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Tens of millions of people in rural communities across South Asia and sub-Saharan Africa live every day with the overwhelming noise and stench of diesel generators. A massive, and in many markets heavily subsidized, diesel economy has been built up in the two regions in recent decades, mainly due to the failure of state-owned power grids to serve rural businesses and households. And that failure has left people with no other choice but to buy expensive and polluting diesel generators and fuel.
But at a time of increasingly volatile oil prices, innovation has opened up an opportunity to scale community solar microgrids and rooftop solar to provide clean power to rural businesses, households, health clinics, schools and farms.
It’s time to finally phase out the diesel generator and fully embrace the era of solar-powered generation. World leaders gathering at the COP27 climate conference in Egypt next month could help make this transition happen more quickly by doing two things: recognizing the climate relevance of solar microgrids and making microgrids a core part of investment focused on both climate mitigation and climate adaptation.
The problem: Dirty, expensive and volatile diesel
In sub-Saharan Africa, there is more spending on fuel for generators than on the entire power grid, with generators consuming up to $50 billion worth of diesel and gasoline annually. In fact, according to a recent report, at least 17 countries in sub-Saharan Africa have more distributed diesel generation capacity than grid-connected power generation capacity.
Relying on that diesel infrastructure is risky, with market volatility now the norm. Diesel prices have more than doubled this year in Nigeria, for example. Diesel users are struggling to predict their costs, much less afford their fuel.
This further strengthens the value proposition of solar microgrids. Even before the recent spike in diesel prices, researchers from the European Commission’s Joint Research Center and other institutions found that solar microgrids were the more affordable “no-regret option” for providing electricity to 177 million people in Asia and sub-Saharan Africa when compared to diesel generation, and microgrids were nearly competitive with diesel for another 266 million people.
The solution: Solar-powered microgrids
There are strong economic, commercial, environmental and social reasons to support this transition, and the shift is underway, starting in India.
The government of India, which is several years ahead of sub-Saharan Africa in scaling solar energy and therefore a good bellwether, earlier this year announced plans to eradicate the use of diesel from its farming sector by 2024. Agriculture is the second largest consumer of diesel in India, a country that imports 85% of its crude oil. This decision, even if not achieved within the ambitious timeframe put forward, is a huge signal to the global market and has implications not only for irrigation, which is largely powered by diesel pumps, but also agro-processing and cold storage. It creates a big opening for the deployment of solar-powered microgrids.
Even before this announcement, many small and medium-sized businesses in India were adopting microgrids, both to save money and to secure better service in a country with a weak grid and unreliable state-run energy-distribution companies. Other emerging economies can be expected to follow India’s lead.
When microgrids and rooftop solar systems are deployed for rural businesses, small factories, hospitals and farmer collectives, diesel generators come offline. In Nigeria, about 40% of diesel generators in the off-grid communities where microgrid developer Husk Power operates have been made redundant within the first 12 months after new, clean systems are commissioned. Businesses that switched from diesel to solar are also seeing at least 30% savings on their monthly energy bills.
In 2022, several companies involved in the microgrid industry signed U.N. Energy Compacts in which they committed to a variety of climate goals by 2030. For its part, Husk committed to displacing nearly 700 million gallons of diesel generation.
Increasingly, microgrid companies are monetizing avoided carbon from diesel displacement and selling the resulting offsets on the voluntary carbon market. This creates a new revenue stream for the companies as they transition rural economies away from diesel and also helps lower the cost of their energy services.
Added benefits: Climate resilience and cleaner air
But the story is not just one of cutting carbon emissions.
Microgrids are also emerging as an important contributor to climate adaptation and resilience. This cannot be undervalued in India and sub-Saharan Africa, two regions that are especially vulnerable to climate change. Although results are still preliminary, microgrids are proving to be more resilient than both centralized grids and diesel generation to climate shocks such as heat stress, drought, extreme storms and flooding. Based on a framework being developed by the African Development Bank, Husk is currently working to create a baseline for the adaptation benefits of microgrids.
The health implications of transitioning away from diesel are also significant. In sub-Saharan Africa, for example, backup generators are responsible for 15% of all nitrogen oxide pollution, and generators’ emissions of PM2.5, a type of fine particulate pollution, are equal to 35% of emissions from all motor vehicles.
So many reasons to switch to solar microgrids
The pros of replacing diesel with solar generation are multiple:
- Countries greatly reduce the impact of shocks and disruptions in global fossil fuel markets.
- Governments save money by doing away with the need for diesel fuel subsidies and by tapping into private-sector capital to install and manage clean, reliable and affordable rural energy infrastructure.
- Small businesses and farmers save money on energy costs that can be invested in expansion and new employment, and can contribute to local economic growth.
- Communities become healthier by removing poisonous and harmful substances from the air and by gaining access to electricity infrastructure that can withstand climate change while ensuring cooling, irrigation, drinking water and other essential services amid a fast-changing environment.
The World Bank and International Energy Agency have stated clearly that microgrids are the most cost-effective path to rural electrification for the hundreds of millions of people still living without electricity and the many more who live with unreliable power. At the same time, the United Nations leadership has called for half of all climate finance to go to adaptation, with a priority on infrastructure in developing countries. Some of this infrastructure funding must be invested in community solar microgrids.
But it will take up to $200 billion to scale solar microgrids by 2030 and create a world that is free of expensive, polluting diesel generation. Now is the time for governments and their funders to accelerate the end of the era of diesel generation. Solar microgrids have arrived, and it is their time to shine.
Manoj Sinha is the CEO and co-founder of Husk Power, an energy services company that provides renewable power to unserved and under-served rural communities in Africa and Asia.
Joseph Nganga is vice president for Africa at the Global Energy Alliance for People and Planet, an initiative of the Rockefeller Foundation, the IKEA Foundation and the Bezos Earth Fund.