Universal Access to Electricity: Closing the Affordability Gap

Abstract

Access to electricity changes lives but only when people can afford electricity-powered services to meet their basic needs, and this is more than just two light bulbs and a fan. Decentralized renewable energy (RE) minigrids, particularly solar photovoltaic (PV) minigrids, can cost-effectively electrify a large share of currently unelectrified rural populations. But the cost of using appliances with this electricity is still much higher than what the poor can afford without deep subsidies. This affordability gap stunts the sustainability and growth of RE minigrids. Significant improvements in the economics of supplying electricity with minigrids, combined with higher-efficiency appliances, are needed to reduce the effective cost of using electricity in decentralized RE minigrids. These would bridge the affordability gap and improve business opportunities and value to users, investors, and service providers and thus create market-driven expansion to overcome the acute lack of funding that they currently face. Technology breakthroughs that can help in this respect include (a) significantly cheaper solar PV components to reduce up-front costs of solar PV minigrids; (b) significantly more affordable and energy-efficient appliances; (c) better-performing bulk storage at a significantly lower cost; (d) affordable and easy-to-use grid management solutions, and (e) a utility in a box for a simpler, cheaper, and faster way to set up minigrids.