Africa's Electrification Mix Series: Grid Extension vs. Off-Grid Solutions (Part 1 of 4)

20 May 2024
Africa's Electrification Mix Series: Grid Extension vs. Off-Grid Solutions (Part 1 of 4)

This month, we explore the pros and cons of expanding the traditional electrical grid compared to deploying off-grid solutions such as mini-grids and solar home systems. We'll examine which approaches are most suitable for various regions and communities across Africa.

Expanding electrification access in Africa is challenging. According to Sustainable Energy for All, an international organization working in partnership with the United Nations, 87% of the 675 million people without access to electricity live in Sub-Saharan Africa. Electrification rates vary by country and by population density. Urban electrification rates are generally higher than rural ones. For instance, Nigeria which has the largest number of people without electricity access (about 90 million) has an urban electrification rate of about 89% while Burundi’s is 67.3%. The rural electrification rate is 39% in Nigeria and 2% in Burundi. As a result of these differences, policymakers across the region must make electrification planning decisions that factor in the peculiarities of their regions. Often, the choice is between extending the grid or providing off-grid solutions.  

In the past, policymakers and governments have taken an electrification approach that focused on expanding grid electricity access. This centralized approach helped accelerate the provision of affordable power across cities and urban areas in the continent. It, however, has been a challenge to replicate in rural communities, especially those located in remote areas. Connecting these communities to the grid proved expensive with little commercial returns for utilities.  

Utilities presently struggle to meet urban demand (who are their most commercial customers), and there is often not enough leftover supply to meet rural demand. As a result, most rural grid extension projects initiated by the government or by utilities are either uncompleted or non-functional. In 2017, Nigeria’s Rural Electrification Agency (REA) stated that about 1,600 grid electrification projects had been abandoned, and were unlikely to provide electricity to rural communities because they lack “reliable power supply sources”.  

Due to such challenges, including the inadequate grid generation and supply supply, and the prohibitive cost of extending the grid to remote areas, governments across the region have increasingly adopted an off-grid strategy. off-grid electrification options like solar-powered stand-alone solar systems and mini-grids have become a mainstay of rural electrification policy. They are increasingly being seen as an alternative for grid extension. Even in areas with grid access, these solutions are used to augment grid supply.  

Why we need an integrated approach 

Electrification options are chosen based on their economic feasibility. For urban and peri-urban communities not far from the grid, extension remains the cheapest viable option. Urban and commercial centres are best served by the grid, as it provide cheap power for large-scale industrial and economic activities. For remote areas, off-grid clean energy-powered solutions present the best option for electrification. A 2021 UNDP report which calculated the Levelized Cost of Electricity (LCOE) for grid extension compared to a solar-powered and battery storage option, showed that at distances of over 20km from the existing grid, off-grid solutions become more cost-effective compared to grid extension.  

As African policymakers and utilities look at the financials and economics of grid extension vs off-grid solutions, they must also take into account the dynamics of the continent in their electrification planning. According to the OECD, Africa has the fastest urban growth globally. The continent’s urbanization rate (average rate of change in the size of the urban population over a given period) was 45% in 2023. Electrification plans across the continent will require adopting both options. If government and utilities deemphasize grid extension, the continent could end up with urban centres powered by individual expensive solar systems, rather than by a cheaper central grid.  

While adopting off-grid for remote and rural communities, governments across the region must also still integrate planning for future grid infrastructure. Off-grid solutions and electrification programs should be designed in a way that can facilitate future interoperability with the main grid.   

African governments and stakeholders can learn from India, which was able to electrify 750 million households in two decades through its Saubhagya Scheme. This programme among other benefits helped to eliminate the high connection costs for poor households while integrating off-grid solar systems for remote households.  

For millions of unconnected people across Africa, it does not matter where their energy supply comes from. What matters to them is that their supply is reliable and affordable. Energy policymakers must therefore ensure that they are planning electrification expansion in a way that ensures affordability, reliability and sustainability for these people.  

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