Guest Articles

Thursday
March 26
2020

Jonathan Phillips / Marc Jeuland / Emily Pakhtigian

New Data and Technologies are Transforming Energy Access – Public Policy Must Catch Up

Leveraging the advances of the information revolution, private energy companies are finding ever more innovative ways to effectively target customers around the world. These days, geospatial imagery and machine learning technologies tell us more than ever before about who has electricity, where they are, and how they are accessing it. New micro-level survey data gives us new insights on energy usage and the impacts of enhanced energy access. Thanks to cheap solar, plummeting battery costs, deep mobile connectivity and smart distributed power systems that can be monitored and managed from afar, there are ever-increasing modalities for delivering electricity beyond the grid.

Public policy, in stark contrast, is struggling to keep up with these rapid-fire developments. For many government agencies responsible for their country’s electrification vision and implementation, this deluge of data and innovation has been met with paralysis. A 2017 World Bank report found only half of 35 sub-Saharan African countries surveyed had electrification plans – and those plans that do exist have rarely offered an evidence-based vision for energy access, even as they articulate ambitious universal electrification targets.

This disconnect between government and the private sector can translate into inefficient capital allocation, the development of unsustainable energy systems, fewer people and businesses ultimately gaining access in low- and middle-income countries, and the cementing of deep inequalities in opportunities for development. Vast amounts of potential human capacity and productivity are being left untapped.

What needs to happen now to improve this situation?

 

Step 1: Re-define how we measure energy access.

To those following Sustainable Development Goal (SDG) progress, last year’s announcement that the global unelectrified population had dropped nearly 15% in a single year—from about a billion to 860 million—was remarkable news. However, this top-line indicator masks a complicated and disturbing reality. Progress is uneven, with birth rates surpassing new connection rates in some African countries. Debilitating reliability problems inhibit investment, because many energy users cannot depend on the electricity they supposedly have. For this reason, among others, productivity gains predicted to come from enhanced energy access remain elusive. In short, we are not on track to reach SDG 7’s goal of “access to affordable, reliable, sustainable and modern energy for all.”

In response, we must sharpen our language and develop better metrics. Electricity access is generally thought of as a binary indicator—there are electricity “haves” and “have nots,” and electricity “haves” are all the same. A household with just enough electricity to power a single light bulb for a few hours is in the same category as a household having 24/7 power for household appliances, irrigation systems and welding equipment. Yet these access situations are fundamentally different in terms of what people can actually do with electricity, and how it affects their lives.

To capture these differences, the World Bank’s Energy Sector Management Assistance Program has led the way in developing an improved metric for access – the Multi-Tier Framework (MTF). The MTF incorporates capacity, availability, reliability, quality, affordability, legality and safety measures. It classifies electrified households into one of five energy access tiers, thus beginning to provide clarity not only on access, but also on the quality of that access. Transparently incorporating this level of specificity into planning can set the table for a rigorous process that engages constituents, development partners and implementers, and builds political will behind a strategy.

 

Step 2: Identify who needs improved access, understand options and set goals

After developing a more nuanced measure of energy access, we must understand the situation of people struggling with energy poverty in a particular local context. There is no one-size-fits all solution to the energy access challenge. Is a country’s challenge moving significant numbers of people from no electricity, toward access to basic lighting, phone charging and small appliances? Or should the country focus on improved productivity, requiring higher levels of service? What are the benefits of focusing on one strategy or the other, and what trade-offs exist between them?

In a report published in December, Duke University researchers, in partnership with the Inter-American Development Bank and Sustainable Energy for All, examined the energy access situations in Haiti and Honduras and attempted to quantify the benefits—or Energy Access Dividend—that improved and accelerated access could bring. These countries are in totally different places along their electrification journeys. Extrapolating from recent trends, Haiti, with the lowest electrification rate in the western hemisphere, will not achieve universal electrification before 2150, while Honduras is on track to meet this target before 2030.

The Dividend approach quantifies the potential benefits of electrification based on the access conditions in each country. It estimates and monetizes a number of benefits that electrification can unlock—reduced spending for lighting and phone charging, reduced emissions from kerosene burning, increased study time, and increased household productivity and asset ownership. Building on the work that Power for All and Sustainable Energy for All developed in the 2017 “Why Wait? Seizing the Energy Access Dividend” report, the model is refined to differentiate between the MTF electricity access tiers. Stakeholders can now analyze the benefits that alternative electrification pathways provide, thereby making more informed decisions that meet their country’s needs.

