Papua New Guinea is facing an electricity access crisis. Only 14% of its population has access to the grid, and even those connected experience unreliable and costly power. With rugged terrain, scattered rural communities and a financially stressed national utility, extending the central grid to meet the government’s 2030 electrification target of 70% will be challenging.
Decentralised solar systems, whether individual home kits or small-scale mini-grids, offer a scalable, cost-effective solution to PNG’s electrification challenge. Solar technology is getting cheaper and PNG has abundant sunshine. What is needed is the institutional, financial and technical ecosystem to make decentralised solar work at increased scale.
In a new paper, we explore why PNG’s grid has struggled to expand, what role decentralised solar could play and how other countries have overcome similar challenges. We then outline key steps PNG can take to turn decentralised solar from a promising technology into a viable nationwide electrification solution.
PNG Power Ltd (PPL), the national utility, is struggling. It operates an ageing grid, sells power below the cost of production and faces payment arrears from government departments. Outside investors are wary of engaging with PPL due to poor payment security and the lack of sovereign guarantees.
PNG’s power sector suffers from fragmented oversight, complex land-tenure arrangements and regulatory uncertainty. Independent power producers are discouraged from investing in grid-based expansion by legal grey areas, foreign exchange shortages that affect equipment imports and profits, and a procurement system that lacks transparency.
Extending the grid to rural areas is expensive. Building power lines through mountainous terrain is difficult and capital costs for power plants in PNG can be two to three times higher than in comparable countries. Research shows that villages located just five kilometres from an existing power line can often be served more cheaply through solar.
Decentralised solar avoids many of the grid’s problems. There is no need for transmission lines, no fuel logistics and no dependence on a struggling utility. With PNG’s high solar potential, a basic home system can provide lighting, phone charging and power for small appliances for far less than the lifetime cost of running diesel generators or using kerosene appliances.
Decentralised systems that incorporate batteries also build resilience. When the grid power suffers a “black-out”, solar-powered systems keep the lights on. And because systems can be expanded incrementally, villages can start small and scale up as needs and resources grow.
This approach is already in use. About half of PNG’s total electricity generation is already off-grid, mostly diesel systems run by mines, agribusinesses and institutions. The challenge is extending this model to the broader population, especially in rural communities with limited cash income and low technical capacity.
Decentralised solar could play a major role in expanding energy access across PNG, particularly in remote areas where grid extension is unlikely. But progress has been slow, held back by a mix of financial, regulatory, technical and community-level challenges. A more coordinated approach that draws on the experience of contemporary countries could help unlock the sector’s potential.
Affordability remains one of the biggest barriers. A typical solar home system costs between US$500 and US$700, a price that’s out of reach for most rural households without financing options. In Kenya and Tanzania, mobile money platforms enabled pay-as-you-go (PAYG) solar systems to reach millions of users, spreading costs over time in manageable amounts. In contrast, PNG’s limited mobile money infrastructure and logistical difficulties have made it harder to apply similar models. To improve access, the government could support PAYG providers through targeted incentives, reduce remaining import duties on solar products and encourage local banks and microfinance institutions to offer loans for solar purchases. Payroll savings schemes, where urban workers finance systems for their home villages, could also provide an innovative way to connect city income with rural energy needs.
Finance alone, though, is not enough. Across the Pacific, including in PNG, many donor-funded solar systems have failed within a few years due to a lack of maintenance. Batteries wear out, components break and there are often no trained technicians available to undertake repairs. Tuvalu offers a useful example: long-term sustainability there has depended on regular maintenance and strong community involvement. PNG needs to follow a similar path by establishing a national maintenance network, supported either by the public or private sector, and ensuring that maintenance plans are built into every installation from the beginning. While PNG has adopted the Lighting Global standards to ensure product quality, enforcement has been limited and technician training remains underdeveloped.
