THE BLOG

Small Scale Green Energy Can Address Poverty in a Big Way

08/11/2010 11:25 pm ET | Updated May 25, 2011

You probably don't put much thought into the energy that makes your computer run, your microwave work, or your lights turn on. In fact, you probably struggle to remember how many times and ways you use energy in a day.

Our easy access to energy stands in stark contrast to the daily struggle experienced by billions. These people lack access to any kind of modern energy and are also the poorest on the planet. They rely on archaic fuels, such as firewood, kerosene, and charcoal, to provide them with heat, light, and power -- fuels which are expensive, harmful to their health, hugely time consuming to obtain, and result in greenhouse gas emissions. Families can spend hours a day collecting firewood, and up to 30% of their household income purchasing these fuels which often barely meet their basic needs. In addition, indoor air pollution from these fuels kills more people than Malaria every year and a recent World Health Organization report noted the use of kerosene in a household was equivalent to smoking two packs of cigarettes a day. .

The International Energy Agency acknowledged that lack of access to energy is an important reason the poor continue to be poor when it estimated that if poverty is to be halved by 2015 energy will need to be extended to an additional 700 million people.

That's a lot of people! So how are we going to reach them?

Despite a large amount of evidence pointing towards the correlation between energy and poverty alleviation, there is surprisingly little information on strategies that are working to improve energy access. International money and effort has overwhelmingly focused on large scale electrification projects and this approach certainly should be a part of the solution for expanding energy access to those who need it. However, in countries with very little infrastructure and poor governance these large scale projects are often delayed for many years and sometimes never completed. When they are completed electrical grids tend to only reach those in the cities and the grids are so poorly maintained that brown outs and black outs are the norm.

Small scale green energy projects, starting with something as simple as a $10 LED lamp, represent an exciting opportunity to quickly make a real difference to energy access for the poor.

Consider the hypothetical story of Ophelia who lives in West Africa on the fringe of a city. She runs a small bakery and earns an average of $4 per day. She buys kerosene for light, charcoal for cooking, and every day she spends a few hours collecting firewood. The purchase of a LED lamp eliminates the need for her to buy kerosene, and because the lamp can provide many hours of light at no cost, she can open her bakery for longer hours - meaning more revenue for her. The LED lamp pays for itself in less than two months. Ophelia then purchases a fuel efficient cook stove for her bakery. The cook stove uses half as much firewood as her older cook stove, and because the stove gets hotter faster, it saves Ophelia 1 hour a day of cooking time and she is able to serve her customers quicker. Ophelia really likes the stove because it doesn't produce smoke, which hurt her eyes and irritated her customers, and it is built well so it does not burn her children's hands when they touch the exterior.

Anecdotal stories of the financial, health, and productivity benefits of small scale energy projects, such as Ophelia's, are supported by the emergence of an industry which focuses exclusively on selling energy to the very poor - people who earn $1 to $6 a day. Companies, such as Barefoot Power and D. Light, focus on manufacturing and selling small scale LED lamps and solar systems to the poor. Both intend to reach tens of millions of people in the coming years. Other organizations, such as StoveTec, are pioneering the introduction of extremely affordable and fuel efficient cook stoves. These efforts not only provide enormous value to the populations buying them, but also bring a climate dividend by reducing reliance on fuels that generate greenhouse gases.

As the bulk of global greenhouse gas emissions increases over the next three decades are projected to come from developing countries, green energy represents a way to bring the poor out of poverty in an environmentally friendly way. This is important because climate change is projected to disproportionately affect the poor, and further hinder efforts to eradicate poverty.

If the companies distributing small scale green energy manage to hit their growth projections and their potential, it will be good news for their investors, good news for the planet and most importantly, good news for the poor.

Hugh Whalan is the CEO and co-founder of Energy in Common (EIC), a non-profit which helps microfinance institutions to profitably develop and expand small scale energy loan portfolios.