Electricity Powers Economies


To unlock affordable, reliable power and turn on a green and equitable recovery from the Covid-19 pandemic, we must make distributed energy a core part of integrated electricity systems.

BY 2030, ELECTRICITY  NEEDS TO POWER
ALL PEOPLE,  AND ALL ECONOMIES -sustainably.

but today,
1.5 billion
have
unreliable
energy access

and another
800 million
have
no electricity
at all.

A third of the world’s population
are left without steady power.


This limits potential and stifles economic prosperity.

The energy
Challenge


Covid-19 has magnified inequality, making it harder to progress on the UN’s Sustainable Development Goal 7 (SDG7)—ensuring access to affordable, reliable, sustainable, and modern energy for all.

The Green Opportunity


If we make investments now to enable an equitable recovery, we can power a future brighter than we ever imagined—more sustainable, safer from pandemic threats, and better for the world’s poorest two billion, who can enter a growing global economy. 

Power ON


Accelerating progress on SDG7 requires power. Today, the world needs a massive, public-private investment in green infrastructure that unlocks inclusive growth for everyone. Without electricity, you’re powerless in today’s global economy.

With new breakthroughs in distributed renewables, it’s now possible to end energy poverty in 10 years, without accelerating climate change. Distributed energy can be integrated with grid infrastructure to enable a sustainable, equitable recovery that drives economic growth and job creation. 

For two billion people living with no or unreliable access to electricity, distributed energy provides a pathway to economic inclusion and prosperity.

 

THE IMPACT:
Electricity has the power to transform people’s lives


No rich country is energy poor. Electricity access and consumption are essential for human development and economic growth—especially in rural areas where access to power remains limited.

Providing Energy
for rural development


Most electricity is used outside the home. Without sufficient access to power for agriculture and businesses, people risk being locked out of the modern economy.

As a first step on the energy ladder, let’s consider a minimum level of annual electricity demand per person to drive social and economic development in rural communities.

Electricity consumption per person will be much higher when averaged across a whole country, including cities and industry. While 200 kWh per person can provide power for the first stages of development in rural communities, a modern energy minimum of 1,000 kWh per person has been proposed as a country-level threshold for middle-income status. See the proposal here.

50kWh

per person, per year


Powers a household


Household services include:
Lights, phone chargers, a fan, TV


What’s needed to unlock this demand:
Support for homeowners to wire their houses; financing for home appliances and places to buy them

70kWh

per person, per year


Powers a household
+ community services


Community services include:
Health clinics, schools, water pumping


What’s needed to unlock this demand:
Support for Better coordination between responsible ministries, NGOs, and power providers

200+kWh

per person, per year


Powers a household
+ community services
+ productive use


Productive uses of energy include:
Agricultural processing, small businesses


What’s needed to unlock this demand:
Structured support to access appliances and finance

Energy-efficient appliances are critical to optimize electrification’s impact.


200 kWh is our minimum productive use benchmark: energy-efficient appliances cut demand by half, making the same set of energy services viable at half the cost.

Energy Consumption Benchmarks

Examples of Productive Use


These agricultural processing activities are enabled at 200 kWh per person per year.

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Grain Milling

Cold Storage

Irrigation

When a community reaches an average electricity consumption of 200 kWh per person, a new world of opportunity opens. Small businesses can be electrified, agricultural productivity is unlocked by this energy, and incomes will rise.

Higher-income households can afford to use more appliances, like refrigerators. They can use electricity for cooking, leading to major health benefits. As communities move to the next stage of the energy ladder, electricity consumption can rise to 300 kWh per person (or 600 kWh if inefficient appliances are used).

 

Learn more about predicting demand:

Achieving Impact
with the Productive Use Ecosystem


Providing 200 kWh per person is only the first step. To unlock the full benefits of electrification, a community needs:

  • reliable and affordable power,
  • access to efficient, appropriate appliances, and
  • finance and business support for productive use.

The opportunity:
Integrating Distributed Energy


The future of energy is decentralized. Rapidly falling costs and improving technology mean that distributed energy is ready to play a major role in modern energy systems.

Distributed energy includes renewable generation, local storage, and demand management


These three types of energy resource are sustainable, and work close to the end-user. When used together, they can provide the energy services that people need, complementing traditional grids and large-scale energy generation.

