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In rural sub-Saharan Africa, the global poverty hotspot, smallholder farmers account for 80% of agricultural production, with 90% of cropland being exclusively rainfed. A key obstacle to rural development and poverty elimination is the lack of electricity access: less than one in three dwellers have electricity at home. The main barrier to rural electrification is the capital-intensiveness of energy supply infrastructure among sparse communities with low demand density and insecurity of payment. While public governments have largely been unable to channel the required resources, private players are often unwilling to pursue risky and unprofitable household electrification programs. In this context, this perspective argues that the paradigm of rural electrification should be centred around an integrated approach aiming at increasing agricultural productivity and profitability. These bear the necessary potential to enable local income generation and thus also provide an incentive for private energy investment, including in the residential sector. A framework for the integrated approach is proposed and the crucial synergetic role of data modelling and business and policy research to pursue this paradigm is discussed.

In rural sub-Saharan Africa, the global poverty hotspot, smallholder farmers account for 80% of agricultural production, with 90% of cropland being exclusively rainfed. A key obstacle to rural development and poverty elimination is the lack of electricity access: less than one in three dwellers have electricity at home. The main barrier to rural electrification is the capital-intensiveness of energy supply infrastructure among sparse communities with low demand density and insecurity of payment. While public governments have largely been unable to channel the required resources, private players are often unwilling to pursue risky and unprofitable household electrification programs. In this context, this perspective argues that the paradigm of rural electrification should be centred around an integrated approach aiming at increasing agricultural productivity and profitability. These bear the necessary potential to enable local income generation and thus also provide an incentive for private energy investment, including in the residential sector. A framework for the integrated approach is proposed and the crucial synergetic role of data modelling and business and policy research to pursue this paradigm is discussed.

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.

Achieving universal electricity access in sub-Saharan Africa – a milestone of SDG 7 – requires about $30bn annually until 2030 on the top of baseline investment. The private sector plays a key role in supplying these investment flows, given the governmental budgetary constraints. Yet, private players face numerous sources of risk in their infrastructure investment decisions. This risk is usually factored in using a discount rate. To allow for a more realistic evaluation of the role of the investment environment in financing energy access, here we introduce the Electricity Access Governance Index (EAGI), a composite index of energy sector regulatory quality, energy sector governance, and market risk. The index is implemented through a discount rate conversion into a bottom-up integrated electricity planning model (IMAGE-TIMER) to evaluate the role of different sources of risk for electrification investment dynamics. Our results show that the adoption of decentralised systems for achieving universal energy access requires governance and institutional reform to lower discount rates faced by companies and households and mobilise private finance. Failure to reform investment environments will likely hamper the uptake of decentralised systems even in areas where they would be the techno-economically least-cost electrification option, and thus likely leave many without electricity.