United Nations has called on
businesses, governments, and
civil society to achieve Sustainable
Energy for All by 2030
From the UN Foundation – May 2017
We were pleased to be able to announce the results of our 2016 Practitioner Network survey at the Sustainable Energy for All forum last month with many of our members in attendance. We greatly appreciate your taking the time to participate in our yearly surveys. As the largest network of stakeholders in the energy access space, the Practitioner Network is a great lens through which to understand the successes in the sector and the challenges that remain for scale.
While the fast-paced distributed energy access sector has seen many changes since the Practitioner Network’s inception, which our surveys have grown to reflect, a number of questions have now been answered multiple years in a row, providing us the ability to track trends over time.
One of the clearest results of recent surveys, which will come as no surprise to our membership, is the significant representation of SMEs and start-ups in the respondent pool year-after-year, which underscores their importance in growing the distributed energy access sector. With support tailored to the needs of SMEs, these enterprises are well placed to understand and respond to local markets and meet household energy needs and preferences more quickly than traditional electrification approaches.
Their needs along with the rest of our membership continue to center around financing, and our survey results have tracked an ever-increasing emphasis on debt financing as the sector seeks to scale-up. The amount of financing needed overall continues to be on the rise as well, with many of our members successfully completing new and increasingly significant funding rounds as recognition for their work grows. Comparing survey results to our real-time online investment directory also underscores the exponential growth of the funding needs and therefore scale potential of what was once considered a niche sector. Interestingly, in 2015, social and environmental impacts each ranked among the three most important considerations for investors when evaluating investment opportunities in the energy access sector, while return on investment ranked second to last. This suggests that investments in the energy access sector may be driven primarily by a desire for impact and scale.
Financing is not only still a concern for energy service providers, but their customers as well. The past few years’ survey results have confirmed that business models that are designed to respond to the needs of rural households and their abilities to pay (e.g. pay-as-you-go) are a key factor behind the growth of standalone solutions, making the systems more affordable to a larger customer base. However, the same surveys also prove that even with lower prices and innovations in end-user financing, households remain concerned with the up-front cost of standalone electrification solutions. This challenge is recognized throughout the sector, and reflects the fact that the majority of off-grid households do not yet benefit from having access to innovative financing, still using one-time cash payments to purchase their energy solutions.
In terms of non-financial resources, for the second year in a row, matchmaking ranked as the top
industry need to grow their business, followed by access to new customers within their
country(ies) of operation, access to information and talented employees. The Practitioner Network will continue to build up its services around training, sharing best practices, and matchmaking to help answer some of this need, and we look forward to planning for this year’s survey to ensure we continue to capture the changing needs of our membership to be able to work towards the right answers collectively as a sector.
|Yasemin Erboy Ruff
Senior Officer, Energy & Climate
United Nations Foundation