1a

The Magnitude of theENERGY ACCESS

Problem:

How many are unserved?

How much would service cost?

This presentation in context

The following analysis is based on entirely on assumptions, some of them well-founded. Though we are confident in the general conclusions and the order of magnitude of all results, if for any reason you should like to repeat the exercise using different numbers, feel free to use this spreadsheet as a template:

Magnitude of the Energy Access Problem

2 Billion is the number,Now what is the question?

• There are several compelling reasons to use 2 billion as the number of people un- and under-served by modern energy services. – Fairly credible data indicate 2.4 B using biomass

to meet their cooking needs (G8 task force, 2001, annex, p. 24).

– Less than credible data indicate 1.5 B people living in un-electrified homes. Adjusting for the gross misreporting of China (claiming only 8.5 M un-electrified), this easily reaches 2 billion.

– 2.6 B are said to live on $2 a day or less.

2 Billion is the number,Now what is the question?

• Furthermore, this estimate of 2 billion un- and under-served is not projected to change significantly over the next 20 years (!) according to the IEA WEO (2008).– Population growth and decreasing household

size eat away at gains in service provision.– Grid connections become increasingly difficult in

rural, peri-urban and slum environments.

What is required?How many households is that?

• Assuming there are 2 billion un- and under-served and there are 4-5 people on average per household, this translates into approximately.

400-500 million households

What is requiredfor each household?

• Each household’s BASIC ENERGY REQUIREMENT is comprised of – Light, several hours per day – power points (or equivalent) supplying

electricity, for example, to charge a cell phone or power a radio.

– and reduced smoke, more efficient biomass cooking capable of meeting the household’s nutritional requirements

What is requiredfor each household?

• Let’s consider two different packages:– If biomass resources – cow dung, chicken litter

etc. – are available, then a $250-$300 biogas digester can supply lighting and cooking. Electric power would need to come from small solar PV or batteries.

– Alternatively, basic electricity and lighting could come from a solar PV system combined with an efficient biomass stove. This would cost approximately $300.

• Whether $300 / HH is the “right” number, is it a reasonable proxy? Let’s use it and see what happens.

What is requiredat the community level?

• In addition to households, communities of ~100 houses need potable water and some electricity and lighting for education, health services and meetings.

• One estimate, from the G8 Task Force (2001), pegged this need at 5 kWh/day.

• 5 kWh / 5 hrs. daily operation 1000 W * $7 / Wp = $7,000 / 100 HH(or $3,500 at each of two locations,

one school/community center and one clinic)

How much does it cost?(HH + Communities)

• Combining these two budgets, $300 / HH and $7,000 / community of 100 HH, then a $37,000 budget will serve between 400 and 500 people at a one-time cost of

$74-$93 per person

How much does it costall together?

• Putting 4 people in each household, and spending $300/HH and $7,000 for every 100 HH, the final total comes to

$185 billion

Basic Assumptions$300/HH (5 people)$7000/community (100 HH)$74-$93/person$185 B for everybody

How much does it costall together?

$185 billionThese resources could come from…

– Household budgets• existing energy expenditures, fuel savings, improved income, etc.

– National and local government budgets for health, education and sanitation

– Outside donor support

How much does it costover time?

• Now suppose that IDA-type funds could be applied to decentralized electrification and cooking in the developing world. The cost could be amortized over 30 years at 2% interest. That would translate to

$1.46 / HH / mo.

or

$17.54 / HH / yr.

Basic Assumptions$300/HH (4-5 people)$7000/community (100 HH)$74-$93/person$185 B for everybody

How does this cost compare to others?

• $185 billion represents modern energy services for 2 billion people (for 10+ years) and:– 2.9% of the total developing country

electricity improvements estimated in the WEO (2006).

– 4.3% of the worldwide electricity bill over ten years’ time.

SME Potential

CASE 1Installations/yr/enterprise:5,000Enterprises needed:10,000

CASE 2Installations/yr/enterprise:10,000Enterprises needed:5,000

Target: reach 100% of 500M HH over 10 years:50 M HH/yr

SME Potential

CASE 1Installations/yr/enterprise:5,000Enterprises needed:10,000Initial Capitalization:$130,000Total Capital Required:$1.3 B

CASE 2Installations/yr/enterprise:10,000Enterprises needed:5,000Initial Capitalization:$130,000Total Capital Required:$650 M

Target: reach 100% of 500M HH over 10 years:50 M HH/yr

SME Potential

CASE 1Installations/yr/enterprise:5,000Enterprises needed:10,000Initial Capitalization:$130,000Total Capital Required:$1.3 BInitial Subsidy:15%Total Subsidy Required:$200 M

CASE 2Installations/yr/enterprise:10,000Enterprises needed:5,000Initial Capitalization:$130,000Total Capital Required:$650 MInitial Subsidy:15%Total Subsidy Required:$100 M

Target: reach 100% of 500M HH over 10 years:50 M HH/yr

SME Potential

CASE 1Total Capital Required:$1.3 BTotal Subsidy Required:$200 M (15%)Capital Recovered:(P+I @ 7% net of losses)$1.1 B

CASE 2Total Capital Required:$650 MTotal Subsidy Required:$100 M (15%)Capital Recovered:(P+I @ 7% net of losses)$550 M

Target: reach 100% of 500M HH over 10 years:50 M HH/yr

SME Potential

CASE 1

SME Capital (recovered):$1,100,000,000

+ SME Subsidy:$200,000,000

= $1,300,000,000+ Program Capital:

$185,000,000,000= $186,300,000,000

SME Subsidy as % of Total:0.107%SME Subsidy per HH:$0.40

CASE 2

SME Capital (recovered):$550,000,000+ SME Subsidy:$100,000,000

= $650,000,000+ Program Capital:

$185,000,000,000= $185,650,000,000

SME Subsidy as % of Total:0.054%SME Subsidy per HH:$0.20