Can Market Mechanisms Enable Energy Access for People Living in Extreme Poverty?

Many people in extreme poverty do not have access to electricity. We know the transformational effects that clean affordable energy can have and want people to be able to harness that.

So, together with Kuungana Advisory, we investigated the energy access needs and challenges of people living in extreme poverty. We looked at the potential of different business models and market interventions (market mechanisms) to improve communities energy access.

Here, you’ll find a series of resources produced as part of this research.

The study has been funded by UK aid from the British people via the Transforming Energy Access (TEA) platform; however, the views expressed do not necessarily reflect the UK government’s official policies.

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Findings and Recommendations

This summary report brings together findings and recommendations from the study, and is intended to support donors, governments, and advocacy bodies so they can select, target, design, and implement tailored market mechanisms for those living in extreme poverty.

We encourage you to refer to the other reports for comprehensive results and recommendations.

Part 1: Understanding the Relationship Between Energy Access and Extreme Poverty

This report provides an overall picture of the number of people in extreme poverty living in sub-Saharan Africa and the Indo-Pacific who don’t have access to energy. We examine the key drivers of poverty and lack of energy access and how these interact. Specifically, we looked at the similarities and differences in energy needs, the access barriers people face, and the factors that are likely to hamper people’s ability to take up market mechanisms. We looked at extreme poverty in general, and among six specific demographic groups:

• Rural workers.
• Residents of informal urban settlements.
• People in fragile and conflict-affected areas.
• Displaced people.
• Women and girls.
• People with disabilities.

Appendices – Standalone country reports

These six reviews look at energy access for people living in extreme poverty in a specific country. Each review looks at issues around energy access for a specific demographic group. People in these groups experience differential levels of extreme poverty or lack of energy access, have distinctive energy needs, and/or face distinct barriers to achieving energy access.

Part 2: The Role of Market Interventions and Business Models

This report explores how market mechanisms can be used to provide energy access to people living in extreme poverty. In it we review the available market mechanisms and their ability to provide energy access to demographic groups. We also outline an econometric model that can be used to estimate the extent to which specific mechanisms can provide energy access to people who live in different circumstances.

Econometric Model

We developed an excel-based tool to estimate the extent to which different market mechanisms can support energy access, especially for households living in extreme poverty. You can find a full description of the model and its uses in Part 2. We provide a user guide with the model.

Market Mechanisms Categorisation Matrix

We also developed a categorical matrix to classify market mechanisms by type, nature of impact, and properties to enable selection of the most suitable option(s) for a given group and context.