Distributed renewables play an increasingly important role in promoting energy access, already accounting for 6 gigawatts of capacity in the developing world, with an expectation of providing over 60% of new electricity connections in Sub-Saharan Africa by 2030. New analysis in Escaping the Energy Poverty Trap shows that national governments need two things to succeed in creating markets for distributed renewables: 1) institutional capacity and 2) local accountability mechanisms.
A thriving private sector in distributed renewables is shaped by effective government policy, from funding research and development to setting subsidies. This starts with a basic interest in energy access.
But only with a functioning bureaucracy and administration can government design good policies in support of distributed power providers. Programs must be well funded, and the money has to be used effectively. Only governments staffed with skilled personnel and enough resources are in a position to satisfy these requirements.
Accountability ensures that government policies are properly implemented. In the absence of such mechanisms, consumers are left defenseless against corrupt local officials or distributed power companies. Even setting problems such as corruption aside, accountability is essential to match government policies with the needs of the energy poor. Good accountability mechanisms reduce the risk of communication and implementation failures, as local communities participate in the design of energy access policies.
Bangladesh illustrates why capacity and accountability are so important. The country is well-known for the success of its solar home system (SHS) program. According to government estimates, as of 2017 about four million systems have been deployed to the benefit of 18 million people. This makes Bangladesh one of the world’s leaders in distributed power access.
One key contributor to this success was the Infrastructure Development Company (IDCOL), a government-created but independent organization. IDCOL provides funding and technical assistance to private producers and consumers of distributed power. Its ability to promote distributed renewables on such a large scale can be pinned down to two factors. First, IDCOL benefited from generous financial support, notably from the Bangladeshi government and the World Bank. This enabled it to overcome one of the biggest barriers to the deployment of distributed renewables: credit constraints. Second, a network of non-governmental organizations and impartial observers ensured that the money was spent well by the local providers. Capacity and accountability were the keys to success.
These findings have three policy implications:
- Focus on supporting motivated governments. Creating markets for distributed renewables is excessively difficult without government buy-in.
- Emphasize institutional capacity and local accountability. When the government is committed to energy access, investment in institutional capacity and robust local accountability pays off.
- Avoid superficial, short-term solutions. Without institutional capacity and local accountability, solutions such as financial support or technical assistance will not produce lasting results.
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