Left with a decade to meet SDG 7 goals, the current pace of electrification through to the last mile is far from sufficient. The world has to do better.
Among the SDG 7 targets, achieving universal access to affordable, reliable, sustainable, and modern energy services (Target 7.1) is the one that has the most profound implication for Ethiopia having only 45% and less than 5% access to electricity and cooking services respectively.
SDG 7: Target 7.2 calls for substantial increase of the share of renewable energy in the energy mix. The most predictable positive development in Ethiopian Energy system is the fact that almost all grid supply (except backups) comes from renewable sources. Many key projects from multiple sources are under development to minimize the current hydro dependency. There are also interests and signals to shift the transportation and industrial use to electric sources albeit at early stages.
SDG 7: Target 7.3 calls for energy efficiency improvement. For Ethiopia, although the energy intensity (units of energy per unit of GDP) slightly declines over the years reaching 9.7(MJ/USD 2011 PPP) in 2017, it still needs a significant improvement even to hit the global average of 5.0 the same year. In my view, the historically low electricity tariff in the country has played a significant role for the inaction or lower efficiency performance.
The report provides policy recommendations based on best practices as identified by national authorities and the international community as insights to emulate.
In reference to the best practice insights provided, based on the publicly available rate of access and informed by the country practice, this article will shade some light on the Ethiopia case as a matter of bringing the topic to the larger public attention. Hoping it would drive further discussion and action. Given the significance, this review will focus only on target 7.1. You are advised to read the full report for a complete picture of the progress of all the energy targets.
Before you continue reading this article, you are, again, advised to quickly go through part I of this series to understand the overall background.
The how to deliver affordable and reliable service at scale in countries where the level of electrification remaining low such as Ethiopia, and the how to connect those hardest to reach countries approaching universal access still in limbo, the report advises countries to go beyond the available data to mapping the journey toward universal electricity access, commit themselves and explore the latest innovations in policy and regulation, public and private investment, and business models for electrification.
Below are best practice recommendations and my reflection on Ethiopia case piece by piece. Note: The writer is aware of the publication of a new investment proclamation and its consequent investment regulation. The investment regulation is not yet publicly available and it is not considered here.
Integrated Electrification Strategies and Planning To Drive Policymaking and Investment Decisions
In terms of integrated electrification strategy and planning my view is that Ethiopia's approach is somehow in line with the best practice recommendation given the inclusion of On-grid and off-grid based technology options in its national electrification strategy and subsequent planning. Georeferenced, multiyear approach encompassing both on grid (65%) and off-grid(35%) options are considered to reach universal access by 2025.
Fig 1. Integrated electrification for universal access: grid and off-grid connectivity
Source: NEP 2.0
The plan document indicates that 97% of the population will be served through the On-grid by 2030 explaining that it would be the least cost in the longer term. In my experience working with the utility, managing the distribution infrastructure becomes cumbersome as it goes further away from the substations or maintenance centers. The universal electrification access program where the utility is proud of in extending the grid coverage to almost 60% of the country is an excellent learning point. In the UEAP program, maintaining the quality of the projects' construction were challenging and it was a burden for the utility to sustain the operations once project handovers were made. This is evident from the fact that that anyone can see poles and wires but no lights as you move to rural settlements. You can imagine how tough it would be as you move even further.
My biggest concern is that the T&D infrastructure will continue to be a constraint for the real demand growth despite the capacity expansions in generation. In my view, other options such as mini-grids and SHS would give more sense on technical, economic and timing terms. The declining cost of solar PV and storage devices coupled with small-scale hydro, wind and SHSs may be viable options. Leveraging PV solutions in telecom towers could also support the access effort.
Policy Frameworks, Workable Regulations, and Strong Institutional Arrangements to Create Enabling Environments
In its access outlook to 2030, the report mentions Ethiopia as one of the few countries that should reach universal access to electricity and in a possible policy implementation pathway forward to clean cooking solutions. Looking in to the country's situation very closely, my view is that this subject is one of the key areas that needs improvement the most to achieve the stated goals. The policy frame work which has been on a draft stage for many years, regulatory clarity tailored to the specific access pathway and empowering the regulator and making it accountable for the results is something still work in progress. The regulation speaks general and it is risky for the private sector to commit resources as it is. Workable regulations is the key word here. Under the current progress, Ethiopia is one of the countries where population growth is outpacing the rate of electricity access, which calls for a ramp up to interchange the growth trajectory.
