Publication - Closing the Circuit: Stimulating End-Use Demand for Rural Electrification

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Closing the Circuit: Stimulating End-Use Demand for Rural Electrification
Rocky Mountain Institute
Margaret Mccall & Scarlett Santana
Published in
February 2019
Electrification’s ultimate measure of success in developing nations—and its real contribution—is to

both meet basic humanitarian needs and underpin economic development. But most electrification programs focus on expanding supply with limited investment devoted to enabling end uses that drive productivity improvements and meet critical needs.

For example, from 2000 to 2008, supply expansion represented almost half of the nearly $4 billion the World Bank approved for investment in energy access, whereas investment in productive use represented 0.7%. In Africa, all investment in productive use financed technical assistance (TA); no such financing was directed to implement productive use investment projects.

Electricity is a system solution that matches supply to demand, so both must be addressed. For example, providing power without access to financing for equipment that can use that power to increase productivity means that the customer cannot fully realize the benefit. The supplier, in turn, has a system with low capacity utilization which leads to higher per-unit energy cost, which in turn reduces customer demand and benefits. Increasing end use improves capacity utilization and so improves system cost recovery and profitability, shortening payback periods and decreasing the subsidy burden.

In this report, the case is made for a greatly increased focus on supporting demand, outline the key barriers hampering increased use of electricity, and provide a succinct set of recommendations on actions that can be taken to complement the current focus on supply-side solutions.