Courtland Walker

TN4B: Focus on Energy

Solar Electric Light Fund at workWhat follows below is an excerpt from the Energy Chapter of the The Next 4 Billion report. The chapter contains two country specific case studies. The study below, on India, provides a comprehensive preview of much of the data and analysis available in the energy chapter.

India’s energy story points to trends seen consistently across surveyed countries, namely; inferior fuel source use, especially in rural areas, amongst the poorest income groups, whether for cooking or for lighting, that decreases as incomes rise; a poignant example of the “BOP Penalty.” These inferior fuel sources are a risk both to the health of the poor and to the surrounding environment.Other notable trends are seen in energy when comparing the spending of rural households to urban households, in the same income level. Since, in this comparison, differences in spending and choice of fuel sources between urban and rural areas can not be explained by differences in overall income, the discrepancies observed point not only to access issues in rural markets, but indicate latent demand for more effective energy solutions in these areas.

Examples of these solutions appear elsewhere in the chapter, in case studies on public-private partnerships in Chile, projects by Shell and BP, solar photovoltaics providers (Solar Electric Light Company), and light-emitting diodes technologies (Light Up the World Foundation).

The full energy chapter is available for download, as is a powerpoint on the chapter.


india 1India has the largest measured energy market in Asia, with $163 billion in annual household spending. Some 52 percent of that market is in the bottom three BOP income groups (70 percent of the population), and 81 percent in the bottom five (92 percent of the population). Annual per household spending averages $342 in BOP500, $606 in BOP1000, and $751 in BOP1500.

Rural areas account for 63 percent of the national energy market, or $102 billion in annual spending–and 70 percent of the BOP market, or $99.7 billion. The urban BOP energy market represents $42.3 billion in spending.

For rural BOP households, energy spending averages around $705 a year, or $2 a day. For urban BOP households the average is $1,008 a year, around $2.75 a day. Per household spending in the mid-market segment averages $1,236 in rural areas and $1,368 in urban areas.

The rural BOP energy market shows a large concentration in the lowest BOP income groups: 69 percent in the bottom three, compared with just 23 percent in the urban BOP energy market. This concentration is due in part to the small mid-market population in rural areas. While the mid-market population’s energy spending in rural areas amounts to $2.3 billion, it is nearly nine times as much in urban areas, at $18.7 billion. In contrast, the bottom three BOP income segments in rural areas spend $70 billion on energy–nearly 45 percent of all national per household energy spending. Yet in each of these three BOP segments household energy spending averages less than $2 a day.

india 2Kerosene is the most common lighting fuel for the lowest two BOP income groups–reported as the primary source by 65 percent of BOP500 households and 50 percent of BOP1000 ones. Kerosene use rates fall off dramatically in higher income segments, dropping to 7 percent in BOP2500 and BOP3000 and only 1 percent in the mid-market. Electricity becomes the main lighting source in BOP2500 and higher income levels.

Firewood is the primary fuel source for cooking in the lower BOP income groups in India, reported by 75 percent of surveyed households in BOP500, 78 percent in BOP1000, and 60 percent in BOP1500. Use falls to only 23 percent of households in BOP2500 and 15 percent in BOP3000. Propane or LPG becomes the main fuel source for cooking in higher income groups, reported by 65 percent of households in BOP2500, 79 percent in BOP3000, and 87 percent in the mid-market.