For those of us living with electricity, it is easy to forget the social and economic impact of going without. Power shortages cut economic growth by 2 to 4% annually. Households without electricity pay 60 to 80 times more for energy-related products -- charcoal, candles and kerosene -- than people in New York or London. Health clinics without electricity struggle to refrigerate medicine and exposure to smoke from wood-fired cook stoves cause more than 4 million premature deaths each year.
Great strides have been made in recent decades to increase global access to electricity, but there is still too large a gap between the haves and the have-nots. More than one billion people -- roughly 15% of the global population -- still lack access, and to achieve access for all by 2030, the pace of expansion must double.
It was with this goal in mind that nearly 600 off-grid renewable energy practitioners and leaders from the public and private sector gathered in Nairobi, Kenya last week for the third International Off-Grid Renewable Energy Conference (IOREC). The event was entirely focused on boosting electricity access through the development of off-grid renewables, as estimates suggest these solutions will provide the majority of additional generation needed to achieve 100% access. After two days of discussions, panels and debates, it became clear that achieving universal access through off-grid renewables has never been more possible than it is today.
We are already seeing early examples of off-grid success. In Bangladesh, a solar home system programme deployed 280,000 systems in six years between 2002 and 2008. Today, it deploys the same number in fewer than five months. The programme now benefits over 18 million beneficiaries - 11% of the total population. In Africa, M-KOPA Solar has connected more than 375,000 homes in Kenya, Tanzania and Uganda to solar power with 550 more added daily. For a deposit of USD 35, buyers get the system then make 365 daily payments of $0.43 through mobile money system M-Pesa. When it is all paid off, the system belongs to the buyer.
So why are these solutions booming? The promise of off-grid renewables is broadly captured by three main cases:
The economic case
Thanks to dramatic cost reductions in recent years, renewable technologies are now the default cost-competitive choice for off-grid installations, both stand-alone and mini-grids, in most rural and peri-urban areas. They can be significantly cheaper than diesel-fired generation or kerosene-based conventional lighting.
In Bangladesh for example, the solar home programme replaces 242,000 tons of kerosene, saving $300 million annually. Likewise, if Nigeria used modern off-grid lighting solutions, it would save more than $1.4 billion annually. What's more, costs are expected to decline even further in the coming years.
The social case
The deployment of off-grid renewables directly creates jobs, and not just for the installers and those working within the renewable industry, but also for those who gain meaningful employment through industries created from newly gained access to reliable electricity supply. IRENA estimates that at least 4.5 million jobs can be created in the off-grid electricity sector by 2030, in positions ranging from entrepreneurs and technicians, to installers and distributors.
Efforts made to increase energy access also benefit other sectors critical to human development. Access to electricity can improve the accessibility and reliability of the water supply for drinking and irrigation. Solar irrigation solutions can help increase farmer yields by 300%. It can also facilitate extension of basic rural healthcare services and enable the outreach of telecommunication services in rural or island contexts.
The environmental case
Another compelling case for off-grid renewables is the impact, or rather lack of impact, it has on the environment. The energy sector accounts for two-thirds of global emissions. As such, any effort to reduce emissions and mitigate climate change must focus heavily on decarbonising the global energy system. IRENA research has found that doubling the global share of renewables by 2030 to 36% - combined with energy efficiency measures - would cut emissions to the level required to stay on the two degree pathway as enshrined in the Paris Agreement.
Development with off-grid renewables offers a path to leapfrog the polluting route historically taken by developed economies -- one that is not even a feasible option for countries of certain sizes and regions of the world. Small island states are particularly affected by climate change, and for many of the 750 million people living in the inhabited 10,000 islands around the world, the means or resources for large-scale energy production and a national grid connection are limited. In these cases mini-grids powered with diesel generators offer a route to energy access. Incorporating renewables into these mini-grids through the addition of solar PV, wind turbines, and particularly biodiesel, is an attainable goal.
The way forward
Thankfully, the strong business case for deploying off-grid renewables in rural areas is driving innovative business models, which is encouraging growth in the sector.
Key market development initiatives, including the Green Mini-Grids Market Development Programme, Beyond the Grid Initiative, and the ECOWAS Programme on Access to Sustainable Energy Services, are steps in the right direction. But to achieve scale, off-grid grid renewable energy development must transform from a project-by-project endeavour to one that is market driven, a message that resonated strongly at IOREC last week.
This will require collective efforts to create an enabling environment that supports the scale-up of energy access efforts through private sector participation. This includes adopting an effective policy and regulatory framework, along with tailored business and financing models and adapting technologies to the rural context. If the enabling environment is appropriate, off-grid solutions can be deployed rapidly to extend electricity access for meeting basic needs but also for promoting productive uses.
These enabling policies can also create a more secure environment to encourage investment. We currently invest $9 billion a year on energy access, but five times that is needed to achieve universal access. This investment is beginning to trickle in. In the last three years, investments in the off-grid solar sector increased 15-fold, and private sector players are raising substantial financing from impact investors, private equity funds, corporates, government development finance, donors and crowd funding.
These early examples demonstrate that, with the right policies in place to spur investment, off-grid renewables can offer a practical, actionable solution to today's most pressing economic, social and environmental issues. This complementarity presents a compelling case for policy-makers to adopt a more holistic approach to energy access and to include off-grid renewables as a means to stimulate economy-wide development, fight poverty and improve livelihoods, and protect the planet from the dangerous effects of climate change.