What Drives Electricity Adoption? A Review of Connection Charges in Sub-Saharan Africa

By Doug Barnes

Household Electricity Meter
Picture Credit: Douglas Barnes

Today many development agencies focus on the price and physical presence of access to electricity as being the main issue for lack of electricity in developing countries.  They may want to alter their thinking.  This is not to say that physical access and the price of electricity are not important, for clearly they are very important.  But a new study on Electricity Adoption and Connection Charges in Sub-Saharan Africa finds that an equally important factor may be electricity connection charges for new consumers.  Africa is the region with the lowest electricity access rates in the world (only 1 in 8 rural households and 1 of 2 urban households have electricity) and also is the region with the highest initial service connection charges.  One question not explored in this paper is the extent to which high connection charges are an indirect way for power companies to confine service to more profitable high income electricity users and to avoid political pressure to extend electricity to poor, low electricity using households. 

For electricity companies, expanding electricity to all makes quite a bit of sense for long term business development.  Electricity would contribute to economic development, and then more people could afford electricity.  As incomes grow even poorer people would buy more appliances and increase their electricity use, making them more financially attractive for electricity companies.  Thus, in the long term policies to expand electricity service make both solid financial and economic sense.

Energy Poverty and Income Poverty: How Do They Differ?

by Doug Barnes, Shahid Khandker and Hussain Samad

There is a continuing discussion over what constitutes energy poverty with several approaches being used to define it.  But as yet, no consensus has emerged for measuring and monitoring energy poverty and explaining why and how it differs from income poverty.  After all, income poverty is a standard measure, so if the two are highly related it would not be worth the effort to develop a unique measure for energy poverty.  In other words, why create a separate indicator of energy poverty because in the end it would just be a reflection of income poverty.  Everyone seems to know about energy poverty,but truly defining and measuring it gets a bit complicated. 

About 10 years ago energy poverty was thought to be related mainly to lack of access to electricity.  More recently the United Nations and Department of International Development of Great Britain (DFID) have broadened definitions of energy poverty to multiple indicators using somewhat arbitrary weights.  International Energy Agency (IEA) has never actually defined energy poverty (except that it is related to lack of access to modern energy), but advocated that better ways of using biomass energy for cooking should be an important policy for household energy.  Also, most international organizations measure energy poverty indicators as outputs (e.g., lack of electricity connections) rather than outcomes (e.g., welfare gains from electricity consumption).  Thus, unlike income poverty—which is usually based on minimum consumption of food and non-food items necessary to sustain a livelihood—energy poverty lacks a well-established theory based on energy demand to establish a relevant poverty line. 

In several recent papers the authors of this post have taken a different approach, focusing on energy demand in order to define energy poverty.  Like income poverty, energy poverty may be defined by the minimum energy consumption needed to sustain lives.  This approach defines an energy poverty line as a threshold of energy consumption needed to sustain life.  Similar to the concept of income poverty, we reasoned that there had to be a point at which energy is essential for living.  After all, people have to cook their food; in cold climates they must heat their homes; and they generally need a minimum level of light in the evening for basic tasks (sometimes including eating).  In theory this is all well and good, but the question remained how to measure that threshold. 

Figure 1:  Energy End Use Energy Consumption by Income Class,
Bangladesh and India

Therefore, we tested this demand approach using rich household survey data sets from Bangladesh and India.  We found that although energy consumption rises with income, this increase is not uniform (Figure 1).  This is because energy consumption at lower income groups turned out to be somewhat flat--in economist's terms it is income inelastic (does not rise with income).  After those minimum levels, energy consumption increased for households with ever higher incomes--once again in economist's terms, income elastic (does increase with income).  The theory is that for those levels where the energy income relationship is inelastic, this is the minimum level of energy necessary to maintain a healthy life.  This is the basic level of cooking, heating, lighting or other energy service needed to sustain life. 

Resurrection of ESMAP Knolwedge Exchange Series 2005-2009

Between 2005 and 2009 I was the technical editor of an ESMAP Knowledge Exchange Series that involved the publication of four page summaries of current energy issues.   When I recently reviewed these notes after four years, I was struck by both the quality of these four page notes and the continuing relevance of the issues covered.  Also, most of the authors of these notes have 20 to 30 years of experience of working on energy in developing countries issues.   Because they are no longer very prominent on the ESMAP website, buried beneath more recent work, I have decided to resurrect them in this blog

I am sorry for the long delay between posts.  Both an illness and work somehow got in the way of working on this blog.  I have decided to revive it, but will not post as often as before.  But continue to check back as there will be more to come. 

