Pro-poor electricity provision
Energy poverty is a major development issue: nearly 1.3 billion people, close to one-fifth of the world’s population, have no access to electricity. We also face the pressing need to decarbonise existing energy systems to address climate change. Therefore, making progress on both objectives requires a sharp increase in renewable electricity production, both on and off-grid. It is within this context that this Key Issues Guide explores the potential poverty impacts of increasing renewable energy capacity in developing countries.
After intense activity during the 1970s, electrification slipped down the list of development priorities, largely due to the disappointing results of many programmes. From the late 1990s this began to change and today, electrification is again seen as central to poverty reduction efforts. Where production comes from renewable sources, it also makes a positive contribution to low-carbon development strategies. For many, this is a classic ‘win-win’ situation.
Electricity access can have significant impacts on poverty and welfare, but not automatically. First, once electricity is generated, it needs to be reliably fed into the system. Second, this additional supply must be made accessible, and affordable, for the poor. Third, increased electricity consumption then needs to translate into poverty reduction. Finally, increased electricity supply can indirectly reduce poverty by boosting economic growth.
Figure 1: Casual chain of poverty impacts of electricity generation capacity*.
At each stage (A-D in figure 1), the scale of the final poverty impacts will be influenced by key factors, as noted above. If these are not addressed, few improvements may be seen. If they are acknowledged and dealt with appropriately, there will be a much greater likelihood that for increasing the supply of electricity will reduce poverty and improve the quality of poor people’s lives.
*Source: Ana Pueyo et al, 2013
- Key Feature Resource - The Evidence of Benefits for Poor People of Increased Renewable Electricity Capacity: Literature Review
Lack of access to electricity is seen as a major constraint to economic growth and increased welfare in developing countries. In this report, the authors conducted a review of the evidence that investments in electricity-generating capacity have benefits for poor people, and what factors influence that relationship. The review analyzes a large and diverse range of literature dealing with the poverty impacts of increased generation capacity. It begins by explaining a theory to break down the causal chain between additional renewable electricity generation capacity and poverty impacts in four stages or links.
How does increased on-grid renewable electricity capacity affect the availability and reliability of supply?
As well as the need to build and maintain adequate grid and distribution capacity, there are crucial decisions to be made on which communities to electrify. In this regard, public utilities have traditionally concentrated their services on urban elites. More . . .
To what extent is an increased supply of more reliable electricity likely to be used by the poor?
Even if electricity is available, poor households need to be able to afford connection costs and buy and use sufficient electricity to alleviate their poverty. These were big issues in the 1980s and remain a problem with rural electrification projects today. More . . .
How does greater electricity consumption affect poverty?
Electricity consumption can affect poverty in many ways. However, measuring these impacts has proved extremely challenging. Benefits tend to be difficult to quantify as they are often indirect, and can be distorted by the tendency to increase access to areas that already have relatively good prospects. More . . .
How does increased electricity supply and usage affect economic growth?
Increased electricity supply can contribute to economic growth. An important question, when considering whether to prioritise electrification is the effectiveness of this approach in comparison to other measures to boost growth. More . . .
Image credits: Abrinsky / Flickr | Warrenski / Flickr | Ktorster / Flickr | Jasinthan Yoganathan / Flickr | AIDG / Flickr
This initiative, part of DFID’s Accountable Grant to the programme on Strengthening Evidence-based Policy, develops and promotes evidence-based policy and programme guidance on low-carbon energy investments to benefit poor people, especially women and girls.