Clear regulation is another essential piece of the puzzle. At present, PNG’s National Energy Authority has drafted an off-grid regulatory framework but it has yet to be approved. This leaves companies unsure whether they’re operating legally, how to set tariffs and whether their systems will be protected if the main grid later reaches their service areas. In India, a supportive policy environment has helped scale up rural mini-grids, with rules that specify how these systems will be treated as grid infrastructure expands. PNG could adopt a similar approach, providing legal certainty for investors while protecting community systems from being abandoned or dismantled.
Land access is another important consideration. Even small solar installations need land and with 97% of PNG under customary ownership, developers must negotiate with local landowners — often a complex and time-consuming process. Projects that don’t build trust early on risk being delayed or derailed by disputes. Successful initiatives in other countries, such as Bangladesh’s Infrastructure Development Company (IDCOL) program, have shown the value of community engagement and local partnerships. IDCOL combined donor funding with microfinance and a strict quality assurance regime to deploy over four million solar home systems, in part because it worked closely with users and treated them as customers, not just beneficiaries.
Ultimately, all of these issues — finance, maintenance, regulation and community involvement — are interconnected. Making systems affordable won’t deliver results if they break down within a year. Good quality equipment still needs policy support to operate at scale. And no regulation can succeed if communities aren’t engaged and supportive. The experience of other countries shows that with the right mix of financing models, long-term support, clear rules and genuine community involvement, off-grid solar can thrive.
Decentralised solar energy is not a silver bullet. However, it is currently the best solution to push PNG towards widespread electrification in the next decade. If the right enabling environment is created to allow the industry to grow, solar can transform lives in rural PNG. It can improve health outcomes by powering clinics and reducing indoor air pollution (from kerosene lighting), enhance education by enabling evening study with proper lighting, and unlock economic opportunities through phone connectivity and electric tools. For PNG, the challenge now is not to invent something new but to apply and adapt these proven solutions in ways that fit its unique context.
I totally agree with Anura. The article is so hung up on solar and fails to recognise the potential of mini hydro schemes in PNG. A Decentralised Electricity Supply (DES) Policy workshopped jointly by USAID-PEP, IFC and NEA to stakeholders in 2023 and 2024 appears to have flamed out largely because of fears from PPL loosing its loss making isolated grids to Concession type arrangements or entirely to reputable private sector operators and PPP arrangements between the Provincial Governments and private sector operators. NEA needs to revive the DES policy and push for its adoption ASAP as maintaining the status quo is simply not an option.
I have worked on several electrification projects in PNG. Sad to see that many of them did not take off due to shortcomings in funding and sustainability issues. I am fully aligned with your assertion that PNG’s rural electrification programs should be different from grid connection. Small-scale and independent mini-systems based out in scattered communities would be the sustainable solution. In this regard, solar systems and mini-hydro schemes should be prioritized. Apart from a few scattered solar systems based in Christian centres far out in the woods, there is hardly any emphasis on solar power. In contrast, mini-hydro systems are totally lacking from the land scape filled with natural streams. These two systems offer a high degree of resilience not dependent on complex land-tenure related issues. I would like to add mini-hydro systems that were not mentioned in this article. In remote and rural Pakistan for instance, 100% of households in water-deficit areas are supplied with individual mini-solar systems. Our extensive field work in the country reveals that almost all have solar power. In terrain where streams are abundant, mini-hydro schemes have taken over as the source of energy supplying both day and night. The writers of article are right that solar has not spread fast enough in rural PNG. On the other hand, mini hydro schemes are totally absent. These gaps are partly due to the focus of funding agencies which almost entirely are aligned towards PNG Power grid supply or in a few cases large hydro power schemes. What is important is reliance on individual or community schemes rather than the alienation towards public agencies as the modality of ownership. The public systems face a number of challenges including land owner rights issues whilst individual and community-owned systems do face none. PNG’s energy challenge is not just on electrification. We need a macro focus on all energy needs including cooking and other domestic chores. In this regard, attention is needed on fuelwood-efficient stoves that not only do save energy by as much as 50=70% but also a sustainable solution to deforestation. India, several countries in Africa and to a lesser extent in Pakistan have successfully implemented programs for introduction of wood efficient stoves that work very well.