Introduction
Universal access to electricity is hampered by failures in the distribution segment of the power sector in many low-access countries. Reforms are needed in all activities of the electricity supply chain: centralised generation, transmission, distribution, retail, system operation, off- grid supply, management of distributed resources and cross-border electricity trade, as well as in the structure and institutional governance of the power sector. Our focus on distribution, however, stems from the fact that there are proven approaches and much experience in bringing generation and transmission investment to developing countries, as well as in how to approach the other activities, but turning insolvent distribution companies into viable businesses committed to achieving universal electrification remains an unresolved challenge. And without a properly functioning distribution system, universal access will never be achieved.
Financial viability challenges have hindered the mobilisation of the substantial public and private investment needed to extend the main grid to increase access to electricity, while the recent growth of off-grid solutions has been largely in silos and in small and, at most, medium- scale projects, well below what is needed to achieve full electrification. Achieving universal access requires a new business model for distribution – both on-grid and off-grid – that leaves no one behind, ensures continuity of supply, integrates different modes of electrification (on-grid and off-grid), and is aligned with sound long-term development of the power sector. To achieve these goals, we propose a set of principles and a framework we call the Integrated Framework for Electrification (IFE). The IFE is based on the idea of one or more entities – public, private or partnerships – each with responsibility for distribution in a given area (in principle through some form of concession) and with a mandate to provide universal access in its service area using one or an appropriate mix of electrification modes, with a viable business plan supported by cost of service regulation, viability gap funding and appropriate risk mitigation. Private capital is sorely needed in distribution, but will remain difficult to attract in the absence of viable business models.
Aspects of the IFE have been successfully implemented in electrification programmes throughout the developing world. However, there are very few cases where this framework has been fully applied for the express purpose of scaling up access to electricity.
