Despite the clear potential of solar power systems, these systems will not expand rapidly in rural areas unless other obstacles to universal access are addressed. Rural dwellers in developing countries who lack access to electricity are typically poor and have limited access to credit. As a result, their ability to pay (effective demand, in economic terms) for modern energy is low and could remain low for a long time. Even were electricity provided for free, demand would likely be limited because these rural residents possess few (if any) appliances or other assets that use electricity. Nor do they have funds to purchase these assets.
What can be done to promote universal access? Future gains in electricity access are contingent on adequate public support in developing countries.
For solar power to make a substantial contribution, policies will need to take account of the nature of these energy systems. Important differences between distributed renewable systems and centralized fossil-fuel-based systems require a new approach to public support and a new institutional framework for energy generation. Four differences are highlighted here.
First, the economies of scale inherent in traditional fossil-fuel-based systems mean there are few players in generation and distribution, creating a monopoly-like situation that argues for substantial state involvement, either through direct industry ownership or regulation, to limit market power and lower prices. In contrast, distributed solar power systems can be constructed and operated by many players. State involvement is needed not to regulate a lone or limited number of providers but to foment competition across an array of providers who can help extend electricity to poorly served areas. At a minimum, the model of a monopoly energy provider delivering services to rural communities should be rethought.
Second, with expanded possibilities for delivering electricity to dispersed rural communities should come expanded effort to deliver packages of support that include both electricity access and the means to use it. Rural electrification is only beneficial if it can be used to provide lighting, heating, cooling, pumping, and other productive services – it is a means to achieving development goals. A focus on packages of support opens the possibility of attaining much larger development benefits much more quickly. Along with the expansion of electricity access and use comes the need to be vigilant for unintended consequences. For example, solar power and electrical pumps can drive down the cost of pumping water dramatically, and without appropriate institutions in place to govern resource use, groundwater may be rapidly depleted. Also, disposal of spent solar cells and batteries raises environmental concerns.
Third, the selection of locations for renewable power installations will differ from traditional systems. Renewable systems not only offer new possibilities for local rural electrification, they can also supply power to the main electrical grids. Historically, location of fossil-fuel-based generating assets has been driven largely by fuel acquisition costs. For example, coal-fired power plants are frequently located near coal mines, eliminating the need to transport low-quality coal. Likewise, the location of grid-scale solar or wind systems will be driven at least in part by the location and properties of renewable energy endowments (reliability and quantity of sun and wind). Considerable incentives also exist to distribute utility-scale renewable power generation installations across space. Spatial distribution of utility-scale renewable assets creates a portfolio effect—with multiple locations, it is likely that the sun will be shining or the wind blowing somewhere. This portfolio effect helps to stabilize total power output from variable renewable sources and thus eases the problem of matching supply with demand. The costs of transmission to sources of demand must also be factored into site selection.
The potential for leveraging rural electrification for rural growth should enter into this calculus. In West Africa, for example, populations are concentrated along the coastal south, but solar energy potential is greater inland toward the Sahelian zones in the north. A legitimate question might be: Is it better to generate power near coastal cities for low distribution costs, or to build utility-scale solar power in the north and invest in transmission to deliver it to the south? Answering this question requires detailed location-specific analysis. If the utility-scale solar and associated transmission offer a low-cost means to contribute to rural development in the north, this benefit should be taken into account. And, if rural electricity demand can be modulated cheaply and easily, then the addition of rural zones not only can support rural development but also can help match electricity supply with demand.
Finally, technology adoption and the implications of technology once adopted are mediated by social circumstances. For example, a study in Tanzania and Ethiopia shows that access to small-scale irrigation resources does not guarantee success in improving dietary diversity. Looking at a sample of households in both countries, the study found that irrigation was associated with improved dietary diversity in Ethiopia; however, the association between irrigation and dietary diversity was not statistically significant in Tanzania. These kinds of results highlight the need for understanding the impact of technology adoption within households. Other recent research on small-scale irrigation finds that who controls a technology within a household helps determine not only whether the technology will be adopted but also how the benefits and costs of adoption are distributed within the household. Some evidence shows that solar-powered pumps could be a promising technology for women, especially where the pumps reduce both domestic and field labor requirements. Pumps located near the household, where women exercise more control, are also preferred by women, according to a study in Ethiopia.
Overall, the good fit between the technical characteristics of solar power systems and the dispersed populations and sunny environments that characterize many rural areas of developing countries argues for adopting the new approaches and undertaking the necessary institutional transformations. There is also reason for optimism. For 25 years, the number of people living without access to electricity in Africa south of the Sahara increased steadily – from 400 million in 1990 to 600 million in 2015. A decline finally registered in 2016. Recently, the net number of people gaining access to electricity on a global basis has been about 120 million people per year, with solar power systems playing a substantial role. Some simple back-of-the-envelope calculations suggest that near-universal access to electricity by 2030 is possible. Assuming that the population lacking access in 2017 was one billion people, the rate of population growth in this group is 3 percent per year, and the net gain in access to electricity is 100 million people per year (less than the net gain of 120 million people per year registered recently), then universal access could be attained by 2030, despite the headwinds created by rapid population growth. Maintaining net gains in electricity access of 100 million people per year will not be easy, but we have better tools than ever before for achieving this goal.
Todayas renewable energy revolution is providing valuable tools for enhancing growth and development prospects in developing countries while meeting environmental objectives at global and local scales. Accelerated research efforts and fresh thinking will help us to realize the potential of the ongoing energy revolution.
Channing Arndt is division director, Environment and Production Technology Division, International Food Policy Research Institute, Washington, DC, USA.
Excerpt of: International Food Policy Research Institute. 2019. 2019 Global Food Policy Report. Washington, DC