Lusaka, May 25, 2016 -- At the African Development Bank (AfDB) annual meeting today, Power for All released a new framework for achieving universal energy access before 2030, which outlines specific actions multilateral development banks (MDBs) can and should take to expedite delivery of electricity to the 1.1 billion people living without access to modern energy services. The framework, which was previewed at the World Bank Spring Meetings in April, is contained in a report titled “Decentralized Energy: the Fast-Track to Universal Energy Access”.
In the report, Power for All explores how current investments by MDBs in big energy infrastructure projects “actually hinder efforts to meet global goals for electrification... The opportunity costs of delaying energy access can be remedied if MDBs and infrastructure development agencies incorporate into their plans the full spectrum of energy options available today, including decentralized renewable energy (DRE) systems.”
The report emphasizes a “need for speed” in achieving universal energy access and highlights why DRE solutions, such as solar home systems and mini-grids, offer the best path forward. The report identifies three specific courses of action for MDBs:
Utilizing energy access opportunity cost assessments in funding decisions;
Catalyzing dedicated energy access super funds to accelerate the DRE sector; and,
Mobilizing national DRE accelerators (based on successful models like Bangladesh’s IDCOL) in key countries suffering from energy poverty.
Notwithstanding its clear prioritization as a global goal, little progress has been made in achieving universal energy access to date. Despite the MDBs’ mission of poverty alleviation, DRE spending still only accounts for a tiny fraction of their total investment in energy access; as of 2014, the AfDB invested just one percent of its energy access portfolio in DRE, with the remaining 99 percent going towards large energy infrastructure projects, which, according to a recent independent evaluation of the World Bank’s energy investment portfolio, take an average of nine years to complete.
This outdated emphasis on large-scale infrastructure initiatives is misguided considering 85 percent of the energy-poor live in rural areas where DRE can deliver on energy access goals, and climate, gender, education, health and rural development goals quicker, more cost-effectively and more reliably than the centralized grid can. The new Power for All report shows that a household solar company would require at most a three-month wait per connection, while connections from a mini-grid company would take approximately four months; more than eight years less than the average grid. The MDBs’ current energy investment imbalance thus equates to a tremendous energy access opportunity cost; a cost that must be integrated into energy planning and development finance models if the banks stand a chance of meeting their universal energy access aspirations.
“Energy access is central to nearly every major development challenge the world faces today, and with decentralized renewables, it doesn’t have to wait,” said Power for All’s Kristina Skierka, director of the global campaign. “With a reprioritization of funding, shifting of internal incentives, and adaptation of successful, fast-track funding schemes for decentralized renewables, the MDBs can become the great accelerators of energy access and leaders in achieving power for all.”
While the global Sustainable Development Goal (SDG) for universal energy access is 2030, the AfDB’s “New Deal on Energy for Africa” is committed to achieving universal energy access across the continent by 2025. The AfDB has announced major commitments on energy access, but its focus appears to remain on large infrastructure. It is clear that if the AfDB, and other MDBs alike, prioritized energy projects based on time to access - which is part of the energy access opportunity costing - decentralized renewables would emerge as a key energy source for unelectrified countries; and present the AfDB with the opportunity to achieve its universal energy access goals not just by, but before, 2025.