The impact of COVID-19 on the off-grid energy sector

This article was written by Abigail Jibril

With the on-going pandemic, COVID-19 around the world, it is evident that one of the most effective ways to curb the spread of the virus is to maintain social distancing. Social distancing is best done by enforcing lockdowns and stay-at-home measures just like some countries have done. But some people staying at home do not have access to reliable electricity supply, have to work from home, entertain their children, bond with their families and more during this period. So, what do they spend time doing at home without access to reliable electricity? 

Did you know that only about 28% of health facilities in Sub-Saharan Africa have what may be called “reliable” access to electricity? Just like Damilola Ogunbiyi mentioned in her opinion piece, “Reliable, affordable electricity is needed to keep people connected at home and to run life-saving equipment in hospitals”.

But this is the situation for urban regions that have access to electricity that is unreliable. What do we now say about the millions of people who have never had access to electricity? There will be a delay in getting them connected because of the current worldwide pandemic. In this article, we share our thoughts on how COVID-19 is affecting off-grid energy access in Nigeria:

Delayed timelines in the deployment of solutions

Some of the equipment used in off-grid electrification are sourced from outside the country. Due to port and movement restrictions within the country, developers have increased difficulties in accessing the equipment and project sites. This affects the timeline of delivery of projects. Some of these equipment include batteries, solar panels, inverters, smart meters and more mostly from China, Germany or the United States of America.

Access to Finance 

Electrification requires high capital investment, mostly debt finance. With the expected slowdown in access to finance, the rate of electrification would be negatively affected if appropriate measures are not taken to increase liquidity within the sector.

Electrification requires high capital investment, mostly debt finance. With the strides made by the Rural Electrification Agency, Nigeria in collaboration with other financiers (World Bank, African Development Bank etc), there is funding available for the development of the sector. Nevertheless, the nature of some of the available finance facility requires developers to obtain prior debt or equity financing for project development. 

Unfortunately, most of the conversations by developers with potential financiers may be on hold due to the uncertainty with the global health crises that is affecting different sectors of the global economy. With the expected slowdown in access to finance, the rate of electrification would be negatively affected if appropriate measures are not taken to increase liquidity within the sector.

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Increased demand for electricity but an inability to pay

With a lockdown and the implementation of social distancing measures, the electricity demand load curve will be different, especially for households. This is because most of the users are at home. Although the lockdown may not be effective within the villages, indigenes who work or sell their products in cities, have to stay at home. This affects their ‘daily’ source of income. With this increased demand for electricity for residential use, some of the consumers may not have the ability to pay for power. 

With reduced earning capacity, the consumers may not be able to pay for the basic electricity they need and the mini-grids may experience a decline in revenue and potentially operating losses. 

With this pandemic and its looming impact on the global economy and status quo, is ensuring access to affordable, reliable, sustainable and modern energy for all still achievable by 2030?  It is instructive to ask “what measures are being put in place to prevent distortion of the SDG7 Goal?”