Energy pathways: alternative visions for transitioning away from Fossil Fuel Generators

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Convenience at a cost: the clean transition away from Fossil Fuel Generators

The transition away from fossil fuel generators (FFGs) – both diesel and petrol varieties – is both an urgent necessity and a complex challenge. FFGs are a longstanding, recognised – albeit polluting and noisy – source of power for millions of people around the world, particularly in low income and lower-middle income countries (LICs and LMICs) where grid infrastructure is often weak, unreliable or entirely absent. Displacing FFGs requires more than just identifying cleaner technologies; it demands a strategic, context-sensitive approach to the transition that responds to the diverse barriers faced in different regions.

Compared to other technologies, FFGs remain the most widely used and accessible due to their availability, relatively low upfront costs, well-established supply chains, and minimal space requirements. Their familiarity among end users and ease of installation makes them a practical choice for meeting energy access needs. However, their high operating and maintenance costs, inefficiency, and environmental impact underscore the need to reduce reliance on them over time.

In contrast, renewable technologies are quickly advancing to become viable alternatives to FFGs. Solar generators and battery backup systems offer lower operating costs, higher performance, and quieter, cleaner energy solutions. Micro-wind turbines show potential but face scalability and infrastructure challenges, while emerging technologies like hydrogen fuel cells require significant further development and infrastructure to overcome cost and technical barriers before becoming viable alternatives.

In this context, the ZE-Gen initiative was launched as a collaborative, cross-sector initiative aimed at the replacement of polluting and expensive FFGs by accelerating the transition to renewable energy-based alternatives (‘zero-emission generators’, or ze-gens). It takes a system-wide approach to tackle barriers, accelerate innovation and fund activities to build a thriving, competitive market for renewable alternatives in Sub-Saharan Africa, South Asia and the Pacific Islands. With this ambitious agenda in mind, ZE-Gen is preparing a comprehensive report on the barriers of ze-gen deployment and the actions the sector can take to overcome these and achieve a sustainable energy transition. Before focusing on zero-emission generators, however, the programme analysed the full range of energy transition pathways available to tackle the challenge of unreliable access to electricity of billions of people. This blog provides a macro-view of these energy transition pathways, including investing in the grid, various distributed renewable energy alternatives (DREs) and interim mitigation measures.

Transition pathways away from FFGs

Transition pathways are distinct yet complimentary routes to eliminating reliance on FFGs. While the specific approach will vary by context, each pathway addresses a different aspect of the FFG challenge. In some regions, the most effective strategy may be to invest in grid expansion or improving service reliability. In others, DREs may provide the ideal pathway.

The two pathways to energy transition away from FFGs are:

Investing in the grid to eliminate the need for FFGs altogether, achieved through expansion and strengthening of current grid infrastructure and large-scale generation.
Scaling-up and deploying DREs to support reliable energy access in both off-grid and weak-grid contexts, including a diverse set of solutions tailored to local conditions, such as standalone solar systems, mini or micro-grids, battery systems and others.

These pathways are not mutually exclusive and must be pursued in parallel to reflect the diversity of energy needs, infrastructure gaps, and market conditions across different localities and contexts. Efforts to curb FFG use and reduce fuel consumption are considered short‑term mitigation measures.

Pathway 1: Investing in the grid

Upgrading the grid could render three in four FFGs redundant,¹ but a lack of investment creates a bottleneck for the transition. Currently, 80% of global grid investment is concentrated in advanced economies and China.² Coupled with rising global energy demand³ and the urgent need to integrate more renewable energy into the grid to align with nations’ climate targets, this lack of investment across LICs and LMICs is of great concern. In Africa, the disparity between required investment and current investment is stark: annual investments must reach $50 billion by 2030⁴, a fivefold increase from the $10 billion invested 2024.⁵ Projections indicate that simply maintaining the status quo of energy services in Nigeria, the country with the world’s largest energy access deficit, will require an investment of approximately $100 billion in grid infrastructure over the next two decades.⁶

