Lukhanyiso Ndevu

Financing of off-grid solar in informal settlements in Africa - Practice and opportunities

The use of traditional fuels poses significant respiratory health risks, fire hazards, and hampers economic opportunity. To address this, the South African government introduced the Free Basic Alternative Energy (FBAE) policy, providing financial support for alternative energy sources (solar systems, gas, paraffin, etc.) to households that are unelectrified and incapable of providing for their own basic energy needs. Interest is growing in using the FBAE subsidy for decentralised solar technologies in unelectrified informal settlements to improve energy access. However, since the FBAE’s 2007 introduction, municipal use of the FBAE subsidy has been limited. The only notable use has been municipalities supporting the use of solar home systems (SHSs) in a concessionaire programme. The programme targeted rural households and encountered difficulties which prevented it fulfilling its intended goals.

This study explores (1) what motivates or hinders municipalities from supporting energy needs in urban, informal settlements and (2) whether available solar delivery models currently being used in informal settlements would be vulnerable to the same challenges encountered in the concessionaire programme. The study follows a qualitative approach focused on perspectives of municipal officials on their willingness to intervene in informal settlements and insights from solar professionals operating in informal settlements on the technologies they are deploying. Semi-structured interviews were conducted followed by coding processes to uncover categories of information that offer significant explanatory power on the incentives and challenges of solar solutions in informal settlement contexts.

The findings in this study confirm the results of existing work that control is a significant barrier to municipalities starting energy provision in informal settlements. What this study adds, is that the challenges of control can emerge even amongst municipalities that are willing to enact energy programmes. The difficulty in verifying and auditing what the municipality is paying for can undermine municipal support. Control is therefore both an obstacle to initiation and a risk that can undermine initiated energy access projects. This study recommends the use of tier 5 level microgrids which are metred enabling municipalities greater ability for verifying the use of state subsidies. The microgrid could perform better than SHSs have as it is less prone to theft and more importantly, there is no threat of the conventional grid arriving and making the microgrid redundant, as was the challenge in the concessionaire programme. Municipalities have greater incentive to continue the microgrid and generate electricity for themselves, thus avoiding the central utility’s intermittent and costly supply.