LARGE SCALE INFRASTRUCTURE AND ENERGY POVERTY ALLEVIATION

This paper discusses the reasons why there is neither a single route nor a single model that can be used to widen access to modern forms of energy. Modern energy is in this context energy which is more efficient and cleaner (electricity, LPG, natural gas, kerosene to some extent) than energy provided from traditional energy sources eg biomass.  Although decentralised energy pathways seem suitable for rural areas, grid connection should also be considered, particularly for large villages close to the grid.  In both cases, small-scale decentralised or large-scale infrastructure, the associated high capital costs remain a major constraint. However, in the case of large scale infrastructure, public capital either from the utilities or government budget is necessary to reach poor beneficiaries particularly in rural areas.  In the case of small-scale decentralised schemes, under various funding mechanisms (soft loans, subsidies), a large fraction of poor people can access modern forms of energy, such as electricity in rural areas or Liquefied Petroleum Gas (LPG) in urban areas for cooking, for at least some of their basic needs. This transition to modern fuels is mainly driven by the cost-effectiveness and the comfort of modern energy. Indeed, very often, when modern forms of energy are available, they are cheaper on a mid to long-term basis.

Sub-Saharan Africa is characterised by the lowest rate of access to modern energy, and also by the huge disparity between North Africa (Algeria, Libya, Morocco, Tunisia and Egypt) and sub-Saharan Africa.  Such a discrepancy can be explained to some extent by the unequal level of the development between the two sub-continents. However this explanation is insufficient, as in some North African countries, access to modern forms of energy has dramatically increased during the last two decades in a way that is not necessarily correlated with GDP growth. Lessons learned from North Africa, despite sharp economic, social and cultural differentiations, provide interesting lessons for scaling up strategies in sub-Saharan Africa. 

1. Strategy and lessons from North Africa
Access to modern energy services is very often associated with electricity and small-scale decentralized schemes.  In fact, electricity is only one form of modern energy; it is particularly suitable for energy services such as lighting, communication (radio), ventilation, and refrigeration.  Cooking, which is the most important need - at least in terms of quantity, is better met with other sources such as kerosene, LPG and natural gas.  Electricity might be a suitable vector (It carries the energy, but may require solid fuel to generate it), but the efficiency of cooking with electricity is not good and can be very costly.  Apart from traditional energy (firewood, charcoal), LPG appears to be the preferred option for cooking when this form of energy is available. 

For electricity, infrastructure remains the major constraint and it is obvious that the capital cost, even in the case of decentralised schemes, cannot be supported by poor people in the absence of incentives. Not only are other alternatives, such as kerosene lamps or candles, more expensive, but they cannot be used for some services, such as the media, as electricity (grid or battery) is the only option for TV and radio. Thus, although improved infrastructure, particularly electricity, may reach minimal consumption levels for such services, it will not necessarily lead to development and income generation in the absence of other conditions, such as potential markets. Examples reaching from urban areas in Senegal to rural areas in North Africa show that when modern forms of energy, such as LPG, are available, fuel switching from traditional  to modern forms will be for both economic reasons (modern fuels are often cheaper if we consider the whole chain), and social reasons such as access to modernity. 

1.1. Impact of oil and gas rent and state leadership
Access to electricity is now around 100 % in North Africa, and specific end uses (lighting, media, communication, ventilation, etc.) are met by electricity, even in rural areas.  Compared with other alternatives, such as kerosene for lighting, electricity (excluding energy from torch batteries and the like) is the most cost effective option, and sometimes the only option. This explains why the availability of electricity has led to its spread among the quasi totality of households for at least basic electricity needs. It is therefore interesting to understand the mechanisms which led to such widespread electricity coverage in North Africa.  The experiences across the individual countries vary according to the natural resources, particularly oil and gas endowment.

