Solving the Energy Poverty Problem

solving the enrgy poverty problemIn the age of iPhones, Facebook, and Twitter, we have instant access to information and constant means of communication. It is difficult to imagine life without these luxuries, but they are just that, luxuries. For a large portion of the world these technologies are not only a rarity, but an impossibility, as there is no access to electricity.

1.5 billion people do not have access to electricity; 585 million of them living in Sub-Saharan Africa and 404 million in India. Three billion people, almost half of the world’s population, rely on biomass, such as wood, charcoal, and dung for cooking and heating purposes. Sub-Saharan Africa is an especially dire case. Only 31% of the population has access to electricity and the Sub-Saharan African population (excluding South Africa) of 791 million consumes as much energy annually as New York State, a population of 19.5 million, according to a recent IEA and UNDP report entitled “Energy Poverty: How to Make Modern Energy Access Universal.”

These people are living in energy poverty, the ramifications of which extend far beyond heating and cooking. Instead of children – usually young girls – going to school, they have to spend hours collecting firewood to heat their homes and cook. If the children are able to go to school, they can only do school work during daylight hours because they have no light to study by at night.

Energy poverty is one of the least discussed aspects of our current energy challenge, yet it poses serious threats to economies, national security, the environment, and public health throughout the world. It is unacceptable that such a massive social problem exists, yet here in the U.S. we do little to alleviate it. This article seeks raise awareness about energy poverty and to describe the threats posed by it and what is being done to remedy them.

Energy Poverty and Economic Development

From an economic standpoint energy poverty is a serious hindrance to growth. Households and countries as a whole cannot develop economically if a significant portion of the population is living in energy poverty. Time that could be spent working must be spent gathering fuel for cooking and heating. This task usually falls on women, preventing them from pursuing economic opportunities like starting their own business.

People cannot charge cell phones, if they have them, limiting their access to information and markets. They have little access to machinery, so their farming techniques (most of the energy poor live in rural areas) are primitive and inefficient.  If businesses or households do have access to electricity, there are often power cuts and blackouts, seriously limiting productivity and efficiency.

Energy Poverty and Health Risks

The use of wood, charcoal, and dung cook stoves poses some of the most serious health risks in the developing world today.  Primitive cook stoves create indoor air pollution because homes are poorly ventilated and the dirty air sits in the home, breathed in by the occupants. According to the IEA report, the number of deaths from this kind of indoor air pollution currently kills more people each year than malaria or tuberculosis. The report also estimates that by 2030 the number of premature deaths from household air pollution will be more than the number of deaths from HIV/AIDS, malaria, or tuberculosis, all of which are projected to decline over this period. By 2030 the number of deaths from biomass smoke is estimated to increase to 1.5 million per year, or 4,000 deaths per day.

Energy Poverty and National Security

Economic development and security are inextricably linked. In a post 9/11 world, the security of a nation is no longer guaranteed by a large military; the biggest threat to national security is no longer a strong, well organized military of another country, but rather disconnected, unpredictable networks of extremists.  When people have a job, food on their table, and an overall good standard of living, they are less likely to turn to radical groups for change. One of the contributing factors to the recent protests across the Middle East is high unemployment and lack of economic opportunities. Instability in the Middle East or any region that is home to extreme groups is a threat to US security. There are of course many reasons why people turn to extremism and poverty is just one of them, but one cannot overlook this important link.

How to solve the energy poverty problem

Alleviating energy poverty poses numerous problems. Most of the energy poor live in remote rural areas making it difficult and costly to connect to the electrical grid. Some energy poor countries simply do not have the infrastructure or economic means to connect rural inhabitants to the grid.

Environmental and climate change issues also makes dealing with energy poverty a tricky situation, mostly because coal remains the cheapest source of energy for much of the world. If electricity was generated from clean, but more expensive sources like wind and solar, rural inhabitants would likely be unable to afford it. Over a billion people are without electricity, so how do they improve their quality of life without adding huge amounts of greenhouse emissions to the atmosphere?

Because of the difficulty in connecting rural inhabitants to the grid, small-scale, off the grid energy projects currently provide the most feasible way of bringing energy to people in remote areas, but achieving this on a large scale is difficult. Large corporations and governments are the most financially and technically equipped to deal with these issues, but corporations lack incentives to do so. Funding a small scale project in rural Africa does not yield as much return as funding a large scale renewable energy project in China. For governments, finding funding for such innovative projects has largely proven tricky.