There are two distinct ways grid investment can be considered:

Grid strengthening would reduce the need for backup power and shift the financial burden of providing reliable power away from consumers. However, a recent World Bank report revealed that more than half of utilities in the studied LICs and LMICs are unable to cover their operating and debt service costs.⁷ High operational expenditure, low tariffs, transmission and distribution losses, inefficient payment collection, and inadequate planning not only drain public resources but also deter private investment. This is particularly problematic given that three quarters of global energy investments come from the private and commercial sectors.⁸
Extending the grid could provide more reliable access to many but may not be the most viable in all settings. Achieving universal electrification via the grid can be costly, with connection costs rising significantly in remote areas, particularly for populations living on islands separated from the main grids. In the Philippines, a more than 7,000-island archipelago, the dispersed population makes universal grid connection economically infeasible at present; as such, roughly 10% of the country’s households remains without electricity.⁹ In lieu of grid supply, off-grid FFGs in Philippines account for an estimated 97% of electricity generation, versus 61% for on-grid areas.¹⁰ Similarly, in Ghana, extending the grid to isolated, rural communities is around four times less cost-effective than reaching less remote, near-grid areas.¹¹

While investment in renewable energy-powered grids across LICs an LMICs is essential for reducing fossil fuel dependence, improving energy access, and supporting long-term decarbonisation, grid expansion alone cannot fully replace FFGs in all contexts. Complementary solutions – such as DREs, hybrid mini‑grids, and storage – are required to provide reliable, clean energy that matches the resilience and immediacy traditionally offered by FFGs.

Pathway 2: Scaling-up and deploying DREs

In the absence of grid upgrades, various DREs can be deployed effectively to suit varying contexts and energy demands currently served by FFGs. DREs present substantial benefits across various use cases, such as improved reliability, cleaner air and health benefits, reduced operating costs and alignment with global climate goals. However, the suitability and scalability of these alternatives vary widely depending on the context.

DREs are highly relevant for the estimated 3.5 billion people living in weak-grid settings¹², where three-quarters of FFGs across developing economies are used to compensate for unreliable grid infrastructure¹³. Rather than acting merely as a stopgap where grid upgrades are delayed or unfeasible, DREs can serve as a strategic tool to strengthen the performance and resilience of the grid itself.¹⁴ Deploying a combination of DREs in weak grid settings (normally urban or peri-urban areas) can reduce overall demand from the electricity grid (especially at constrained peak times), reducing transmission and distribution losses and ultimately reducing the frequency and severity of blackouts and the associated socio-economic disruptions and impacts. By bringing power closer to the point of use, DREs can alleviate strain on the grid and help build more resilient, sustainable energy systems.

Off-grid populations also stand to benefit significantly from DREs. Around one in four FFGs globally are used in off-grid settings, either as standalone systems or within mini-grids. Replacing these with DREs can deliver cleaner, more reliable and cost-effective power. According to the World Bank, off-grid solar and mini-grids are the least-cost solutions for providing electricity access to populations where grid extension is not financially viable.¹⁵

DRE technologies offer a diverse set of solutions that can be tailored to local conditions, enabling communities to meet their energy needs reliably while reducing dependence on FFGs and enhancing energy security. These solutions include:

