Molly Ayala
While access to electricity is considered a prerequisite for modern life, it is not equally distributed across the globe. In 2021, 91.4% of the world population had access to electricity, leaving hundreds of millions of people without it, with most of them living in least developed countries (LDCs). This disparity is more pronounced in rural areas, where access to electricity is lower than in urban regions.
| Characteristics | Values |
|---|---|
| Number of countries with low access to electricity | 10+ |
| Countries with lowest access | South Sudan (5.1%), Liberia (9.8%), Burkina Faso (13.1%), Sierra Leone, Niger, Tanzania (15.3%), Chad |
| Main causes of low access | Economic crises, political instability, frequent rebellions, military coups, lack of infrastructure, lack of investment |
| Impact of low access | Lack of refrigeration for vaccines, reliance on biomass and charcoal, limited economic opportunities, energy poverty |
| Global access rate | 91.4% as of 2021 |
| Historical access rate | 80% as of 2000 |
| Urban vs. rural access | Urban areas have higher access than rural areas in most countries |
| High-income countries vs. low-income countries | High-income countries have higher access and consumption |
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What You'll Learn
Least-developed countries (LDCs) and their lack of access to electricity
As of 2017, there were several countries with extremely limited access to electricity. South Sudan, for instance, only had 5.1% of its population enjoying access to electricity. Liberia, too, has a short supply of electrical energy, with only 9.8% of its population having electricity. In the case of Sierra Leone, the World Bank granted a $40 million line of credit to expand electricity to its rural areas. Similarly, Burkina Faso received a $50 million line of credit from the World Bank to assist in electricity supply development.
While these countries are in dire need of assistance, the situation is not much better in many other least-developed countries (LDCs). In fact, over half of the people in LDCs lack access to electricity. This is equivalent to about 570 million people, or about two-thirds of the world's population without electricity. In a quarter of the world's 46 LDCs, more than 75% of the population lack access to electricity. Rural electrification is particularly low, with two-thirds of the rural LDC population (458 million people) completely without access. Even in urban centres, up to one-third of the population in LDCs don't have access to electricity.
The lack of electricity in LDCs has far-reaching consequences. Firstly, it undermines the capacity of firms to produce competitively and export goods and services, limiting the ability of these countries to grow their economies. Secondly, it affects the availability of social services, health, and education. For instance, during the COVID-19 pandemic, the lack of electricity in some areas hampered the refrigeration of vaccines during transportation and storage. Finally, the energy-transformation nexus, or the two-way relationship between the productive use of energy and economic development, remains very weak in LDCs. More than 40% of businesses in these countries are held back by inadequate, unreliable, and unaffordable electricity.
Renewable energy sources such as solar and wind power could be a potential solution for LDCs, especially in rural areas. However, these technologies need to be deployed rapidly and on a large scale to bring about the transformational change needed to power homes and grow businesses and industries. To achieve this, LDCs require greater investments in electricity generation and distribution, as well as support from developed countries in the form of technology transfer and financial aid.
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The impact of income levels on energy access
Access to electricity is closely linked to income levels. While the relationship between the two is complex and influenced by various factors, it is clear that a lack of access to electricity and energy can have detrimental effects on income inequality, economic growth, and development.
Firstly, energy poverty is closely associated with income levels. In wealthier regions such as Europe and North America, access to electricity is almost universal, while in low-income countries, a significant proportion of the population often lacks basic electricity access. For example, in countries like Burkina Faso, Liberia, Sierra Leone, and South Sudan, only a small fraction of the population has access to electricity, primarily due to economic crises caused by political instability and conflicts.
Income levels play a crucial role in determining the affordability of energy services. In low-income households, the cost of energy can be a significant expense. For instance, in Sub-Saharan Africa, households dedicate about 7% of their expenditures to lighting and cooking energy. The use of fuel-based lighting, such as kerosene lamps, is much more expensive than modern fluorescent lighting, and the adoption of solar technologies can significantly reduce lighting costs relative to income. Improved access to electricity and clean fuels can reduce these financial burdens, freeing up income for other purposes and potentially stimulating economic growth.
Additionally, access to electricity can improve income inequality by enhancing educational opportunities and health status. Studies have shown that energy poverty negatively impacts literacy levels and average school years, particularly in developing countries. By providing reliable electricity, communities can benefit from improved social services, education, and economic opportunities. This can create a positive cycle where increased access to electricity leads to higher disposable income, resulting in greater demand for goods and services, and ultimately contributing to overall economic development.
However, the relationship between income levels and energy access is not linear. Research suggests that energy security tends to have an inverted U-shaped impact on income inequality. In the early stages of economic development, energy security may worsen income distribution, while it improves as countries reach higher levels of development. This indicates that the impact of energy access on income levels is influenced by various factors, including the stage of economic development, the availability of infrastructure, and the affordability of energy services.
Furthermore, the transition to clean and modern energy sources can also influence income levels. While access to electricity is crucial, it is insufficient to ensure energy equity. The affordability of energy, particularly for low-income households, is essential. The shift from solid fuels to modern energy sources can improve health outcomes and reduce the financial burden on low-income households, thereby improving their overall economic situation. However, the adoption of renewable energy sources may be hindered by the affordability of the required technologies, even though they offer long-term cost savings.
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The role of foreign investment in energy infrastructure
Foreign investment in the energy sector has become increasingly important, especially in the context of the COVID-19 pandemic and the need to accelerate the transition to renewable energy. The energy sector is critical for economic development, and foreign investment can play a key role in promoting economic growth, technological progress, and the development of renewable energy sources.