Retroactively I have grouped these Knowledge Exchange Notes into four groups.  The first is on grid and offgrid rural electrification programs.  The second is on electricity generated mainly for the electricity grid.  The third group is biomass energy both for cooking and transport.  Finally, there are two notes on how rising energy prices impact the poor. 

The Basics of Wood Burning Stoves: A Case for Standards or Rating Systems?

Many people interested in better stoves know something about fire, smoke, health and new ideas.  However, to explain these on a more fundamental level that is understood by all can be difficult.  Therefore to explain the relationship between health and smoke, I turn to the late comedian Steve Allen who said that “Asthma doesn't seem to bother me any more unless I'm around cigars or dogs. The thing that would bother me most would be a dog smoking a cigar.”  For those who are promoting stoves innovations, I quote Mark Twain who says “The man with a new idea is a crank until the idea succeeds.” 

More seriously, I recently came across this nice brochure on space heating stoves that has been published by the California Environmental Protection Agency.  I was struck by this brochure because in a very simple way it publicizes the issue of smoke and health, the need for standards,  the basic principles of combustion and even the alternatives to wood stoves including gas and electricity.    These are many of the same issues that the clean cooking community today is attempting to communicate to the general public.  This brochure highlights the fact that improved heating stoves in the United States and other developed countries are now very efficient and burn very cleanly compared to past stoves.  But this was not always the case. 

Painting of Old Heating Stove in School

On a personal note, I can remember old coal stoves used to heat "temporary" small classrooms built to accommodate a sudden rise in student populations.  These "potbelly" coal heating stoves were similar to the wood burning stove in the picture.  At the time in western Pennsylvania coal was king and this was at the very end of the time period when people would heat with traditional coal stoves.  Was it smoky? Yes. Was it energy efficient? No. Did it give good even heat?  No.  Wast it durable? Yes. Was it safe? Yes. Was it cheap?  Yes.  Now of course schools are heated with modern systems. 

Even now there are legacy fireplaces and wood stoves that burn warmed air in the house which in turn draws in cold air from the outside.  Thus, the old traditional space heating stoves in developed countries are somewhat analogous to open cooking fires in developing countries.  The rather important exceptions are that the cooking fires and traditional cookstoves in developing countries typically are built of local materials by those who use them and they also do not have chimneys.

Energy Services for the Poor: A Review of World Bank Lending

By Doug Barnes

A couple of years ago I completed this review of Modernizing Energy Services for the Poor:  A World Bank Investment Review 2000-2008.  This was followed by extensive reviews and then revisions.  And this was followed by new revisions and fresh reviews and so on and so forth.  I am happy to announce that this report is finally out and comments are welcome, but no more reviews please. 



Source: World Bank Investments in Energy Access: 2000-08(Figures are Millions)

It may seem like a trivial exercise to classify energy access lending, but nothing could be further from the truth.  When you think about it almost all energy investments can be considered as promoting or being related to energy access.  Energy sector reform makes it possible to have a well functioning energy markets, and this is turn means the electricity and other forms of energy can reach the poor.  Likewise, rural electrification would not be possible without generation and transmission projects.  So where do you draw the line for ruling in investments as relating to energy access energy poverty or ruling them out. 

Much Ado About Energy Poverty: A Look Behind the IEA Numbers

By Doug Barnes

The International Energy Association (IEA) has published a very nice special paper with the title Energy Poverty: How to Make Energy Access Universal.  This report makes a substantial contribution to the work on energy poverty and provides the updated figures on electricity access and the use of fuels for cooking.  The purpose of the report is to raise the issue of energy poverty to a higher level of international visibility.  This is quite a welcome tact by an energy agency that for many years has specialized in addressing issues of modern energy. 

I really like several things about this new report.  For one, the energy access and cooking fuel issues are well documented and nicely presented in tables and figures.  They also have made this publication free as supplement to the World Energy Outlook.  However, if you want the more country specific details you must purchase World Energy Outlook.  Finally, IEA has now added cooking fuels to the other types of energy they track to compliment their emphasis on electricity and other modern fuels.  This will raise cooking fuels to a higher level of public awareness and tracking their use is a very good idea for policy makers in the field of energy. 

