THE ROLE OF END-USER SUBSIDIES IN CLOSING THE AFFORDABILITY GAP

This policy brief by Sustainable Energy for All (SEforALL) examines the use of end-user subsidies to bridge the affordability gap for electricity access, specifically focusing on solar home systems (SHSs). It analyzes methodologies for calculating affordability gaps, outlines key design attributes for subsidy programs, and compares case studies from Ghana, Uganda, and Togo to identify best practices and data requirements for improving energy access in high-impact countries.

• Global electricity access remains a challenge, with 759 million people lacking basic access as of 2019, 75 percent of whom reside in Sub-Saharan Africa.
• Providing basic off-grid electricity products, such as solar home systems (SHSs), to 617 million people globally would require between USD 6.6 and 11 billion in financing, with up to USD 3.4 billion needed as public subsidies for end users.
• The 'Taking the Pulse' methodology assesses the affordability gap by comparing the percentage of household consumption spent on electricity to the cost of a suitable system, assuming an affordability threshold of 5 percent of total household income.
• The World Bank's Off-Grid Solar Market Trends Report methodology introduces a category called 'affordable at a stretch,' where products cost between 5 and 10 percent of monthly expenditure for pico products and up to 15 percent for larger systems.
• End-user subsidies can cause market distortion if subsidy thresholds are inaccurate or beneficiaries are poorly targeted, potentially leading to consumers delaying purchases or the occurrence of arbitrage and leakage.
• Ghana's 'Improving Rural Energy Access through Solar Home Systems' programme was successful due to accurate subsidy thresholds and targeting, providing SHSs and lanterns at subsidies of 50–60 percent to rural households.
• Uganda's Energy for Rural Transformation (ERT) programme Phase 2 struggled due to complicated monitoring, delayed subsidy payments, and a pricing mismatch where subsidized units remained unaffordable for many households.
• Togo's CIZO programme utilizes an innovative digital model leveraging mobile money and a government registry to provide monthly subsidies of USD 4 to eligible rural customers.
• There is a need for a new, harmonized energy burden threshold specifically for developing and emerging economies, as current thresholds (5-6 percent) are often based on outdated or US-centric on-grid data from 2003.
• Policymakers are encouraged to collect disaggregated household-level electricity consumption data by gender to address the finding that male-headed households utilize off-grid products more than female-headed households.

APA

Richmond, M., Pinko, N., & Azhar, H. (2022). THE ROLE OF END-USER SUBSIDIES IN CLOSING THE AFFORDABILITY GAP. Sustainable Energy for All. https://www.seforall.org/system/files/2022-03/End-User-Subsidy-March-2022.pdf

Chicago

Richmond, Morgan, Nicole Pinko, and Haysam Azhar. THE ROLE OF END-USER SUBSIDIES IN CLOSING THE AFFORDABILITY GAP. Sustainable Energy for All, 2022. https://www.seforall.org/system/files/2022-03/End-User-Subsidy-March-2022.pdf.

Wikipedia

{{cite report |last1=Richmond |first1=Morgan |last2=Pinko |first2=Nicole |last3=Azhar |first3=Haysam |title=THE ROLE OF END-USER SUBSIDIES IN CLOSING THE AFFORDABILITY GAP |publisher=Sustainable Energy for All |date=March 2022 |url=https://www.seforall.org/system/files/2022-03/End-User-Subsidy-March-2022.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{richmond2022role, author = {Richmond, Morgan and Pinko, Nicole and Azhar, Haysam}, title = {{THE ROLE OF END-USER SUBSIDIES IN CLOSING THE AFFORDABILITY GAP}}, institution = {Sustainable Energy for All}, year = {2022}, month = mar, url = {https://www.seforall.org/system/files/2022-03/End-User-Subsidy-March-2022.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }