Failing to Solve Energy Poverty: how much international investment is going to distributed clean energy access?
Sierra Club, 2014
Increasingly, distributed clean energy is proving to be an important tool for providing energy services for those living beyond the grid. Distributed clean energy includes off-grid and mini-grid renewable energy solutions that provide power to populations either not reached by the conventional grid or those connected to the grid but considered ‘under-electrified’ as a result of chronic power outages or load shedding. Distributed clean energy has several advantages for poor populations, including the fact it can be deployed more rapidly and cheaply than the grid can be extended. Thus, it provides services directly to off-grid populations—something centralized conventional power plants have often failed to do.
Despite the important role these solutions can play in delivering energy access, they have received very little investment from multilateral development banks (MDBs) to-date. This is troubling given the role distributed clean energy must play in ending energy poverty—according to projections by the International Energy Agency (IEA). In its Energy for All Case, the IEA projects that, to achieve energy access for all by 2030, additional investment must be balanced among grid extension, mini-grids, and
off-grid energy (36 percent, 40 percent, and 24 percent respectively), with the lion’s share of that investment—64 percent—flowing to distributed solutions.
Distributed energy solutions account for the highest portion of the additional energy access investment because, of the 1.3 billion people without access to electricity, 84 percent are located in rural areas where it is too costly to extend existing grids. In this report, Sierra Club use the funding breakdown in the IEA scenario as a recommendation for MDB spending on energy access. In this report Sierra Club developed a methodology for grading the energy portfolios of four major MDBs—the World Bank Group, Inter-American Development Bank, Asian Development Bank, and African Development Bank—to evaluate their performance against the recommendations that we have based on IEA’s scenario in which universal modern energy access is achieved by 2030.