Urban and Rural Energy Access: “Leapfrogging”?

Mark Borchers from SEA writes on the recent context of SAMSET work in the wider space of urban and rural energy access in the developing world.

Christoph Frei, Secretary General of the World Energy Council[1] recently noted that “only three years ago, when suggesting to energy professionals that there could be ‘leap frogging’ in energy similar to what has happened in the mobile phone industry, the response would have suggested little understanding of energy realities. We now see tens of thousands of direct household solutions being delivered to rural Africa without a formal supply chain and in the absence of any energy infrastructure backbone. What does leapfrogging mean, if not this?”

…and…

“In many rural contexts in Africa, renewables are providing an engine for local development and poverty reduction.  Of the two-thirds of people in Africa without access to power, 80% live outside urban centres. A mix of off-grid renewable power instalments could be the key to electrifying rural Africa with consumers buying power locally and paying via their mobile phone.”

The potential of energy delivery modes “without a formal supply chain and in the absence of any energy infrastructure backbone” that Frei speaks of is indeed exciting. This largely bypasses the cumbersome processes of central institutions with their inefficiencies and mixed agendas.

He also notes: “For the energy sector, unprecedented speed of change and new realities pose a wide range of challenges and new opportunities for companies and governments who are on a high-stakes journey to adapt their business models and policy frameworks.”

Energy leapfrogging does not only apply to rural areas, direct benefits to the local economy can be seen in large cities such as Kampala, above. Image: Daniel Kerr

Frei importantly reinforces the perception that the energy sector is changing rapidly, and that the old way of doing things – where centralized planning and large utilities are the key players – needs revisiting, as it is unlikely to be the way of the future.  Yet most national governments and utilities in Sub-Saharan Africa seem to be moving into the future as if this is not the case, with the potential for stranded assets and business failure. Surely new approaches and business models need to be explored more urgently.

Secondly, Frei emphasizes rural energy access in Africa. This rural focus is clearly important, and it suits national governments whose political support is generally rural-based (opposition movements tend to grow from urban areas).  But this traditional focus on rural access can unduly overshadow the importance of urban energy access. Looking at access to electricity, although most unelectrified households are currently rural (around 550 million people are unelectrified), urban electrification rates are not high – often well below 50% – and currently around 150 million urban dwellers have no access to electricity[2]. Between 2035 and 2040 Africa’s population is expected to become predominately urban[3].  Modelling undertaken by Sustainable Energy Africa as part of the SAMSET project[4] indicates that the future energy demand of Sub-Saharan Africa is likely to be substantially urban, with the urban share of total demand rising to over 75% by 2040 (see Figure).  We should not overlook that there are huge opportunities to boost access to modern energy in urban areas. It is in urban areas that populations are closer to infrastructure, more dense, with higher average incomes and where delivery systems can be more cost-effective.  It is in urban areas also where the very poor can be the most destitute, with reduced access even to traditional biomass energy.   It seems justifiable to encourage a parallel focus on rural and urban access in a sector where ‘access’ currently seems almost entirely synonymous with ‘rural access’.

Figure: Urban sub-Saharan energy demand over time showing Business-as-Usual, Universal Access and Energy Efficiency scenarios. Total sub-Saharan Africa energy demand (urban and rural) is also shown (Source: Modelling the Urban Energy Future of Sub-Saharan Africa, Sustainable Energy Africa, 2015).

One more point worth considering regarding the urban-rural population dynamic: At a recent course SAMSET was running for municipal officials and urban energy practitioners, a lecturer asked “how many of you are first generation urban, or still consider your ‘home’ to be in a rural area?”.  The majority raised their hand. There may be various implications of this characteristic: urban-rural remittances are likely to remain common into the medium-term, which could facilitate rural energy access with small decentralized technologies such as PV being funded from urban earners for their rural homes and families.  On the other hand remittances may reduce investment in urban areas, which may impact to some extent on urban economies and possibly also the willingness to invest in urban energy infrastructure.  Let’s keep an eye on how this dynamic plays itself out over the coming years.

[1] World Energy Council Secretary General reflects on key highlights of 2016. Africa Energy Indaba Press Release, 12 January 2017

[2] Calculation from IEA’s African Energy Outlook 2014 electrification database.