Oil rent is the difference between the value of crude oil production at world prices and total costs of production.  Economic rent can be collected as royalties or extraction fees, in the case of minerals and oil and gas. Natural resources such as land and minerals can be collected by governments for the purpose of public finance without the adverse effects caused by taxes on production or consumption. There are however adverse effects (see for example Hartzok, 2004). Algeria and Libya adopted a top-down approach, based on oil and gas rent. This was not necessarily the best option, as it has resulted in rural electrification being grid-based and fossil-fuels based, which creates relatively high levels of greenhouse gas emissions, although in the case of Algeria almost all the electricity is generated from local natural gas. In Algeria, networks gas is also reaching small and medium towns. However the positive aspect, in terms of energy access, is that all small villages have access to electricity and LPG.  Algeria is now considering large-scale and small-scale schemes for isolated populations based on renewable energies, particularly in the South of Algeria which has a high solar potential and in which communities are often far from the grid. The first large hybrid power plant (125 MW and 25 MW concentrated solar power) came on stream in June 2011 and may lead to further and larger schemes in the future, particularly if the Desertec project is implemented (2010).

Libya and Egypt have to a large extent adopted a similar pattern, in which the rent (oil and gas in Algeria and Libya, and hydropower, oil and gas in Egypt) and state intervention were the key drivers in widening access to modern forms of energy.

This model cannot be replicated in poorer countries, but in some rich oil and hydropower countries (Nigeria, Angola, Gabon, Mozambique, DRC, Cameroon), this model could be considered. It would mean setting aside a large fund from oil, gas and hydropower revenues to pay for rural energy. Some countries have already taken steps for the institutionalisation of funds to be devoted to rural electrification.  However, in practice, in almost all countries, access to electricity is still limited, particularly in rural areas.

1.2. State intervention, increased access and low carbon development  
Morocco and Tunisia are  more interesting cases for  Sub-Saharan Africa as they are not driven by the rent, but nevertheless have made the transition from a low level of access (below 30% in 1996) to a very high level (above 96 % in 2009) in a relatively short period of time, as Figure 1 illustrates.   

Figure 1 The rate of rural electrification in Morocco increased dramatically over a short period of time

The strategy was based on both decentralized off-grid electrification for small villages, and grid extension for larger villages, financed by public funds including external funding.  Access to basic electricity needs could be considered as almost complete in Morocco, although the share of villages that were grid-connected was much more important than the decentralized off-grid schemes. Unlike other North African countries, Morocco imports more than 95 % of its primary energy. This country now has an ambitious renewable energy programme, particularly through targeting its important wind energy potential. Renewable energy technologies can play an important role and should be more prominent, particularly with PV prices decreasing dramatically over the last few years. 

1.3. Key  lessons learned from Northern Africa
In all Northern African countries, access to modern energy on a large scale was dependent on infrastructure which was funded by the state.  For oil-rich countries, the rent played an important role in funding the infrastructure.  In other countries (Morocco, Tunisia) public funds and external sources contributed to funding the infrastructure. In all Northern African countries, access to modern forms of energy has been driven by a government-led strategy.  This is not very different historically from the growth observed in Europe or North America at the beginning of the electrification process. The contribution of renewable energy technologies is much higher in countries which started the process later, and which are less endowed with fossil fuel resources. 

2. Sub-Saharan Africa

2.1. Background
Sub-Saharan Africa remains, by and large, characterised by the predominance of biomass as a main fuel for cooking, and by a low rate of increase in access to electricity. The sub-continent is marked by a big divide in the pattern of energy supply and consumption between rural and urban, and between rich and poor. Nevertheless, rural access to electricity has slightly increased in some countries,  particularly in  the  Sahel, thanks  to a strategy combining  institutional measures led by the  government (such as the agencies for rural electrification)  and the involvement  of other stakeholders (national and international private sector,  NGOs, donors etc.) in rural electrification  programmes.   There is an absence of other modern forms of energy, apart from some exceptions, such as in Senegal, resulting in charcoal and firewood remaining the main sources of fuel energy, due to the absence of  infrastructure, such as units for LPG  conditioning (bottling), and low purchasing power.  Indeed, for the large majority of the population, access to LPG would imply subsidies, and these cannot be provided by any state budget which is currently under heavy pressure to meet other basic needs, particularly with current increased prices of food. This situation is exacerbated in landlocked countries for which access to LPG will include high transportation costs resulting in higher selling prices.
Although access to modern energy, particularly for cooking, has only marginally changed over the last couple of decades for most sub-Saharan countries, the combination of a sharp drop in the price of renewable energy technologies, such as photovoltaic, and investment in infrastructure (such as regional power and gas interconnections) should lead to better coverage of efficient and affordable access to modern energy in these countries.