Rapidly falling costs have made distributed energy accessible


Between 2010 and 2019, prices of PV panels fell by
82%


and prices of Lithium Ion batteries by
85%


In mature markets, building new renewables and battery storage is cheaper than operating many existing power stations.

Integrating Distributed Energy Presents Multiple Benefits

It saves time, reduces emissions and delivers robust, more equitable access. Compared to traditional approaches, distributed energy is:

  • FASTER TO BUILD
    A 50 kW minigrid can be deployed in two months, instead of years or decades for large power infrastructure
  • MORE RELIABLE
    Minigrids report system uptime close to 99%, far higher than unreliable grid-edge power for traditional grid extension
  • RESILIENT
    Solar panels and battery systems are already being used to keep the power on after major disasters, such as hurricanes and wildfires
  • LOW CARBON
    Renewable energy avoids emissions from fossil-fueled grid supply

New technology accelerates impact

Evolving technology can optimize systems, improve service and reduce costs:

  • MODULAR DESIGN
    expanding systems as demand grows
  • PLANNING TOOLS
    geospatial mapping, satellite data and load mapping
  • DIGITALIZATION
    remote monitoring, payments, and customer management
  • DEMAND MANAGEMENT
    variable pricing, smart meters and load-shaping interventions
LEARN MORE: DISTRIBUTED ENERGY REFERENCE SHEET

DEPLOYING DISTRIBUTED ENERGY


We can calculate the cost of electrification and demonstrate the models and technologies to serve different communities and loads.

LET’S IMAGINE
FOUR communities


We have modeled the cost of providing power to 2,000 households, spread across a town and three nearby villages.

While the communities are modelled, the data for the calculation of energy system costs comes from real cost and design benchmarks.

On-grid community


A small town, with 1,000 households (about 4,500 people). There is grid supply, but it is often unreliable, and not all households are connected. A textile factory is the town’s major industry.

Off-grid communities


Three nearby rural villages of different sizes have no grid access, and are located several kilometers from the medium-voltage lines. Diesel is used for essential tasks like milling grain.

A mix of energy solutions are improving access today

Minigrids


Minigrids can be rapidly deployed to electrify productive uses and businesses in the largest off-grid communities. By targeting areas with higher productive use potential and daytime loads, minigrids can provide cost-effective power supply immediately.

Stand-alone solar systems


Stand-alone solar systems can provide power to more affluent households or businesses far from the grid; costs are dropping and service improving

GRID DENSIFICATION


New connections can be added to reach people close to existing grid infrastructure.

EXPANDING reach OF DISTRIBUTED ENERGY

Solar-battery Back-Up Systems


These systems can provide grid-connected enterprises with reliable power, reducing losses and improving service for users and the utility, especially when combined with energy efficiency.

Undergrid minigrids


These minigrids can provide win-win solutions for communities and distribution utilities, offering reliable energy supply and reducing losses.

Modular minigrids


These minigrids can expand to meet higher levels of demand, as communities become wealthier and increase their access to appliances.

REACHING UNIVERSAL ENERGY PROSPERITY


The four communities shown here have now reached full electrification at high levels of energy consumption and reliability, enabled by a blend of energy supply technologies and energy efficiency.

Tools and approaches exist for making these energy solutions work together, to provide solutions that are sustainable over the long term:

With today’s best-case equipment prices, this represents an annual cost of

US$
500,000


to supply

1.4GWh


This power provides new connections to 1,200 households and improves grid supply to 800 that were already connected. Consumption in rural areas increases to an average of nearly 200 kWh per capita. Energy efficiency is a vital part of the equation, providing more energy services at a lower cost.

COST CALCULATIONS


The cost of power for this scenario is calculated and shown here. This includes both capital and operational costs, to produce an estimate of the total cost to generate, distribute, and consume each kilowatt-hour of electricity. We can compare the cost of an integrated, distributed energy approach with the cost of providing the same service through a pure grid extension approach.

DOWNLOAD THE MODEL INPUTS AND COST BENCHMARKS

BUILDING BLOCKS FOR ADVANCED ENERGY SYSTEMS


Grid expansion will continue. Over time, grids will draw on both distributed and centralized energy resources to create interconnected systems that are low carbon and low cost, providing reliable power to all.

Around the world, clean energy portfolios integrating distributed energy are replacing traditional generation as the lowest-cost, most resilient option for expanding generation.

