Energy Access in Low-Income Communities in South Africa

The Cape Town based consultancy, Impact Amplifier, has recently released a new research paper entitled ‘Energy Provision at the Base of the Pyramid: Are there viable business models to serve South Africa’s low-income communities?’ According to the description provided on its website the “Research paper reviews the decentralised energy business models being used in poor communities, if and how they have been tried in South Africa, and the potential these models have for expansion.”

The key objective of the research is to enable entrepreneurs, researchers, public benefit organisations, government and other institutions interested in creating economically sustainable energy solutions at the base of the pyramid to actually do so. The report intends to provide both a snapshot of what is currently happening, but also motivation to enter where others have yet to venture.

The paper argues that “The decentralisation of energy provision poses an ideal opportunity to investigate flexible renewable energy models that can be adapted to local needs, as well as innovative solutions to reduce the burden shouldered by municipalities in the shift to decentralised energy systems.” It adds that due to the social imperative for energy provision this creates vast opportunities for the private sector to develop and implement alternative solutions.

Illustrating why energy access is so critical the paper also points out multiple consequences of unaffordable and inadequate energy access. Some significant ones include households spending a large percentage of their limited incomes on energy access thereby compromising other basic needs, a lack of access limiting the ability to children to do homework and study at home after dark and environmental destruction as a result of the extensive collection and use of wood and charcoal as energy sources.

Impact Amplifier is firmly of the belief that South Africa, out of all sub-Saharan African countries, has the greatest potential to achieve universal energy access. However, it understands that despite this great potential, it will only be possible if the public sector establishes an enabling environment in which entrepreneurs can and do enter the market with innovative solutions and communities then successfully adapt to these alternative solutions.

As a parting thought the paper states the for South Africa to realise its universal access energy ambition “A new mix of centralised and decentralised solutions [will be required including] new, flexible financial markets to fund these decentralised solutions; greater local government control in policy, planning and the funding process; and, supportive legislation, which removes encumbrances and encourages private sector entrants.”

Impact Amplifier believes that in order to address Africa’s socio-economic and environmental challenges then innovative entrepreneurs and business models must emerge. It helps drive this vision by providing investment readiness and acceleration services to impact businesses which combine financial success with positive social and environmental change. It also assists impact investors to source and invest into compelling opportunities and delivers supplier development and sustainability advisory services to corporations and public institutions.

To download the free research paper you must first register on Impact Amplifier’s website here.

Photo: Erik Hersman/Source: Flickr