Letter to the Economist: Nothing's really changed in off-grid solar in 10 years
What is so depressing about the Economist’s article on private firms powering Africa with solar is that much of it could have been written 10 years ago.
In 2014, 606 million people in Sub-Saharan Africa lacked access to electricity according to the World Bank. This number has not moved in 10 years. M-Kopa and Powergen, leaders in off-grid solar, were 3 years old at the time, just two among many companies in the market.
In 2014, solar PV prices had declined 83% in the preceding 10 years. Even back then, off-grid was cheaper than grid extension for many customers, because building long powerlines to rural areas was just so expensive. Solar was still too dear for most families, even with payment plans.
In 2014, Eskom was also instituting load shedding due to diesel shortages. In Ghana there’s a local portmanteau word for power outages, ‘dumsor’, (roughly meaning ‘off-and-on’ in Twi) to describe the repeated outages from 2001 onwards caused by low water levels in dams.
In 2014, the World Bank and other donors were pledging hundreds of millions of dollars to off-grid solar every few years, just as today. Whether this funding ever gets disbursed is another story. Off-grid developers complain of the mismatch between funding committed by donors with fanfare at major events like COPs, and what they later dole out.
Then, as now, we are not doing enough to fund electricity infrastructure in countries that need it. Electricity grids in the West were heavily subsidised when first built out. Indeed, in some countries like Australia, rural customers are still subsidised by urban customers. Africa’s GDP per capita is 1/45th of the USA’s and 1/27th of the UK’s, yet we still expect electricity to be funded by the private sector and paid for by customers in a cost-reflective manner. Wages might be lower in Africa, making it cheaper to build projects. But logistics costs are significant, there are lower economies of scale, and solar panels are a globally priced commodity.
We would get excellent bang for our donor buck if we funded energy access projects in Africa with zeal. This pays dividends by lowering carbon emissions from diesel generators, coal and gas as these economies expand. It also contributes to economic growth, improves well-being and creates jobs, reducing the need for migration to seek a better life. For decades, donors have been saying they want to eliminate people living without electricity. This time, they should put their money where their mouth is and actually do it.