cost of borrowing increased significantly in the countries with higher electricity access deficits, says IEA.
The less costly way to improve access to electricity is through off-grid technologies. Solar off-grid technologies are the popular means for providing electricity access to the last miles in access poor countries. However, the pandemic also influenced the financial health of the off-grid companies as well as disrupted the supply of components. The Government of Burkina Faso announced 50 percent reduction in the cost of solar kits for the rural households and an allocation of US $500,000 relief fund was announced for the off-grid renewable energy firms in Nigeria. The Power Africa programme redirected US $4.1 million in grants to off-grid companies for rural and peri-urban health clinic electrification. On the bright side, the recent report on renewable markets by IEA mentions that the renewable capacity additions in 2020 is more than 2019 by 45 percent. This increase is primarily in China, USA, and Vietnam. However, the rush for the installations were linked with policies related to tariff and tax decided prior to COVID pandemic. For example, in Vietnam phase out of Feed-in-Tariff (FiT) for solar photovoltaic projects led to faster installations. In India, the renewable energy capacity installations between February and May 2020 has seen an increment of 0.75 percent. However, a significant amount of auctioned capacity are facing challenges in finding buyers. The overall scenario indicates towards the cycle of reduced consumption of electricity due to reduced economic activities, which in turn affects the financial health of electricity generation and distribution companies. The issue needs measures at country level through policies, regulations, and other initiatives to revive the health of distribution and generation companies as well as economic activities as a whole.
The Government of Burkina Faso announced 50 percent reduction in the cost of solar kits for the rural households and an allocation of US $500,000 relief fund was announced for the off-grid renewable energy firms in Nigeria.
The reversal in access rate of electricity is a matter of concern, especially when less than a decade is left to achieve the SDGs.Another major impact of the pandemic is the reversal in electricity access rates due to economic reasons, especially amongst the poor, in Africa and Asia. Thirty million people in Sub- Saharan Africa may no longer be able to afford basic electricity in recent future, mentions a report released by IEA in the year 2020. The reversal in access rate of electricity is a matter of concern, especially when less than a decade is left to achieve the SDGs. The three amongst the six influences of COVID-19 directly impacts access to electricity amongst the poor; (1) reduced affordability to pay for the electricity, (2) inability of off-grid companies to continue with their services, and (3) diversion of resources allotted for electricity access. FIGURE 2: INFLUENCE OF COVID-19 PANDEMIC ON ELECTRICITY ACCESS AMONGST THE POOR
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
Manjushree Banerjee was associated with the Social Transformation Division of The Energy and Resources Institute (TERI) for ten years. In total she possesses about fifteen ...Read More +