[3] African Urban Futures 2016, Bello-Schünemann and Aucoin; State of African Cities 2014, UN Habitat

[4] Modelling the Urban Energy Future of Sub-Saharan Africa, Sustainable Energy Africa, 2015. www.africancityenergy.org

Rivers, Technology and Society – Dipak Gyawali at the LCEDN Conference, Durham, 23rd – 24th March 2015

Simon Batchelor from Gamos writes on the relevance of Dipak Gyawali’s talk at the 4th LCEDN Conference to the SAMSET project.

I attended an interesting talk by Dipak Gyawali (Interdisciplinary Analysts, Nepal) at the LCEDN 4th Conference, Durham March 23rd and 24th 2015.  Dipak has been both minister of water and minister of energy for the government of Nepal in the past.  Now an academic studying and discussing the water, energy, food nexus, he is best known for his book Rivers, Technology and Society.  He raised a number of points in his talk that seemed particularly relevant to SAMSET.

Nepal is a country with great potential for hydro power and yet it has only 750MW and in recent years is having daily load shedding on 15 hours.  He focused on how long it takes to build a hydro dam, and the complexities of the ecosystem, the role of activists, and the conditionality of the loans.  Indeed he told the story of how he was involved in challenging the bad economics of the World Bank, arguing against a particular dam not from an environmental point of view (against which the World Bank would argue they would mitigate the environment effects, and then 15 years later we would all see that the mitigation didn’t work) but using economics to argue against the massive investment and delayed outcomes – bad economics was a convincing argument.

But arguing against something is not the way forward for a country.  So Dipak gave us some very concrete examples of possible ways forward.  He talked about the emerging role of decentralised electricity, which takes so much less time to plan and implement.  He noted that in addition to the 750MW national grid, there is also 750MW of Diesel (and Petrol) generators, being run by retail outlets, shopping centres and homes!  Where the grid costs 7 to 8 rupees per kWh, the people who feel they need control of their own electric destiny are paying between 30 to 80 rupees for their diesel generation.  This indicates a massive willingness to pay – if it is attached to reliability.  And Dipak pointed out that from first discussions to actual switching on in 2011, the 750Mw of hydro took more than 70 years; the 750MW of diesel has been thought of and switched on in the last 10 years.

“Kaligandaki Hydro” by Krish Dulal – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons – https://commons.wikimedia.org/wiki/File:Kaligandaki_Hydro.jpg#/media/File:Kaligandaki_Hydro.jpg

So how can we leverage this willingness to pay and this idea of decentralised but reliable electricity?  Of course his example is of carbon based diesel; it would be good if the decentralised reliable energy could come from clean energy.  In Nepal, there are regulatory difficulties in connecting renewables to the grid.  There are 46MW of solar PVs in the country, and studies quoted by Dipak suggest that with a reasonable and a more bureaucratic light feed in tariff, people would install 250MW within 6 months.  His views from Nepal illustrate how ‘business as usual’ can lead to a strange energy landscape, with people paying more than necessary for their energy when a change in policy and regulatory framework could rapidly change the scene.

He also talked about alternative models for funding smaller responses.  Small hydro has not really been very cost effective and yet stepping out of the box and looking at it from different angle can completely change that.  He talked about hydro and transport, and I confess that I thought ‘How is that possible?, how can you link hydro and transport?’.  In Nepal people carry items up mountains by foot, and it can take five hours or more to get goods up to a village. Ropeways can offer an electric pulley transport system. Connecting a hydro to a ropeway can make the hydro economically justifiable, working on the ropeway during the day and then its use for lighting in the evening for the community doesn’t even need to be charged.

In SAMSET we have noted the difference between South African municipalities who buy electricity wholesale and are responsible for and gain revenue from distribution, and Uganda and Ghana where municipalities don’t have such responsibility.  In Nepal, Dipak introduced communitisation of electricity, where communities were enabled to mobilise to purchase electricity wholesale and take responsibility for distribution.  Some 250 communities operate in this way now, and theft of electricity has dropped to zero (since the wholesale has to match the distribution and any community member attempting theft is soon identified and sanctioned).

Interestingly at this point Dipak spent some time on the political economy, noting that almost all sides of the political spectrum do not like the communitisation idea.  The Maoists were said to not like it because it wasn’t through the party system, and the far right didn’t like it because they liked to gift things to the people, in order to get their political support – the communitisation empowered the people outside the patronage system.  Dipak also mentioned that the centralists were lobbied by vested interested to not explore these interesting alternative models!

It was a very interesting talk.  I cannot guarantee I have remembered everything accurately, and numbers may be slightly off, but I felt particularly his focus on decentralised reliable energy, and the willingness of people to pay for reliability, was relevant to all our SAMSET locations.