Roundup: COVID-19 Sector Response

The decentralized renewable energy (DRE) sector's response to COVID-19 falls into two main categories: 1) ensuring that companies and consumers emerge intact from the crisis, and 2) embedding DRE solutions, both immediately and longer term, into the nexus between “energy for all” (SDG7) and “healthcare for all” (SDG3). In the words of Sarah Bieber of Acumen, “We’re in a race that is both a sprint and a marathon.” Power for All pulled together this comprehensive Roundup, and will continue updating it as things evolve. Also, check the Resource links below for more information.

Sector Support

With many businesses temporarily dormant due to the lockdown and expecting to reach a financial cliff in 3-4 months, multiple company surveys show that the biggest threat for all types of businesses -- solar home systems, mini-grids, appliance manufacturers and distributors -- is a financial one, specifically the need for bridge loans, operating capital and grants. Many jobs, particularly companies with large sales forces, are in jeopardy. Efforts are also being discussed on how to support customers who have reduced ability to pay for energy services because of COVID-19.

Financial support:

  • Debt: A group of social impact investors and foundations have created a sector-wide $100 million concessionary debt fund to help companies get through the fiscal challenges of the coming months. The COVID-19 Energy Access Relief Fund, managed by SunFunder and responsAbility, has a June target for starting to deploy funds, but it is also working to line up some bridge funding starting in May. Nearly 500 companies have already expressed interest in funding and/or technical assistance through the website (eligibility criteria are listed, including a minimum loan amount of $200,000). The Fund says it will help in "stabilizing economies in emerging markets and providing security for up to 370,000 jobs." The Fund has raised some concerns about only supporting more established companies (addressed by GOGLA here), but it was always focused on debt and its backers have been open about it not being a "silver bullet", while encouraging other non-debt facilities.  
  • Stimulus: the United Nations has called for a $2.5 trillion recovery fund for developing countries, with a focus on Africa and women, and SEforALL has been tasked by the Secretary General to determine how to include energy access and SDG7 in the stimulus. SEforALL is urging national governments to do two things: 1) to set aside at least 25% of stimulus packages for renewable energy, and 2) to invest locally in upstream capacity, including assembly and manufacturing of energy equipment to promote job creation. Additional perspective can be seen in this joint article by SEforALL's CEO and the head of the World Bank's energy department. #RecoverBetter.
  • Re-directing: Some development banks and large bilateral donors say that due to institutional constraints they will not be able to activate new capital during the immediate COVID response, but instead are working to redirect money from existing programs to help. CLASP for example, is converting a percentage of its results-based financing money that came from USAID through the Powering Agriculture Energy Grand Challenge, from output-based payments to grants to alleviate financial pressure. 
  • Consumer: Discussions have also started about supporting customers who may be unable to keep up energy payments during the crisis. SEforALL and the Rockefeller Foundation are exploring possible avenues for delivering lifeline services to consumers. At the same time, 60 Decibels is working with GOGLA to fast track a 6-country survey to better understand consumer impact, staring data collection on May 7, with first results at the end of May, and then updating data monthly. Sign up form is here and onboarding form here. 60 Decibels will do a similar survey in 6 other countries with The Rockefeller Foundation. The consumer challenges are summarized well here by GOGLA's Koen Peters, and in this write-up by BFA Global.  
  • Grant: While leading industry representatives have called for a $35 million grant facility (see advocacy section below), smaller efforts are underway. The REACT Kenya Relief Fund, operated by AECF, has set aside USD $2 million in emergency grants to support locally registered and operated businesses in the off-grid sector. Grants can range from $50,000 to $200,000, with applications being accepted until June 11, 2020. Global Distributors Collective (GDC) is exploring structuring a $8 million dedicated fund to support distributors with a combination of grant and debt financing. Contact them if you're interested in collaborating with them. Other groups including GOGLA, ARE and AMDA are looking for ways to mobilize grants for SMEs that cannot afford to take on debt. Crowd-funding platforms like Energise Africa are also working to adjust to the new reality.

