DFID’s energy policy framework which was established in 2015, has three objectives:

 

These are aimed to be delivered through a mix of approaches, which is dependent on the context:

  • Electricity provision solutions: On-grid, mini-grid (stand-alone grid) or off-grid
  • DFID’s technical and funding support: TA to public sector, TA and capital for start-ups or research and development, investment and international influencing

Only the electricity sector will be considered here and this includes:

The topics of the wider ‘energy sector’ such as cooking and transport fuels, and the extraction of the raw materials used in the generation of power are not included.

The Power Sector Topic Guide [1] sets out the importance of electricity to achieving the SDGs, and the major challenges and opportunities in providing access to affordable, reliable and sustainable electricity for all households and businesses. Increasing focus is being put on renewable energy, such as solar power in developing countries, for a number of reasons – falling prices of solar power, off-grid solar may be more attractive in areas with lower density (massive areas in the Global South) and the increasing focus on the climate benefits of using renewables which supports governments National Determined Contributions (NDCs) as well as access to climate funds (through funds such as the Green Climate Fund).

  • Be clear on the outcome (s) that the intervention is trying to achieve, i.e. i) power for growth – driving economic development; ii) environmental sustainability – in energy generation and use; and iii) energy access – that is affordable and leaves no one behind.
  • Consider the level of access needed – refer to the Multi-tier matrix to measure access to household electricity services by ESMAP.[1]

  • Based on the outcome, agree on what needs to be built, it could be generation (renewable or non-renewable – note that DFID may not support non-renewable generations), distribution network or transmission lines. Engage with an energy or infrastructure adviser to discuss potential approaches.
  • Be aware of the political and economic considerations of different options, given the context of the country and their neighbours. This is important if the interventions are linked to a power pool or regional interconnectors.
  • Be aware of the country’s legislative frameworks pertaining to the electricity sector and environment/planning.
  • Be aware of the other projects being planned in the pipeline and in the local area to enable resource sharing but also be aware of the logistics disruption.

  • Conduct a feasibility study which considers:
    • The location of the demand for electricity versus where the generation of electricity is, to minimise losses in the transmission and distribution
    • The types of technology that is being used, the quality of the technology (including plans for operations and maintenance of equipment) financial feasibility should take into account the cost and benefit throughout the lifecycle. Using the average levelised cost of electricity (LCoE) across the pool of plants as the basis for determining a cost-reflective tariff therefore means that producers and customers will receive the right pricing signals. It will also help ensure a sustainable and economically efficient long-term balance of supply and demand. Minimising the overall system-wide LCoE (subject to achieving access and service objectives) should therefore drive decision-making. Therefore it is important to consider the capital costs, the operating and maintenance cost, and the tariff structure, i.e. how is the cost outlay going to be paid, and who is going to be paying for this.
  • Be aware of incentives for renewable energy that may exist, including both price-based (e.g. feed-in tariff (FiT)) and quantity-based (e.g. quotas) approaches, as well as reform to fossil fuel subsidies. International climate finance can also be leveraged to attract private investment in renewable electricity.
  • Consider off-grid electricity systems of supplying electricity that can play an important role in ensuring access prior to grid expansion, substituting unreliable grid-supplied electricity or reaching dispersed households and communities that cannot be economically reached by the grid. However, overcoming the perceived investor risk requires giving certainty to the role of off-grid systems within an overall electrification plan, establishing regulatory and technical rules and standards, and supporting financial viability when reaching the poorest. Smaller off-grid electricity producers may be governed by different sets of regulatory and technical rules – refer to the Bureau of Standards of the country. Refer to Lighting Africa standards for off grid products [2].
  • Consider public private partnerships (PPPs) for large scale power sector projects.
  • Plan monitoring visits to ensure smooth operations and maintenance. Poor maintenance lead to inefficiencies, higher losses and failure to meet the demand.

 

References:

[1] Power Sector Topic Guide, Peaks: https://www.gov.uk/dfid-research-outputs/power-sector-topic-guide

[2] Lighting Africa off grid products: https://www.lightingafrica.org/products/