The COVID-19 pandemic has caused an unprecedented global economic and social crisis. It has significantly affected all aspects of life, including in the energy sector. The World Bank estimates that globally, the pandemic will have far more damage to the energy sector and economies than the 2008 financial crisis. The energy market outlook remains uncertain.
Rwanda targets universal access to electricity by 2024, with 52 per cent on-grid connections and 48 per cent off-grid. Current official figures suggest that electricity access is at 51 per cent, of which 37 per cent are connected to the grid while 14 per cent use off-grid solutions.
During COVID-19 times where countries are taking diverse severe measures, a rural off-grid customer who has just stepped on the energy ladder is at risk of going back to darkness.
With this projected expansion rate, developing countries that have the lowest levels of access to electricity took advantage of the situation to expand growth and accelerate the access by deploying new technologies in the provision of off-grid solar solutions.
There are fears that the sector may suffer heavily should the pandemic drag on, thus living many in the dark.
A recent survey conducted by Sustainable Energy for All (SE4ALL) showed that only 4 per cent of the firms that offer off-grid Solar Home Systems (SHS) would have enough cash to last six months.
This, however, presents an opportunity to quicken development through different components and arrangements if embraced.
We are encouraged to see that the sector’s leading investors and donors have banded together and indicated profound comprehension during this time of crisis.
They predict that a looming liquidity shortage, if not addressed urgently, would leave many off-grid energy companies with no option but to plunge their customers back into darkness.
Such far-reaching indebtedness would derail our shared ambitions of universal energy access.
Presently, extra discussions are required on the most proficient method to support and fund existing customers.
This would include reimbursing the aggregate spend by off-grid companies in providing a minimum service for customers, even in case of non-payment, to essentially ‘keep the lights on’ at such a crucial time.
The ongoing conversations with Governments and Donors regarding subsidies for the sector need to be completed sooner than later.
The off-grid sector has a task to carry out in guaranteeing that energy access does not fall off a cliff, to be there for communities when they need it most while doing what we can with key partners during these uncertain times.
If we act now and ensure energy provision remains front of mind, we can contribute to triggering a return to economic growth and development in the long term, with widespread benefits for many citizens who had of late been lifted out of energy poverty.
We could then be able to proceed with our shared mission of transforming lives and unlocking potential through access to energy.
As providers of access to electricity, off-grid companies should be regarded as essential service providers and treated as such in countries where they operate.
This will be key to keeping the lights on in times where countries instruct lockdowns or curfews. This has been accomplished in some African countries including Kenya, Togo and Rwanda.
The good news is that most off-grid companies, especially those offering SHS, did not need to go through a digital transformation as most of them collect their payments on a Pay As You Go basis (PAYG) through mobile-based transactions.
This has reduced the level of exposure as certain customers have shown resilience during the lockdown.
This has given companies a real-time perspective on the financial effect brought about by COVID-19 on their customers.
There is an opportunity for off-grid companies to partner even more strongly with Government in fighting COVID-19 as most of them possess data, which is important for understanding the magnitude of the economic impact of the virus, especially in rural areas. This is useful in Government decision making.
Most companies are also well positioned logistically and can offer logistical support should the government need to deliver country-wide COVID-19 related supplies in a short period.
COVID-19 has extremely impacted the energy sector, here in Rwanda and the world over. The effects are yet to be felt and they may take us a long time to recover.
When economies take a dip, so does energy consumption. Likewise, economic growth brings with it an increase in energy consumption.
Regardless, the "off-grid” agenda should not be slipped further below on the list of national policymakers’ and regulators’ priorities.
The author is the Managing Director of Bboxx Rwanda and Chairperson of the Solar Energy Sub Sector under Energy Private Developers (EPD).