In advanced markets, these solutions are already cheaper than building new gas-fired power plants and make it possible to drive a drastic switch to a 90% renewable grid by 2035 with no extra cost for consumers.

 

 

 

 

 

 

 

 

 

ACHIEVING UNIVERSAL ELECTRIFICATION


Integrated electrification, with modernization of electricity grids and widespread use of distributed energy, is the fastest and most cost-effective way to provide affordable, reliable electricity to everyone.

Universal Electrification
is achievable within ten years.

REALIZING
THE OPPORTUNITY


Distributed energy coupled with efficiency can raise average rural energy consumption to over 200 kWh per capita, reaching the threshold for productive use that supports community services and economic activity. Integrating distributed energy is the proven way forward to fast, efficient, robust, and sustainable energy supply universally.

THE RESULT:
BIG RETURNS ON INVESTMENT, FOR EVERYONE


Unlocking the full potential of distributed energy requires a dramatic ramp-up of investment for the sector. This represents a huge opportunity for private and public investors, and a path to low-carbon, inclusive economic development for all.

Investments in Distributed and Renewable Energy
Need to Scale


Distributed energy can expand access to an additional 450 million people by 2030. Regions with poor grid reliability can rely heavily on distributed energy to improve service, but for distributed energy to deliver on its promise, investment needs to scale up quickly.

For distributed energy to deliver on its promise, investment needs to ramp up dramatically.

INVESTING IN DISTRIBUTED ENERGY
MULTIPLIES IMPACT

GDP


Spending

$1   


on distributed energy resources can unlock

$20

For example, reaching per capita consumption of 200kWh per year in rural Ethiopia would make national GDP 14% larger in 2030, compared to business as usual.

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Installing solar panels for a rural village enterprise zone in Diara Rasulpur, Saran District, Bihar, India. A rural energy program in Bihar encourages productive use of energy to foster business development.

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A metalworker in Kenya. Minigrid development requires additional labor beyond direct energy jobs, such as metal fabrication of parts and equipment. Photo courtesy Isaiah Lyons-Galante.

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Producing cotton yarn and socks in Addis Ababa, Ethiopia. The availability of reliable energy resources creates abundant productive use jobs, such as textile factories. This factory employs at least 450 people.

The role of distributed energy in responding to
Climate change


Climate change impacts are accelerating. A hotter world is a poorer world. It means deeper, longer droughts decimating farmers’ crops, and more deaths in vulnerable populations from excessive heat. Investment decisions made now will be central to meeting climate goals. Adaptation and resilience must increasingly be at the heart of infrastructure design.

Investment in renewables and distributed energy resources will unlock development pathways that are:

  • Resilient to climate change
  • Low-carbon
  • Cheaper than traditional supply

Example:
Malawi


An integrated electrification approach can provide a least-cost, reliable and diversified solution for Malawi, saving the country US$500 million by 2030 and avoiding 19 million tons of CO2 emissions

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The 80kW Sitolo minigrid in Mchinji district, Malawi, shown while still under construction

Example:
Diesel Generators


Today, 20-30 million backup generators run on fossil fuels at a cost of $50 billion per year. Reliable, integrated electrification can make these obsolete, saving over 60 million tons of CO2 per year.

RESPONDING TO A CRUCIAL MOMENT
FOR CLIMATE AND ECONOMIES


The Covid-19 crisis risks reversing development gains and pushing up to 400 million people back into extreme poverty, earning less than US$1.90 per day. Energy infrastructure should be at the core of a robust international response.

The future of
energy investment is green


A decentralized and affordable energy system based on renewables is more than a great investment: it is a promise for increased prosperity for all.

Distributed energy can unlock the potential of a new energy ecosystem

Distributed energy can unlock the potential of a new energy ecosystem


As distributed energy becomes the least-cost approach for more people, the sector is at a tipping point, and poised for exponential growth
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TODAY


The legacy market has been focused on standalone minigrids and has not yet achieved scale or realized the full potential of distributed energy.

But as costs are falling and technology is improving, only a small push is needed to get the sector on a pathway to rapid expansion.


Four actions can transform the sector

Decrease
cost
of system hardware and operations

Shape
demand
with efficient appliances and productive use

increase
Investment
providing low-cost capital and streamlined subsidies

Enable
expansion
through planning, regulations, & new business Models

future


These four actions will unlock positive feedback loops of falling costs and rising investment, enabling rapid growth and bringing the benefits of distributed energy to hundreds of millions of people.

we need
coordinated action through global solutions

Unifying the sector around these four actions can create scale and unleash energy solutions for economic development.

