Solar-fueled mini-grids are a cost-effective, resilient solution for powering communities in developing countries.
Climate change adaptation, or ensuring vulnerable communities are resilient in the face of the unfolding climate crisis, has mostly been an afterthought for climate finance, attracting less than 20% of the total invested in addressing the crisis. That is changing amid global headlines of unprecedented wildfires, floods, droughts and severe storms.
Early this year, United Nations Secretary General Antonio Guterres called on donors and development banks to allocate over half of their climate finance to adaptation and deliver on that commitment by 2024, with a focus on developing nations and on infrastructure. This was an important signal, as annual adaptation costs in developing countries are about $70 billion, and expected to reach $140 billion to $300 billion by 2030.
Unfortunately, a cost-effective and highly reliable solution that ticks all of the boxes identified by Mr. Guterres — plus has a meaningful impact on emissions reductions — is still cloaked in obscurity when it comes to the climate finance community.
The COP26 summit in Glasgow in November is an opportunity to shine a light on this solution.
These mini- or micro-grids, according to the World Bank, have the potential to deliver electricity to half a billion people in Sub-Saharan Africa, developing Asia and island-states.
The solution? Small, decentralized solar-powered grids that are purpose-built to provide resilient energy infrastructure. These mini- or micro-grids, according to the World Bank, have the potential to deliver electricity to half a billion people in Sub-Saharan Africa, developing Asia and island-states. Not only are these communities the most vulnerable to climate change, they are also home to the “energy poor,” rural populations that have never had access to electricity.
Even before climate change became a global issue, national electricity grids had failed for decades to reach the energy poor, while also perpetually losing money and delivering sub-par service. Now with climate-induced environmental shocks on the rise, power utilities are proving even more unfit to tackle these challenges on their own, as seen in recent outages in the United States and other mature energy markets. During those outages, in contrast, micro-grid systems remained online. The same was true during recent flooding in rural India.
Some governments like Nigeria have already acknowledged that private sector mini-grid developers are the best choice to effectively power communities that are under-served or unserved by national grids. Mini-grids not only provide the stable and consistent electricity required to jump-start economic activity but can also ensure access to clean water, modern healthcare and quality education, as well as mechanized agribusiness (irrigation, processing, cold storage). Moreover, governments are also starting to understand that mini-grids that are interconnected to the main grid can help achieve more resilience by providing back-up in the case of climate disruptions, while also better serving last-mile customers.
The World Bank estimates that it will cost $220 billion to connect 500 million people to mini-grids by 2030.
At this critical moment, however, no one knows exactly how much climate finance has been invested in mini-grids. But we can say with certainty that it is a rounding error. For instance, of the $34.7 billion in climate finance tracked to Sub-Saharan Africa during 2017 and 2018, only $5 billion from concessional lenders went to all types of renewable energy generation — hydro, wind, geothermal and solar.
The World Bank estimates that it will cost $220 billion to connect 500 million people to mini-grids by 2030.
This is a disgrace. Africa accounts for just 3% of global CO2 emissions while being home to two-thirds of the 800 million energy poor. Moreover, the World Bank forecasts that 105 million Africans will be displaced by 2050 because of climate change.
Decision-makers who control the purse-strings of the climate finance community must be held accountable for addressing this glaring inequity.
And these leaders must also remember, that while not necessarily contributing multiple gigatons of avoided emissions, mini-grids help by displacing diesel generation, which currently costs $13 billion in annual spending from African communities already living on the margins. This money can be redirected into clean energy solutions that help cement Africa’s sustainable development.
As we look to COP26, all stakeholders involved in building a climate-resilient future — the private sector, regulators, political leaders in both developing and developed the world, and especially donors and development banks — must make real and practical commitments that support climate-resilient energy systems, with mini-grids at their center. This should include:
- Commitments from climate finance institutions, with detailed timelines, to fund half of the $220 billion needed to scale mini-grids;
- An accurate and regularly updated accounting of how much climate finance is going to mini-grids;
- Consensus on metrics that quantify the impact of mini-grids in building climate resilience;
- Recognizing the limitations of state-owned national grids and accelerating mutually beneficial partnerships between the public sector and private mini-grid companies;
- Rapid development and implementation by all climate-vulnerable countries of national regulations that prioritize mini-grids for weak- and off-grid electrification programs;
- Designating mini-grids as critical infrastructure for refugee settlements arising from climate migration.
These six steps will make meaningful progress towards ensuring that the energy poor, also the most vulnerable to climate change, are not left behind.
