New Release: Sierra Leone makes Bold Commitments to Universal Energy Access

Power for All Country Director Ami Dumbaya addresses the crowd of Sierra Leone energy luminaries at the launch.

Power for All Country Director Ami Dumbaya addresses the crowd of Sierra Leone energy luminaries at the launch.

Freetown, 22 March -- The Sierra Leone Government, civil society and private sector joined forces today in a Call to Action on energy access. At the event, attended by the Energy Minister and leading civil society and private sector representatives, each group made powerful commitments to undertake activities that will accelerate the growth of the decentralized renewable energy (DRE) market—vital for reaching 6  million people living in energy poverty.

Stakeholders also pledged to work closely together in energy access planning and implementation to achieve targets, and speed up progress.

The commitments of the Sierra Leone Government included taking action to:

  • Enhance the ‘green lane’ tax-exempt importation system for quality solar products

  • Take action to better maintain solar streetlights and encourage Government Ministries to save money by adopting solar

  • Create a comprehensive Energy Revolution market development plan, to be launched in May 2017. That will include:

    1. Demand Creation: Public awareness campaigns to build trust and demand for solar technology

    2. Supporting the Supply Chain: Working with companies, universities and the Barefoot women to build private sector technical expertise

    3. Access to Finance: Working with local banks and development finance institutions to build innovative financing mechanisms

    4. Policy Reform: Development of clear and transparent energy access plans, and a framework for mini-grid procurement and regulation, to attract investment.

The REASL commitments included taking action to:

  • Maintain a rigorous screening process to ensure members only sell products that meet international quality standards

  • Collaborate with technical institutes and universities for the inclusion of renewable energy training into curriculum, and to develop accredited training programmes

  • Work with the Ministry of Energy to design and deliver public awareness campaigns on quality off-grid solar, connecting with Paramount Chiefs and community leaders

  • Continue to work with the Sierra Leone Association of Micro-finance Instutitions on a household solar consumer financing pilot, and engage local Commercial Banks

At the event, REASL also released policy recommendations to support the DRE market.

Civil society, donor and sector support organization commitments were also made by Oxfam IBIS, Energizing Development, Sierra Leone Business for Opportunity and Power for All. These commitments included action to:

  • Expand training support for university lecturers and government workers on DRE to include solar thermal energy and water pumping

  • Run a scholarship program for solar PV studies that targets women

  • Build awareness of off-grid solar through road shows, trade fairs, school campaigns and media

  • Track and map sector performance

  • Attract investment and funding into the decentralized renewables sector

These commitments build on the steps already taken to increase energy access following the launch of the Sierra Leone Energy Revolution in May 2016. Since that time, the sale of off-grid solar solutions in Sierra Leone has doubled, and the country has also seen the launch of one of West Africa's largest solar mini-grid programs; 50 villages will see the installation of PV mini-grids by the end of 2017.

The Call to Action and joint commitments aim to speed up the implementation of further activities, and continue to build momentum towards the country’s energy access goals.

The Minister of Energy, Henry Macauley, said: “Today the government, private sector, donors and civil society organizations unite to make solid commitments to accelerate energy access. Most importantly, these commitments will be backed by clear, achievable and specific plans and actions. There is much to be done and we must work together as a sector, alongside our local Chieftains and community groups, to end energy poverty in Sierra Leone. I call on everyone to join us so we can achieve energy for all by 2025.”

Chukwu-Emeka Chikezie, Team Leader, Sierra Leone Opportunities for Business Action (SOBA) said: “We have seen encouraging signs of progress on energy access in Sierra Leone and in support for the decentralized renewables sector, yet we can do better on all-important implementation. We need to do a better job of coordinating our combined efforts in realizing government priorities and objectives, the private sector, and communities. I hope this Call to Action spurs us all on to enhanced coordination and collaboration for combined impact.”