One potential funding source could come from the developed world. Those countries that signed the Kyoto Protocol are required to purchase carbon credits in order to offset their own emissions. This could be done by funding small scale projects that would greatly enhance the quality of life for rural inhabitants, but for now these offsets are most easily achieved by investing in large utility scale projects. There is also much uncertainty associated with these small scale projects because they are in such remote areas and funding these types of projects is a relatively new concept.

The United States is not a signatory of the Kyoto Protocol and therefore not required to offset carbon emissions, however we still fund renewable energy projects in developing countries. In 2009, the Obama administration announced the launch of Climate REDI (Renewable and Efficiency Deployment Initiative) a program to “accelerate deployment of renewable energy and energy efficiency technologies in developing countries.” The initiative created several programs and partnerships as well as funding mechanisms to bring energy efficiency to developing countries. New programs were:

  • “The Solar and LED Energy Access Program will accelerate deployment of affordable solar home systems and LED lanterns to those without access to electricity.  This program will yield immediate economic and public health benefits by providing households with low-cost and quality-assured solar alternatives to expensive and polluting kerosene.
  • The Super-efficient Equipment and Appliance Deployment Program will harness the market and convening power of MEF countries to improve efficiency for appliances traded throughout the world.
  • The Scaling-up Renewable Energy Program (S-REP), under the World Bank’s Strategic Climate Fund, will provide policy support and technical assistance to low-income countries developing national renewable energy strategies and underwrite additional capital costs associated with renewable energy investments. Funding through Climate REDI will accelerate the launch of S-REP.

The $350 million pledged for these programs will come from the United States as well as other developed nations.

Despite modest government lead efforts, most small scale energy production in the energy impoverished world is being taken on by nonprofits and local organizations.  The NY Times recently ran an article about small scale renewable energy systems and the role they are playing in Sub Saharan Africa. The article discussed one woman and the arduous process she had to go through to charge her cell phone. She relied on a cell phone for “small money transfers, contacting relatives, and checking prices at the nearest market”, but had no electricity and therefore no means of charging her phone.

“Every week, Ms. Ruto walked two miles to hire a motorcycle taxi for the three-hour ride to Mogotio, the nearest town with electricity. There, she dropped off her cellphone at a store that recharges phones for 30 cents. Yet the service was in such demand that she had to leave it behind for three full days before returning.

That wearying routine ended in February when the family sold some animals to buy a small Chinese-made solar power system for about $80. Now balanced precariously atop their tin roof, a lone solar panel provides enough electricity to charge the phone and run four bright overhead lights with switches.

Since Ms. Ruto hooked up the system, her teenagers’ grades have improved because they have light for studying. The toddlers no longer risk burns from the smoky kerosene lamp. And each month, she saves $15 in kerosene and battery costs — and the $20 she used to spend on travel.

In fact, neighbors now pay her 20 cents to charge their phones, although that business may soon evaporate: 63 families in Kiptusuri have recently installed their own solar power systems.”

These small scale solutions are spreading throughout Africa and other parts of the developing world as a result of small businesses and nonprofits. One such organization called E+Co invests in green businesses in developing country to provide them with the capital to implement off the grid energy solutions. E +Co has offices in 20 developing countries and has invested $40 million in various businesses. Some of E+Co’s investments include a $127,000 investment to Ghanaian company, Wilkin Solar, that sells solar powered lanterns to rural and urban homes in Ghana so homes do not have to rely on kerosene and firewood for lighting; a $224,241 investment to an Indian company, Selco India, that has sold small scale solar systems to more than 70,000 households in India, and an equity investment in Chinese company, DLLD, that manufactures mini hydropower systems that are used to generate electricity in rural China.

Energy in Common is another organization working to fight energy poverty by allowing individuals to make micro loans to entrepreneurs in developing countries. Individuals can choose from a list of green entrepreneurs on their website, make a loan to help fund green energy projects, track the progress of the project, and eventually get repaid. This is a sustainable and affordable way for ordinary citizens to become involved in remedying energy poverty.

Solar CITIES is a nonprofit that works in Cairo to install solar-powered hot water systems and biogas reactors in Cairo’s slums. The Charcoal Project works to raise awareness about the dangers associated with using biomass fueled stoves and bring together stakeholders to work towards potential solutions. The Lumina Project, an initiative of the Lawrence Berkeley National Laboratory, works to “enable small companies to innovate more rapidly, advises international organizations how to support these emerging [energy] markets, designing market research and performing market research, and helps students engage in the issue.”

