Search results

Achieving the Sustainable Development Goals (SDGs) requires ensuring universal energy access. Yet, governments of low-income countries face significant budget constraints for the capital-intensive infrastructure required to reach the hundreds of millions of households and businesses without grid electricity. In this context, private investors are the key actors capable of channelling such large capital requirements. Compared to the previous decades, the 2010s witnessed a growing mobilization of private funding in the off-grid electricity access sector, including some success stories. Nonetheless, with less than ten years left until the SDGs horizon, off-grid companies systematically struggle to ensure the financial sustainability of projects, as the industry still seeks to demonstrate its maturity and profitability. In this paper, we critically review the main business approaches adopted by private decentralised electricity access service providers. The aim of the analysis is to identify the main drivers of risk and failure which have been hindering sectoral investment. We then propose and discuss four potential game-changing factors that could foster the next generation of private investment in decentralised electricity solutions: (i) anchor-businesses-community (ABC) models; (ii) the design of integrated business models centred around income generation; (iii) the growing role for "local" financiers; (iv) the securitization of assets. Our paper targets private infrastructure developers and financiers aiming at fostering investment in financially sustainable decentralised electricity access projects.

Achieving the Sustainable Development Goals (SDGs) requires ensuring universal energy access. Yet, governments of low-income countries face significant budget constraints for the capital-intensive infrastructure required to reach the hundreds of millions of households and businesses without grid electricity. In this context, private investors are the key actors capable of channelling such large capital requirements. Compared to the previous decades, the 2010s witnessed a growing mobilization of private funding in the off-grid electricity access sector, including some success stories. Nonetheless, with less than ten years left until the SDGs horizon, off-grid companies systematically struggle to ensure the financial sustainability of projects, as the industry still seeks to demonstrate its maturity and profitability. In this paper, we critically review the main business approaches adopted by private decentralised electricity access service providers. The aim of the analysis is to identify the main drivers of risk and failure which have been hindering sectoral investment. We then propose and discuss four potential game-changing factors that could foster the next generation of private investment in decentralised electricity solutions: (i) anchor-businesses-community (ABC) models; (ii) the design of integrated business models centred around income generation; (iii) the growing role for "local" financiers; (iv) the securitization of assets. Our paper targets private infrastructure developers and financiers aiming at fostering investment in financially sustainable decentralised electricity access projects.

BACKGROUND: Government- and charity-funded medical research and private sector research and development (R&D) are widely held to be complements. The only attempts to measure this complementarity so far have used data from the United States of America and are inevitably increasingly out of date. This study estimates the magnitude of the effect of government and charity biomedical and health research expenditure in the United Kingdom (UK), separately and in total, on subsequent private pharmaceutical sector R&D expenditure in the UK. METHODS: The results for this study are obtained by fitting an econometric vector error correction model (VECM) to time series for biomedical and health R&D expenditure in the UK for ten disease areas (including 'other') for the government, charity and private sectors. The VECM model describes the relationship between public (i.e. government and charities combined) sector expenditure, private sector expenditure and global pharmaceutical sales as a combination of a long-term equilibrium and short-term movements. RESULTS: There is a statistically significant complementary relationship between public biomedical and health research expenditure and private pharmaceutical R&D expenditure. A 1% increase in public sector expenditure is associated in the best-fit model with a 0.81% increase in private sector expenditure. Sensitivity analysis produces a similar and statistically significant result with a slightly smaller positive elasticity of 0.68. Overall, every additional £1 of public research expenditure is associated with an additional £0.83-£1.07 of private sector R&D spend in the UK; 44% of that additional private sector expenditure occurs within 1 year, with the remainder accumulating over decades. This spillover effect implies a real annual rate of return (in terms of economic impact) to public biomedical and health research in the UK of 15-18%. When combined with previous estimates of the health gain that results from public medical research in cancer and cardiovascular disease, the total rate of return would be around 24-28%. CONCLUSION: Overall, this suggests that government and charity funded research in the UK crowds in additional private sector R&D in the UK. The implied historical returns from UK government and charity funded investment in medical research in the UK compare favourably with the rates of return achieved on investments in the rest of the UK economy and are greatly in excess of the 3.5% real annual rate of return required by the UK government to public investments generally.