Lessons for Modernizing Energy Access Finance, Part 1: What the Electrification Experiences of Seven Countries Tell Us about the Future of Connection Costs, Subsidies, and Integrated Planning
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Countries facing electricity access challenges today have more options and potential electrification pathways than ever before. Technology developments in distributed renewable electricity systems, monitoring and payment systems, and end-use equipment efficiency have made off-grid electricity systems the lowest-cost and most expedient option for the majority of unconnected rural populations. However, the initial cost of connecting new rural customers remains an expensive proposition, and public financing that addresses the affordability issue will be required for most countries to achieve universal access, just as it always has. This brief explores the successful rural electrification experiences of seven case countries—Brazil, Chile, Laos, Peru, South Africa, Thailand, and Tunisia—looking specifically at the cost of connections and how subsidies and public financing were deployed to address the affordability challenge and facilitate energy access. The analysis finds that connecting rural customers has been costly—more than $1,500 per connection on average—far more than the cost of distributed systems today. The rural electrification programs examined subsidized 70–100 percent of connection costs. Maintaining these public investments and adapting funding mechanisms to address the unique nature of the off-grid sector, will dictate the extent to which distributed systems are able to scale in the coming decade.
Phillips, Jonathan, Victoria Plutshack and Seth Yeazel (2020). Lessons for Modernizing Energy Access Finance, Part 1: What the Electrification Experiences of Seven Countries Tell Us about the Future of Connection Costs, Subsidies, and Integrated Planning. Retrieved from https://hdl.handle.net/10161/26642.
Jonathan Phillips is the Director of the James E. Rogers Energy Access Project at Duke University, with an appointment at the Nicholas Institute for Energy, Environment & Sustainability. His work focuses on policy, regulatory, and economic issues related to rural electrification, grid de-carbonization, off-grid energy systems, and energy for productivity.
Phillips was the senior advisor to the president and CEO of the Overseas Private Investment Corporation during the Obama Administration, helping scale-up the agency’s climate finance capabilities and lead the implementation of strategic initiatives, including the agency’s $2.1 billion Power Africa portfolio.
Before that, Phillips led private sector engagement and programming with Power Africa at USAID, helping ramp-up the $300 million presidential initiative into one of the largest public-private development partnerships in the world.
From 2007-2014, he held a variety of roles in the U.S. Congress, most recently serving as the senior policy advisor to Senator Ed Markey of Massachusetts. He supported many notable legislative efforts, including serving as one of the lead authors of the Waxman-Markey cap-and-trade bill that passed the House in 2009. He also served on the House Select Committee on Energy Independence and Global Warming as well as the House Natural Resources Committee.
Phillips was a business and economic development volunteer with the Peace Corps in Mongolia. He received a bachelor’s degree from the Milwaukee School of Engineering and a master’s degree in public policy from the Harvard Kennedy School.
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