The Call to Action event was facilitated by the Power for All campaign, and saw presentations from various sector stakeholders, and an exhibition of decentralized renewable technologies.

 

 

News Release: Nigeria Launches Call to Action for DRE

Government, civil society and the private sector came together to make commitments to speed up the adoption of decentralized renewable energy in Nigeria, helping to achieve universal energy access faster.

Government, civil society and the private sector came together to make commitments to speed up the adoption of decentralized renewable energy in Nigeria, helping to achieve universal energy access faster.

 The Government of Nigeria, civil society and private sector joined forces last week in a Call to Action on energy access. At the event, attended by Federal Ministry of Power Permanent Secretary, Engineer Louis Edozien, a range of companies, civil society organisations and the rural electrification agency made powerful commitments to undertake activities that will accelerate the growth of the distributed renewable energy (DRE) market— vital for reaching Nigeria’s unelectrified population, which has grown from 44 million to 75 million since 1990 (SE4ALL, 2015).

The Call to Action showcases the first ever recommendations from the Industry stakeholders under the Renewable Energy Association of Nigeria (REAN), and a range of commitments from stakeholders, including the Federal Government of Nigeria, to take action in support of DRE market growth in 2017.

The cost of the energy access deficit is huge, and is borne by households, businesses and the government. For instance, in the 2017 budget the Federal Government of Nigeria, its agencies, ministries and institutions are expected to spend N8.4bn on the maintenance, fuelling and purchase of new generators for the 2017 fiscal year alone.

Around 60 million Nigerians use diesel generators, with households spending as much as N6,660 on kerosene monthly according to the General Household Panel Survey by the National Bureau of Statistics and the World Bank. The energy access challenge is also a tremendous opportunity. With kerosene and diesel use so widespread, Nigeria has the largest potential DRE market in Africa -  and the chance to save money, create jobs and drive economic growth through adopting DRE.

Engineer Louis Edozien, the Permanent secretary, Federal Ministry of Power said: “We are looking to the private sector to lead and drive the renewable energy sector to ensure that we achieve access. We have laid solid foundations to government policies to ensure that this happens. The work of Power For All in the Decentralized Renewable Energy Space, particularly in the areas of market development and advocacy. We are committed to meeting the needs of the millions of unelectrified Nigerians and belive that continued collaboration with your organization and other similar platforms will certainly help in moving the ball forward.”

Keith Hammond – Head - Infrastructure Advisory - DFID Nigeria said: “I think Power For All can play an important role in helping inform people of what can happen and what needs to happen– and all that are involved in the development of Renewables in Nigeria should welcome their efforts to do so. DFID is proud to have supported this campaign over the past year and is committed to continuing to work with Power For All to end energy poverty faster.”

The Renewable Energy Association of Nigeria (REAN) makes the following recommendations:

  • Improve access to finance for DRE companies, through for example improving access to foreign exchange & increasing Central Bank of Nigeria micro, small and medium enterprise funding for DRE.
  • Raise awareness - help build demand for DRE through public awareness campaigns.
  • Consistently apply VAT & tariffs to DRE products and components.
  • Strengthen the Renewable Energy Department as the lead government agency responsible for DRE market growth.
  • Improve market data to help inform decision-making and attract investment.
  • Develop a framework for DRE quality and standards promotion.
  • Provide technical assistance and capacity building for businesses.

The Federal Government of Nigeria Ministry of Power:

  • FGN has approved and adopted complementary enabling policies such as the: National Renewable Energy and Energy Efficiency Policy (NREEP),  National Renewable Energy Action Plan (REAP) and Rural Electrification Strategy and Implementation Plan (RESIP).
  • Launched the “Presidential Initiative on Rural Solar Home Lighting Systems”, in partnership with Azuri and Niger Delta Power Holding Company, which aims to provide electricity for 20,000 rural households.
  • FGN’s 2016 and 2017 budgets concentrate on completion of on-going off-grid and mini-grid demonstration projects such as 50kW Pakau Village, in Kaduna State.
  • FGN has resumed work on major base-load hydro projects at Kashimbilla 40MW with completion in 2018, Zungeru 700MW with completion in 2019, and is actively preparing for the Mambilla 3,050MW with target completion in 2024.
  • NBET executed solar power purchase agreements with solar 14 project developers with total 1,100MW with target completion date in 2017 and 2018.
  • FGN is facilitating development of hydro-electric sites in partnership with private investors starting with concession of six locationswith totalcapacity of 16.3MW