These organizations are doing inspiring work, have noble goals, and continue to make a real impact on the lives of the world’s poorest citizens; however, they are small organizations with limited capacity and funds. Small scale projects are for now, the most feasible and economical way of bringing people out of energy poverty, but the projects are just that, small. For the 3 billion people living in energy poverty, this relief is not coming fast enough.

R&D and the Future of Energy Poverty

At AEL, we have frequently written on the need for energy innovation and the role it has to play in America’s economic growth, competitiveness, and national security. By investing in energy innovation America can simultaneously fuel its economy and help to alleviate international energy poverty. AEL President Teryn Norris and CEO of the Cleveland Foundation Ronald Richard recently wrote an op-ed entitled “Winning Ohio’s Energy Future” that highlights the energy innovation projects occurring in Ohio’s private sector and the 35,000 jobs they have created. The article notes that while Ohio’s private sector has stimulated innovation and growth, there is also a need for the federal government to do the same:

“If America wants to lead the next great growth industry, it’s imperative that we make a serious national commitment to advanced energy technology. Today, the United States spends more on potato chips than federal energy research and development, and continues to spend billions of tax dollars subsidizing fossil fuels.”

The American Energy Innovation Council has issued similar calls for government investment in energy research. The AEIC is a group whose mission is to “foster strong economic growth, create jobs in new industries, and reestablish America’s energy technology leadership through robust, public investments in the development of world-changing energy technologies” and is led by a group of prominent American business leaders such as Microsoft’s Bill Gates, the former CEO of Lockheed Martin, Norman Augustine, and the chairman and CEO of General Electric, Jeff Immelt. The AEIC recommends investing $16 billion annually in energy research, increasing funding of the Department of Energy’s ARPA-E program to $1 billion, and establishing a New Energy Challenge Program to build large scale pilot projects.

To put $16 billion in perspective, the US currently spends $30 billion in health research and $80 billion in defense research and development. In an op-ed Gates and Holliday wrote for the Washington Post last year, they discussed the US’s lack of initiative on energy research, the importance for energy innovation, and why the public sector should be the one to do it:

“But our country is neglecting a field central to our national prospect and security: energy. Although the information technology and pharmaceutical industries spend 5 to 15 percent of their revenue on research and development each year, U.S. companies’ spending on energy R&D has averaged only about one-quarter of 1 percent of revenue over the past 15 years…

…We need a vigorous strategy to invent our future and ensure its safety and prosperity. In the realm of energy, as with medicine and national defense, that requires a public commitment. Why can’t the private sector do this? What makes energy different from, say, electronics? Three things.

First, there are profound public interests in having more energy options. Our national security, economic health and environment are at issue. These are not primary motivations for private-sector investments, but they merit a public commitment.

Second, the nature of the energy business requires a public commitment. A new generation of television technology might cost $10 million to develop. Because those TVs can be built on existing assembly lines, that risk-reward calculus makes business sense. But a new electric power source can cost several billion dollars to develop and still carry the risk of failure. That investment does not compute for most companies.

Third, the turnover in our power system is very slow. Power plants last 50 years or more, and they are very cheap to run once built, meaning there is little market for new models.

It is understandable, then, why private-sector investments in clean energy technology are so small. Yet, while it may make sense for individual companies to make these choices, accepting the status quo would condemn our country to very bad options. There is vast opportunity in energy. Prices are declining in solar energy and wind, and they could fall further with new technology. There is a critical need for better electricity storage technologies to enable electric vehicles and very-large-scale renewable energy.”

Investment into energy R&D would not only help secure America’s future, but could also do much for the billions living in energy poverty. As noted earlier, small scale renewable projects provide the best opportunity for alleviating poverty while not adding to greenhouse gas emissions. By driving down the cost of solar cells, wind turbines, and energy storage electrifying rural areas could become not only become a cost effective proposition for governments, but profitable endeavor for private investors. While renewables remain a tough business pitch in much of the developed world, these margins become even smaller in the developing world, with lower electricity prices and increased technical hurdles. Lowering prices and creating more logistically feasible renewable power could also stem off the growing trend of developing nations looking to coal as the basis for electrification.

