Mapping the capital landscape of health facility electrification – new report launched
A total of approximately USD 2.6 billion is needed to sustainably electrify health facilities across seven key countries in the Global South, i.e, India, Nigeria, Sierra Leone, Malawi, Zambia, DRC, and Kenya, according to the latest report, Health Facility Electrification Capital Landscape, launched by Sustainable Energy for All (SEforALL) and Shell Foundation in collaboration with Odyssey Energy Solutions and CrossBoundary Advisory.
The report, supported by Power Africa and the UK Aid-supported Transforming Energy Access initiative (UK TEA), maps the landscape of capital for health facility electrification in important emerging markets, and includes a systematic analysis of the demand, current supply and capital provided so far to power health facilities.
COVID-19 showed us the urgent need for accessible and reliable healthcare. With the predicted increase in the frequency of such diseases and the rise in global temperatures, it has never been more important for health facilities to be run by clean and reliable energy to be able to deliver quality healthcare. The study points to the fact that unreliable electricity leads to the loss of nearly half the vaccine supply and the failure of 70 percent of medical equipment in Africa.
“Investing in powering healthcare is therefore critical and urgent. Our study shows that to electrify health facilities in the seven countries, approximately half the total global investment required for health facility electrification will be needed,” said Rahul Srinivasan, Senior Energy Specialist at SEforALL leading this study. “Of this, USD 1.4 billion is needed for public facilities and USD 1.2 billion for private facilities. Segmenting the total investment need across public and private facilities supports effective intervention planning, and helps us better understand who the ultimate payor for the newly installed system will be, which informs the bankability of projects.”
For instance, the government’s ability to pay upfront or for ongoing operation and maintenance in public health facilities is constrained by several factors, including under-investment in healthcare, tighter budgets, and dependence on donor-backed project-based funding. This limits the private sector’s ability to invest in public facilities. The challenges of private facilities are slightly different. While privately run facilities do not have to wait on bureaucratic government sponsorship, they too struggle to present bankable power projects due to unprofitable business models, inability to pay upfront, and limited demand for energy stemming from limited capacity to pay.
So how much money goes into powering health facilities currently and where is this coming from? The report reveals that a total investment of USD 175-250 million has been made over the past seven years in the seven countries studied, and most of this funding has been in the form of capital grants (approximately 95 percent) from donors. Factoring in the same level of investment, say USD 250 million, over the next seven years, there will be a looming gap of at least USD 2.35 billion for health facility electrification by 2030.
“It is evident that private sector capital needs to complement public sector resources and donor grants to bridge this large gap”, said Rob MacIver, Infrastructure/Energy Innovation Adviser at the Foreign, Commonwealth & Development Office. “The good news is that new approaches are being tested which could unlock commercial capital investing in distributed energy. The FCDO stands ready to help partners address this issue.”
Several donors and multilateral institutions are testing out innovative financing structures to help mitigate risks for the private sector to invest in the powering healthcare space. The most active donors and multilateral institutions in this space have also committed to electrify close to 100,000 facilities across the globe. This may present an opportunity for partnerships, particularly to support and seed new models for investment into electrifying health facilities.