Unlocking Utilities of the Future in Sub-Saharan Africa

Abstract

African utilities face the complex and interrelated challenges of being capital constrained, having a relatively low demand base of customers with lower abilities to pay, high levels of system inefficiency, and very large unserved and underserved populations in their service territory. Traditional business-as-usual methods for electrification have fallen short, and utilities in sub-Saharan Africa are critically under-equipped for the universal access challenge. Advances in digitized and decentralized technology offer new delivery models for reliable and affordable access that African utilities could leverage to solve these dual challenges of financial sustainability and universal access. Indeed, though the 'future grid' conversation predominantly focuses on advanced energy markets, the value proposition of such advances is arguably stronger in African markets. From the literature, we find that the inertia of the entrenched regulatory frameworks governing competition, tariffs, and investment priorities are a major hurdle keeping African utility incentives at odds with technology trends and propose reforms. Using case studies, we identify key regulatory reforms needed to transform the sector, and best practice models for novel public-private sector engagement to unlock opportunity.

Keywords: Utility, electric utility, business models, reform, Africa, sub-Saharan Africa, minigrids, energy access, solar energy, tariffs, concession, distribution utilities, transmission, distribution, power, electricity