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DECREASE
COST

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THE PROBLEM

Technology improvements and cost reductions in energy technologies are currently slow to reach small developers and local utilities.

WHAT NEEDS TO HAPPEN

  • Streamline supply chains, remove barriers to import, and support local business to create distribution networks
  • Standardize low-cost specifications, defined by developers and manufacturers, that can be procured at scale
  • Secure volume guarantees by underwriting bulk orders, working through governments or large companies
  • Facilitate access to planning data, support digital innovation, and bring technology to scale

SOLUTION


TECHNOLOGY FACILITY: PROCUREMENT & INNOVATION

Harness cost disruptions in storage, smart meter, solar PV, and other relevant distributed energy technologies via ambitious pooled market commitments, and drive continued innovation through a dedicated fund.

Coming Soon

INCREASE
INVESTMENT

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THE PROBLEM

Finance flows remain far short of the estimated US$40 billion required annually to reach universal electricity access. The economic crisis caused by Covid-19 threatens to slow progress even further. 

WHAT NEEDS TO HAPPEN

  • Step up actions by international public finance to stimulate market development and private sector engagement, particularly in nascent markets
  • Prioritize least-cost, sustainable energy solutions and support them with the right incentives to give private investors the confidence required for long-term investment in energy infrastructure and assets
  • Use proven business models and financing mechanisms to unlock additional private capital and leverage further investment

SOLUTION


UNIVERSAL ENERGY FACILITY

The Universal Energy Facility is a multi-donor results-based financing facility that provides incentive payments to eligible organizations that are deploying energy solutions, providing verified end-user electricity connections (minigrids and solar home systems), or providing clean cooking alternatives based on predetermined standards. The facility will begin accepting project applications in 2020.

LOW-COST CAPITAL

Mobilize finance to address the unique capital needs of distributed energy project developers in emerging markets, through a blended capital fund that leverages concessional capital and encourages commercial financing flows.

Coming Soon

 

SHAPE
DEMAND

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THE PROBLEM

Lack of demand-side management and stimulation results in high costs to consumers, lost revenue for suppliers, and limited expansion of power to other productive use activities.

WHAT NEEDS TO HAPPEN

  • Carry out integrated energy planning to identify productive uses and link them with appropriate supply
  • Ensure access to affordable, energy efficient solutions that meet user needs and support productive uses of electricity
  • Provide appropriate financing, including loans for smallholders, insurance, and credit guarantees
  • Offer extension services to help rural farmers and businesses make better use of modern energy services

SOLUTION


ENERGY EFFICIENCY

Reduce energy needs through efficiency, including passive and active solutions, by enforcing product standards, supporting the supply chain manufacturers or importers and last-mile distributors, and investing in getting the right solutions to consumers at low cost.

Coming Soon

 

PRODUCTIVE USE AND SOCIAL SERVICES

Link electrification with national programs on agriculture, health, education, and small business support, to leverage synergies and capture benefits across areas.

Coming Soon

ENABLE
EXPANSION

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THE PROBLEM

Without certainty provided by clear plans and regulatory frameworks at national levels, investment in distributed energy will stall. Current business models and approaches are far from sufficient for unlocking the full potential of the sector. High financial risk further threatens the scale-up of the distributed energy sector, which is characterized by small to medium enterprises.

 

WHAT NEEDS TO HAPPEN

  • Adopt national electrification plans that clearly identify the role of different technologies and resources required to achieve universal electrification
  • Improve planning at a national level, based on least-cost approaches and geospatial mapping
  • Enforce clear regulatory environments that define crucial issues such as tariffs, licensing, technical standards, and grid interconnection
  • Establish political risk insurance instruments for minigrid and off-grid developers
  • Demonstrate bankable business models that leverage the benefits of modern distributed energy resources
  • Develop project pipelines, alongside national agencies or utilities

SOLUTION


INTEGRATED DISTRIBUTION FRAMEWORKS

Apply effective governance models to restructure the distribution sector and accelerate electrification; for example, through the application of concession agreements at the utility level.

INTEGRATED ELECTRIFICATION PLANNING

Carry out geospatial electrification planning to identify least-cost strategies for providing electricity and the associated energy services necessary to meet human needs and contribute to sustainable development.

