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Technology should save cash. Households reduced their monthly expenditure on energy freeing resources for other needs.No Comments » | Add your comment
Technology should be affordable: Price matters. As anticipated, the technology we offer is highly connected to their price. If it is affordable, adaptation will be rapid. Price can range from free to unaffordable based on individual household’s income status. Only the technologies that are within the affordable finance will see the light of the day, that too with efforts by development agents.
Poor the households, more they spend on technology (% of income). Based on local situation, knowledge of level of investment that can be realistically expected from different income groups is crucial?
Everyone yearn for new technology. It provides social status and also peer pressure to own new technology (conforming behavior). Some of the values users derive are tangible and others are not. Household decision making has factors other than eco
Improving energy access has been in the agenda for quite some time in the Agenda of development partners – State, donors and civil society. After the UN Secretary General called of Sustainable Energy Access for All (SEforAll in 2012), the agenda got hyped in almost all development partners menu. With its integration in Sustainable Development Goal, it has firmly established as one of development agenda worldwide. Awareness, affordability and availability are described here as three pillars of energy access that is sustainable and smart.
1. Awareness – Knowledge about and knowledge how to use, cognizance
Knowledge on ways and means how people understand their energy need and their access to it is a matter of their level of knowledge. A person’s ability to live a decent living in terms of health, safety, convenience and comfort and exploit potential to earn a decent living or exploit economic opportunities depends on knowledge and skill set owned in addition to assets (resources) at ones disposal. Since energy and device to use energy can impact heavily on one’s productivity, capacity to achieve her/his earning for living, importance of knowledge and awareness of existing options of energy access is immense. Another dimension of awareness in this regard is how the state or society supports or deters her/his access, which is equally important (politically) to ensure equitable energy access.
Therefore, awareness–knowledge at all level including policy makers, users and suppliers is essential for sustainable access to ensure optimum resource utilization in terms of attaining high impact at household national and global level. Competency to select and use the best technology/resource option means being able to acquire and operate based on unabated availability of technical and market information. The ultimate result of knowledge and awareness can be perceived to be willingness to invest at all level by users, state and global actors.
2. Affordability – Be able to buy, able to purchase or able to secure finance
Access to energy resource and device that are better efficient comes at a price. This price needs to be analysed in terms of capital investment and day to day operating costs. The better options are often associated with higher up-front capital requirement. They end of in saving in operating costs mainly fuel costs later. This requires summing-up up-front cost and operating cost to derive real cost of service. Life-cycle costing technology using appropriate discount rate can provide meaningful insights to help in making energy access option selection process. This analysis can be used by consumers, national policy makers and global actors, alike. However, consumers may select discount rate purely based on his financial costs, usually based on current projected market interest rate at which he will be able to source his funding requirements. National policy makers will need a different set of discount rates that takes into account parameters such as supply risks, political and social in addition to financial parameter alone. Further, global actors would add additional parameters like global environmental concern and other matters like world peace etc. while choosing a discount rate to make their decision.
Differentiating consumptive and productive use of energy from affordability aspect is also important. Often higher per unit cost can be affordable for productive use as costs are passed-on to final product costs. Amalgamation of productive use of energy with access for basic need will in effect provide opportunity to bring-down cost of basic energy access through cross-subsidy from productive use. Similarly, grants of various shape and size will impact the immediate affordability. Capital cost, operating cost grants are most common ones.
Financial analysis and life cycle cost of access is only a part of story; another side of coin from affordability point of view is access to finance. What is important to understand and realize is that affordability is not about being able to pay but it is institutional back up including mechanism for grant and loan that will make end-users able to afford. The socio-politico-economic perception and commitments will greatly impact people’s affordability.
3. Availability – Resources and devices are physically available in different size and quality to serve different energy needs. Resource availability is a factor that is governed by nature in tandem with human ingenuity in terms of harvesting technology and processes. However, availability of devices to enable use of resources is entirely made of parameters made by the society. Therefore, as it sounds availability of natural resources and devices for energy access may not be as simple as it sounds. Availability is matter of fact driven by geopolitical realities. Economic policies like pricing and tax and subsidies will determine immediate availability and long-term sustainability. Politically, it may sound attractive to subsidise primal energy access for poor, particularly in poor countries, however financing such a subsidy has always been a challenge. Difficulties in targeting such subsidies, transaction cost and financing the policy are some of the argument that will tend policy makers to look for alternatives. Energy access in the urban and rural areas varies widely in terms of access be it in quantity or in quality. Rural areas are mostly at the short-change side. Enhancing availability in the rural areas, therefore, warrants more importance for multiple reasons including reducing pressure on urban infrastructure and keeping rural economy rolling in addition to maintain geopolitical balance. Optimising resource utilisation, natural as well as financial, will hold the key to a balance and sustainable energy access. Use of various innovative financing instruments and market regulation should be the areas to look for to improve availability. A systemic analysis that comprises market (supply chain) enabling factors like governance and regulations and necessary services to avail energy such as after sales service, finance, insurance, road-access, human resource capacity to acquire and operate will be a way to start analysis and planning for availability.
