Energy poverty strongly correlates with income poverty, and is most acute in the poorest households in rural areas. This guide argues that access to electricity, combined with assets, can help people escape persistent poverty. Complementary interventions, coordination, and inter-sectoral collaboration are recommended to maximise the poverty reduction potential of energy services. National commitment and vision, engaged local actors and users and financing are central to ensuring the effective scaling up of successful small-scale or pilot interventions.
The guide highlights a number of key issues:
- Sub-Saharan Africa and South Asia have the greatest number of people without adequate access to energy and that energy poverty is more severe in rural areas.
- Research indicates that chronically poor households are less likely to have electricity than other low-income households, and in parallel, households that remain out of poverty are more likely to have access to electricity. Lack of access to electricity among the chronically poor is caused by unavailability of supply and lack of affordability. Energy expenditures of chronically poor households are a higher proportion of non-food household expenditure than other groups.
- Reducing energy poverty requires affordable modern energy services and cleaner-combusting fuels and/or stoves. The former requires forms of financial support for the poorest through better-targeted subsidies, perhaps through tariff structures, or other alternatives such as cash transfers. The low success rate of interventions focused on the latter is the result of several factors , including the gendered nature of cooking, irregular cash earnings and easy access to biomass sources.
- Modern energy has a number of benefits. It reduces the drudgery of work (largely care work undertaken by women), and improves health, employment opportunities and education.
- Electricity can generate production, enterprise growth, and employment by reducing energy costs – households with electricity are more likely to engage in a micro-business than those without. This has positive effects on employment (farm and non-farm), particularly for women, which is critical for escaping extreme poverty. Business development support services (e.g. microfinance) and enterprises that generate decent jobs for unskilled workers are key complementary interventions.
- Mini-grids or stand-alone systems are likely to supply the lowest cost additional power to remote rural regions at the lowest cost, although it depends on context. Stand-alone systems have limitations but can be appropriate for isolated off-grid households, businesses and public services. Decentralised energy systems in rural areas will depend on capable local bodies, while access to such systems for the poorest will require support (e.g. subsidies).
Designing the most effective policies and priorities for addressing energy poverty will vary depending on country context, e.g. socio-economic and energy circumstances. A summary table of proposed recommendations by country context is provided. However, three main policy priorities should underpin a transformational approach to escaping poverty through energy services:
- expanding electricity coverage and distributing clean-combusting fuels and equipment to excluded populations;
- improving/supporting the poorest to afford these services when they are available; and
- enhancing the reliability and availability of energy services.
