Affordability constraints can prevent households from gaining access to electricity or from taking advantage of electricity services once a connection is made. An estimated 220 million people in sub-Saharan Africa (around 40% of those without access) would find the basic bundle unaffordable, rising to 400 million for the essential bundle (65% of those without access). Filling this affordability gap would cost an additional USD 2-10 billion per year, via supply-side subsidies to reduce developer costs, demand-side subsidies to reduce consumer costs, or reductions in financing costs.

The cost of capital for electricity access projects is three to four times higher than grid projects in advanced economies, due to higher perceived and actual country-level and project-related risks. If financing was available at rates more in line with advanced economies, this would reduce the cost of electricity access projects by 15-25%, making the basic bundle affordable for 40 million more people.

Supply-side subsidies via grants to developers can also drive down the cost of access. Using grants to cover 30% of capital and operational expenditure on mini-grids and 50% on solar home systems (SHS) would make the basic bundle affordable for 110 million people. While this marks a notable improvement, it also highlights that demand-side support remains necessary, particularly for the poorest households.

Hundreds of millions of Africans are living in vulnerable situations such as informal settlements, displacement settings, fragile and conflict prone states or small islands. These communities have some of the lowest electrification rates on the continent but are often excluded from financing due to their complexity. In many of these settings, decentralised solutions are viable, but higher risks mean public and highly concessional capital will be necessary, particularly to pilot new financing models.

Women play an integral role in electricity access since they are often managers of household energy, as well as consumers, including as entrepreneurs. They face severe barriers to accessing finance, with an estimated USD 42 billion financing gap for women-led businesses on the continent. Improving sex-disaggregated data is key to understanding both supply- and demand-side challenges, as well as introducing tailored financial products such as loans backed by cash flows or moveable collateral.

The impact of concessional capital is maximised when directed to the most underserved communities and to close affordability gaps – roles that other providers are unable to fill. It is crucial to build an enabling environment by improving data availability, supporting policy reform and developing local capacity. To ensure financing is catalytic, investors need to take higher-risk positions, support innovative deal structures, scale up risk mitigation tools, and plan for responsible exit strategies.