Piloting Basic Solar Energy Grants for Equitable Access to Energy

Like many emerging markets, South Africa has a fast-growing urban population, resulting in the proliferation of informal settlements on land often unsuitable for grid electrification. Nevertheless, under South African law, municipalities have a legal obligation to provide basic services, including energy, to all households but prioritising the poor. While existing national policies do allow for alternative (off-grid) energy services, these policies were not initially intended for urban informal settlements and are thus not fit for that demographic. A number of municipalities are thus exploring how to develop their own policies to meet this need. For example, the City of Cape Town is considering implementing a grant for eligible low-income households that do not have grid electricity. The monthly grant could be put toward an energy service of each household's choice. An advantage of such a grant is that it would provide affordable and varied options for consumers, and would stimulate innovation and competition amongst potential service-providers.

Before implementing such a policy the city is seeking evidence to help establish an optimal grant-value that ensures a high level of inclusivity. iShack and Zonke Energy have been providing off-grid solar energy services (via Solar Home Systems and Solar-Towers, respectively) for a number of years in various informal settlements around Cape Town. They have tested a range of financial and operating models, and have shown conclusively that for the South African informal settlement context, private enterprise alone cannot fill the gap of energy access due to a lack of affordability. Thus, some form of state support is needed. In this project a Basic Energy Grant (funded by Energy Catalyst Round 10) will be implemented in one large community in order to demonstrate its effect on inclusivity, as well as build the case for viable business models. iShack and Zonke will collaborate to provide a choice of basic solar energy services. The project will run for two years, during which each participating household will have the benefit of the grant, which they can use towards the purchase of a Solar Home System or access to Solar-Tower electricity. A programmatic community engagement element will support a co-productive relationship with the community as well as promote energy democracy and capacity building, gender equality and inclusivity. Progress and outcomes will be monitored by Future Advisory Ltd who will conduct communications to disseminate the results of the pilot to relevant stakeholders, in particular to municipalities.