HomeRegional NewsAfricaThe challenge of reaching last-mile customers

The challenge of reaching last-mile customers

Providing people living and working in sub-Saharan Africa’s rural, isolated areas with access to electricity – last-mile electrification – is challenging. However, the task at hand is fundamental to meeting universal energy access goals. Simon Trace, programme director of the Energy and Economic Growth (EEG) research programme, funded by the UK’s Foreign, Commonwealth & Development Office (FCDO), explains how some of the issues are being addressed.

The article appeared in ESI Africa Issue 1-2021.
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In sub-Saharan Africa, only 36% of rural inhabitants have access to electricity (compared to nearly three-quarters of households in cities) – and closing this energy access gap is receiving growing attention. According to Power for All, more than 40% of sub-Saharan African countries have official rural electrification targets.

There are various estimates regarding the proportion of rural, last-mile electrification that can potentially be achieved through off-grid, decentralised solutions (minigrids or standalone technology such as solar home systems) compared to grid expansion. There are also many assessments of the pros and cons of each approach, including least-cost analyses. According to the International Energy Agency (IEA), the relative attractiveness of grid versus decentralised solutions to deliver electricity access depends on existing and planned network infrastructure, technology progress, local resources, population density and the distribution and growth of electricity demand.

An EEG-funded paper reviewed the literature on the nexus between grid and off-grid electrification and found no firm evidence to support the commonly held claim that off-grid options, particularly minigrids, represent the least-cost option that will account for a major share of electricity access for non-electrified populations. It suggests universal electrification will rely on a combination of grid and off-grid solutions, and the technology mix will largely depend on local contexts.

The paper also highlights that while there are cases where grid and minigrid tariffs are competitive, the typically regulated grid tariffs are much lower than those for minigrids, as there is a cross-subsidy element in most cases. For example, in Senegal, the central grid tariff is approximately 120 XOF per kWh, versus more than 500 XOF per kWh for private minigrids. The paper argues that as the grid expands, off-grid can cease to be the least-cost option due to shrinking distances – and that this continuous revision does not appear to be captured in planning models.

Last-mile challenges

Delivering last-mile grid connections to homes, businesses, and public facilities such as health clinics and schools is complex and financially and logistically challenging.

Many utilities operating in sub-Saharan Africa are already struggling to finance upgrades and essential maintenance of their existing systems. According to the World Bank, utility quasi-fiscal deficits can average 1.5% of GDP – while three countries topped 5% of GDP. Utilities’ limited resources will hamper their efforts to expand generation and transmission capacity to reach every village and every household.

Extending the main grid to remote, hard to reach areas can be expensive (the unit costs of serving sparsely populated regions can be extremely high, and utilities can face challenging terrains and infrastructure issues). Besides, rural communities are often poor, affecting the ability to pay for electricity (according to the World Bank, the incidence of poverty is three times higher in rural areas than in urban ones).

Furthermore, newly connected customers often use little power and are likely to be served at the lowest tariff. This affects profitability (and hence quality and reliability of service) and creates financial risk – reducing the incentive to extend the grid and making it difficult to attract private sector investment. We must, of course, also consider the impact of COVID-19, which, according to the IEA, is reversing energy access progress in Africa.

Initiatives in Uganda

In Uganda, co-participation between Umeme, the country’s largest private distribution utility, and the public entity Rural Electrification Agency (REA), the principal implementing agency of rural electrification programmes, has unlocked and demonstrated the opportunities of institutional cooperation in increasing access rates. An EEG-funded Energy Insight report on scaling up rural electrification in Uganda documents some of the key policy, institutional, technical, procurement and financing initiatives adopted by the partnership. This partnership is a first-of-its-kind, fast-track rural electrification project.

The country’s grid electrification rate is estimated at 22% (rural 21% and urban 57%). The Electricity Connections Policy sets a target to achieve a 60% connection rate by the year 2027, representing 6,303,923 households both on-grid and off-grid, of which 67% (4,223,628) are to be realised on the grid. The annual target has been set at 300,000 connections – Umeme, with donor/government funding support through the REA, is expected to plan and scale up the rate of subsidised connections countrywide to 225,000 per annum, with the other seven service providers expected to connect the remainder.

