from Energy, Security, and Climate and Energy Security and Climate Change Program

A New Paper on Energy Poverty

November 10, 2010

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Fossil Fuels

International Organizations

I’m a coauthor on a new paper, “Understanding the Scale of Investment for Universal Energy Access”, just published in Geopolitics of Energy. (The other authors are from UNIDO, the IEA, and Margaree Consultants.) We assess the cost of delivering basic electricity and modern cooking fuels to those who currently lack them (about 1.3 and 3 billion people respectively). After presenting a comprehensive review of other estimates, we derive our own: $12-134 billion for electrification, and $1.4-2.2 billion for clean cooking fuels. To be clear, this isn’t a cost estimate for government spending: it is the total annual cost, including private expenditures. The sources of this money and the policy framework for mobilizing it are separate matters.

The estimate for electrification, aside from the low end, is considerably greater than those that have been presented in the past. Why? Peculiarly, most past estimates have only included the cost of generating equipment, but have ignored the cost of fuel. We include that cost, which is particularly high for rural electrification, which still tends to include a significant (and highly inefficient) oil- or diesel-fired component. The very highest estimate ($134 billion) also reflects higher electricity consumption than other studies normally use; I’d put my bets closer to our midrange estimate, $60 billion, which has more modest expectations for electricity consumption.

Our estimate may actually, however, be low. We note in the piece that we are missing two important quantities: the cost of connecting users to the grid (as opposed to generating the electricity for grid-connected users in the first place), and the cost of buying appliances (electricity isn’t much use without lightbulbs and TVs). We provide some crude estimates for those costs, but don’t include them in our bottom line.

There’s a lot more to be understood if we’re to successfully address the tragic state of energy access facing half of the world. We hope, though, that this paper will help provide a useful framework and foundation for thinking some of the important issues through.