Towards Integrated Business and Partnership Models for Universal Energy Access in Kenya and Rwanda

Pailman, Whitney Lisa

Towards Integrated Business and Partnership Models for Universal Energy Access in Kenya and Rwanda

Thesis / Dissertation

2024

Publisher

University of Cape Town

Department

Department of Mechanical Engineering

Faculty

Faculty of Engineering and the Built Environment

Abstract

Integrated electrification models have garnered significant attention in the energy access discourse as an essential element of achieving universal access to electricity. The absence of integration often results in competing rather than complementary electrification solutions, fragmentation in the market and a duplication of financial resources, with off-grid providers primarily serving certain geographic regions while others remain unelectrified. This thesis proposes integrated business and partnership models to improve the viability, inclusivity and scalability of off-grid electrification models in Kenya and Rwanda. In recent years the concept of the Integrated Distribution Framework (IDF) has been conceptualised to support the achievement of universal access to electricity and improve the viability of electrification models. This framework is premised on four core principles (pillars), namely (i) inclusiveness, (ii) permanence, (iii) a combination of electrification modes and (iv) external resources for viable electrification models. These pillars form the foundational elements of the IDF framing, upon which this thesis expounds. Notwithstanding the developing literature on the IDF, this thesis addresses several knowledge gaps in the implementation of the IDF in different contexts. An important contribution to knowledge this thesis makes is operationalising IDF principles for financing and partnership models commonly used for mini-grids and stand-alone solar systems in Kenya and Rwanda. Specifically, this study applies the tenets of the IDF to results-based finance (RBF) models and flagship off-grid electrification programmes using public private partnerships (PPP)s. Integral to the IDF, is addressing the viability gap. This is a central aspect of this thesis and is intricately linked with a complex array of factors, including the regulatory environment, affordability, financing and geographic considerations. This study used qualitative research methods to carry out the empirical investigation, and a case study design through in-depth case studies of Kenya and Rwanda. Forty-nine semi-structured interviews were conducted with key stakeholders in the off-grid energy sectors in Kenya and Rwanda, including mini-grid developers, stand-alone solar companies, international development partners, industry associations, the national utilities and Ministries of Energy. Specifically, this study found that for mini grids, determinants of the viability gap included: revenue which is influenced by tariffs and demand; affordability; funding to address the viability gap; policy support; the regulatory environment; institutional priorities and long-term planning. For stand-alone solar systems the viability gap was mostly influenced by affordability, quality standards and financing. This study further identified key determinants of the IDF pillarsfor mini-grids and stand-alone systems in Kenya and Rwanda. Inclusivity was impacted by affordability; incentives and subsidies; and national electrification planning. vi Permanence was influenced by tariffs and regulation; planning certainty; incentives and subsidies, quality standards and demand stimulation and productive uses. The efficient combinations and co existence of electrification technologies was affected by the prioritisation of off-grid technologies in electrification plans, geography, institutional priorities and the availability and affordability of finance. These all impacted the external finance leveraged and the continuity and sustainability of business models within the case studies of Kenya and Rwanda. This thesis demonstrates the complexities of RBF and PPPs as approaches to address the viability gap. It shows how the framing of the IDF can improve the permanence and inclusivity of RBF programmes and PPPs. It further highlights that there are many trade-offs that need to be considered when the private sector form part of larger scale national electrification projects. As this thesis demonstrates, even when there are targeted incentives in place through RBF programmes and PPPs, there are a variety of challenges which need to be overcome and it therefore identifies ways in which partnerships can be strengthened to improve the financing ecosystem.

Keywords

Energy and Development

Reference:

Collections

PhD / Doctoral

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