Financing Electrification and Off-Grid Electricity Access Systems

Abstract

This chapter provides a review of financing mechanisms used for energy access in general and off-grid electrification in particular. It reviews the literature on the subject and tries to find answers to issues like whether the funding has been adequate, whether sufficient funding for the future is likely to be available, whether states should take the lead or leave it to the private sector and so on. It also looks at the innovative approaches used in funding and indicates whether small-scale projects can benefit from such initiatives. The chapter finds that in general the state has played an important role in funding infrastructure investments in both developed and developing countries. But many developing countries faced difficulties financially and neglected this for a long time. The gap has been somewhat filled by international donor agencies but their scale of operation so far has been selective and limited and cannot ensure adequate funding for the future. The innovative mechanisms are also unfriendly towards small-scale projects and therefore, do not really provide much hope. The challenge of mobilising finance and ensuring its appropriate delivery and use remains a major issue and would require a co-ordinated effort of all relevant stakeholders.