Universal energy access just got harder

While the full impact of Covid-19 on the global energy landscape remains to be seen, economic shocks to electricity providers and their customers threaten many with disconnection. And interrupted investments are hitting the energy sector unevenly, creating an atmosphere of uncertainty. It is also becoming clear that economic recovery policies will play a significant role in determining the future trajectories of energy access and renewable energy.

The most recent edition of the annual monitoring report, “Tracking SDG7: The Energy Progress Report”, shows how we’ve achieved remarkable progress to date with key technologies and financing models, but also reveals how far we still have to go. Rich in data and analysis, it offers lessons for how to turn a crisis that threatens energy supply for so many into a catalyst for accelerated progress.

Advances over the past decade have been striking, with the electrified share of the global population growing from 83% in 2010 to 90% in 2018. More than 1 billion people gained access to electricity during that period, far outpacing progress in previous decades.

And yet, this progress has been uneven. Latin America, the Caribbean, and Southeast Asia are now almost fully electrified. Central and South Asia not far behind, with 92% of the population enjoying access in 2018. Yet Sub-Saharan Africa continues to lag behind. In 2018, only 47% of the region’s population had access to electricity, with electrification efforts unable to keep pace with population growth. Energy poverty also continues to be a largely rural problem. While cities have plateaued at about 97% access over the decade, the electrified proportion of rural populations rose from 70% to 80%. This is where most of the work is yet to be done.

Renewable energy is a critical component of SDG7, and its advancement goes hand in hand with improved access. In addition to policy support, resource availability explains regional differences in renewable electricity consumption. Sub-Saharan Africa might have the highest share of renewable energy in final consumption, but almost 85% of that is down to traditional biomass, with its various pollution and health risks. Latin America and the Caribbean have the largest share of modern renewables, thanks to the extensive use of modern bioenergy in transport and industry, as well as hydropower. In Europe, Northern America, and Oceania, hydropower remains the largest source of renewable generation, followed by wind and solar PV. While hydropower remains the largest source of renewable electricity in Africa too, governments have been introducing policies to foster deployment of wind and solar technologies, which have benefitted from recent cost reductions.

The annual growth rate of renewables in the power sector was almost 6% last decade, driven primarily by wind energy and solar PV. In 2017, they increased by 18% and 35%, respectively, and together they were responsible for almost 85% of year-on-year renewables growth. China was already the largest consumer of solar PV in 2016, and as of 2017 the country also became the largest consumer of electricity from wind and bioenergy, surpassing the United States. In most European countries, wind and solar PV were the largest sources of renewable energy, with their shares ranging between 15% and 20%.

These technologies have now passed a tipping point. A recent International Energy Agency report found that almost $320 billion was invested into the sector in 2019, and global additions had been expected to hit a record in 2020. Falling costs also mean that every dollar buys more power, and in constant 2019 cost terms, investment had been rising rapidly over recent years.

Since Covid-19, investments in renewable electricity assets have been relatively resilient, partly thanks to their small share of the overall demand decline. As money switches out of more vulnerable energy sectors, that may indicate more growth to come. Cost declines in components like solar panels, and the increasing popularity of competitive auctions to set electricity tariffs, mean that renewable energy is now the cheapest option for at least two-thirds of the global population, according to BloombergNEF.

Advances in solar, battery storage, and minigrid technologies are bringing those advances to bear on rural energy poverty. Between 2010 and 2018, the adoption of renewable offgrid energy sources tripled worldwide, providing below Tier 1 electricity services to 136 million people around the world, up from about 1 million in 2010. They now represent the best option to connect 40% of Africans who still lack electricity.

Despite these remarkable gains, the world is still not on track to achieving universal access by 2030. While the annual pace of electrification accelerated over the past decade from 0.77% (2010-16) to 0.82% (2017-18), it needs to rise to 0.87% over the coming decade to meet the target – and that was true even before pandemic-related setbacks. Pre-crisis policies and trajectories would leave 620 million people without access in 2030, about 85% of whom live in Sub-Saharan Africa.