- Finalizing the Tariff Guidelines and Methodology for Off-Grid Systems,
- Identify on grid and off-grid locations and publicizing it in more understandable format,
- Clearly stating connection protocols, standards, and exit strategies
- Introducing subsidy programs or incentive mechanisms for the deep remote areas,
- Empower the REF and REB to lead the off-grid sector, the utility focusing more on industrial and on grid consumers,
- Enabling a policy and regulatory framework to go beyond the energy sector and also cover aspects of digital development and financial inclusion,
- Simplify the Licensing, tariff regulation, access to finance and specific project risks related to the eventual arrival of the main grid,
- Further unbundling of the transmission and distribution sector,
- Introducing feed in tariffs for DERs and promote local manufacturing of components
Innovations in Technology and Business Models to Reach the Remaining Unserved Population
Coupled with the limitation of the regulation, telecom infrastructure and digital payment platforms, exercising latest business models is far from commercial stages. It is way behind in adopting the available business models even on a regional contrast. The reform measures taken in the telecom and e-payment when grounded and hopefully an accompanying reform in the energy sector will play a positive role. Although clearly stated on the program document to deploy all available business models based on a least cost approach, the utility diverted to historical practices (EPC) dragging all the efforts. Only a hand full companies are operating in PAYGo models to date for, example. Despite, global best practice recommendations, there is no indication of how the distributed energy resources fit in to the grid supply either.
NEP2.0's approach is that Private sector will be engaged in market-based supply, delivery and, aftersales service chains in proximate/commercially attractive rural areas for beneficiaries that are not located “under the wire,” with focus on solar systems and in close collaboration with MFIs and REBs; and together with cooperatives in mini/micro grids for deep rural and pre-electrifications. I find this approach problematic due to the fact that in the absence of a clear policy support and regulatory framework the private sector will not see it as a viable business leaving the marginalized communities for a prolonged time of having no access to basic services. The recent development shows the utility engaged in minigrids in line with the NEP recommendation. In my view, either allowing the private sector to more commercially viable locations or providing clearly defined policy support for the deep rural areas would be key to leave no one behind.
Fig 2.0 Top 20 countries with the largest share of solar lighting systems (below Tier 1), 2018
Source: Tracking SDG 7 Report: The Energy Progress Report 2020
As the above figure in the report shows, despite the huge potential available, the share of population connected to off-grid solar is below 5% in Ethiopia, amounting a cumulative 11Mwp installed capacity across the country (2018), and it is an indicative of the lower adoption of new business models.
The SDG7 report opts that Cooking is multisectoral, and it demands multisectoral solutions to achieve universal access to clean fuels and technologies. Ethiopia too should follow suit. It should not be left to the government or few stakeholders alone. Given the cultural connotation of cooking, everyone (civil society organizations, related ministries such as environmental, health, education, agriculture, private sector, academia, financial sector and the religious institutions for that matter) has a role to play in fostering adoption of new technologies and easing the transition away from polluting fuels such as unsustainable and in inefficient use of biomass and charcoal. I think the government's programmatic approach or commitments of the cooking sector are encouraging for now and it is better to wait for and review it in few years' time if commitments are going to be realized as planned.
Please read Assessment of Ethiopian Energy and Power Business Updates from Policy to Implementation, October 2019 for the bigger picture of how Ethiopia approaches the cooking sector
Leveraging Public and Private Financing to Fund Electrification at Scale and Leaving No One behind
The report says expanding access to electricity—especially for clean technologies like renewable energy mini grids and off-grid electrification—remains underfunded, especially in Sub-Saharan Africa. The case of Ethiopia is even worse. Private capital is almost none and it is constrained by design. Although the country is calling for a pivot to private sector led growth, the energy sector investment is still inclined to public financing and historical business models rather than leveraging the limited available public resources to mobilize the private sector capital. Upstream private sector capital flow is expected through the PPP model but not to the rural access yet. The use of climate finance to support energy access is also a limited focus area.
If any, they are the handful companies operating in SHS distribution supported by the World Bank finance and a couple of them in PAYGo business model reaching early commercial stage with limited scale and geographical coverage.
Given the energy gender gap in the country, the utilities' should continue the positive initiative of engaging women in the boardroom discussions, promote the job creation potential of the sector (with relevant trainings) and ensuring inclusion of people in the displacement settings. Ethiopia is home for so many displaced people in almost every corner of the county's border across neighboring countries in the region. Exclusion of this significant number does not just deny access to millions but also overburden the ecosystem of settlement areas. Inclusion is one of the key success factors.
