The BGFA approach
Pillar 1. Incentives and Procurement
The backbone of the BGFA approach is an innovative financing mechanism that offers incentives to companies to close the ‘viability gap’, on a per-connection basis, of the rollout and scaling up of clean energy services in areas that would otherwise not represent viable markets.
Pillar 2. Platform for Market Change
When fully established, BGFA will also work with a range of stakeholders to improve market ecosystem conditions through a combination of capacity building and technical assistance, stakeholder outreach and market intelligence development. During the first phase of the programme in Zambia, this work has been formalised as the Off-Grid Energy Task Force, which is embedded in the Ministry of Energy and led by the Ministry of Energy and the Office of the Vice President, with REEEP providing secretariat services. Since its launch in April 2018, this Task Force has met four times and, among other activities, facilitated a VAT exemption for LED lights, the drafting of a new national mini-grid policy and the initiation of discussions to improve the affordability of off-grid energy solutions. A Market Scoping process is still ongoing in Liberia. Provided the outcome of the Market Scoping and subject to donor approval, the aim is to establish and support a similar platform in Liberia, and to facilitate opportunities for inter-country exchange of experiences between Liberia, Mozambique, Zambia and Burkina Faso.
Pillar 3. Market Information and Analytics
With its aim to reach at least 5 million people in four African countries in the next five years, BGFA has the potential to generate very valuable market intelligence, including data on customer willingness and ability to pay. To capture this intelligence, BGFA will combine detailed market analysis with real-time data on deployment of energy service subscriptions. Once the programme is established, the results will be shared through the Platforms for Market Change foreseen in each of the new countries in addition to the one already functioning in Zambia, to be used to inform investment decisions and policymaking. The data will be gathered and analysed through the custom-built Energy Data and Intelligence System for Off-Grid Networks (EDISON), which will be connected to the selected energy provider companies’ internal systems and provide live information on energy service subscriptions sold, payments, upgrades and warranty events, among other data points. This will allow the verification of the results of BGFA in real time, and the data will have potential to de-risk future investments in concerned countries’ off-grid energy markets, and to help guide policymaking. The progress and impacts of the first phase in Zambia can today be followed live on EDISON’s public dashboard (edison.bgfz.org).