On the whole, to achieve sustainable energy access, the mechanism and procedures of energy access need to be made “smart”. Use of existing and new technologies with maximum involvement of citizens politically and financially with innovative governance and administration to improve cost-effectiveness are some of the key components of “smart” energy access.
Vishwa Bhushan AmatyaNo Comments » | Add your comment
Head of Programme, Energy
Practical Action South Asia Regional Office
This blog is based on a note prepared for a Panel at a South Asian Regional Workshop held in Kathmandu funded by DfID and executed jointly by the University of Berkeley and Oxford Policy Management.
1. What is the most pervasive form of energy poverty?
Understanding energy poverty or lack of energy access, as I see, needs understanding of energy access in three spheres of energy needs for human society to prosper in a sustained way.
These three spheres are:
i) Energy for household uses (includes energy for cooking, lighting and other uses)
ii) Energy for productive activity of a household to make living in an efficient and humanly manner
iii) Energy for making community services and activities more effective. Practical Action has been advocating this framework through its annual publication by name, ‘Poor People’s Energy Outlook’
If we further analyse these energy requirements, they can be lumped together based on application into energy for thermal applications including cooking, electrical energy for light and appliance use, and sporadically mechanical energy, especially in rural areas for various activities (mainly productive use applications, water mills for agro-processing are an example).
In terms of quantity (energy units) most demand arises for thermal applications of which cooking is the major activity in developing countries, partly contributed also by lower conversion and utilisation efficiency. It is met mainly through the use of solid biomass fuel (mostly non-commercial wood-fuel, occasionally agricultural residues and dried animal dung) in the developing world and some form of commercialised fossil-fuel (kerosene, liquefied petroleum gas – LPG).
The use of electricity in cooking is very limited. The portion of wood-fuel in the total supply (wood-fire, electricity and fossil-fuel) is progressively more for households located in rural areas, which consequently have more access to forests for firewood. When firewood (or wood-fuel)is collected rather than purchased and a lack of rural employment co-exist side-by-side, there is very little incentive to improve efficiency. Consequently, the technology used for this purpose (solid biomass stoves) is rudimentary, inconvenient and unsafe. Thus, the energy poverty is very much represented by unsafe and unclean way of cooking. The urban poor also face similar problems where they resort to various ways of cooking that are unsafe and unclean.
The most pervasive form of energy poverty is the lack of access to clean and safe methods of cooking.
2. Are South Asian households likely to gain access to energy for cooking through electric stoves?
Compared to other alternatives, electricity is costly, not accessible everywhere and reliability is an issue. The evidences show that the equation is more of LPG/kerosene versus wood-fuel in many situations. The trend of penetration of LPG stoves to substitute wood-fuel and kerosene is seen to be very strong and verifiable with import figures of LPG. The intensity of electricity use for cooking is very low and limited within affluent households. Although newer and more efficient electric technologies like induction cooking stoves are making a strong market entry, it will still take a long time to replace fossil-fuel based cooking solutions. The question of substituting wood-fuel with commercial fuel is more one of availability of time to collect (notion of free/near free wood-fuel) as against affordability of poor rural households.
It is, therefore, very unlikely that electricity will replace current methods and trends of cooking solution with current supply characteristics and growth trend in South Asia. There may be some exceptions where electricity supply characteristic is an anomaly where electricity is highly subsidised.
3. What additional interventions will be required to promote alternative cooking technologies?
Promoting alternative cooking technologies (alternative to wood-fuel with inefficient device) will have to be dealt in progressive stages. After all wood-fuel use for cooking is not at all a bad thing if it is sustainably harvested and used with a highly efficient device.
This can start from replacing the current dominant traditional stove (with less than 10% efficiency) with more and more convenient, safe and efficient stoves. Sustainable Energy for All’s multi-tier framework provides five stages of development of cooking energy access with various forms of energy and devices. According to which, energy like electricity and other commercial forms of energy (biogas, LPG, electricity, natural gas, BLEN) and manufactured stoves appear at tbe higher tier and use of biomass in a homemade inefficient stove appears at the lowest end.
To climb the tier, interventions will be inevitable to make it rapid. If we are looking for a long term solution, interventions have to come from outside and cannot be politically popular, limited, free distribution of stoves, that is for sure.
The proper market development of stoves where people find their roles as market actors is important for large-scale change to happen. With a proper market system development, an efficient supply chain and after sales service can be established that are profitable and sustainable.
The necessary interventions to make it happen could be:
- There may be projects with a limited role of subsidy to kick-start the market but must have a clear exit strategy
- Support for market system development with capacity development for market actors
- Ensure that lack of finance does not hinder the market growth
- Another important intervention should be geared towards increasing affordability and reducing the availability of free time to make seem wood-fuel a free resource.
- With proper market development of stoves people will find their roles as market actors. This is important for large-scale change to happen.
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