Conclusion and Final Remarks
True story I
As a kid, I myself used to collect firewood travelling to remote places (I cannot imagine how far they could go by now given the level of deforestation over the years) taking almost 9-10 hours every working and non-schooling days. I never realized how much waste full and unhealthy practice it was by then just because everyone was doing it and, of course, there were no alternatives. No electricity access and scarce Kerosene was the only option to study during the night. Forget the health implications, you have no idea how many times I survived from burn out while sleeping. It was when I passed to high school I came to know electricity. I feel ashamed millions of people (Ethiopians) live the same way even after 18+ years.
In rural areas, children, usually, spend the daytime (out of school if there is one) in productive tasks whether be it as a shepherd, collecting firewood or supporting families in the agricultural fields. There is no access to electricity of any form means; they do not have time to study safely. If they fail to study, they will not go beyond the life style of their predecessors and the vicious cycle continues, worse in diminishing agricultural resources.
True story II
As a coincident, I started my career in the power utility as a junior engineer and part of my job was to monitor power theft mainly in higher energy consumers. In the face of the lowest electricity tariff in the world, and lucky they were of having electricity access out of the millions vying for it, to my disappointment, finding consumers engaged in illegal practice was a common experience. I did not stay long in the utility and I believe there has been a lot of improvement since then. Yet, the experience stuck in my mind given the minimum level of commitment to support rural access even if every one of us have equal right for the resources.
Related: THE HIDDEN EVIL POWER OF POWER THEFT
In my experience working in the field for many years, one of the very few infrastructures or services people need is electricity or power. Although they live far away from the urban centers with no formal educational background to understand the technology or business models, the people knew what electricity services entail for their livelihood, and electricity initiative is the single most cooperation you could expect despite the repeated broken promises.
The way I see it, beyond resources, the insufficient policy support and regulatory commitment are the main factors where millions of Ethiopians are still left in the dark while viable technologies and business models are at the country's disposal. Although the overall international energy access financial flow to Africa is very low, benefiting companies of foreign origin than Africans, the volume is far better in countries that adopt new business models, Ethiopia being in the losing side.
I am pretty well informed that the responsible ministry and the utilities have been doing what they can do( in fact I am truly appreciative of the progress in such a short span of time), yet they are too stretched with competing objectives with insufficient resources. The report asserts that Electrification programs should be grounded in a broader agenda of social transformation as evidenced from countries with universal electricity access emphasizing that the persistent lack of household demand, inability to pay, or unwillingness to pay making service providers reluctant to serve low-income users impeding the scale-up of electrification and threatening the sustainability of efforts across all technologies—grid, mini grid, and off-grid. In Ethiopia, while the country continues to subsidize on grid users, it still shies away when it comes to rural electrification. As an outside observer, I have concerns that millions can be left behind even after 2030 unless something is done to support or incentivize the sector and accelerate the rate of access. The access rate of Ethiopia in the report is not far from 1% quite in contrast with the 7 % access rate of neighboring Kenya.
Fig 3.0 The 20 countries with the largest access deficit, 2010–18
Do you see the big fat circle in the figure? It indicates the size of the access challenge ahead of Ethiopia, sitting only behind Nigeria and DRC in Africa.
Beyond basic access, the productive sector is also the one that is more useful yet seen lightly. Every sector has peculiar characteristics demanding a customized approach to power productive sectors. Powering agriculture is different from Powering health care. The same calls for powering industries, powering rural households or powering urban centers. Instead of a addressing the power needs of every sector uniformly, it would be more useful to approach in a programmatic manner aligning with the specific sector needs including applying the available sector incentives to the power sector as well.
My suggestion is to put in place an independent and empowered agency (I do not think the current DOE or REF structure is up to the challenge) with clear resources and mandate to address especially the rural access mantra. The regulatory authority should also be made to strive for a result. Leaving more than 60 million people the size of Kenya, Liberia and Djibouti combined in the dark is not a time for complacency whatever strategy or program the country sits on. We must do faster and better to make 2025 a serious deadline for a result.
The irony is that as Ethiopia achieves the energy targets, other SDG goals are sufficiently supported as well especially in the face of COVID-19 pandemic.
Sharing, commenting, feedbacks are encouraged. The goal is to encourage energy discussion in Ethiopia. No hidden ill intention or whatsoever. You may Download the Full Trackig Report.