Electrification Challenge in Rural Areas

Overview

Without the provision of modern energy and electricity there is no support for socio-economic development and improvement of the living conditions in rural areas in developing countries. Although the awareness of the importance of reliable electricity infrastructure is given there are still about 20% of the global populations who have no access to electricity. Based on current trends, 1.2 billion people (15% of the world’s population) will still lack access in 2030. This means the financial framework and the enabling environment (appropriate and sustainable political, legislative, organizational and financial circumstances) in the developing countries are by far the most important determinants for successful electrification. But it also requires improved international cooperation.

Facts and Figures

• From over 1.4 billion people without access to electricity 85% are coming from rural areas
• Over 1 billion people have no reliable power supply (unplanned power outages, massive losses, power quality issues) and most of them are poor and living in rural and remote areas in developing countries
• Sub-Saharan Africa: about 70% of the population lacks access to electricity and 85% of them live in rural areas
• South Asia: about 50% have no access to electricity
• Between 2011 and 2050, the world population is expected to increase by 2.3 billion, passing from 7.0 billion to 9.3 billion
• Urbanization will continue: the urban population will grow (from 3.6 billion in 2011 to 6.3 billion 2050) and there will likely be 0.3 billion fewer rural inhabitants in 2050
• Between 2008 and 2030 cumulative global power sector investments of US$ 13.7 trillion are needed to meet the expected growth in electricity demand and replace obsolete infrastructure.
• Energy costs in rural, underdeveloped areas are disproportionatelyhigher per connected consumer than they are in urbanized areas (grid systems are more developed and service providers have a higher incentive to provide higher quality and generally, lower cost service)

Universal Access to Electricity in 2030

The Energy Access Practitioner Network (supported by the UN Secretary-General's "Sustainable Energy for All" initiative) defined 3 interrelated objectives by 2030:

• Universal access to modern energy services
• Doubling the global rate of improvement in energy efficiency
• Doubling the share of renewable energy in the global energy mix

To finally power opportunity, maximize development benefits and help stabilize the climate change with this three goals, significant hurdles must be overcome: High capital costs (the actual costs are site and technology specific and vary enormous) Lack of incentives as extending the access to electricity to rural areas is commonly a loss making activity (depending on external support from the government / aid organizations) Financial resources

Estimated Costs

Assumed costs:

• rural grid connection: US$ 2,000
• urban grid connection: US$ 1,200
• mini/ off grid connection: US$ 1,200

According to these assumed costs a total investment of US$ 752 billion that would mean:

• urban grid: US$ 418 billion
• rural grid: US$ 140 billion
• rural off-grid: US$ 48 billion
• rural mini-grid: US$ 146 billion

US$ 752 billion is just 5% of the total investments needed in the global power sector until 2030.

Rural communities are already using commercial energy with extremely high prices. These traditional sources of commercial energy include dry cell batteries, candles, kerosene and diesel. In a study financed by the word bank Yemen, the cost per kilo-Lumen hour for light derived from candles and kerosene was US$0.145, while the cost for grid-supplied electricity was a mere US$0.008/kilo Lumen-hour. New delivery systems have to be found to provide electric servise to millions of households in rural areas of Africa and Asia without reliable commercial service. As the consumption of rural households power is in general considerably smaller than in urban areas it is not necessarily more expensive to install. They can be engineered to supply the identified needs at an appropriate cost.

Socio-economic Context

It is very crucial to understand the socio-economic context as it plays an important role in achieving the Millennium Development Goals (MDGs) linked to energy supply. The uptake of energy services and their application by the end user is needed.

Influencing the Demand

Living in a town or in an urban area makes a huge difference in defining the energy demand. The demand for electricity in urban and rural town areas is mostly dominated by industrial uses and large service locations. However in rural areas the demand for electricity is defined by household energy demands, needs for irrigation and local agro processing or other natural resource related enterprises such as mines. Micro scale enterprises have demands not much larger in terms of capacity requirement but yet different from households. The energy demands for those enterprises are more difficult to predict and also depend very much on the local socio-economic context in which the enterprises operate.

When developing the electricity supply for households or enterprises the current consumption patterns need to be observed but also some capacity for growth needs to be taken into account.

Influencing the Impacts

To reach the development goals (improving health care and education, increasing level of incomes to cross the poverty line) the access to modern energy is a necessary condition. Lighting of homes and schools will have an influence on the education as this allows studying at home even when its dark and will attract teachers to rural schools. Also impacts related to health topics are possible by improving cooking situations, boiling water and cooling food for e.g. hygiene.

The impact of electricity on incomes (especially the non-farm sector) is more complex and little understood. Its important here that the impact materializes especially for the poor. The first to benefit in terms of income generation from new energy access are the more wealthy entrepreneurs within the community.

Social assets rather than financial or other assets are the key to the realization of increasing incomes making use of new opportunities provided by modern energy supply, which implies:

• rural electrification projects where a proper market connection is not yet existing need additional activities related to business support to really meet the poor
• a secondary role are playing the activities in (micro)-finance or other Business Development Services (BDS) as they are only enhance the benefit of electricity for those who have access already but doesn't reach the majority of the poor.

Impacts on the incomes are also relevant for the stakeholders in the energy supply as they are having incomes and therewith higher ability to pay for the energy services.

Especially when reliability and predictability (e.g. enterprise operations) is important the quality of energy supply is playing an important role of influencing the impacts.

Conclusion

To speed up the electrification of the more remote communities in developing countries further technical innovation and cost reduction is necessary. Further development of currently known technologies (central grid systems and off-grid options) is expected.

Further Information

• ELECTA No 259, December 2011 Energy Access Practitioner Network, Towards Achieving Universal Energy Access by 2030, Published by the United Nations Foundation, June 2012
• Impacts of Rural Electrification in Uganda 2011-2019

References

This article is an abstract of the article in ELECTRA no 259, Invited Papers, "The global electrification challenge the case of rural and remote areas", Adriaan Zomers, Dan Waddle, Joseph Mutale, Annemarije Kooijman-van Dijk