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Sustainable Energy for All Forum: Finding answers to the HOW

By Carlos Sordo On 16.05.2018 Influence & ImpactBlog

Sustainable Energy for All Forum

Energy access for all: the WHAT followed by the HOW

Energy access has been recognized as a golden thread to enable other SDGs, with successful earmarks such as the Paris Agreement and inclusion of a dedicated sustainable development goal; both of which urge the international community to find pathways to deliver sustainable energy access to the more than one billion unserved people. WHAT we are aiming for (SDG7) is therefore well articulated, with clear political commitment from the international community.

The 2018 Sustainable Energy for All Forum served as a critical opportunity to come together and explore the HOW: mechanisms to address, and ways to deliver, universal energy access.

So, have we progressed on the HOW?

The Forum brought together many top-level representatives in the energy access space, with thriving discussions taking place – many of which bolstered our position at Practical Action over the last year, and are reflected in the Poor Peoples´ Energy Outlook 2017 report. Current flows of finance seem not to be sufficient to cover the energy access gap and, while private sector plays a key and fundamental role in scaling up energy access solutions, it seems clearer than before that the private sector alone won’t reach the furthest behind. More holistic, multi-stakeholder approaches, together with a suite of financing mechanisms, are needed to activate markets and accelerate the pace to achieving universal access to energy.

What does the data tell us?

During the SEforAll Forum there were several events and discussions where this message was loud and clear – but we still have some way to go. Let’s summarize where we are at the moment. Recently published insights from ACUMEN’s Lean Data (which includes more than 8,750 customers’ interviews from 23 companies ACUMEN is currently financing) show that just 13% of the customers served by those 23 companies are working in the extreme poverty percentile (less than $1.3/day). While the work ACUMEN is doing in the energy access space is formidable, improving the quality of life for tens of thousands of people, this data suggests that the vast majority of these people aren’t necessarily the ones who desperately need to be reached.

Similar conclusions come from the Shell Foundation and CDC, who currently invest significantly in supporting some of the top 10 off-grid companies in the space – which are mostly concentrated in the buzzing East Africa region. This reflects a generally risk averse policy from investors who are mostly reticent to invest in smaller entrepreneurships with less of a track record. As a result, finance into these companies – which are usually social enterprises able to reach out to many of the poorest people – is simply not happening. To be clear, we need hundreds of these sorts of businesses up and running to stand a chance of achieving SDG7.

A holistic approach to reaching the last mile

During the SEforAll Forum, we heard again that in order for the flow of capital to reach these sorts of local entrepreneurships, investors need to have clear de-risking mechanisms and ways to ensure they won’t lose their investments. Similar messages were shared during the gender and energy panel organized by ENERGIA, where we heard from several thriving and promising female entrepreneurs who simply aren’t getting the financing they need to increase their operations and reach out to the very poor rural areas they want to cover. Women, in particular, continue to be perceived as high-risk investments and face additional barriers to accessing finance compared to their male counterparts.

Little progress but more clarity than before

It is clear that by following the current approach we won’t achieve SDG7 by 2030. And while we need to support the replication of successful off-grid business models operating in the space (e.g. PAYGO, SHS systems), part of this support must be diverted into de-risking investments. And for this to happen, we will need either:

  • To create new public-private vehicles that enable investors to invest more capital on riskier private sector actors, or
  • Public programs enabling the poorest to progress from level 0, no access to any basic social services or non-energy service purchasing capacity, to level 1 where some basic energy services could be acquired.
  • Or, of course, a combination of the two.