Universalizing and accelerating electricity access over the next decade through Public Service Delegation (PSD)
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July 2023 No.13
According to estimates by the International Energy Agency (IEA), 775 million people were still living without electricity as of 2022. Electrification is improving in Southeast Asia, but registering slow progress in sub-Saharan Africa. Electricity access in developing countries (DCs) is best conceived as distribution of a commercial public service and as a capital intensive public good. The deployment of pay-as-you-go technologies in the 2010s and the fall in photovoltaic (PV) prices have revived private sector interest in electricity access. However, private initiatives have been carried independently from public authorities and suffer from unstable institutional environments. Widely used in the water sector, which is also unprofitable in contexts similar to those prevailing in regions not yet electrified, the Public Service Delegation (PSD) offers a solid regulatory and financial framework that balances Government needs on one side, and greater visibility for private sector operators on the other. It can be applied to all three electrification modes: grid extension, mini-grids, stand-alone PV systems, and is designed to be financially viable.
Since the 1980s, several reforms have been carried out to create enabling environments for electrification. The most significant of these have been the unbundling of national monopolies and the creation of dedicated rural electrification agencies. The objectives of these reforms were to diversify funding sources, to use new forms of distribution, and to mobilize the private sector for rural electrification. However, for several reasons, the results have not been as expected. First, the unbundling of national companies and the creation of dedicated agencies have led to the segmentation of electrification into two markets: first, a urban market, which is a priori profitable; and a second, rural market, which is unprofitable and remains under-funded. Further‑ more, public operators rarely have the human and financial resources needed to fulfill their electrification mandate. More recently, expectations have turned to the private sector. With the technological advances and lower PV and battery costs, authorities expected that economies of scale would be sufficient to attract private investment. However,
Authors Gabriel CLAUTIAUX, Grégoire LENA, Christian De GROMMARD, Baptiste COMPAGNON