HomeRegional NewsAfricaDemand Side Subsidies for off-grid solar

Demand Side Subsidies for off-grid solar

Roundtable broadcast date: 9 June 

Duration 90 minutes 

09h00 GMT | 10h00 London | 10h00 Lagos | 11h00 Johannesburg | 12h00 Nairobi 

One of the biggest obstacles facing the millions of people in Africa who don’t have access to energy, is the cost of electricity. 

There are various ways organisations, funders, governments and utilities try to solve this problem, but a consensus seems to be coalescing around the positive effect of of demand side subsidies. 

Off-grid renewable energy systems are transforming the way secure, affordable electricity is being delivered to rural communities around the world. They play a role in breaking a cycle of energy poverty which stifles the socio-economic progress for hundreds of millions. But, the best will in the world does not get the person access if they don’t have the money to pay. And, it makes little sense for a developer to create the electricity system or sell a product, if they can’t make money doing so. 

A demand side subsidy increases the purchasing power of the renter or potential buyer of the solar system, though trying to figure out the exact way to give that person access to such a subsidy differs from country to country.  

Innovative funding models to address this gap is just one of the issues the Household Solar Funders Group looks at. The Group builds on the Scaling Off Grid Energy initiative founded by US Agency for International Development, Foreign, Commonwealth and Development Office, the African Development Bank and the Shell Foundation to coordinate donor activity in the sector.   

Group coordinator Wim Jonker Klunne says the group specifically brings together funders working in household solar sector in Africa. “Through coordination and collaboration between the members we try to ensure the best possible impact of funds deployed. Inputs from players in the field are crucial to that and will ensure that any actions by the HSFG will be aligned with other initiatives.” 

“We need to look into ways of closing the affordability gap through targeted subsidies, while at the same time ensure that the energy provided will be used for productive uses as that is the best way of ensuring economic development,” he explained. 

Jonker Klunne will convene a roundtable during the Enlit Africa digital event to discuss What do we need to advance demand side subsides? 

Wim Jonker Klunne, coordinator, Household Solar Funders Group, South Africa

Johanna Galan, energy access consultant, World Bank, Austria

Theresa Smith
Theresa Smith is a Content Specialist for ESI Africa.