The 5 mistakes we’re making in the fight against global energy poverty

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. Author: Todd Moss, Founder and Executive Director, Energy for Growth Hub

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Energy consumption, in all its many forms, enables everything from how we live, eat and move, to how we work and communicate. Greater energy use is also needed to end poverty and boost incomes around the world. That’s why the UN SDG7 to reach “access to affordable, reliable, sustainable, and modern energy for all” by 2030 is a wonderful vision.

The UN’s goal is especially salient across Africa where nearly all people live in energy poverty – energy is too costly, too unreliable or simply unavailable. Yet confusion over what is meant by “affordable, reliable, sustainable, and modern” when it comes to energy is hampering progress against poverty and short-changing hundreds of millions of Africans.

Here are the five big mistakes we are currently making:

The main indicator for tracking SDG7 is the number of electrified homes. The goal to reach 100% is a worthy objective: every person on the planet deserves to have lighting and electrical appliances at home. Yet residential electricity accounts for only about 5% of global energy consumption and one-quarter of the world’s electricity. The vast majority of energy is used in industry, commerce, agriculture and transportation, so we’re only tracking one tiny slice of the energy pie. That’s why basic household access cannot solve energy poverty.

The International Energy Agency, the global standard-setting body, defines modern access as 50 kilowatt-hours (kWh) per person per year in rural settings. This is pathetic; it’s barely enough power to run lights for a few hours per day and to charge a cell phone. It cannot power a TV, a fridge or a stove, nor is it anywhere close to enough power for an air conditioner. In other words, our definition of modern energy is in no way modern.

Even when energy is targeted to business or what economists call productive use, modern is also poorly defined. Many actors investing in energy for income generation focus on micro-cottage industries, such as sewing machines or lights for corner shops, not the power needed to run a factory, a data centre or a cold storage facility. Such efforts, when they work, are mitigating the worst effects of extreme poverty, not creating the conditions for economic transformation and growth. An example: promoting solar blowers for blacksmiths. While applying new tools to a low productivity technology from the Middle Ages might bring incremental benefits, if we’re still talking about blacksmith efficiency in a decade, we will know we have failed to provide truly modern energy or to end poverty.

Ghana is an energy-access success according to SDG7: its access rate is already at 85% and the country should approach universal access soon. However, if you asked a typical Ghanaian business owner about the power sector, they would say it’s a disaster. Outages are so common they have a phrase for it (“dumsor”) and tariffs are now $0.23/kWh, among the world’s highest prices for electricity. Nearby Nigeria has far lower prices at $0.07/kWh, but firms report needing to use generators nearly 60% of the time when the cost is more than $0.35/kWh. How are companies in Ghana and Nigeria supposed to compete with Vietnam, where power is $0.07/kWh and reliability is about 99%?

SDG7 specifies affordable and reliable but makes no attempt to track either. The Energy for Growth Hub convened academic and business experts to propose rectifying this oversight by creating a new metric: the reliability-adjusted cost of electricity (RACE). It captures the effective prices paid for electricity by a typical firm that also has to self-generate when grid power is out. RACE enables countries to more accurately compare themselves to competitors and to set improvement targets, hopefully incentivizing power investments that unleash job creation.

The notion that providing everyone with a little bit of electricity is success ignores the vast chasm of global energy inequality. An average American will use 50 kWh in less than a day and a half, but this amount is supposed to last a person in Kenya or Nigeria a whole year. In fact, no high-income country in the world consumes less than an average of 4,000 kWh per person per year. The US uses more than 12,000, while Ghana is at 350 and Nigeria is under 150. The gaps are so extreme that the office buildings along K Street in downtown Washington DC use more power than the nation of Liberia and the entire country of Senegal uses less electricity than Californians use playing video games.

Reaching the SDG7’s goal of modern energy for all means refusing to accept that poor people must be satisfied with energy crumbs. Thinking small on energy consigns hundreds of millions to poverty.

For many, sustainability simply means promoting solar and wind. But this conflates ends and means. Renewable energy will play a huge role in Africa’s future energy mix, especially as technologies improve and prices drop. But the goal should not be to deploy one favoured technological solution. Compare this to transport: bicycles are cheap, clean and efficient ways to get around, but they are useless at hauling cargo; a modern transportation system has different solutions for different needs – the same is true for energy.

What about climate change? Africa’s power sector isn’t a factor in global emissions mitigation, nor will it be any time soon: the continent’s total electricity consumption (~500 tWh) was only about half the amount of last year’s global growth (~900 tWh). The energy-climate nexus in Africa is indeed critical but it’s mostly about adaptation.

Sustainability in Africa means equipping vulnerable countries to cope with extreme weather events, rising temperatures and severe drought. Resilience requires steel and concrete for hardened infrastructure, cold storage and air conditioning, and pumped irrigation and desalination for freshwater. These are all energy-intensive technologies. The effects of climate change require Africa to use more energy, not less.

The ultimate goal of global development is to raise incomes and enable every person on the planet to have a fair shot at fulfilling their creative and human potential. This isn’t possible when people live in energy poverty. Modern energy systems that can deliver cheap and dependable power at scale can drive higher living standards, productivity growth, and economic transformation.

Declaring success with light bulbs and a solar-powered sewing machine is selling billions of people short. The UN was right in calling for affordable, reliable, sustainable and modern energy for all. We can only achieve the vision of ending energy poverty if we stay true to what each of these lofty words entails.