 

Technical support:

Power Africa, GET.Invest, the Global Distributors Collective, PFAN and others (CGAP is helping on coordination behind the scenes) are already looking at ways to offer increased technical assistance, making dozens of experts available to help private sector companies with risk management and scenario planning, Implementing force majeure clauses, processing rapid liquidity financing and other legal needs. Organizations like Power for All, GOGLA, and the Energy Access Action Network are working to make sure that companies are aware of this assistance and able to access the resources that they need.

Advocacy:

Six of the sector's leading industry representatives issued a call for donors to set aside $35 million in grant funding: $10 million for a first-loss guarantee needed to activate the concessionary debt facility, as well as $25 million of additional grants or returnable grants to avoid the most severe impacts - including the bankruptcy of energy access companies, halting progress of the SDGs and leaving communities in the dark.  GOGLA, Alliance for Rural Electrification, CLEAN and other trade groups have published open letters to government outlining the importance of the DRE sector, with specific requests for support (see list of some key requests below). One request: that DRE be made an essential service has already been approved in Kenya, India and Nigeria. Leading CEOs have also weighed, calling for a “liquidity fund” to support companies, while individual CEOs from BBOXXZOLA Electric and SunFunder have also commented separately). Meanwhile, DFID-funded Africa Clean Energy (ACE) has engaged 12 governments so far to promote understanding of how COVID-19 restrictions will affect their universal energy targets, specifically on underserved communities; to ensure distributed solar can maintain service and warranties and protect consumers unable to pay because of reduced income; and to provide evidence of the benefits of solar in providing electricity in the short term to rural health facilitates and clinics (a briefing prepared for energy ministries on challenges and actions required is here). 

SDG7 and SDG3

While immediate steps are being taken to prop up the DRE sector companies and their customers, action is also underway to ensure that the sector’s role in electrifying rural health clinics is fully factored into both the immediate COVID-19 response, as well as a longer term, systemic solution to addressing the problem of the 500 million people who are still served by rural health clinics that are unelectrified. For a summary on the value that the SDG7 sector can bring to SDG3, SELCO Foundation hosted a webinar with key stakeholders, accessible here. Various initiatives are also under way:

Financial support: 

  • The Health and Energy Platform for Action (HEPA), an initiative announced last year by the World Health Organization (WHO) and UNDP with a focus on clean cooking and electrifying health facilities with renewable energy, is also mobilizing after being quiet since its launch. Under HEPA, WHO is working with GAVI and others to find ways to expand an existing solar refrigeration for vaccines program (officially called the Cold Chain Equipment Optimization Platform) to power other healthcare equipment that would allow delivery of additional services. Working with the World Bank, IRENA, and SEforALL, WHO is also leading a global assessment to establish a baseline of data on rural clinic electrification. It is also making progress on activating an advocacy platform of energy-health champions. 

  • The World Bank said that it is working to "mobilize donor funds to support governments—mostly in Sub-Saharan Africa—to respond to COVID-19 by rapidly electrifying health facilities with distributed solar PV/battery solution, including the provision of off-grid solar products and associated solar refrigeration to safely chill vaccines all the way to village clinics." This follows World Bank ESMAP establishing in 2019 the Efficient, Clean Cooling Program, a multi-sectoral technical assistance program to accelerate the uptake of sustainable cooling solution, including refrigeration and cold chain in developing countries. The United Nations Development Program (UNDP) also said that it is "set to expand" its Solar for Health program across Africa.

  • Some country funds are already being set aside to increase clinic electrification, such as the AllOn fund for Nigeria, while the Rural Electrification Agency there is also moving quickly. Similarly, pre-COVID the African Development Bank approved funding to install solar and batteries on 500 primary health centers in rural Togo. Apparently, one main obstacle to expediting that work, which is the scale of ambition required, has been onerous procurement requirements. In response to COVID-19, the World Bank says it has already put out emergency procurement guidelines that allow for “direct selection” of suppliers and has used that already in Pakistan and Nigeria.

