The pandemic continues to slow progress towards universal energy access

This is a pre-release of findings on energy access from the World Energy Outlook 2021, co-inciding with Executive Director Fatih Birol’s address at the United Nation’s High-Level Dialogue on Energy on 24 September 2021. The World Energy Outlook 2021 will be released on 13 October 2021.

The Covid-19 pandemic slowed global progress in reaching universal access to electricity and clean cooking, reversing years of steady progress. Because the pandemic has slowed the rate of both new grid and off-grid connections, the number of people without access has increased by 2% in 2021, according to our estimates. Virtually all of this growth occurred in sub-Saharan Africa. 

For clean cooking, the pandemic increased the number of people without access by 30 million between 2019 and 2021, a rise of 1%. This was the result of a marked slowdown in progress in developing Asia, where many people who recently gained access to clean cooking fuels reverted to traditional fuels during the pandemic for financial reasons, combined with a continued deterioration of the situation in sub-Saharan Africa.

Many governments – notably Nigeria and Indonesia for electricity, and India for clean cooking fuels – intervened to maintain affordability for consumers and to provide financial support to energy providers. These swift actions helped improve the actual outcomes in 2020 compared to our previous year’s projections. Those governments without strong access policy frameworks in place had little ability to quickly mobilise support.

Many of these supports are set to disappear as the immediate pandemic situation comes under control – with some exceptions like Mongolia who have extended supports to the end of 2021 – but the impacts on household income will linger, especially for those on the lowest rungs of the economic ladder. Additionally, the utilities, companies, and governments able to mobilise support now face strained finances at a time when access investments are meant to proliferate, not wane. This is why, globally, the estimates for 2021 remain pessimistic for clean cooking and increased access to electricity. 

Since 2013, sub-Saharan Africa has seen a steady decline in the number of people without access to electricity, owing to enhanced access policies in countries such as Kenya, Senegal, Rwanda and Ghana. The Covid-19 pandemic reversed that progress in 2020, and the number of African people without access in 2021 is expected to continue to increase, to about 4% above pre-pandemic levels, and reach nearly 600 million.

Africa’s experience is in strong contrast with countries elsewhere in the world, predominately in Asia, where roll-out of grid connections and distributed electricity access solutions were supported by more concerted policies and easier access to financing. The gains in electricity access in these regions slowed down, but they still proved more resilient through the pandemic than did the gains in Africa. As a result, over the past two years, sub-Saharan Africa’s share of the global population without access has grown from 74% in 2019 to almost 80% in 2021. In other words, four out of five people in the world without access now live in sub-Saharan Africa.

Despite disruptions in the early phases of the pandemic, many new connections via grids and mini-grids were completed in 2020. However, planning of new projects slowed during the pandemic, a result of both procurement delays and the need to prioritise the public health emergency. These pipeline slowdowns make the outlook for new grid connections somewhat more pessimistic for 2021.

Stand-alone off-grid solutions – increasingly preferred as the way to achieve first access – were particularly hurt by the slowdowns resulting from the pandemic. The deployment of solar stand-alone systems declined by more than 20% in 2020, according to GOGLA, the Global Off-Grid Lighting Association. This was driven in part by travel limitations that prevented installers from reaching households since many countries did not consider off-grid solar companies as essential services providers. In addition, supply chains disruptions continue to increase prices for solar cells and other electronic components. These factors, as well as weakened household incomes due to the pandemic, are expected to keep sales lower than prior to the pandemic in 2021.

Sales of new off-grid systems have also skewed toward more basic packages since the pandemic, with customers unable to afford the larger off-grid systems that support more energy use, with the result that they miss out on critical end-uses, such as refrigeration and the food health and safety benefits that come with it.  

Due to the pandemic, 15 million sub-Saharan Africans who recently gained basic electricity access lost the ability to pay for it. An additional 10 million customers who had gradually upgraded and expanded their energy supply can no longer afford this level of consumption (i.e. lighting for four hours, TV/Radio for four hours, mobile charging, a fan for six hours, refrigeration).

Governments and development agencies have provided emergency financial relief in the form of expanded poverty programmes or subsidised electricity tariffs. However, policy support is often limited to grid-connected customers, even though the reality is that an increasing number of people initially gain access through off-grid solutions. Around two-thirds of countries in sub-Saharan Africa have, however, integrated off-grid systems into their framework for energy access support, and at least 11 countries in the region – including Nigeria, Tanzania, and Ethiopia – did extend affordability support to these customers prior to the pandemic. 

Achieving full electricity and clean cooking access by 2030 requires around USD 43 billion a year – only about 2% of the annual energy sector investment of the past five years. Recent investment levels fall well short of this, with sub-Saharan Africa in particular lagging. Based on 2019 access investments tracked by SE4All, we estimate sub-Saharan Africa receives only 15% of the annual investment required to achieve universal electricity access, and the shortfall is even wider for clean cooking access.

The Covid-19 pandemic has both decreased the flow of new investments and increased the cost of capital in developing economies. Our analysis last year found that in the first half of 2020, sovereign risks perceived by investors (i.e. the premium on top of the long-term cost of borrowing) rose by two percentage points from end-2019, reaching 7%. While these premiums have narrowed since the early phases of the pandemic, financing energy projects in developing economies remains up to seven times more expensive than in Europe or the United States. 

International support is needed to accelerate investment and overcome these financing barriers. Concessional and blended finance structures could play a role in closing the gap, but so too would increased policy action by local governments. As of 2020, more than 40% of sub-Saharan Africa and developing Asia countries have not yet set an electricity access target, and even more have no provisions for clean cooking. The lack of strong regulatory frameworks has a clear impact on their access to financing.

Setting national plans with clear and monitored targets, and creating institutions to fulfil those objectives, are important first steps. Holistic national access plans that consider other sustainable development goals as well as climate mitigation and adaptation needs, can combine the many priorities in developing countries. The need for action becomes more urgent each year that progress stalls or slows down, making it even harder to realise the goal of universal access in 2030. The world must maintain its focus on achieving access for all, and international support is more critical than ever as progress continues to deteriorate in the wake of the pandemic.