Helping utilities boost energy access and the quality of energy services

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Utilities are crucial in building modern economies and reversing climate impacts Utilities are crucial in building modern economies and reversing climate impacts | © aydinmutlu, Getty Images

Utilities are the backbone of power delivery. They generate, transmit, and distribute the electricity that lights up homes and powers businesses and play a crucial role in building modern economies and reversing climate impacts.  

The 130-year-old model of electric utilities, however, is facing new challenges. As decarbonization has become a global priority, more countries switch to lower-carbon energy to achieve more sustainable development.  For existing thermal powerplants, this means reducing their carbon footprint, introducing energy storage systems for grid optimization, and finding innovative ways to shift load to times when the most low-carbon electricity is available. New technology, such as rooftop solar systems and battery storage systems, is driving decentralization in the sector. And digitalization is making power systems more complex and data-intensive.

The rapid pace of change has been turbulent for electric utility managers, especially in developing countries. Many already face chronic challenges from financial insolvency to operational failures that literally leave the world's most vulnerable populations in the dark. The World Bank estimates that weak utilities and associated power losses take away up to 4 percent of GDP in some countries.  This hampers development across the board and affects households, schools, hospitals, and digital infrastructure. It also creates severe obstacles for small businesses and entrepreneurs, impacting jobs and livelihoods. More than 40 percent of firms in the least-developed countries report the lack of electricity as a major constraint to their activities.

As countries are beginning to recover from COVID-19, their utilities need to be drivers of economic growth and poverty reduction.  To help countries step up to the task, the World Bank launched this week, a new initiative called Utility of the Future—Knowledge Exchange Platform, or UKEP. The initiative is also supported by ESMAP, a World Bank Trust fund dedicated to decarbonization and access to energy and the Quality Infrastructure Investment (QII) Partnership.

UKEP is a knowledge exchange platform that will help stakeholders in the power sector—including utilities, energy sector institutions, regulators, system operators, the private sector, and World Bank teams—identify best practices, improve operational efficiencies, stimulate businesses, and accelerate technological innovation.

Galvanizing collaboration in the power sector

The platform is open to electric utilities from developing and developed countries, including those engaged in Bank-funded projects in the early stages of technology adoption and business innovation.

It also includes companies that have succeeded in applying technology. Integrating renewable energy technologies, automation, and cybersecurity will be needed to improve reliability and expand electricity access to the last mile. This integration is crucial as the pace of innovation and the falling cost of digital technologies (such as 5G), coupled with the urgent need to decarbonize, are reshaping the power sector at lightning speed.

Rooftop solar panels illustrate some of these changes. This new technology is powering homes while providing a revenue stream from selling excess capacity to the grid. Battery storage provides backup power during grid outages to reduce electricity costs and dependence on noisy and polluting diesel generators. Power lines are now being inspected with drones, which identifies issues quickly.

For example, in India, the largest power distributor in New Delhi, BSES Rajdhani, aggregated solar power capacity to benefit its customers and attract investment. It connected solar photovoltaic systems from rooftops and integrated them with the power grid through a single metering point. This allowed the households in the community to share the benefits, such as lower electricity bills. Distributed solar photovoltaic systems are also well suited to small island nations, which are vulnerable to extreme weather events and supply shocks. And in Rwanda and Zanzibar, drone technology is being used to inspect roads, bridges, and power infrastructure

UKEP will become increasingly valuable to help expand electricity access

Through its global network of experts, UKEP will help electric utilities better navigate the technological change and business innovations that are transforming the power sector landscape and underpin the energy transition.  It will help share lessons of experience from utilities that have tackled the challenges facing the sector, making the journey easier for those beginning their transformation.

In addition to the launch event, UKEP is planning a series of events to enable the transfer of cutting-edge knowledge. These include events, such as round tables, seminars, workshops, and field trips. It will also produce tools such as publications, "how-to" blueprints, and roadmaps.

UKEP will also leverage databases of utility performance that the World Bank also supports. In sub-Saharan Africa, a data platform called UPBEAT—to be launched later this year—provides benchmarks to compare utilities' financial, operational, and governance performance and track their progress. Related to UPBEAT is a new global database that covers the remaining regions. The two systems will eventually be integrated.

Electric utilities are critical for meeting Sustainable Development Goal 7—ensuring access to affordable, reliable, sustainable, and modern energy for all.  The World Bank is playing its part by supporting electric utilities in their transformation journeys with financing and advisory services that increase their operational efficiency and build their institutional capacity.

The challenges facing the sector today make better knowledge exchange between regions especially urgent. In that regard, UKEP promises to be an essential part of the solution.

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Demetrios Papathanasiou

Global Director for the World Bank's Energy and Extractives Global Practice

Ani Balabanyan

Energy & Extractives Global Knowledge Uni, Practice Manager, World Bank

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