Access to energy is one of the most important factors in raising people in emerging economies out of poverty. Energy—whether ripped from earth (coal) or harvested from the heavens (solar)—is not an end in itself. Energy doesn’t cause well-being, but how—and when—it is delivered enables people to create opportunity for themselves. The dividends afforded by energy—health, education, economic opportunity, choice—come sooner with faster access to it.
How and when people get that access is a critical decision for national governments and their funders, as over 1 billion people still had zero access to electricity when they woke up this morning, mostly rural communities in Sub-Saharan Africa and South Asia.
This week at COP 23, the annual international climate negotiations, representatives of the current U.S. administration put forward the notion that fossil fuels are a cure for energy poverty. This point of view is misinformed at best and disingenuous at worst. Traditional fossil fuel power plants are not designed to create quick access for the unelectrified by 2030. These incumbent approaches most often serve the needs of the already connected: urban and peri-urban populations, and factories. Central grids rarely serve meaningful numbers of rural communities—which is where the vast majority of the energy poor reside, far from existing infrastructure.
If the creating the biggest improvements in the lives of the energy poor for the least amount of money is the goal, coal-fired power plants are out of date and out of time. The US COP 23 team did make one thing abundantly clear: There is a missing link between the pace of funding and the speed of access. Governments—including the U.S. government--lack a standardized model to weigh the opportunity costs of various electrification options and may, unintentionally, make choices that end up actually reducing the net benefits of electricity to the energy poor. Inadvertently, policymakers may focus on over-electrification when access could be delivered at much lower cost--and in dramatically shorter time frame—via distributed renewable energy than access through the expansion of centralized, fossil-fuel powered grid infrastructure.
A new report released today by SEforALL and Power for All puts forward a new framework—the Energy Access Dividend—which lays the groundwork for an approach to decision-making for institutions funding—or receiving funds—for energy-based development projects. This model (1) Maps development and climate impacts to different levels of energy access (from basic lighting to 24x7 power); (2) Applies a time “cost” or value to different electricity supply options; and (3) Estimates the value, or dividend, from earlier access to energy services via quick-to-deploy decentralized renewables v. traditional approaches. By creating a quantifiable approach, the Energy Access Dividend is a first step in helping planners, governments and donors assess the comparative advantages of energy products, services and systems in achieving Sustainable Development Goal (SDG) 7—targets universal access to affordable, modern, clean and reliable energy by 2030—framed by appropriately valuing the time to access in the equation.
The potential implications of the dividend described in the report are enormous, and extend far beyond the household. According to the Energy Access Dividend, least-cost services can be provided more quickly with decentralized energy. Once this access is gained, households can reduce expenditure on kerosene lighting and phone charging, and school students can increase study time at home. But there is a ripple effect from these initial dividends. In just one example from our work with the United Nations Environmental Programme in Nigeria, research shows that in West Africa, the transition to clean efficient lighting can create about 30 times more jobs than fuel-based lighting ever could.
Somehow, the U.S. delegation in Bonn has forgotten that the slow-moving, expensive and poisonous energy that they are so committed to defending had 100 years to get it right. Yet today, there are still over 1 billion people without access to energy. To be sure, in virtually every new region being electrified, there is a “right mix” of grid, mini-grid and stand-alone solutions that will achieve universal access at optimum speed. The energy poor deserve more than the slow, expensive hand-me-down solutions proposed by the American delegation; the energy poor deserve the benefits afforded by clean energy—health, education, economic opportunity, choice—delivered at rate that decentralized renewables can deliver.