Excluded from the power equation

October 15, 2018

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OUR rural population without access to electricity deserves more empathy from policymakers.

The politics of loadshedding in Pakistan revolve around the demand-supply gap and the frequency and duration of power cuts in urban centres. While power supply has improved over the last few years, it came at the cost of neglecting millions of rural households which have no access to modern energy services.

By keeping the policy and political debate fixated on the grid-connected consumer, our decision makers have in fact excluded the most vulnerable segment of our rural population from “power equation”.

The official claim of 97.5 per cent electrification rate in the country is doubtful. An International Finance Corporation survey estimated that 35pc of Pakistani households were not connected to the national grid in 2015. According to the International Energy Agency’s (IEA) Energy Access Outlook 2017, this ratio is upwards of 25pc. In either case, over 50 million Pakistanis may be living without access to the grid. A recent study by the World Bank argued that universal access to electricity in Pakistan could increase the national income by $5.7bn a year.

Without the provision of electricity services, rural households rely on solid fuels such as wood and charcoal or kerosene oil for cooking and lighting. These energy sources are linked to toxic pollutants, posing serious health risks to women and children who are in direct contact with emissions at home. Energy poverty deepens the vicious circle of economic poverty by inundating medical bills on these households.

It’s common to hear about donor-driven rural electrification projects in the country implemented by a host of NGOs. Most organisations are so consumed in proving the “impact” of such initiatives and rushing to a new grant proposal that they often fail to take a long-term view of the sector. Distributing solar home system to rural households to light an electric bulb and charge a mobile phone may qualify for the something-is-better-than-nothing criterion but this is not a solution to overcome energy poverty.

Distributing solar home systems to rural households to light an electric bulb and charge a mobile phone may qualify for the something-is-better-than-nothing criterion but this is not a solution to overcome energy poverty

Some institutions, such as the Asian Development Bank, are promoting small-hydro and solar power plants to power off-grid communities through mini-grids. The limited scale of these efforts cannot satisfy the need of unelectrified households. Moreover, the changing weather patterns triggered by climate change may risk the reliability of hydropower plants in the long-run.

The renewable energy policy of 2006 required the federal and provincial authorities to enact regulatory measures to promote off-grid renewable energy solutions, including mini-grids, which has seen insignificant progress. It is high time for the government and its development partners to promote clean energy mini-grids with a possibility to connect them to the national grid in the future. For that, we need an ecosystem that encourages private sector’s participation in this sector. On that journey, certain challenges solicit thoughtful deliberations.

First, and foremost, is the issue of cost-recovery of electricity services. Nearly two-third of the target population lives below the extreme poverty line. The small size of these communities limits economies of scale.

Energy poverty deepens the vicious circle of economic poverty by inundating medical bills on these households

The scalability and plummeting cost of renewable energy technologies make these sources more relevant in this context. Solar PV projects, for example, can be scaled between one kilowatt and one gigawatt with minimal impact on technology cost. To reduce the cost of financing, development partners can redirect their sources towards de-risking private investment and help improve the affordability of these services.

Second, to ensure that the future mini-grid projects serve the needs of their target communities in a reliable manner, the government should enforce technology standards and allow the dissemination of hybrid technologies. The deployment of hybrid and storage solutions can ensure round-the-clock power supply.

On the other hand, when there is a possibility to extend the national grid to the community, the local grid should be able to meet the technical criteria. That possibility, however, should be assessed carefully so it minimises impact on the mini-grid’s business model and honours the existing contractual terms.

Third is the involvement of rural communities in these projects from the planning to operations stage. The government should eliminate red tapes and let the communities and local governments negotiate the terms of service with investors.

Evidence shows that the projects that embody local communities’ trust and involve them in their decision-making process are more likely to succeed. The sense of ownership is created through offering ownership stake and/or local employment. The ideal policy should target both.

It is fair to suggest that instead of lavishing subsidised electricity prices on urban households, the government should allocate these resources for the economic uplift of the rural poor. Their inclusion in the power equation will promote the agenda of development which is not limited to a single segment of our economy and society but encompasses multifaceted benefits for women and children in rural areas.

The writer is an analyst specialising in energy policy and political economy.

He tweets at @sohaibrmalik

Published in Dawn, The Business and Finance Weekly, October 15th, 2018