One of the main challenges in the energy sector is the need to secure energy supply while also addressing environmental concerns and transitioning to renewable energy. Foreign direct investment (FDI) has been found to negatively impact the transition to renewable energy in host countries, particularly in low-income and non-OECD countries. However, FDI can still play a positive role in promoting economic growth and technological progress. Governments should aim to attract high-quality FDI with green attributes, offering tax incentives and fiscal subsidies to encourage foreign enterprises that prioritize environmental protection and sustainable development.
Foreign investment in the energy sector also raises legal questions and requires a balance between private and public interests. The Energy Charter Treaty is the most important international legal instrument in the energy sector, and it addresses issues such as legal protection for foreign investment in oil, gas, mining, and hydroelectric industries. Other legal considerations include compliance with safety and labour standards, protection of the environment, respect for indigenous peoples' rights, and protection of public health.
In recent years, there has been an expansion of foreign investment control regimes, with many countries implementing screening mechanisms for foreign investment in critical infrastructure, including energy. This trend has been particularly notable in the EU, with the FDI Screening Regulation listing critical infrastructure, critical technologies, and the supply of critical inputs as factors to be considered by Member States and the European Commission when assessing potential investments. Similar approaches have been taken by individual EU countries, such as France, Italy, and Germany.
Foreign investment in energy infrastructure can have significant implications for countries with limited access to electricity. For example, countries like Sierra Leone, Burkina Faso, and Liberia have received lines of credit or grants from organizations like the World Bank to improve their electricity distribution and supply development. These investments aim to establish more reliable power grids and improve the lives of people in rural areas.
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The use of biomass and other energy sources in rural areas
Hundreds of millions of people worldwide still lack basic access to electricity, with most of them in least-developed countries (LDCs). In these countries, even in urban centres, up to one-third of the population doesn't have access to electricity. Where electricity is available, access is often unreliable.
Biomass is one of the most widely used energy sources in rural areas of many LDCs. For example, in Liberia, 9.8% of the population has access to electricity, and the energy supply in the country is sourced mainly from biomass, mostly for cooking and heating. Similarly, in Ethiopia, biomass (wood, solid, and agricultural wastes) is the primary source of energy for the rural population, accounting for approximately 87% of the total energy supply. In Tanzania, biomass collected from forests meets about 80% of the energy needs in rural areas, such as burning wood for cooking and heating.
Biomass is considered a renewable and carbon-neutral energy source, and it has the potential to be sustainable. In the context of a bioeconomy, biomass can be harvested sustainably and used to create environmentally compatible products that can be reintroduced into the natural environment without harmful effects on surrounding ecosystems. This approach can also stimulate jobs and economies in rural areas.
However, there are challenges to building a sustainable bioeconomy. For example, garnering the attention of younger individuals to create a more diverse workforce can be difficult, as many younger individuals prefer to live in cities. Additionally, the use of biomass may lead to significant degradation of forest resources and negative consequences for the climate, human health, and social well-being if it is not efficiently exploited. Furthermore, as biomass is a living material, its supply can be inconsistent due to variables such as weather, insects, fungus, and disease.
Other energy sources that have been explored to address the electricity shortage in LDCs include renewable sources such as hydropower, solar, wind, geothermal, and natural gas. However, the development of these alternative energy sources and the necessary infrastructure is often limited by political uncertainties and a lack of investment.
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Political stability and its influence on electricity access
Political stability is essential for ensuring access to electricity. Countries with higher institutional quality, including political stability, rule of law, and the absence of violence, tend to witness a meaningful contribution of government spending to alleviating energy poverty. Political instability, on the other hand, intensifies investment risks and discourages financial inflows to energy projects, hindering the development of necessary infrastructure for electricity access.
Countries with political instability often struggle to provide their citizens with reliable access to electricity. For instance, South Sudan, which has endured 30 years of war and government neglect, has only 5.1% of its population with access to electricity. Similarly, Liberia, which has experienced frequent rebellions and economic crises, has limited electrical energy access, with only 9.8% of its population having electricity. The energy supply in Liberia primarily comes from biomass, with some rural households relying on expensive imported fuel for electrical generators.
Political stability is crucial for attracting the investments needed to develop energy infrastructure. For example, Sierra Leone received a $40 million line of credit to expand electricity access in its rural areas, and Burkina Faso obtained a $50 million credit for its electricity supply development project. These initiatives aim to establish more reliable power grids and improve the lives of people in rural areas.
In contrast, countries with political instability may struggle to secure the necessary investments. The Democratic Republic of the Congo, despite having resources for electricity generation, faces challenges due to ongoing political uncertainties that deter investment in infrastructure development. Political stability is essential for providing the stable environment needed for policy formulation and implementation in the energy sector.
Additionally, political stability can influence renewable energy finance. Stable political environments facilitate financing for renewable energy sources such as wind and hydropower, attracting foreign investment and international aid. Political stability also reduces investment risk and increases energy demand, further promoting renewable energy development.
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Frequently asked questions
While all countries have some access to electricity, as of 2021, 8.6% of the world's population still lacks basic access to electricity.
South Sudan has the lowest access to electricity, with only 5.1% of its population enjoying access.
Frequent rebellions, military coups, economic crises, political instability, and income levels can hinder a country's ability to develop and provide reliable access to electricity.
Limited access to electricity affects social services, health, and education, and economic opportunities. It also impacts vaccine roll-out due to difficulties in refrigerating vaccines during transportation and storage.
The World Bank has provided lines of credit to countries like Sierra Leone and Burkina Faso to expand electricity access in rural areas and improve power grids. Additionally, countries are exploring renewable energy sources and infrastructure development to enhance electricity distribution.
