A Policy Brief by Rishu Garg.
To mark the 75th anniversary of the UN, member states asked the Secretary-General to prepare “recommendations to advance Our Common Agenda and respond to current and future challenges” (United Nations, 2020a). Thereby, the Our Common Agenda (OCA) report is an agenda of action designed to accelerate the implementation of existing agreements, including the SDGs. The OCA report outlines key proposals for the 12 commitments agreed upon by member states in the UN declaration signed in commemoration of its 75th anniversary. Energy is a key factor underpinning these commitments, and utilities are a key aspect to ensuring the availability of energy that is clean and accessible. This policy brief seeks to accelerate progress on two commitments, namely: 1) leave no one behind, and 2) build trust (United Nations, 2021). The financial health of utilities greatly impacts States’ abilities to implement transitions to cleaner and more environmentally friendly sources of energy and achieve net-zero emissions by 2050, as outlined in the OCA report. The policy recommendations suggest ways to provide universal energy access—moving one step closer to achieving SDG 7—and also propose the development of transparent and accountable institutions to improve long-term public experience with these utilities.
Current status in the Global South
According to the International Energy Agency’s World Energy Outlook 2020, 90% of the world’s population in 2019 had access to electricity as compared to 80% in 2010. The progress was mainly dependent on increased access in Latin America and Asia, with access levels reaching 97% and 96%, respectively, by 2019 (International Energy Agency, 2021). 3 Also, by 2019 over 99% of India’s population had access to electricity, which contributed in large part to Asia’s progress. As per IEA estimates, Asia is on track to achieving universal access by 2030. However, 771 million people worldwide are still without electricity, with most situated in Sub-Saharan Africa. While North Africa has been successful in achieving 97% access to electricity, around 52% (578 million) of the population in Sub-Saharan Africa is still without electricity. Another important characteristic of this metric is the urbanrural divide. While 76% of the urban population in Sub-Saharan Africa has access to electricity, the proportion decreases substantially to only 29% in rural areas (Figure 1). Central Africa is the region most affected, with only 6% of the rural population having access to electricity, compared to 44% of the urban population, resulting in a total population connectivity rate of 24% (IEA, 2020).
- Electricity distribution utilities drive the expansion of energy access and the transition to clean energy. With the COVID-19 pandemic deteriorating the financial health of utilities, measures at operational, institutional, financial, and commercial levels should be initiated to make utilities economically sound and future-ready.
- Utilities must strive to become decarbonised, decentralised, and digitalised with a paradigm shift in their operations, particularly in planning, load forecasting, and energy utilisation in the grid. This can be accomplished by creating smaller profit and loss units within the distribution utilities to make operational-level officials more commercially inclined to the overall goal.
- Technical and commercial losses damage the operational and financial health of a utility. Given that COVID-19 has aggravated these losses further, investments in smart technologies must be improved and expedited to aid in reducing losses and assist utilities in making the transformation to a digitalised world.
- Reducing regional disparity in fund disbursements and introducing homogeneity of investment in the power sub-sectors can help utilities ensure system efficiency, grid extension, and renewable energy integration. Furthermore, bridging the investment gap through proper routing of funds for solar-based mini-grids can resolve the energy access problem, especially in rural and remote areas.
- Utilities should be able to earn enough to recover the cost of supplying power. Precise targeting of subsidies for consumers and ensuring cost-reflective tariffs can be instrumental in building self-sustaining utilities.
Click here to access the brief on Southern Voice website.