Standalone solar systems: Currently, 561 million people are estimated to have access to electricity via off-grid, standalone solar energy kits, such as solar lanterns and solar home systems of varying sizes and capacities.¹⁶ Standalonesolar systems can provide immediate, cost-effective solutions to meet current levels of demand, particularly for low-income households that can only afford, or at present require, limited electricity use. These systems can also act as effective interim solutions which can later be integrated into eventual grid extension or mini-grid projects. In addition, off-grid solar can help stimulate future demand, ensuring that in circumstances where households, businesses, etc., eventually receive grid connections, they consume sufficient levels of electricity to support the financial return of infrastructure investments, which, in turn, reduces dependency on government subsidies to cover the cost of low demand.
Mini- or micro-grids: It is estimated that 48 million people around the world currently have access to electricity through mini-grids – small groups of connected generators typically serving villages or clusters of homes, businesses and other use cases.¹⁷ They are powered by a mix of renewables (e.g. solar, wind, hydro) and, in some cases, FFGs, either as the primary source of power in refugee camps or in hybrid configurations alongside renewables. Mini-grids are particularly well-suited for communities with higher energy demand, including productive use cases such as agro-processing and manufacturing. However, high upfront capital costs and regulatory barriers limit the scale of mini-grid deployment in emerging and developing economies.¹⁸
Grid integrated or battery back-up systems: For households and micro‑entrepreneurs operating in weak‑grid settings, grid‑integrated battery back‑up systems provide a practical way to maintain reliable power for essential appliances and income‑generating activities. These systems can supply energy during grid outages. Behind‑the‑meter battery systems are particularly valuable for small shops, home‑based enterprises, and service providers, where they can buffer peak loads, reduce energy costs, and ensure continuity of operations during blackouts. As battery technologies improve – with longer lifetimes, reduced costs and higher efficiency – their suitability for distributed, consumer‑level use continues to increase, helping expand access to clean, dependable energy across low‑income and micro‑enterprise markets. Such systems can be combined with solar to create a flexible solution. Their suitability ultimately depends on the grid providing enough reliable uptime to recharge the batteries sufficiently for daily use.
Battery rental or ‘energy as a service’ models: Battery rental and “energy‑as‑a‑service” models are becoming increasingly relevant in off‑grid and weak‑grid markets, offering users access to reliable electricity without the financial burden of purchasing a full battery system upfront. These models typically allow households or businesses to rent portable or stationary batteries that can be charged from solar systems or local charging hubs, improving affordability and supporting the adoption of clean energy technologies.

Mitigating FFG impact

It is important to acknowledge the role of intermediary measures aimed at mitigating the social, health, environmental and financial impacts of FFGs currently in operation. These include:

Promoting the use of energy-efficient appliances powered by FFGs to lower overall energy demand, thereby reducing runtime and fuel consumption. Improving the efficiency of appliances in off‑grid and weak‑grid settings is both a practical and forward‑looking investment. Energy‑efficient devices ease pressure on scarce and often unreliable power supplies, allowing households and enterprises to meet their needs with far less fuel and far fewer generator hours. This not only cuts operating costs and emissions, but also paves the way for a smoother transition to renewable energy: when demand is lower, solar‑ and battery‑based replacements can be smaller, more affordable, and more dependable. In essence, efficiency serves as a quiet enabler – reducing today’s burdens while expanding tomorrow’s clean‑energy possibilities.
Pursuing hybrid systems that combine renewable energy sources with FFGs to reduce fossil fuel consumption by allowing renewables to meet demand when available, while utilising FFGs as backup during periods of low generation. These systems are particularly relevant for mini-grids and isolated communities, including remote regions and islands, where grid access is limited or entirely unavailable.¹⁹ While hybrid systems can play an important transitional role, they continue reliance on FFGs, even as a backup source. This prolongs exposure to volatile fuel prices, supply-chain disruptions, and ongoing emissions. In many cases, the infrastructure required to maintain fossil-based components locks communities into technologies that will eventually need to be replaced. Ultimately, fully renewable, storage‑supported systems offer far greater sustainability, resilience and cost stability. Accordingly, hybrid configurations should be viewed as stepping stones rather than endpoints on the path to a decarbonised energy future.
Using biodiesel and bioethanol as less carbon-intensive fuel sources for powering FFGs.²⁰^,21 Although these fuels produce fewer pollutants than traditional fossil fuels during combustion and can be manufactured using renewable energy sources, concerns remain regarding the expansion of biofuel use, including deforestation, biodiversity loss, and the displacement of food crops due to the conversion of cropland for biofuel production.²²
Improving the operational efficiency of FFGs to reduce fuel consumption and emissions. This involves ensuring they run within optimal load ranges²³ and are regularly maintained through cleaning and filter replacement.²⁴ However, the efficiency gains from such measures are relatively small and short‑lived, offering limited climate or cost benefits compared to investments in cleaner, more sustainable alternatives. Funds dedicated to finding cleaner pathways forward cannot be justified for such measures unless they deliver clear, broader benefits – such as safeguarding critical services or there is community wide benefit.