Other stakeholders making commitments included the Rural Electrification Agency, DRE private companies (Nova Lumos, Azuri), civil society organisations (Global Rights, Heinrich Boll Foundation, Yar’Adua Foundation, Nigeria Economic Summit Group, NigeriaWomen Trust Fund, Nigeria Investment Promotion Council), faith-based groups (Caritas, Lux Terra Leadership Foundation) and market development programmes (Solar Nigeria). Highlights from these commitments include:

  • Raise public awareness of DRE and strengthen demand.
  • Advocate in favour of DRE, and specific measures that would accelerate DRE market growth such as VAT/tariff reductions.
  • Enter, scale up or invest in the market to sell products or services.
  • Help attract investment to drive growth in Nigeria’s DRE sector.
  • Providing grants and technical assistance to DRE businesses to support their growth.
  • Engaging the faith community to do more to adopt and promote DRE.

The full text of the Call to Action will be released in the coming week.

 

Designing Energy Markets of the Future

Shop powered by solar | Image: Power Africa

Shop powered by solar | Image: Power Africa

A Power for All survey of leading decentralized renewable energy (DRE) companies has revealed the practitioner's view of priority policies for market growth. Designed to complement a wider study on national policy and energy access—to be released on March 22—the survey captures insights from 23 DRE companies which, combined, provide pico-PV, solar home system (SHS) or mini-grid services to over 2.7 million households. Asked to rank the importance of policy instruments—national energy policy, financial policy and regulation, and technical regulation—in supporting their local business operations, the results provide front line insight into the policy actions needed to scale DRE and boost energy access. Check out the findings below, and stay tuned for the full report.

“Survey Says”: Clear Policy Favorites Identified by DRE Companies

A DRE penetration target and time frame was identified as the  most influential national energy policy. As one respondent explained, “only explicit (penetration) targets and time frames seem to be leading to proactive support from the Government for DRE - general inclusion of vague targets alone has so far not shown to be very promising”, adding that “having a defined timeline and target penetration for DRE ensures that the government is held accountable for achieving that target." While specific DRE targets came out as the number one policy overall, mini-grid companies specifically prioritized the importance of national electrification plans which integrate DRE—marking the vital role that “knowing where the grid will go” will play in de-risking the mini-grid market for investors.

While a raft of financial policies and regulations were deemed crucial to catalyze market growth, across a range of DRE technology companies, a majority of respondents were in agreement on the top priority: exemption from import duties and tariffs on DRE. Duties can have a significant impact on sales in an extremely price sensitive market, with high tariffs increasing costs by up to 40 percent. As one SHS/pico-PV respondent advised, “exemption from import duties allows us to pass along lower costs to customers and make products more affordable.” However, financing support—including debt financing and loan guarantees—was also highlighted as particularly important by mini-grid operators, with one mini-grid respondent taking the view that due to the need for “risk mitigation in emerging markets, finance is the most critical element.”

With respect to technical regulation, clear and low-cost permitting and licensing regimes for DRE companies, along with the adoption of internationally recognized product quality standards and performance reporting requirements, were the two most important regulatory measures identified. Almost two-thirds of companies that sell SHS/pico-PV ranked adoption of quality standards as the number one policy, and 75 percent of mini-grid only companies chose clear, low-cost permitting and licensing regimes—with one mini-grid respondent noting that licensing is “the first stumbling block when looking to enter a market.”