Applying the approach in Haiti, providing basic tier 1 access (access of four hours/day, ~12 watt hours) to Haitians currently lacking it would generate $30 in benefits per household per year, or more than $420 million in benefits over the next two decades. So at the current time, an electrification strategy emphasizing speed and high numbers of connections would seem a compelling electrification strategy for Haiti.

In contrast, as official government statistics show that electricity access in Honduras is already approaching 90%, accelerating basic access provides only modest benefits—$54 million if unelectrified households received access today. Using MTF survey data, however, we find that the majority of Hondurans (62% of households) have less than “tier 5” electricity—the standard for safe, reliable electricity available at least 23 hours/day. The figure below illustrates this highly varied electricity access situation. Focusing on improving reliability and raising the quality of electricity service to this tier 5 standard would generate about $267 million in benefits. It would support the purchase of more high-power appliances and increase income generation, as well as reduce losses during outages.

 

Most common energy tier by municipality, Honduras

 

Step 3: Identify the tradeoffs and construct electrification strategies

These scenarios for Honduras provide hard numbers on how different electrification approaches and priorities generate different levels of benefits. Each approach requires different technology, entails varying costs, can be funded through different public and private financing models, and offers different opportunities for supporting complementary sectors, like agriculture and commodity processing. Perhaps most importantly, these differing potential strategies underscore the need to consider equity and broad stakeholder engagement.

In other words, it is not enough to develop electrification strategies in the abstract; policy-makers must roll up their sleeves, engage with the data, and confront the trade-offs inherent in any electrification plan. Resources are limited, and this visioning and implementation planning is a complicated, technical and politically-charged exercise. Governments need support in this effort, ideally in ways that facilitate learning, making data and analytic tools more accessible for policymaking. Many donors and development partners are already stepping up to help make this sort of integrated planning a focus.

  

Step 4: Refine, test and refine

Despite improvements in data availability, countries will never have perfect information – and they shouldn’t wait for it to build and execute their electrification plans. But in the meantime, much work still needs to be done to make data more usable for policymaking, and to sharpen these tools so that plans can be regularly updated to reflect the latest technical, financial and socioeconomic conditions in the country.

To build on our understanding of the costs and benefits of different electrification pathways to improve targeting, researchers will need to push forward in these areas

  1. Quantifying more benefits, especially for businesses: The benefits modeled to date should be considered lower-bound estimates, given data and methodological limitations. As researchers drill down further in identifying and quantifying the impacts of energy access and reliability—like changes in health, how people use their free time, community effects such as safety, and increases in business productivity—these effects can be incorporated into decision-making. Rigorous real-world evaluations can support this process.
  2. Gathering more country data: Detailed MTF household level surveys have been completed in the Democratic Republic of Congo, Ethiopia, Kenya, Liberia, Niger, Nigeria, Rwanda, Uganda, Zambia, Bangladesh, India, Cambodia, Myanmar, Haiti, Costa Rica and Honduras. More are coming, and researchers are already building on the World Bank methodology to deploy similar instruments in other contexts.
  3. Understanding costs: The Dividend methodology so far does not include costs, which are highly technology-dependent and contextual. Yet least-cost electrification models exist that estimate costs for grid extension, mini-grids and stand-alone systems. Planning tools that capture factors like population density and distance from the grid should be linked to benefit and demand estimation models to provide guidance on the net value of alternative electrification approaches.

Electrification choices are among the most difficult decisions that governments must make, and the ramifications of those decisions have great bearing on a country’s ability to support improvements in well-being and broader development. By harnessing the vastly improved tools and information available today, government decision-makers can more fully leverage the dramatic improvements in energy access technology, and direct impact-focused capital more optimally to achieve SDG7’s targets.

 

Jonathan Phillips, Marc Jeuland and Emily Pakhtigian are part of the Duke University Energy Access Project.

 

Photo courtesy of DFID.

 


 

 

Categories
Energy
Tags
electricity, emerging markets, energy access, global development, government, LMICs, public policy, Sustainable Development