The report also has some very high figures for the investment costs necessary to reach universal modern energy access by 2030.  At first glance, I thought these figures were too high, so I decided to “look behind” the figures.  I can tell you that that even for someone as seasoned as me this was not an easy task. 

Impact of Rural Electrification in Peru: A "New" Study

By Doug  Barnes

 

A “new” report on rural electrification in Peru demonstrates the usefulness of conducting energy surveys to help with assessing policies for such programs.  The usefulness stems from the ability to not only estimate the benefits of rural electrification, but to analyze if the subsidy policies are both effective and well targeted. There are many ways to structure subsidies for rural electrification in developing countries (see previous blog on energy subsidies).  Some types of subsidies can be progressive and others well could be regressive.   Assessing the appropriativeness type of subsidy generally is difficult to do without energy survey information.  

Rural Energy Expenditures by Income Class in Peru
in Soles per Month (1 US$  = 3 Soles) 
Source: Peru National Survey of Rural Energy Use

In developing countries generally people with higher income spend more cash income on energy than those with lower levels of income.  This same pattern can be found in Peru as indicated by the figure.  It is somewhat expected that electricity and LPG expenditures in rural Peru increase significantly with increases in income as measured by total expenditures.  But interestingly even cash expenditures on fuelwood rise with income which indicates that there is even a willingness to pay for what is probably high quality fuelwood. One reason that it is necessary to have quality surveys is to track both the effectiveness and the targeting of subsidies.

Improved Biomass Stoves For Bangladesh: Practice and Promise

Bangladesh has a better record in addressing rural energy issues than most countries. They have a very aggressive rural electrification program that is based on rural electric distribution cooperatives. There is an award winning program for promoting solar home systems in offgrid regions. Yet as we documented in our report on Bangladesh’s Rural Energy Realities the country has not been as successful in promoting ways to alleviate problems associated cooking with biomass energy on rudimentary stoves. This is in spite of the fact that bioass energy is so scarce that leaves and grass account for 15 percent of total rural energy use.

Bangladeshi Woman Cooking with Child:  Photo Prabir Mallik

Recently there has been a new report released on Improved Cookstoves and Better Health in Bangladesh.  For a preview there is a online version of the report at the bottom of this blog.  This report is provides a new twist to work on improved or advanced biomass stoves. Not only does the report review programs in Bangladesh, but it also draws lessons from successful international experiences and water and sanitation programs.  The picture to the right has graced the cover of several reports and it was originally taken by Prabir Mallik on one of the assignments that took place during the project.

Many of the existing programs in Bangladesh are promoting what we have called in previous blogs artisan stoves. There are not too many successful examples of artisan programs in the world. Most of the programs that flourished have had at the very minimum manufactured parts as was the case in China and Guatemala.  A promising new development is that within the last couple of years Grameen Shakti (see text below the break) has recently entered the picture in Bangladesh to promote improved stoves, and they are manufacturing some of the parts such as stovepipes and grills, but the firebox of its stove is still made from local materials such as clay or mud.

What are the recommendations of the new Bangladesh report? The main recommendation is to move towards higher quality stoves that are proven to be more energy efficient and lower household air pollution. Here are some key quotes from the executive summary.

Lessons from the international programs emphasize the need for a wide range of efficient stove designs tailored to user requirements as a prerequisite for program success. They should have proven efficiency, the ability to reduce indoor air pollution, and good durability and safety. Further, the viability of the program in the long term often depends on strong commercial approaches to promoting stoves. Targeted marketing has also been seen to be an effective strategy; stoves should be marketed to households facing fuelwood scarcity or high costs of purchasing wood, as they would be the most likely group to benefit from improved stoves, at least in the initial stages of a program.

The review of the status of improved stove programs in Bangladesh, along with the best practices from around the world, leads to several recommendations for consideration. One clear message is the need for a more unified program without diminishing the creativity of the various groups advocating improved stoves in Bangladesh. In fact, creativity and a wide variety of approaches should be encouraged. The government’s role is not necessarily to be the main actor, but rather to facilitate a process that promotes variety, improved durability, better safety, and greater efficiency of improved stoves.