While a range of policy measures will be needed to enable the DRE market to reach its potential—and increase its reach from 100 million people to 10 times that number—knowledge from practitioners who have already brought clean power to millions show us that supportive tariffs and taxes, improved access to finance, clear licensing, standards and reporting, and DRE penetration targets and integrated planning, are a great place to start.

 

Video: Africa Energy Indaba

The Power for All panel at the Africa Energy Indaba 2017 brought together some of the sharpest minds in the sector to ask: "How far and fast will distributed renewables go?". The result was a conversation that challenged the status quo.

From policy to planning, business models to blockchains, check out the videos below for the panel’s top 6 insights and questions:

--

The utility of the future

1. ‘Can’t we all just be friends?’ asks off-grid smart meter provider SteamaCo’s Sam Duby, as he explains that mini-grids, solar home systems and the traditional grid are complementary, and will coexist in the future. 

When Powerhive first entered Kenya

2. The private sector can and should proactively engage with the government to help shape policy—in fact each cannot operate in isolation. Powerhive’s Rik Wuts profile’s the mini-grid developer’s experience entering a new market, and how the government was receptive to their pragmatic approach. 

Why it is important to include decentralized renewables in national planning

3. There are still political challenges to including distributed energy in a national energy plan, but it is vital to meet the energy access challenge in countries across Africa, says Martin Potgeiter of impact investment advisor D.Capital Partners.

Business models and technology working together

4. Scaling up distributed renewable power means finding business models that make it easy for both customers and sources of finance: The Sun Exchange’s Morwesi Ramonyai tells us how the organization’s solar marketplace uses a blockchain based technology to achieve that. 

Raising awareness and working together with governments

5. Increasing awareness of distributed renewables is vital: mini-grids can help governments achieve their electrification goals more effectively, but stakeholders need to work in partnership to make it happen. 

The future is decentralized

6. Morwesi nicely sums up a vision of the future of energy: "decentralized, democratized and distributed". 

 

India: national access target good; national DRE better; state DRE best

Installing a mini-grid | Image: Smart Power for Rural Development

Installing a mini-grid | Image: Smart Power for Rural Development

India grabbed headlines in April 2015 when the Modi government pledged to achieve universal energy access, aka Sustainable Development Goal 7 (SDG7), in four years. It was and remains a world-leading commitment, and coupled with a 175 GW target for new clean power generation by 2022 (including 40 GW of grid-tied rooftop solar), it triggered a wave of new investment and market growth.

Yet it was primarily a vision of access from grid extension, and a closer look at progress to date reveals that more than just a national goal will be required to successfully achieve SDG7. India’s energy ministry has said that all villages will be electrified by the end of this year, and all homes in those villages by 2019. But the government definition of “electrified” is a controversial one — only 10 percent of homes must receive electricity for a village to count as electrified.

Questions have already emerged publicly over whether India will meet the 175 GW goal. And doubts persist about India’s ability to truly meet 100 percent, reliable energy access by 2019.

The issue, according to a recent Power for All survey of companies, is that a national target is not enough. While seen as a factor in the growth of decentralized renewable energy (DRE) solutions and achieving access, the survey showed that the number one national policy priority identified by DRE practitioners—by a significant margin—was setting a specific off-grid or decentralized renewable energy penetration target (and timeline); second was a rural electrification strategy; and third a national electrification policy that incorporates DRE.

One survey respondent explained that DRE penetration targets “communicate a clear action and commitment from the government and allow for relatively accurate forecasting of future growth potential.”

A recent example is that of Rwanda. In 2013 the country had only a few off-grid solar companies operating in it, with few households or businesses benefiting from distributed solutions. It was not until the government announced a specific DRE target of reaching 22 percent of the population with off-grid solutions by 2018, and adopted supportive policy measures, that DRE companies including Mobisol and BBOXX, as well as investors and the international community, stepped up their interest—and stepped into the country. The latest off-grid solar market sales report shows continuing upward growth in Rwanda’s distributed solar market, with a 53 percent increase in sales during the first half of 2016 alone.

