Are Global Goals to End Energy Poverty by 2030 Doomed With a Centralized Approach?

Global efforts to end energy poverty by 2030 are likely to fail if development agencies do not change their investment strategies soon, say advocates of a new development model.

Currently, organizations such as the World Bank are backing the creation of Western-style centralized power plants and large distribution networks to bring electricity to around 2 billion people without access to reliable energy supplies. 

But these infrastructure projects take too long and are too costly to achieve a United Nations' goal of ending energy poverty by 2030, according to William Brent, director of communications at Power for All, an international coalition of distributed energy providers and advocacy groups. 

“Development banks and national governments are used to the old ‘build a centralized grid’ approach," said Brent. “The problem is the World Bank's own internal audit says such centralized power plants take an average of nine years [to build]. Yet the global community has signed up to end energy poverty by 2030. There is zero possibility of that happening on the current trajectory.”

The time needed to secure financing for large power plants -- not to mention transmission infrastructure -- is another potential barrier to building generation infrastructure in nations with shaky economies. The challenges associated with building out power transmission and distribution infrastructure across developing countries are, if anything, even greater than those involved in building generation assets, Brent said.

“People always overlook transmission and distribution,” he said. “Nobody wants to pay for it because it never makes money. The generation piece might be easier to solve, but the transmission and distribution piece is the stepchild that nobody wants.” 

These factors all make it harder to meet the 2030 goal on time -- or at a reasonable cost. 

“Analysts have generated a number of estimates of the cost of providing universal energy access in developing countries,” said Brent. “These estimates range from as little as $30 billion per year to as much as $130 billion per year.”

The International Energy Agency, to take one example, believes it would cost $700 billion in total to provide universal energy access by 2030.

Given these cost and time constraints, Power for All argues that development efforts should focus on the rollout of distributed renewable energy assets. Community microgrids can be rolled out quickly and do not require extensive transmission and distribution infrastructure, argues the organization.

Using this approach, Power for All estimates that universal energy access could be achieved for around $70 billion, or around one-tenth the cost of a traditional model.

Admittedly, this would be for "tier 1" electricity supply, which might deliver as little as 3 watts and 12 watt-hours a day -- just enough to provide basic lighting and phone charging. This will not be enough for many users demanding energy services, say skeptics of a distributed energy approach. 

In a recent article published on GTM, Professor Catherine Wolfram, the faculty director at the Haas School of Business at the University of California, Berkeley, argued that the majority of non-grid-connected households in Kenya want televisions and radios -- appliances beyond the reach of many off-grid solar systems.

PowerGen CEO Sam Slaughter published a piece on GTM about the limitations of current off-grid offerings: “We can link a significant percentage of households in Africa to a power grid with a budget of $1,200 per connection. And that grid will give them freedom that a battery-only system cannot handle.”

The problem, according to distributed energy proponents, is that the centralized model has failed to produce results. In April, the Sierra Club and Oil Change International issued a report blasting development financiers for lack of progress on energy poverty.

“If the goal of universal energy access is to be reached by 2030, the world must consider other electrification options that are both affordable and capable of being widely distributed,” concluded the report.

Jonathan Walters, an independent energy economist and former World Bank director, told GTM: “With the track record of centralized utility-based power in much of sub-Saharan Africa, it’s extremely hard to see how access targets could be reached only through extending grids."

“Now that solar PV is so cheap, and getting cheaper, PV mini-grids could bring power to rural and peri-urban Africans much faster than national grids ever will. PV is becoming the cell phone of the electricity sector in sub-Saharan Africa," said Walters.