Insurance for energy access: Unlocking economic resilience in rural communities

Access to modern, reliable and affordable energy is essential for development, especially in rural and off-grid communities across sub-Saharan Africa and Asia. Distributed Renewable Energy (DRE) systems are helping close this gap, yet both providers and end users face financial and operational risks that are intensifying with climate change. To strengthen resilience, greater support is needed to expand access to insurance and other financial risk-management tools. Insurance can stabilize incomes, reduce exposure to shocks and improve the financial resilience of households, businesses and DRE companies. However, its use in the energy-access sector remains limited and largely confined to pilots. This report examines how insurance can be integrated into DRE markets to reduce financial shocks, stabilize revenues and support community resilience.

Five promising insurance concepts are assessed against core design principles: affordability, value, accessibility, scalability and alignment with national development goals. Examples include index insurance for end-users, such as a Zambia pilot bundling drought index insurance with PAYGo solar systems, and government-administered index insurance schemes in Uganda that help pool systemic risks. Life and health insurance bundled with PAYGo products in Kenya and Nigeria helps households manage income shocks, while credit-risk insurance protects providers from widespread default. Asset protection for solar equipment further reduces operational losses.

Realizing these opportunities requires coordinated action to close affordability gaps, strengthen data systems, build financial literacy and design trusted, scalable products. This report is intended as a landscape assessment to map emerging opportunities for insurance products linked to energy access and promote further exploration to deploy such financial de-risking mechanisms.