Given that 250 million people in India lack energy access—making it the the world’s largest potential market for DRE—bolstering India’s high profile targets with specific targets for DRE penetration in rural markets would turbo-charge investment. Indeed, integrated planning that brings together grid and non-grid targets is key, particularly in the case of mini-grid developers.

As another survey respondent explained: “For mini-grids the key policy risk is grid integration. Hence a recognition that mini-grids are part of the national strategy rather than a bet against it is key.”

This is a critical point. India’s focus on a grid-dominated future has dampened investor interest in mini-grids. Why, investors ask, would I back a solution that will be obsolete once the grid arrives? Of course, this erroneous view makes the assumption—an assumption that is far from guaranteed with bankrupt utilities already struggling—that the grid will arrive and be reliable even if or when it does. Not to mention that decentralized solutions can be fed into a grid if the system is designed properly, as seen in more developed markets.

A target announced last year of 10,000 mini-grids in five years bodes well for India and is a commendable first step, as are state-level policies for mini-grids, but it’s still too early to know their impact. Moreover, while 40 GW has been carved out for rooftop solar, it is grid-tied only and mostly commercial and industrial rooftop in urban markets, while there has been no such carve out for distributed rooftop solar for rural India.

And this leads to the final observation: that “rural” is a broad term, and in places like India it has little meaning. India after all is a federalist system with 29 states that have considerable autonomy. Each of them has its own geography and resource profile, and each will need its own DRE policy. So while national access targets are good, and specific national DRE penetration targets are better, the best (and most important) target for DRE-led rural electrification—at least for some countries with federalist systems such as India and Nigeria—will need to come at the sub-national level.

"In India there is a tendency to fall into the trap of just liaising with the central government ministries when the real 'power' to act on power lies with the states," says Kartikeya Singh, deputy director US-India Policy Studies at Center for Strategic and International Studies.

 

In Conversation with... Johanna Diecker

Exemptions from tariffs and taxes support young industries, attract companies to new markets, and enable them to reduce the cost of products for consumers—helping millions to access goods and services for the first time. In the energy world, exemptions from tariffs and VAT on decentralized renewable energy (DRE) products, are enabling companies to bridge the affordability barrier that has hampered energy access for decades, with a recent Power for All survey highlighting tariff exemptions as the number one fiscal policy that decision-makers can take to accelerate DRE markets even faster.

To learn how exemptions can drive growth and reduce the customer cost of distributed solar by as much as 40 percent, as well as to hear about recent challenges due to tariff amendments in the East African Community, we caught up with Johanna Diecker, Enabling Environment Manager at GOGLA (aka the Global Off-Grid Lighting Association)—whose members have already helped over 100 million people get improved access to electricity.

Listen to the Q&A below.

 

Insider Insight: Rafiki Power

Rafiki Power mini grid installation in Tanzania

Rafiki Power mini grid installation in Tanzania

The International Energy Agency has advised that 45 percent of rural electrification—bringing power to over 480 million people—is best achieved via mini-grids. In a recent Power for All survey, we asked mini-grid providers for their insights on the most important steps policy-makers can take to unlock this potential. In the technology category, standards, clear regulation and fast, low-cost licensing and permitting  were all pinpointed as key policy actions. To learn more, we spoke to Sebastian Rieger, Finance Director, for Rafiki Power—a mini-grid company, owned by the utility E.ON which has built 8 photovoltaic mini-grids in Tanzania, and has plans to increase that number to 100 over the next three years.

Listen to the Q&A, or read the edited highlights below.

Power for All: What was it that first attracted you to Tanzania?

Rafiki: We were attracted to Tanzania due to the good economic environment, relatively stable economic growth, political stability, the large potential market, use of the English language (helpful to a German company), and the comparatively supportive regulatory environment for decentralized renewable energy generally--and mini-grids in particular.