  • Power Africa/USAID is launching a Solar Electrification of Healthcare Facilities grant competition to "support accelerated provision of off-grid energy and reliable power solutions to improve the readiness and resilience of healthcare facilities in rural, peri-urban and urban communities of sub-Saharan Africa". Grants will range from USD $100,000 and $500,000. This will also explore innovative business models to make systems sustainable in the longer term (i.e. fee-for-service, lease-to-own, or pooling of O&M costs). 

Technical support:

  • CLASP and SEforALL and a large working group (World Bank, AfDB, Clinton Health Access Initiative, etc) are coordinating with the health sector on technical aspects of clinical care for COVID patients and related equipment and power system needs (standardized information on power ratings of available medical devices, system design, load profiles of health facilities of 25, 50 and 100 beds, etc), and fostering better health and energy sector coordination. See this initial draft outlining different technical specifications and costs, which are still being refined. DFID is meanwhile working with WHO to figure out how to address different technical standards for what are often life-saving medical devices, since they vary country to country. Countries like Kenya are already working to determine how to account for the potential risk and liability of that equipment.

  • The World Bank has already been working on rural clinic electrification for some time (see this comprehensive summary), and it will continue to focus on sustainable solutions that focus on long-term electricity service delivery rather than just procurement and installation of solar PV. In the meantime, it is working to address the COVID-19 pandemic by accelerating existing projects with components on electrification of health institutions and providing technical assistance on the ground to its client countries, including guidance on fast tracked procurement. In response to COVID-19, the World Bank is looking at hybrid solar/diesel systems to start, but wants to make systems fully sustainable (affordable over time, clean) and potentially combined with community mini-grids. 

  • The private sector is also looking to make a difference. Mini-grid players Odyssey Energy Solutions and Africa Mini-Grid Developers Association (AMDA) are working to identify rural health facilities that are “shovel ready” for electrification by DRE companies. It appears that the number of potential projects is already in the hundreds. Besides projects that are already on the Odyssey platform, others can be added to a tracker sent out by AMDA. Solar Kiosk and UNITAR have also put forward a pandemic rapid response concept that looks promising, as have Winch Energy and Differ Group. SELCO Foundation is also working to do need assessments in Sierra Leone and Burkina Faso. 

  • Schatz Energy Research Center is working with the World Bank on developing a quality assurance framework that uses remote monitoring and financing measures to help guarantee long term functionality of solar installations at public health clinics. 

Advocacy:

  • Power for All worked with a group of healthcare and energy leaders in India to publish an open letter to governments and funders on the role that DRE can play in delivering better rural healthcare in nearly 40,000 unelectrified clinics. The letter outlines four recommendations, and will be followed up by a stakeholder roundtable to determine specific next steps. Power for All and its partners are replicating this for countries in Sub-Saharan Africa as well. If you’re interested in learning more, please email benson [at] powerforall [dot] org. 
  • The Global Plan of Action (GPA) Partnership has published a briefing note outlining the important role of DRE in serving displaced people. It calls for integrating sustainable energy "into the preferred solutions when designing COVID-19 responses related to health, water, sanitation, hygiene and communications."

 

Calls to Action

Some of the key calls to action that have been put forward to support the sector:

  • Set up a sector relief fund

  • Designate DRE an essential service. This has already happened in numerous countries, but is needed across the board.

  • Fast-track existing procurement and funding procedures for DRE projects

  • Pool resources for a rural electrification stimulus 

  • Step up technical assistance for DRE companies

  • Increase availability of energy efficient medical devices for off-grid or weak grid

Resources

SEforALL Energy and Health Portal

GOGLA COVID-19 Resource Center

AMDA Resource Center

Energy for Rural Health Centers: Energypedia 

Global Distributors Collective COVID-19 Resources

SELCO Foundation COVID-19 (India specific)

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