Providing sustainable energy access to the world’s population is at the forefront of the widely discussed energy trilemma — how to ensure energy security, equity and environmental sustainability for all.
Despite dramatic improvements in electricity access since 2000, 1.1 billion people (PDF) remain without access to electricity. This problem is particularly acute in sub-Saharan Africa, where in the last 15 years population growth has outstripped the rate at which people gained access, with the result that 588 million people in the region do not have access to electricity. Finding an effective way to increase the rate of access is of central importance for economic growth, development and reduction of poverty.
However, access to power grids and electricity is not a guarantee for sustainable energy access for all, and the issue of energy poverty is increasingly raised in the developed world. For example, the European Union recently launched the EU Energy Poverty Observatory as “more than 50 million households in the European Union are struggling to attain adequate warmth, pay their utility bills on time and live in homes free of damp and mold.”
This raises a global challenge for energy customers, governments and energy players. Providing sustainable energy access is an opportunity for energy players across the entire value chain — from energy producers to end-user retailers — to unlock value, not only by contributing to social and development goals but also by unlocking business and economic value.
Two examples where new business models unlock value are green mini-grids in the developing world and community generation in the U.K. These models illustrate the social importance of sustainable energy access and how it can create additional economic value for companies.
Renewable green mini-grids in the developing world
Renewable green mini-grids (GMG) are poised to play a crucial part in solving the sustainable energy access challenge.
Mini-grids are power supplies and grids that are larger than individual household systems but are not connected to the national grid. They can vary in size from 10 kW to more than 1 MW and tend to be the most cost-efficient option for remote communities that are far from the pre-existent grids with relatively high population densities.
The International Energy Agency estimates in its “Energy for All” case that 30 percent of new electricity access in sub-Saharan Africa will come from mini-grids. At the same time, the negative social, environmental and economic impacts from a reliance on fossil fuels have led governments to increasingly favor renewable energy sources.
Despite their promise, GMGs have struggled to gain significant scale in Africa. Pre-existing mini-grids often heavily rely on donor support and struggle to be economically viable. Current barriers to market expansion are the lack of regulatory frameworks, demand uncertainty, lack of local capacity and unproven business models.
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