Power for All: The regulatory environment in Tanzania is more advanced than in many other nations with low levels of energy access. How important has this been for your plans to rapidly accelerate mini-grid roll-out? And where do challenges still lie?

Rafiki: While there is some good regulation in Tanzania, there are still very significant gaps. So while the regulatory environment provides a lot of flexibility, it also creates a lot of uncertainty--which can put the private sector in a risky position and puts a question-mark over achieving scale. These include:

  • A lack of transparency on grid extension
  • A lack of clear regulation on what happens when the grid comes, and the commercial mechanisms for dealing with the grid arriving at a mini-grid site
  • A lack of detail around technical standards that will be necessary for mini-grids to connected to the national grid when it arrives
  • Issues around mini-grid specific licensing and regulation--a lot of regulation is designed for larger scale projects but not the right fit for mini-grids
  • A large population living off-grid but only certain towns and villages where mini-grids are currently viable--licensing requirements, environmental assessments, building permits and planning costs can pose a problem for the viability of small projects, and while there are exemptions for small-scale power producers the “devil lies in the detail”, and these can still be difficult to implement in practise

Power for All: How can government better approach energy planning to integrate different energy sources, and how can they work with mini-grid developers to drive scale?

Rafiki: Flexibility to operate, freedom and a competitive environment in the energy sector are necessary to enable the most economic solutions to be adopted. However, mini-grids are long-term infrastructure that will last for decades, and if they are built to enable productive use, developed so they can be integrated into the central-grid, and set up so they can be upgraded over time, the payback period will be in the range of 10 years at a reasonable tariff rate—making uncertainty a problem for investors. In Tanzania, there is a great environment for mini-grid pilot projects at the minute, but not yet the right environment for scale.

Governments need to have off-grid systems as a more integrated part of their planning, and see mini-grids as a chance to accelerate electricity access. A mini-grid which has been built to a good technical standard can provide the same—if not a better—level of energy service as the national grid. It can be integrated into the grid when it arrives. And it can be built today, rather than in 5-10 years.

Power for All: In which other countries are you seeing the policy and regulatory environments shifting in a way that will drive mini-grid development? And what is your prediction for the expansion of the sector over the next few years?

Rafiki: Gradually things are beginning to happen. For example, Nigeria is working on its mini-grid regulations, in Uganda there are plans for tenders on mini-grids in isolated areas, in Kenya there is a tender scheme already executed, and a similar scheme is coming up in Madagascar. A lot of countries have recognized the possibility of accelerating energy access by having private sector friendly regulation in the energy sector. Although, whether fully supportive mini-grid regulation is rolled out, or whether there will be shortcomings, remains to be seen.

The future looks a little mixed. On one side, the potential of mini-grids is becoming better understood. In countries such as Tanzania, the regulatory issues are being worked on, and some policy-makers realize that mini-grids provide a huge opportunity to advance electricity access. Mini-grids make macro-economic sense. So that is another key reason to be positive.

On the other side, work across the last two years in Tanzania has also given me a bit of a reality check. The amount of time that policy-makers have available to focus on different topics is fairly limited, and there is still an inclination towards national grid-extension--simply because it is easier to fund a $100 million grid project than it is to fund 100 x $1 million mini-grid projects. Politicians like to put their name on bigger projects, so this gives a political advantage to the conventional energy system, and donors, including the World Bank and KfW also find it easier to push money into central-grid extension.

I therefore see there is a bit of a “make or break” for the mini-grid sector in the next few years. We have attracted a lot of companies, and the first utilities have gone into the sector--including E.ON, Engie and EDP. There is momentum. Yet if it in the next two or three years the sector does not come to a commercial scale, policy-makers may say that it is not delivering at speed and will simply put their focus back onto the national grid. The next one or two years will be critical.