 

INVESTMENT-GRADE POLICY AND REGULATIONS

Draw on best-in-class electrification policies and regulations to develop a robust regulatory framework enabling private sector actors to contribute to national electrification objectives and unlock investments in the sector.

This Is
Already Happening


Case studies from around the world show how these four actions are already starting to scale the sector. Click the case studies to read more.

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MOBILIZING
INVESTMENT


International financiers including DFID, AFD, AfDB, and IsDB have collectively made billions of dollars of commitments to the sector. The World Bank alone has minigrid programs in 33 countries.

MOBILIZING
LEADERS


The Global Commission to End Energy Poverty is bringing together investors, utilities, development finance institutions, and policymakers to build consensus on the way forward:
www.endenergypoverty.org

DOWNLOAD
ACTIONS YOU CAN TAKE

The solutions shown here can be used to drive coordinated action for governments, investors, utilities, and project developers. By streamlining processes and sharing learning, these solutions can help drive progress in dozens of countries. 

DOWNLOAD
OUR RESOURCES

Access our data visualizations, reports, case studies, data sheets, and more.

Join the
movement


We all play a part. Join us to turn ON the energy that will drive a greener, more equitable, and faster economic recovery.

the project


The Electrifying Economies project demonstrates the role distributed energy will play in ending energy poverty and catalyzing a green and equitable recovery from the Covid-19 crisis. It draws on the latest data and research from around the world to show how distributed renewables can provide sustainable, affordable, and reliable power for all. The project provides information to support policy makers and investors in taking action today, to realize this potential.

Many of the solutions shown here will be launched as major initiatives in the coming months. We look forward to sharing these as they launch.

In the meantime, learn more about these initiatives, which are already underway:

About us


Sustainable Energy for All (SEforALL) is an international organization working with leaders in government, the private sector and civil society to drive further, faster action toward achievement of Sustainable Development Goal 7 (SDG7), which calls for universal access to sustainable energy by 2030, and the Paris Agreement, which calls for reducing greenhouse gas emissions to limit climate warming to below 2° Celsius.

The Rockefeller Foundation advances new frontiers of science, data, policy, and innovation to solve global challenges related to health, food, power, and economic mobility. As a science-driven philanthropy focused on building collaborative relationships with partners and grantees, The Rockefeller Foundation seeks to inspire and foster large-scale human impact that promotes the well-being of humanity throughout the world by identifying and accelerating breakthrough solutions, ideas, and conversations.

Rocky Mountain Institute (RMI)—an independent nonprofit founded in 1982—transforms global energy use to create a clean, prosperous, and secure low-carbon future. It engages businesses, communities, institutions, and entrepreneurs to accelerate the adoption of market-based solutions that cost-effectively shift from fossil fuels to efficiency and renewables.

Acknowledgements


Many people contributed in many different ways to the creation of ‘Electrifying Economies’, and we are most grateful for their efforts.

 

Our institutional partners include:

The content and storyline for the Electrifying Economies project were developed by Edward Borgstein and Ruosida Lin from RMI. The project was coordinated by Eric Gay, Jenny Huang, Silvia Mansur de Oliveira, and Suman Sureshbabu from Rockefeller Foundation. Hadley Taylor, Min Hyejung, and Stephen Kent led content creation and review on behalf of SEforALL.

This website was designed and developed by Ahoy Studios under the creative direction of Connie Koch and Denise Sommer, along with designers Nadine Werjant, Denis Kuchta, Scott Brower and Katja Fluekiger. It was coded by Arne Spremberg, with data science consultation by Helene Schröcksnadel. User research was conducted by Dr. Joana Casaca Lemos and Goksü Kacaroglu in collaboration with Ahoy. Project management was provided by Emily Long from Inflection Point Agency.

We also wish to thank the following individuals for their consultation and participation: Ignacio Perez-Arriaga, James Banaabe, John Spangler, Joseph Peralta, Kelly Carlin, Kenny Anuwe, Rob Stoner, Sahele Fekede Tamiru, Sam Slaughter, Saidi Banda, Todd Moss, Uche Honnah, and Yann Tanvez. Photos and imagery were kindly shared by Rockefeller Foundation, RMI, and Powergen Renewable Energy. The organizations showcased in the case studies were all generous with their time, providing detailed information and reviewing draft versions. Any errors remaining are the responsibility of the website authors.