IEA (*) | The global energy crisis, which will weigh heavily on negotiations at the COP27 Climate Change Conference that starts next week in Egypt, is also undermining efforts to ensure universal access to secure affordable energy, especially in the developing world where populations without access to electricity are once again growing.
According to the latest IEA data, the number of people around the world who live without electricity is set to rise by nearly 20 million in 2022, reaching nearly 775 million, the first global increase since the IEA began tracking the numbers 20 years ago. The rise is mostly in sub-Saharan Africa, where the number of people without access is nearly back to its 2013 peak.
Rising prices for fuel and food are disproportionately hurting those in the developing world, where they are least equipped to cope. In addition to the increasing number of people without reliable and affordable energy, those facing chronic hunger is also sadly on the rise again, reversing progress on several of the United Nations’ Sustainable Development Goals (SDG).
Some countries already witnessing rising populations without access will see this trend accelerate, with the largest increases set to occur in the Democratic Republic of the Congo and Madagascar. While modest progress may continue in some countries, it will be at a much lower pace. Bangladesh — home to almost 10% of those without access in developing Asia — is set to see a slowdown in 2022, especially for new grid connections. In sub-Saharan Africa, progress in Mozambique, Senegal, and Kenya is set to slow, but not halt while in Ethiopia, population growth is once again outpacing new connections, a sharp reversal from the rapid progress prior to the pandemic.
Grid connections proved resilient in 2020 and 2021 with projects in the pipeline from before the pandemic mostly being completed. However, new procurement has slowed down since then with many utilities lacking funds for energy access projects after they prioritised cushioning their consumers from rising prices. Many Africa utilities were already in a perilous financial situation heading into the pandemic with operational losses climbing substantially since then.
Off-grid access solutions are facing even stronger headwinds, with inflation hitting consumer demand. Prices of key components used to manufacture solar PV modules, batteries, and inverters are sharply rising, which has been further exacerbated by local currencies depreciating against the dollar. The cost of solar and hybrid mini-grids has increased by at least 20% in 2022 from pre-pandemic levels. The average market price for a new solar home system (SHS) is up by around 30% since 2020, causing households to opt for smaller or lower quality systems. Sales of large SHS in 2021 were nearly a third lower than their 2019 peak with the largest declines happening in East Africa. These effects are putting firms in the off-grid industry under financial duress, with a majority of firms indicating they risk bankruptcy in the next three years under the current financial circumstances.
Together, these setbacks put the world further behind on meeting targets for universal access by 2030, canonised in the United Nation’s Sustainable Development Goal 7. Under today’s policies, our World Energy Outlook 2022 projects 660 million people still without access to electricity in 2030, 85% of those living in sub-Saharan Africa.
Addressing the consistent under-investment in reaching universal access should be a central focus of negotiations at COP27. There is no pathway to net-zero without first achieving universal electricity access. Not only is it a moral imperative, but renewables often provide the most cost-effective option for connecting consumers, who without affordable electricity will continue to rely on dirtier sources of energy for cooking, heating, transport, and lighting.
We estimate achieving universal global access to electricity by 2030 would require annual investments of USD 30 billion from now to 2030, of which around two thirds are needed in sub-Saharan Africa. As highlighted in the Africa Energy Outlook 2022, international support is essential to catalyse investment, especially in today’s difficult financial conditions. Reaching this level is well within the means of the international community, and must be an unerring focus for development banks.
The COP27 Egyptian Presidency has made it clear that accelerating efforts to reach universal access will be a key part of their agenda, and the IEA is supporting the Presidency as they launch the Africa Just and Affordable Energy Transition Initiative (AJAETI). This timely initiative aims to facilitate technical exchanges and help improve the investment environment for access solutions in Africa. The international community can play a decisive role by mobilising more financial support toward access solutions and the clean energy transition in Africa, which can reduce import dependence while helping countries meet their growing energy needs.
Today’s global energy crisis reminds us that our reliance on fossil fuels perpetuates energy security risks, and also how the clean energy transition holds new opportunities for countries to address their own energy security exposures. But we must not forget that the most fundamental aspect of energy security is providing access in the first place.
(*) Laura Cozzi, Chief Energy Modeler Energy Demand Outlook Division Daniel Wetzel, Head of Tracking Sustainable Transitions Unit
Gianluca Tonolo, Sub-Saharan Africa Statistics Manager
Jacob Hyppolite II, Former Energy Analyst