What We Get Wrong About Energy Poverty

Five big mistakes

Ending energy poverty is foundational to meeting all of the world’s big development goals. Creating jobs, better health and education, industrialization, and achieving a low carbon future all require closing the gap between the energy-rich and the energy-poor. 

At first glance, it appears we’re on it. The United Nations has set a global aspiration, known as Sustainable Development Goal 7 (SDG7), of “access to affordable, reliable, sustainable, and modern energy for all.” This is a wonderful vision. The UN’s goal is especially salient across Africa where nearly all people are held back by energy that is too costly, too unreliable, or simply unavailable – ie, they live in some form of energy poverty. 

Yet how people think of energy poverty and potential solutions can be so muddled that confusion reigns, even over definitions of each of the words contained in SDG7. This confusion has real consequences because it risks derailing development and climate goals – and short-changing billions of people. 

Based on a talk I gave at the World Bank that seems to have resonated with a lot of people, here are what I believe are five big mistakes the world is making about energy poverty – and why they matter:

Mistake 1: Equating energy with just electricity at home. 

The world’s dominant energy goal (and the principal indicator for tracking SDG7) is getting the ratio of electrified homes to 100%, AKA ‘universal energy access.’ It’s a worthy objective. Every person on the planet absolutely deserves to have lighting and electrical appliances at home. 

Yet at the same time, electricity in every home is an exceedingly narrow target. Residential electricity accounts for only about 5% of global energy consumption and only about one-quarter of the world’s electricity. We think of electricity powering homes, but in reality the vast majority of energy is used in industry, commerce, agriculture, and transportation – and in many countries that kind of energy is what’s missing. So by tackling residential electricity, we’re only tackling one slim slice of the energy pie. Just as achieving universal literacy would not solve global education, basic household access cannot solve energy poverty.

Mistake 2: Defining modern down so low as to be borderline gaslighting. 

Because a physical connection to the grid (or a generator or a solar home system) doesn’t always mean people have enough power to meet their needs, it’s great that the International Energy Agency, the global standard-setting body, has an electricity consumption threshold for what counts as ‘modern access.’ Unfortunately, the level is set at just 100 kilowatt-hours (kWh) per person per year in cities and 50 kWh in rural areas. 

What does a person get with 100 kWh per year? That’s barely enough power to run lights for a few hours a day and to charge a cell phone. Maybe a small fan. It cannot power a TV or a fridge or a stove – or is anywhere close to enough for an air conditioner. In other words, the dominant definition of modern energy is in no way modern. 

The current target is better described as an extreme energy poverty line, and we should absolutely work to get everyone above it. But we need a next step on the energy ladder that’s closer to the spirit of SDG7. My colleagues & I at the Energy for Growth Hub have proposed 1,000 kWh as that next step.

Mistake 3: Forgetting affordable and reliable, which is what business really needs. 

SDG7 specifies ‘affordable and reliable,’ but makes no attempt to track either. Ghana is a great example of the problem this creates. The West African country is an energy success in one way because its access rate jumped from 45% in 2000 to 85% today. However, if you asked a typical Ghanaian business owner about the power sector, they would say it’s a disaster that has gotten worse. Outages are so common they have a phrase for it (‘dumsor’) and tariffs are now $0.14-28/kWh, among the world’s highest prices. Power from a typical backup generator in Ghana runs over $0.50/kWh at today’s diesel prices, driving up a company’s energy costs even further. How are businesses in Ghana supposed to grow and compete with places like Vietnam, where power is $0.07/kWh and reliability is about 99%? They can’t. 

While we expand access, cost and reliability have to be addressed or else we’re just entrenching systematic energy poverty.

Mistake 4: We’re not really including ‘all’ if we accept extreme inequalities. 

Providing everyone with a little trickle of electricity can only be considered success if we ignore the vast chasm of global energy inequality. An average American will use 50 kWh in about 33 hours. But this amount of electricity is somehow supposed to last a person in rural Kenya or Nigeria a whole year. 

Energy inequality matters at the macro level too. There’s no such thing as a high-income low-energy country. (That red circle on the graph is entirely empty.) Every single high-income country in the world consumes more than 4,000 kWh per capita per year. The United States uses nearly 13,000. Ghana is around 350 and Nigeria is under 150. 

Inequality is so extreme that the entire country of Senegal uses less electricity than Californians use playing video games. In fact, the street where my office is located in downtown Washington DC uses more power than the nation of Liberia. 

These insane comparisons show why reaching the vision of modern energy for all must start with a refusal to accept that poor people must be satisfied with energy crumbs. Thinking too small on energy consigns hundreds of millions to poverty. 

Mistake 5: Flipping ‘sustainable’ to mean the opposite of what Africans actually need. 

For many people, sustainable energy means simply solar and wind. Yes, renewable energy will play a huge role in Africa’s future energy mix, especially as technologies further improve and prices drop. But presupposing energy choices by picking one favored technology for different energy needs in different places with different available resources makes no sense. Energy policy is about balancing cost and resilience, serving current demand while investing for the future, and meeting all the diverse energy needs of a growing economy. No rational policymaker would just decide ahead of time on one answer and do the same thing everywhere.

I like a transportation analogy: Bicycles are cheap and clean and efficient ways to get around, but they’re useless at hauling cargo. A modern transportation system needs different solutions for different purposes. It would be bizarre to have a policy that all transportation must be bicycles because they are cleaner and cheaper than trucks, ships, and airplanes. The same goes for energy. 

What about climate change, you say? 

I’ll be writing a lot more about this in future posts, but I’ll start here with an emphatic YES, climate change matters a lot for Africa’s future and its energy choices. But not in the way people often assume. 

The starting point is that Africa’s power sector is too small to matter to global emissions. (South Africa, a high-energy coal-dependent anomaly, is the sole exception.) Here’s just one stat: the continent's total electricity consumption (about 2% of the world’s total) is less than the average annual growth in world electricity over the past two decades (about 3%). So we’re adding an Africa & a half’s worth of electricity to the world every year. Couldn’t that small slice grow and become a major source of emissions? Unlikely. There are literally no plausible scenarios where Africa’s future emissions blow the global carbon budget. Worrying about Africa’s power sector CO2 emissions is a total waste of time. 

Climate matters mainly to African energy because of adaptation. Vulnerable countries will need to cope with extreme weather events, rising temperatures, and drought. Resilience to these impacts from climate change will require steel and concrete for hardened infrastructure, cold storage and air conditioning, and pumped irrigation and desalination for freshwater. These are all energy-intensive technologies. That’s why responding to the effects of climate change requires a lot 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. That’s just not 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. That’s why declaring success with light bulbs or a solar powered sewing machine is progress of a sort but still selling billions of people short. The United Nations was right in calling for affordable, reliable, sustainable, and modern energy for all. We can all help to achieve that vision of ending energy poverty only if we stay true to what each of those lofty words entail.