Showing posts with label Financing and Subsidies. Show all posts
Showing posts with label Financing and Subsidies. Show all posts

Monday, December 8, 2014

Electric Power for Rural Growth, 2nd Edition.
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for Amazon "Look Inside"

I recently published a new book on the impact of rural electrification in developing countries. Actually it is a revision of an old book. This is the second edition of my first book Electric Power for Rural Growth, published in 1988 based on research during my first job at Resources for the Future. At the time, international donors were having serious doubt about the benefits of rural electrification for developing countries.

To see a description of the book on this site, click on this link.

This entirely new production of the original book offers important historical information on the state of rural electrification in the 1980s. I have updated the text and titles, and the tables and charts have been revised for clarity. Some material that is no longer relevant has been omitted. I also have added a new chapter that summarizes the development of benefit evaluation methods, along with findings from recent research on the impact of rural electrification for development.

Overall, the issues identified in the 1980s remain extremely relevant today in the context of the new international emphasis on providing modern energy access for all. This includes its social impact and the productive use of electricity for agriculture and small business development. The main countries covered include India, Indonesia and Colombia. Many of the lessons learned from this study have been lost, especially with today's emphasis of providing electricity to those remaining people without service. Although this is a very important, the complementary conditions for rural electrification also should not be forgotten in the rush to provide "electricity for all."

Since the original writing of this book, the development impact of grid electricity on rural households has been the subject of a significant amount of research. I am glad to report that the findings of this early study have been validated for the most part.

Further research still is necessary on subjects like the impact of solar home systems or small lighting systems on socioeconomic development. It is well-known that certain activities cannot be accomplished by relying on the low power levels available through solar home or smaller photovoltaic systems. The question is whether this matters or should such technologies be considered “pre-electrification”—important in their own right but awaiting further expansion of grid electricity systems. These important new questions can only be answered by new research.

In the meantime, I offer this second edition of my impact study of rural electrification. The purposes of this book are to inform the issues in the public policy debate, advance empirical knowledge about the major issues and reach conclusions on the efficacy of various ways to implement rural electrification for development. In the context of new initiatives to promote the expansion of both grid and offgrid electrification, this study with its emphasis on the importance of complementary conditions is probably more important today even than it was over 20 years ago.

Thursday, December 12, 2013

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.

Tuesday, January 25, 2011

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. 

Thursday, December 9, 2010

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. 

Sunday, September 26, 2010

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.

Wednesday, May 19, 2010

Rural Energy Subsidies: “It's Déjà Vu All Over Again”

By Doug Barnes

I have noticed that there has been quite a bit of material circulating recently on energy access and subsidies.  The World Bank has prepared
Cooking with Ecofogon Stove, Nicaragua
Photo: PROLEÑA/Nicaragua
a background paper that will be published soon, and it is quite good. However, in reading this paper and other related material, I almost felt I had read it before—a kind of déjà vu.  So in this period when everybody is asking "Where is my bailout?" it seems a good time to review the justifications and implementation challenges for energy subsidies.

Jonathan Halpern and I had written both a paper and a short note on this subject about 10 years ago at a time when there were strong anti-subsidy sentiments in many development agencies. This blog contains a summary of that paper on energy subsidies published in 2000. So go to the original paper and read it, or read on. Or read on and then go to the paper! This work hopefully has withstood the test of time, but you can be the judge.

Why should we examine the role of energy subsidies for access to energy?  The answer seems obvious.  Energy policies that have the purpose of alleviating poverty must in some way bring down the costs of safe, clean, reliable energy services to make them more affordable. Low-income households often lack access to or cannot afford the initial costs of “modern” energy services. A good subsidy scheme is one that enhances access for the poor while sustaining incentives for efficient delivery of energy services without significant distortions in energy markets. But that is not all: the subsidy scheme must also be within the financial and human resource constraints of the government. This is quite a balancing act.

Much more below the break....

Wednesday, May 12, 2010

Solving Rural Electrification Problems: New Wine in Old Bottles?

Strong institutions, favorable financing, clear service territories, encouraging productive uses, reducing drudgery for women, and local involvement.  Do these all sound like familiar prescriptions for successful rural electrification?

