Recovery of Electricity Sector for Equitable Transition in Yemen

pipeline

Yemen’s electricity sector is in a severe crisis, with generation capacity far below peak demand—especially in major urban centers like Aden—after conflict dismantled the national transmission network into fragmented, weakly connected service zones. Aging infrastructure and urgent rehabilitation needs (including critical transmission lines) further reduce reliability and efficiency, while the Public Electricity Corporation cannot properly maintain generation assets, forcing an expensive and fiscally unsustainable dependence on rented power that still leaves much demand unmet. The situation is most acute in Aden, where very high technical and commercial losses (about 44%), weak revenue collection, and large unpaid public-sector bills undermine financial viability and block investment in maintenance; prioritizing Aden is strategic because it is well-studied and investment-ready, its grid supports neighboring governorates, and reducing its losses and improving commercial operations could deliver outsized fiscal and service benefits—providing a realistic foundation for broader sector recovery.Beyond the urban crisis, the vast majority of Yemen's population in rural areas—nearly 70 percent—lacks access to reliable electricity, hindering basic service delivery and economic recovery. The geographic dispersion and poverty in these regions make conventional grid expansion economically unviable, and previous short-term solutions have proven unsustainable. To address this, a differentiated approach is necessary, transitioning from emergency measures to a long-term, sustainable model. A market-oriented mini-grid program, leveraging Yemen's high solar potential and mobilizing private sector investment through concessional financing, presents a scalable and climate-resilient solution to increase energy access, improve livelihoods, and foster economic development in these underserved rural communities.Drawing upon the foundational analytical work from the World Bank-financed Aden Electricity Master Plan and the mini-grid studies conducted under YEEAP II, the proposed project is a direct, evidence-based response to Yemen's multifaceted energy crisis. The Aden Master Plan identified the severe generation gaps and critical need for network rehabilitation, justifying the project's focus on strengthening the urban grid in Aden to create rapid, fiscally meaningful impacts that stabilize the wider network. Simultaneously, the YEEAP II studies confirmed the unsustainability of conventional grid expansion for rural areas and assessed the viability of alternative models, thus informing the project's dual-track approach. Consequently, the project design incorporates a dedicated, market-oriented solar mini-grid program to provide a scalable and sustainable solution for the Yemen's population in underserved rural communities, directly translating the findings on affordability and private sector engagement into a concrete strategy for increasing energy access.