This strategic objective has meant that much of the technical planning has been jointly executed with the REA, and has required exploring various technical planning and cost-effective connection approaches. In planning grid extensions, the REA and Umeme consider certain vital factors:

  • Household settlement patterns.
  • Proximity to growth trading centres.
  • Design of infrastructure required to cater for the load requirements
  • Corresponding distances from the existing grid.
  • Grid compliance standards.
  • Grid intensification/upgrade requirements.

Optimised cost assessments are carried out to ensure the overall connection costs are within budget. All the collected information is consolidated as baseline data to guide scenario modelling.

The aim is to target and locate unelectrified dwellings and facilities such as health centres, police stations, churches, local government headquarters, schools and trading centres. Identification of potential growth centres, social institutions and households is paramount, as they offer an opportunity to recover costs. This potential is physically identified by planning engineers in areas without electricity grids (greenfield areas) and those with an existing distribution grid but not serving any customers (fill-in areas).

Umeme has also embraced innovative technologies to reduce costs, improve utility performance and ultimately yield better electrification results. For example, high-cost, construction-standard design specifications have been replaced with much simpler, cheaper designs suitable for rural areas, and aerial bundled conductors are used instead of bare conductors, enabling a safer and reliable network free from illegal connections, helping to minimise losses.

Meanwhile, prepayment electricity meters remove the costs associated with reading meters and bill delivery, and reduce nonpayment. Also, ready boards overcome the high cost of internal wiring, which is usually a big hindrance to the rural poor’s connection. Placed in a central location in a house or shack, they contain one or two plug sockets and a light, facilitating electricity use without further house wiring (it is anticipated that consumers will eventually fully wire their homes). Umeme also proposed a radical and proactive outreach campaign, after a demand-driven customer connection approach failed to yield high connection numbers.

Furthermore, Umeme is also part of the Utilities 2.0 coalition in Uganda. The Utilities 2.0 approach, launched by Power for All and funded by the Rockefeller Foundation, is designed to draw on the strengths of centralised and decentralised technologies, combining traditional utility models with learnings from over a decade’s worth of decentralised energy rollout. It is believed that an integrated framework may offer solutions to delivering access while unlocking economic growth and social impact.

EEG has funded a Power for All Energy Insight focusing on the opportunities for distribution utilities and minigrid developers to collaborate, with insights from Uganda (the demonstration community is an unelectrified village of around 400 households approximately 3km from the existing Umeme grid network, and is representative of communities Umeme typically struggles to serve). EEG also sponsored a Power for All webinar, Utilities 2.0 – Better Services, Better Connections – Lessons from Uganda and Nigeria. It covered some of the issues surrounding rural electrification and can be accessed from our website.

Grid construction and reliability

Another challenge that utilities must address is grid extensions’ reliability; any project’s success will be affected by how reliable connections are, with unreliable supplies affecting take-up and consumption.

As part of its project on measuring electricity reliability with GridWatch technology, the University of California, Berkeley, collects data on the grid extension construction process for Kenya’s Last Mile Connectivity Project (LMCP), which aims to achieve universal access to electricity for all Kenyans by 2022. According to the IEA, Kenya has already achieved impressive electricity expansion, with access rates rising from 20% in 2013 to almost 85% in 2019.

It is assumed that in Kenya, unreliability in rural areas will primarily be due to poor construction quality of grid extension projects, rather than an insufficient generation (Kenya Power’s 2018 Annual Report notes the country has a generating capacity of 2,351MW and a peak load of 1,802MW). The research team is deploying its GridWatch remote sensing devices across a subset of study sites to estimate directly whether differences in construction quality impact reliability.

Considerable progress has been made in increasing energy access in a number of countries across sub-Saharan Africa. However, reaching last-mile communities remains a global challenge and still requires attention. Important lessons can be learnt from the innovative policy, programme and technical initiatives and collaboration seen in Uganda and studies into reliable grid construction in Kenya. ESI

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