On track for universal electrification, Asia and the Pacific must aim higher
Asia and the Pacific must seek to achieve 24/7 electricity supply with good quality and sufficient quantity to maximize economic and human development benefits.
According to the latest progress report on the Sustainable Development Goals (SDGs), Asia and the Pacific have made significant progress in electrification. Between 2010 and 2018, an additional 665 million people received access to electricity. Between 2017 and 2018, the people in the region without access to electricity fell from 351 million to about 200 million.
Such success was achieved with clear policy actions from governments and strong support from development partners. Technically speaking, three modes of electrification were used: national grid extension covering large populated areas; renewable energy based microgrids servicing fewer households in remote areas: and standalone solar home systems (sometimes called a “nano grid”) for meeting household electricity needs.
For those still without access to electricity, it is expected that renewable energy-based microgrids and solar home systems will play an increasing role in the next 10 years. Based on existing and planned policies, developing countries in the Asia-Pacific region are on track to achieve universal electricity access by 2030.
This is encouraging. However, in spite of the good progress made in meeting the global electrification aims of SDG 7, there are still three major challenges facing the region before it can enjoy the full benefits of electricity access.
First, in many developing countries in Asia, as the national grid extends, the quality of the services may become less reliable particularly in peak hours. Households and businesses face frequent and sometimes lengthy outages of grid electricity or experience voltage fluctuations that can damage electrical appliances. According to the World Bank’s “Lighting Global” Program, there are currently about 943 million people in Asia and the Pacific, particularly South Asia, who are experiencing unreliable electricity supply.
Secondly, most microgrids and solar home systems only provide very basic and limited electricity services, such as lighting, phone charging and running a television, consuming less than 1 kWh of electricity per month. For a fair standard of living, households would need to use more electrical appliances, like refrigerators, rice cookers, microwaves, washing machines, or even air conditioners, with 5 kWh to 10 kWh of electricity consumption per month.
Third, beyond household consumption, more electricity services are needed. Electricity services in rural areas should be able to cover productive of use of electricity for agriculture, including activities such as cereal and food processing, and pumping for irrigation. Moreover, electricity supply is indispensable to support an effective “cold chain” to avoid losses and waste from production fields to the shelves of the markets.
While Asia and the Pacific is well on track to achieve 100% electricity access, the region must aim higher and seek to achieve 24/7 electricity supply with good quality and sufficient quantity in order to maximize economic and human development benefits.
The Global Commission to End Energy Poverty, supported by Massachusetts Institute of Technology researchers, proposes an Integrated Distribution Framework to bring together all three modes of electrification – national grid, microgrid and solar home systems - so they work in an efficient and complementary way.
To implement such an integrated approach, innovations are needed in three areas: technology, institutional arrangements, and business models.
From a technological point of view, individual solar home systems can be connected to each other to share extra solar generation and battery capacities to form a microgrid; while a microgrid can be connected to the national grid.
With smart energy management systems using digital technologies, microgrids can be operated as a standalone system to maximize solar and other renewable energy generation at minimum cost, or be switched to the national grid when there is a deficit of supply within the microgrid.
Technical integration needs to be accompanied by corresponding institutional arrangements to consolidate the interests and responsibilities of different stakeholders, such as national grid and distribution utilities (often state-owned), microgrid operators (often private) and local communities. With approval from government and regulator, a special purpose rural energy service company may be formed through public-private partnership to coordinate, operate and maintain the integrated electricity supply system.
In terms of business models, the special purpose rural energy service company should play the role of last-mile service provider, but its business should not just be limited to providing electricity. To ensure adequate returns, the company should consider expanding its services to consumers, including monitoring energy efficiency of appliances, installing rooftop solar panels, supporting online education in schools, and promoting productive use of electricity to generate income for consumers. In terms of billing and collection, these companies can also introduce flexible systems.
Will this integrated approach for electrification work? ADB’s Energy Sector Group, which I lead, believes that it can. We are working with our partners in selected countries in Asia and the Pacific to have policy discussions with governments, consult stakeholders, prepare business plans, pilot operations, and disseminate knowledge. On this basis, the integrated approach for electrification can be scaled up in many more countries with financing from development banks and commercial banks.
While Asia and the Pacific is well on track to achieve 100% electricity access, the region must aim higher and seek to achieve 24/7 electricity supply with good quality and sufficient quantity to maximize economic and human development benefits.
This can be achieved through the innovative integrated approach. Asia and the Pacific should take the lead to show the world how innovation will take us to next level of electrification.