Anders H. Nordström, Christian Kornevall
Electricity: the developed world takes it for granted but it is a luxury to many parts of the developing world. In developed countries, electricity is considered the backbone of the economy and it is generally agreed that providing access to electricity is a key element in the fight against poverty and an enabler of social and economic development.
Why is then that an estimated 1.6 billion people, a quarter of the world’s population, have no access to electricity? And in the absence of any new policies, it is estimated that by 2030, 1.4 billion people will still lack access! The reason for this situation is complex and involves energy policies, technological, economical, and institutional aspects.
Across the world, those with no access to modern energy are cooking on wood, dung and charcoal. The results of this, both physically and environmentally, are devastating. Providing power to the poor without destroying the planet has become one of the biggest challenges of modern times. ABB has, in collaboration with UN organizations, governmental and non-governmental organizations (NGOs), industry partners and customers, taken on part of this challenge. Through its Access to Electricity initiative ABB is developing and implementing business models for the electrification and sustainable development of poor rural and semi-urban societies.
The first result of this project can be seen in the remote village of Ngarambe just outside the Selous game reserve in southern Tanzania. Inaugurated in June 2004, the effect that the power system already has on this small community is truly amazing.It is hard for many of us to imagine what life would be like without electricity. Yet, in this day and age almost one-quarter of the world’s population knows exactly what life is like without modern energy. The harsh reality is that regions and communities without electricity are often areas that experience extreme poverty, limited freedom of choice and opportunities, high unemployment rates, insufficient health and education services, lack of basic infrastructure and an unsustainable use of the environment.
It is generally agreed that providing access to electricity is a key element in fighting such problems. But for those living on less than US$ 2 a day, paying for the electricity desperately needed for cooking, heating, agriculture, lighting for education and pumps for clean water is a real problem. It then follows that women and children must spend hours each day collecting heating fuel, which in turn destroys tree cover. Indoor air pollution, due to smoke from cooking fires, causes many deaths every year, mostly in rural areas.
Of the 1.6 billion people around the world who do not have access to electricity, more than half a billion are in India and another half a billion live in sub-Saharan Africa. Poverty, abandoned energy policies and economics are largely to blame for these appalling figures.A vicious circleIn areas with poorly developed financial markets and low domestic savings, raising enough capital for power sector investments is difficult. There are other problems as well: * Exchange rate risks limit the inflow of external capital. * Rural electricity schemes are usually more costly to implement than urban or semi-urban schemes. * Often the technical standards issued by authorities in developing countries are similar to those in European or other developed countries. This then means that they are not adjusted to local conditions, thus leading to unnecessarily high electrification costs. Misdirected subsidy policies. * Tariffs that do not cover costs. * Non-payment. * Political interference. * The distortion of commercial incentives. | In many cases, the policy environment and institutional structure in decentralized rural settings is not conducive to private investment. As a result, demand greatly exceeds supply...