That energy plays a central role in climate change discussions is well understood. In the 20th century fossil fuels were central to economic development and are now recognised as the root of climate change caused by human activity.
Yet even today nearly 3bn people suffer from energy poverty; that is, they have no, or very little, energy access. The new Sustainable Development Goals (SDGs) recognise that, if we are to enable people to get themselves out of poverty, the issue of energy poverty must be addressed. But when combined with continued population growth, an incredible amount of extra energy infrastructure will be required this century.
However, national planning remains firmly rooted in traditional methods and technologies that have seen us running power lines over, rather than to, poor people’s homes and businesses and landed us where we are today.
20th century approaches will not deliver on 21st century priorities
Multilateral finance institutions and energy ministries in developing countries are well-versed in how to build large fossil fuel-fired power plants and develop big grids to deliver big power to big industry. But these projects have failed on two counts. Firstly, the broader population rarely benefit from such projects. And secondly, the utilities themselves are bordering on bankruptcy in energy-poor countries because their supplies are so unreliable and commercial users almost always have some sort of own-generation capacity either as a backup or for their full-time use.
Given this context, why do we see national energy plans in the developing world filled overwhelmingly with these same types of large-scale projects? This continues despite UN climate negotiations and the UN Secretary-General’s Sustainable Energy for All (SE4All) initiative. Although the plans are not yet publicly available, as a reviewer I have seen them and find myself constantly frustrated.
Globally, the SE4All initiative has estimated universal energy access will cost about US$988bn, which will be mostly grid-based power with a mix of decentralised options thrown into the mix. Relying solely on grids for most electrification rather than a truly diversified, energy-ladder approach, will take decades. It is also unattractive to investors who realise such plans call for increasing supply to foundering utilities’ portfolios. Moreover, the vast majority of energy-poor people live in rural areas where big grids, renewably powered or otherwise, will be prohibitively expensive to deploy. The miniscule demand of small rural communities will fail to pay for adequate maintenance and service.
Instead, why not take a truly “all of the above” energy planning approach that includes solar lanterns, small solar home systems and grid-compatible mini-grids? The fact that they are not traditionally seen as the business of governments should not be used as an excuse given that the technology and financial mechanisms exist to make this work.
Universal energy access—starting with smaller, lower-power decentralised renewable energy—could easily be achievable by 2030. Taking this approach would be more reliable than using just grids in most energy-poor countries. It would also create millions of jobs, is much cheaper than relying on poor-performing grids, and puts people on a path towards green growth.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
