Can partnerships deliver electricity to boost livelihoods?

The extension of grid electricity to rural areas of developing countries has proceeded very slowly. Decentralisation and energy sector reforms offer opportunities for local authorities to supply electricity through public-private partnerships (PPPs). The risk however, is that the private sector will only target larger and wealthier communities. What can be done to ensure that poorer people are not excluded from access when new investments are made?

Energy for Sustainable Development (ESD) Ltd co-ordinated the Partnerships for Access to Community Electricity (PACE) project. PACE has been working with partners in Ethiopia, Nepal, Sri Lanka and Uganda to identify how PPPs can make electrification possible for the benefit of entire communities. Guidelines developed from 18 months of applied research – ranging from focus groups in newly electrified villages to interviews with national policy-makers – suggest how to increase the livelihood impacts of electrification projects.

Projects surveyed included diesel, hydropower and solar photovoltaic (PV) home systems, which are owned privately, by local authorities and by communities. Both successes and examples of bad practice are described:

• A provincial council in Sri Lanka diverted their budget for grid extension to subsidise and monitor household installation of solar PV systems, strengthening the reputation of solar energy and private sector technology and service providers.
• In Ethopia an NGO secured a loan for purchasing and installing a turbine and generator, a private company set it up and the local council mobilised community support.
• In another Ethiopian town, local government hostility to privatisation blocked efforts by a community – fed up with the failure of the state utility to provide power – to work with a private contractor.
• The arrival of electricity in a Ugandan village led to a return of educated locals whose investment provided new markets for farmers and stimulated livelihoods diverstification.

Entrepreneurial ambitions are wasted if communities can do little more with electricity than light bulbs for a few hours in the evening. Electricity is an essential, but insufficient, condition for development. Without commercial financing, rural electrification will not advance at the speed required include the poor in development processes requiring electricity. A pool of skilled, specialised manpower is also necessary to develop a successful private sector.

Analysis of how donor, government, private and community resources can be pooled in rural electrification projects is still in its early stages. Key recommendations from research are that:

• A wide range of stakeholders must be involved in combined energy/sustainable income generation schemes. Market and communications infrastructure must be developed, government capacity built and training provided to local entrepreneurs.
• Rural communities must have better access to information on electrification choices and available appliances in order to make informed decisions.
• Public sector involvement is essential to regulate and support the private sector. State subsidies and grants (on capital investment, not on recurring costs) can lessen the risks faced by the private sector.
• Projects must not proceed without first determining financial requirements and assessing communities’ willingness and ability to pay for services.
• Donors need to specify pro-poor conditions and highlight cross-sectoral integration when funding electrification projects. They should also facilitate international information exchange and support pilot projects in regions where rural electrification is minimal.
• Reforms of electricity sector regulations must include options for consumers not connected to electricity grids and provide transparent guidelines for private investment and management.

Source(s):
‘Partnerships for Access to Community Electricity (PACE): policy guidelines’ by Melessew Shanko, Hilawe Lakew. Girish Kharel, Lalith Gunaratne, Abdalla Kyezira, Lillian Nsubuga, Hannah Isaac, Jeremy Doyle and Mike Bess, ESD Ltd, December 2003 Full document.

Funded by: DFID R8148

id21 Research Highlight: 22 October 2004

Further Information:
Jeremy Doyle
Energy for Sustainable Development Ltd
Overmoor
Neston
Wiltshire SN13 9TZ
UK

Contact the contributor: jeremy@esd.co.uk

Energy for Sustainable Development Ltd, UK

Other related links:
Powering rural development: energy management in African schools and hospitals

DFID's Knowledge and Research Energy website

Exploring energy-poverty linkages for poor urban households

A burning issue: promoting sustainable pro-poor access to affordable energy