To regulate or not to regulate off-grid electricity access in developing countries

As off-grid electrification receives global attention in the Sustainable Energy for All initiative, the role of regulation for this alternative form of electricity delivery requires a careful investigation. This paper asks whether the activity has to be regulated or not. It then tries to find out where regulation can be used and what type of regulation is appropriate. It suggests that for product-type delivery options, there is no justification for regulatory intervention in the sense of utility regulation but such intervention makes sense in the case of mini-grid-based off-grid delivery options. The paper considers the pros and cons of a generic license waiver, a simplified regulatory arrangement and a full-fledged regulatory supervision and suggests that a light-handed approach is appropriate in general to promote the activities of the sub-sector but more formal approaches may be required if the players do not abide by the rules. The paper also highlights some regulatory challenges and issues.