While these measures can help mitigate the impact of FFGs, they do not offer sufficient long-term alternative pathways. Relying on such measures risks deepening the existing structural dependence on FFGs to meet the energy needs of millions of people around the world. Therefore, ZE-Gen focuses on permanent, systemic transitions that eliminate reliance on FFGs altogether.

Why Distributed Renewable Energy?

DREs offer a compelling pathway for reducing reliance on FFGs, but their ability to fully replace them depends on more than the technology itself. ZE‑Gen is prioritising DRE because it presents a scalable, climate‑aligned, and economically transformative alternative for weak-grid and off-grid markets – particularly where energy insecurity is both persistent and costly. However, achieving widespread adoption requires an honest assessment of the constrains that currently limit their deployment.

Several factors continue to shape the viability of transitioning from FFGs to DREs. While high upfront costs of renewables along with the high cost of capital and financing remain the most visible barriers, other factors such as user preferences, limited market maturity, gaps in local supply chains, regulatory uncertainty and inconsistent policy signals also slow uptake. Data gaps – particularly around demand profiles, actual generator usage patterns and lifecycle costs – make it harder for developers, financiers and policymakers to design DREs that reliably compete with FFGs on performance and convenience.

In addition, a huge challenge is matching FFGs in their ability to serve a variety of customer needs. FFGs provide on-demand, instant power; many households and businesses rely on that guarantee. For DREs to replace FFGs, they must match this reliability across all sectors and use cases. Whether keeping life‑saving medical devices powered during a nighttime blackout, or ensuring a local barbershop can continue operating during load shedding, DREs must deliver consistent, predictable energy at all hours, in all conditions. Meeting this demand requires advances not only in generation, but in storage, hybridisation, system design, and long‑term service models.

As ZE‑Gen continues to evaluate alternatives in weak‑grid environments, it is clear that the transition will not hinge on a single technology but on integrated, resilient systems tailored to the realities of end‑users – not idealised ones. The next ZE‑Gen in‑depth report will explore in detail the barriers that constrain deployment and adoption of such “ze‑gen” systems and outline the mechanisms – policy, financial, technological and behavioural – needed to overcome them and accelerate the shift away from FFGs for good.

References

¹IFC (2019) ‘The Dirty Footprint of the Broken Grid’

²Ibid.

³IEA (2024) ‘World Energy Outlook 2024: Analysis (figures taken from Stated Policies Scenario (STEPS))

⁴IEA & AFDB (2021) ‘Financing Clean Energy in Africa’

⁵IEA (2024) ‘World Energy Investment 2024: Overview and key findings’

⁶International Trade Administration (2023) ‘Nigeria Country Commercial Guide: Electricity. Power Systems and Renewable Energy’

⁷The World Bank (2024) ‘The Critical Link: Empowering Utilities for the Energy Transition’

⁸IEA (2024) ‘World Energy Investment 2024: Overview and key findings’

⁹Republic of the Philippines: Department of Energy (2023) ‘2023-2032 National Total Electrification Roadmap’

¹⁰ERIA (2018) ‘Distributed Energy System In Southeast Asia. Chapter 5: Distributed Energy System in the Philippines’

¹¹Copenhagen Consensus Center (2020) ‘The Costs and Benefits of Electrifying Rural Ghana’