In Conclusion

Energy poverty is one of the most important and devastating social issues of our time that has been neglected for too long, and bringing half of the world’s population out of energy poverty is an enormous task. Innovative policies are needed to bring energy to people who live away from the grid and financing is needed to implement those solutions. America’s Climate REDI initiative is certainly a step in the right direction as are the efforts of groups like E+Co and Energy in Common. Projects like E+Co and the Energy in Common need continued sources of funding so they can reach the small businesses and local entrepreneurs in energy poor areas who are trying to make a difference.

Ultimately, more public-private investment in these initiatives — especially those based around energy R&D and technology transfer — and strategic partnerships between developed and developing countries are needed to truly reach all of those off the grid.  Nonprofits and small businesses alone will not be able to bring electricity access to billions of people. Meanwhile, technological innovation is needed to drive down the cost of clean technologies so they are competitive and no longer need international subsidies. New ways of connecting remote rural areas to the grid are needed, and in cases where connection to the grid is impossible, improved storage mechanisms for distributed generation resources would improve electricity access in remote areas.

See also: For Energy Poverty, Necessity is the Mother of Innovation by Cory Connolly

Natalie Relich is a Contributor in AEL’s New Energy Leaders Project and her work will be regularly featured on the website. The views expressed are those of the author and do not necessarily reflect the position of AEL.

Correction: The article originally stated that New York City has a population of 19.5 million people but has since been corrected to say New York State.

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7 Responses to “Solving the Energy Poverty Problem”

  1. Dear Ms. Relich,
    I commend you for raising the issue of energy poverty in such a measured, rational way. And thank you for mentioning The Charcoal Project and the role we play in addressing this issue.

    The IEA and the UN Secretary General Advisory Group on Energy and Climate Change (AGECC) have estimated it will cost $35 to $40B to bring modern energy to those who don’t have it today. The big question is where will the money come from to achieve this goal?

    Removing subsidies oil companies may be one source of revenue but others will need to be explored.

    Until a secure, reliable pipeline of funding can be found, the energy poor are stuck with NGOs like ours trying to do what we can to bring scale to our energy poverty alleviating models.

    Thanks for raising awareness about this issue.


    J. Kim Chaix
    The Charcoal Project

    There’s little doubt in our minds that any attempt to reduce large-scale energy poverty demands the leadership of the private sector, either from entrepreneurs providing market-based solutions themselves, or from major social enterprise investors. Social Investment Funds and groups like The Paradigm Project will be key.

  2. [...] is the original post: Solving the Energy Poverty Problem – Americans For Energy Leadership [...]

  3. RKRAO says:

    At one time Britain was called the nation of shop keepers ;now this appellation applies more aptly to USA ; a number of young idealistic entrepreneurs educated and backed by Americas great educational institutions have started projects to help and solve the energy needs of the BOP populations;in the process they got converted to successful businesses which are more after profit than service;to site an example one sells solar powered lamps with the slogan ‘freedom forever from kerosene lamps’;the lamp is good,price within reach of many poor,but it lasts an year or two and has to be thrown out as it does not have a provision for replacement of the rechargeable battery ! in the design the batteries are welded into the circuit and the lamp hermetically sealed ! it has sold more then a million lamps across Asia and Africa and may sell millions more with its aggressive award winning campaigns.
    Another CSR produced a smoke-free stove that sells at Rs800[$16] in retail market in India-manufactured in china for Rs200,given to distributors for Rs300,retailers pay around Rs 400 and the BOP pay Rs 800 !Millions are being sold ,not to the BOP,but to urban lower middle-class.It is a good stove but too expensive for the really poor;for Rs 400 it could attract the poor but the CSR wants to make profit;water finds its level and so does business;Business means business be it American,British or Indian .RKRAO

  4. R Margolis says:

    Glad to see that the issue of energy poverty is getting more attention. Often there is so much talk of overuse of energy that we forget that most of the world needs more. While I am not sure about energy storage (maybe propane and natural gas as the transition fuels), affordable energy technologies are a must for the energy starved societies of the globe.

  5. [...] while approximately 1.5 billion people have no access to electricity at all. A recent piece by Natalie Relich emphasizes the implications that this lack of energy has on education, health, gender, hunger, [...]

  6. [...] constrained. “From an economic standpoint energy poverty is a serious hindrance to growth,” writes Natalie Relich from Americans for Energy Leadership. “Households and countries as a whole cannot [...]

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