Residential Welfare-Loss from Electricity Supply Interruptions in South Africa: Cost-Benefit Analysis of Distributed Energy Resource Subsidy Programs

Abstract

Sub-Saharan Africa has one of the highest population growth projections among major global regions but one of the lowest electrification rates. Only 47% of households access electricity, while the population is expected to double to 2.2 billion within 30 years. Without improvements, this would leave over 1 billion people in the region without electricity. Those countries that do have well-developed electrical grids still often face a second major obstacle: grid reliability. South Africa provides grid electricity to over 90% of residents, but—like many of its regional neighbors—suffers chronic electricity shortages. While households have access, they must live around shortages, which occur regularly and can last for hours. The costs of adjusting can be substantial, especially for low-income households that depend on electricity. Reliable electricity maintains good air quality, helps improve literacy rates, increases free time for household members to devote to leisure and productive activities, and prevents emergency expenditures during a shortage, among many other benefits. With each hour of outage, these benefits slip away. Distributed energy resources, or DERs, (e.g., solar panels and batteries) offer households a solution by providing off-grid electricity resources to temporarily bridge the gap in electricity supply during a grid shortage. Off-grid electricity resources have already grown rapidly as a cost-effective solution to electricity access and reliability in the Sub-Saharan region, and more growth is needed to help keep supply at pace with future population growth. More research is needed to understand the benefits of off-grid technologies and how to deploy them to households in an affordable and scalable way.