Rural Electrification Administration Advertisement
Source: NRECA
In fact they encompass some of the eight steps to successful rural electrification highlighted in a previous blog. Recently I was doing a bit of research on the United States Rural Electrification Administration (REA) and I came across some interesting quotes that illustrate many of these points—some from the 1930s no less.

Before plunging into the quotes, some salient facts for those that do not live in the US—or for those living in urban areas in the US! The United States beginning in the 1930s began implementing a new rural electrification program as part of Roosevelt’s New Deal that was based on a newly created government agency called the Rural Electrification Administration. This government agency was created not to carry out rural electrification projects, but to support their implementation through electricity distribution companies called rural electric cooperatives. These cooperatives were and still are private, independent electric utilities anchored firmly in the communities that they serve. Today there are more than 900 electric cooperatives in the United States providing reliable electricity service to 42 million Americans while maintaining a unique consumer-focused approach to business. For more facts see US Utility Fact Sheet published by the National Rural Electric Cooperative Association.

With this background, it is now time for the quotes which have been paraphrased to provide a better context for understanding them.  

See much more below the break....

Friday, May 7, 2010

Promoting Solar Home Systems and Improved Biomass Stoves: A Comparison

Solar PV Adoption by Herders, Qinghai, China
Photo by China REDP Team
Over the past 15 years strategies for solar home system promotion have moved from a niche activity to the mainstream. Recently I have been thinking that there are quite a few similarities in the obstacles that were faced by solar homes system in the early years and those confronting the new improved biomass stoves today. I thought it might be a good time to explore what we have learned over the years, and what lessons might be relevant for scaling up the adoption of improved biomass stoves.

Both solar home systems and improved stoves are used primarily for household energy services such as cooking and lighting. They both provide significant improvements compared to the kerosene lamp or an open fire. Both devices also involve fairly large initial costs that are barely affordable to the majority of populations in developing countries, but the cost to operate them is fairly low. Solar home systems cost on the order of US $200-$300 and the new generation of improved stoves range from US $10 to $70 or more. As the old joke goes “Solar (read that renewable) energy is free, but it ain’t cheap.”
Today solar home systems are considered fairly mainstream and adoption levels though still somewhat limited are rising quickly in many countries. With the exception for the older large programs such as china, progress is being made by improved biomass stove programs, but they also have quite a long way to go to be accepted on a large scale in more countries.

Much more below the break....

Friday, April 30, 2010

Rural Electrification in Developing Countries by the Numbers

Rural Electrification Lineman Bangladesh
Photo by WB Dhaka
The rural electrification figures in developing countries are pretty well known by now. There are now an estimated 1.5 billion people without electricity in developing countries, and 85 percent of them live in rural areas. However, I am going to give a brief history of the context in which these numbers were compiled. So this post will discuss rural electrification numbers with a twist.

In the early 1990s, several ESMAP energy staff including me were asked to complete a rural energy strategy for the World Bank. One the first things we were asked to do was to find out how many people in the world were without electricity and cooked with biomass fuels. Believe it or not this had never been done in a comprehensive way. This was before the age of instant access to facts and figures over the internet, so it was not an easy task. For the electricity figures we looked at surveys, examined power company annual reports, consulted with those involved in rural electrification projects, and contacted statistical departments in country governments. After well over a year of compiling the data we presented them to our very supportive managers. I remember them saying, “These figures better be right!” Knowing the uneven quality of the sources we were nervously confident. The document was published in 1996 with the title Rural Energy and Development: Improving Energy Supplies for Two Billion People. Yes the answer for data mostly from the early to mid-1990s was two billion people without electricity and coincidentally just over two billion people dependent on biomass fuels.

These figures were widely quoted at the time, but they were not updated annually. Around 2000 the energy group decided that it was time for an update of these figures. I was not directly involved with this effort, but was asked to review the numbers as they collected the information. A new set of figures were published informally in 2002 with the new level of 1.7 billion people without electricity, and most of the progress that had been made during the previous decade was in China. After taking population growth into account this meant that over the previous decade about 1 billion people had gained access to electricity.

Much more below the break.....