2.2. Current and future trends
Small-scale decentralised renewable energy and large scale infrastructure, including gas interconnections, are the two components which seem to shape the strategies to increasing modern forms of energy.

2.2.1.  Small scale initiatives
Prior to the drop in renewable energy technology prices, there were already a few small, regional programmes targeting rural populations, and involving a large number of people. One example was the Regional Solar Programme, developed by the Intergovernmental Committee to Control Drought in nine of the Sahelian countries. Activities in this programme have dramatically increased access to some vital services in rural areas.  For example, the programme based on solar water pumping has allowed about two million people to gain access to clean water. Another minor component of this programme (compared with solar water pumping) was the ‘solar home system’, which provided electricity for lighting, ventilation, refrigeration, and communication. Solar home systems provide individual solutions for individual households, and as such, they are less cost effective and have a more limited coverage than water pumping for villages. For this reason, the regional solar programme was focused on solar water pumping after initially considering the two options. 

The Multi-Functional Platform programme in some West Africa countries, which is currently supported by the UNDP, has led to the installation of over 1700 micro-enterprises led by women. It is based on a combination of mechanical power and fossil fuels, and offers income generation services around  agriculture; the main sector in rural areas.  About 2.5 million people are currently benefitting from these services.
  
All these initiatives are heavily subsidised, and they are initiated or implemented with community involvement.  However, although replication without financial support is unlikely, their sustainability (functioning after technical and financial support is withdrawal) is not called into question because the schemes are meeting crucial needs (water, agro-processing), and the services they provide are paid for, even though capital investment was subsidised.  Payment for the services they provide allows for the payment of running costs and capital replacement, which are the conditions for the sustainability of each individual installation.

2.2.2.  Large scale initiatives
As far as energy is concerned, initiatives are mainly focused on electricity, with the creation of power pools in all sub-Saharan regions (eg East Africa Power Pool, West African Power Pool, Central African Power Pool and South African Power Pool). These large schemes will certainly contribute dramatically to improving the reliability of services in urban areas. In many African cities, power outages are very common, and are impacting a great deal on small and large businesses as well as households.  Diesel back-up generators, which are the option adopted by business to overcome frequent power cuts, have very high running costs due to the price of diesel fuel.

The linkages created through the existing infrastructure for the East African Power Pool - Southern Sub-region are illustrated in Figure 2, and comprise:

• Interconnection between the Democratic Republic of Congo, Burundi, and Rwanda using a hydro-power station at Ruzizi II (installed capacity 45 MW);
• Cross-border electrification between Uganda and Rwanda, Tanzania and Uganda, and Kenya and Tanzania
• Interconnection between Kenya and  Uganda

Figure 2: Large-scale infrastructure is mainly created through interconnections between countries

Future interconnectors are planned between Ethiopia and Sudan, and Ethiopia and Djibouti. These will become the East Africa Power Pool Central Sub-region. This increased infrastructure will improve the general rate of access to electricity, and its efficiency and security, through power sharing. It will reduce the cost per kilowatt as a result of electricity supply coming from the least-cost power plant, which in most cases saves fossil fuels. However there are tens of thousands of villages in Sub-Saharan Africa, far from the grid, for which decentralised options are the least-cost option. Furthermore, most interconnections are based on large hydro-schemes with significant environmental and social impacts; in particular, leading to displacements of people.

References

Hartzok, A. (2004) CITIZEN DIVIDENDS and OIL RESOURCE RENT A Focus on Alaska, Norway and Nigeria, Eastern Economic Association 30th Annual Conference, February 20 ‐ 22, Washington, DC. [Online] http://www.theiu.org/wp-content/uploads/2009/06/alanna-hartzok-paper.pdf

DESERTEC ALGERIA (2010) 'Private algerian group CEVITAL plans $8bln solar energy project ', May 28 [Online] Available from: http://desertec-mediterranee.over-blog.com/article-desertec-algeria-cevital-gplans-8bln-solar-energy-project-51406664.html