Stimulating Energy Demand – a series of Knowledge Briefs from CCG.

CCG has launched a three part series of Knowledge Briefs and here, two of the author team discuss the reasons behind it and the issues it has revealed. Julia Tomei is from the Institute for Sustainable Resources at UCL and Iwona Bisaga is from UCL.   

Electricity is a basic service, crucial for the advancement of socio-economic wellbeing of communities around the globe. Indeed, electricity access offers multiple benefits – from lighting to powering electrical appliances, whether for home or productive uses.

However, solely providing access to electricity alone does not automatically drive demand, nor does it produce the desired development outcomes that governments and development partners wish to see.

Governments with electricity access deficits face a formidable challenge: to provide electricity access without bankrupting the utilities.  Growing electricity demand has proven difficult in many newly connected areas, especially in rural and peri-urban areas, leaving energy utilities and private electricity providers struggling to break even.  Governments tasked with developing and implementing viable strategies for achieving universal access to electricity may wonder how to balance out the development and economic priorities.

The three Knowledge Briefs are a result of numerous conversations with energy sector stakeholders, including electric utilities, researchers, and decision-makers, who have themselves faced this demand challenge.  Through literature review and expert interviews, we explore the issue of energy demand stimulation, with much of the focus falling on sub-Saharan Africa where the access challenge is greatest.

In the first Knowledge Brief, we examine the barriers to growing demand to identify what is missing from current discourse. These include issues such as reliability and insufficiency of electricity provision, as well as high electricity tariffs and connection costs.  Knowledge Brief 1 highlights that simply waiting for electrification initiatives to generate spontaneous positive effects in rural and newly connected areas is ineffective. 

The second Knowledge Brief therefore explores strategies to increase electricity uptake and looks to lessons from countries that have reached universal access without ‘bankrupting their utilities’.  Knowledge Brief 2 provides examples from countries across the world where, at different stages of each country’s electrification efforts, various strategies were deployed to encourage increased electricity consumption. Those spanned marketing and educational campaigns, outreach programmes focused on businesses, and collaborations between utilities and loan providers to facilitate access to appliance financing.

There are valuable lessons that can be learnt from these countries, and from the history of electrification, demonstrating that not only can energy utilities play an active role in demand stimulation, but also showing that there are some universal barriers to boosting demand that exist across countries and contexts. Those lessons can inform the design of projects, programmes and initiatives in sub-Saharan Africa to help address the persisting challenge of lagging electricity consumption.

Finally, drawing on insights from the first two Knowledge Briefs, Knowledge Brief 3 offers recommendations for energy stakeholders working across the spectrum of activities focusing on designing, extending or improving energy access. These recommendations include: supporting integrated energy planning; improving electricity service quality and affordability; developing inclusive financial services; and targeted supported for businesses and other productive users of electricity.

We hope that this series of KBs will reach a wide audience of stakeholders across the energy access sector and will prove informative for their decision making, by offering useful insights while at the same time challenging some ideas and notions around electricity access and demand stimulation. The series is a resource we would like to see widely shared across the energy sector networks, in sub-Saharan Africa and beyond.