As economies and populations grow, standards of living improve for billions of people, and with it the need for energy continues to rise. Or as World Bank Group President Dr. Jim Yong Kim put it “energy is a critical part of boosting prosperity and eradicating poverty.” The world’s center of gravity is shifting more and more toward emerging markets where primary energy consumption is expected to mirror the growth in global population. Across the world, almost 1.3 billion people still do not have access to modern sources of energy and use kerosene lamps and other hazardous and polluting alternatives for lighting such as solid fuels. It is this lack of access to modern energy services that defines ‘energy poverty’.
According to the most recent estimate from the IEA, 18% of the global population lacked access to electricity in 2011. In this regard, the IEA explains that “while the number of those without electricity declined by 9 million from the previous year, the global population increased by about 76 million in 2011, (…) to top 7 billion.” Most importantly, the relatively modest decline in those lacking access to electricity is skewed by the fact that in many affected regions energy poverty stagnated at best as population growth outstripped improvements in access to electricity.
The chart below shows that people without access to electricity live predominantly in the Southern Hemisphere such as in sub-Saharan Africa or developing Asia. Meanwhile, Brazil’s successful ‘Luz para Todos’ (Light for All) rural national electrification program, which started in 2003, has to date registered an impressive expansion of access to electricity.
In sharp contrast, US electricity consumption dwarfed that of most other G-7 nations in 2011, as the next chart illustrates. Canada is an outlier here given its comparatively low population of about 35 million people.
Electric Power Consumption per Capita
Boosting energy access is also vital to many development goals. In December 2012, the United Nations General Assembly unanimously declared the decade 2014‑2024 as the Decade of Sustainable Energy for All, calling upon Member States: “to galvanize efforts to make universal access to sustainable modern energy services a priority.” In response, the UN Secretary-General Ban Ki-moon launched the Sustainable Energy for All initiative (SE4ALL) with three objectives to be achieved by 2030: to provide universal access to affordable, reliable, economically viable, socially acceptable and environmentally friendly generated electricity; to improve energy efficiency; and to increase the share of renewable energy in the global energy mix.
This reflects the growing recognition – especially in elaboration of the post-2015 development agenda – that basic access to electricity is crucial to achieving a range of social and economic goals relating to poverty, equality, education, environmental sustainability and health. As pertains to the latter, the World Health Organization (WHO) regards health as a universal indicator of progress because “monitoring reductions in air pollution-related diseases provides an important bottom-line measure of the social gains from a shift to more sustainable energy policies.” With this metric, progress can be assessed irrespective of countries’ starting points in terms of their current mix of energy technologies and consumption patterns, the WHO stresses.
The IEA projects in its latest WEO a decline of more than 20% in the number of people without access to electricity by 2030, thereby leaving still about 12% of the world population without modern energy. Interestingly, these projections anticipate a regional divergence in terms of the total number of people without electricity in 2030: While the total in developing Asia is predicted to fall by nearly half to 324 million, the reverse is true for sub-Saharan Africa where the non-electrified population rises by 8% to 645 million, according to the IEA.
As particular ‘regions of improvement’, the IEA highlights China, Latin America, and the Middle East, citing continued economic growth and urbanization as catalysts. Still lagging behind, however, is India, which remains the country with the largest number of people without access to electricity, standing at nearly 400 million (about 30% of its population) without grid connectivity nationally. Unsurprisingly, government data further show the problem of access to energy is compounded by an inequality of access. The energy poor population in India consists of about 75 million rural and 6.5 million urban households with 72.4 million households, or 350 million residents of off-grid villages, burning kerosene in basic wick lanterns to produce light and biomass for cooking. Poor logistics infrastructure and geographical obstacles make addressing the access issue extremely costly and difficult. Those issues are representative of most developing countries with predominantly rural populations plagued simultaneously by energy poverty.
All the above fits the IEA’s categorization of fast-growing, energy-hungry developing countries like India as having a “dynamic power system”. Countries in this category are characterized by future high electricity demand growth and a flexible system, meaning that with adequate investments the electrical grid “can be built from the very start, in parallel with the deployment of variable renewables, leading to a very cost-effective deployment of high shares of wind and solar,” the IEA points out. It is also worth mentioning that renewables do not per se require a minimum scale in order for projects to be profitable. Consequently, this appears to make the introduction of solar and wind energy all the more attractive, and given declining costs of solar power, increasingly viable. This is why Gao Jifan, CEO of Trina Solar, suggests to “leapfrog the traditional energy development process and supply power directly from renewable energy sources, such as off-grid solar power stations, in regions where access to electricity is limited.”
Bjørn Lomborg, meanwhile, writes in an article for Project Syndicate titled “The Poverty of Renewables” that current climate policies make energy much more expensive and, much worse, tend to perpetuate the poverty of already energy poor people in the developing world. He criticizes Western governments for suggesting renewables are the best solution by drawing a thought-provoking comparison between China and Africa: “In 1971, 40% of China’s energy came from renewables. Since then, it has powered its explosive economic growth almost exclusively with highly polluting coal, lifting 680 million people out of poverty. Today, China gets a trifling 0.23% of its energy from wind and solar. By contrast, Africa gets 50% of its energy today from renewables – and remains poor.”
The chart below, which illustrates Mr. Lomborg’s point, shows how changes in the allocation of funds towards certain energy technologies impact electricity access for millions of people. Using natural gas electrification would provide electricity access to 90 million people compared with 20 to 30 million people with a renewables-only powered electrification system.
Trade-off between Access to Electricity and Focus on Renewable Energy
In itself this is a sound argument and yet it addresses only one of two related situations: How do you increase national electrification rates in order to help energy poor residents to first catch up economically and then allow the country to keep pace with rising energy demand due to its rapid development? Keep in mind that national grid expansions tend to progress comparatively slowly, whereas off-grid energy solutions – e.g. solar powered – offer speedy, flexible, expandable and more cost-effective energy access in remote areas than generation using traditional fuels. Thus, in order to ‘solve’ the energy poverty issue it is necessary to combine bottom-up with top-down solutions; meaning, that large-scale energy solutions – such as conventional power sources in addition to renewables for the national electric grid – addressing the future long-term energy demand with typically long lead times in terms of project development and financing are supplemented with reversible small-scale off-the-grid renewable energy solutions targeted at the short-term energy needs of the majority of the population which happens to live in rural and remote areas.