Delivering Energy Services for Poverty Reduction

Success Stories from Asia and the Pacific

Regional Energy Programme for Poverty Reduction
UNDP Regional Centre in Bangkok

Executive Summary

Efforts by countries in the Asia-Pacific region to meet the Millennium Development Goals (MDGs), especially the goal of halving the number of poor, will be impaired unless adequate attention is paid to the crucial role energy services play in the development process. As many as 1.7 billion people in Asia-Pacific rely on traditional biomass for fuels and 1 billion do not have access to electricity.

The report was developed as part of UNDP’s ongoing efforts to enhance knowledge by sharing experiences on energy projects for poverty reduction in the region. Through a process of peer review and selection, twelve case studies have been compiled to examine their experiences, particularly in terms of their design, implementation and outcomes. The cases range from small, local pilots to full-scale, national projects and are based on the premise that satisfying people’s needs for modern forms of energy can be an effective entry point for reducing poverty, creating new jobs and business opportunities, improving standards of living, health and education, and contributing to country progress in achieving the MDGs.

In meeting the energy needs of poor communities, calls for a shift in focus from a supply side to a more demand-oriented approach, meaning paying greater attention to end-users and energy services. This requires providing energy in useful, convenient and affordable forms to poor rural households and businesses, where the need is the greatest. It also means that the energy provided needs to be in an appropriate form to improve productive applications and enhance opportunities for income generation.

In many rural areas of the Asia-Pacific region, the extension of the electricity grid to villages is planned for far into the future or is not cost-effective. Since the initial needs of rural households are relatively modest, they can often benefit greatly from small scale off-grid solutions. Even where electricity is available, insufficient attention is often paid to cooking and heating needs of the poor and to mechanical power to reduce the burden of repetitive and time-consuming tasks, which disproportionately affect women and children.

Although the projects considered offer promising approaches, most of them encountered significant social, economic and technical challenges. However, they are considered successful because they have been largely positive in improving people’s lives. They have expanded access to modern energy services, promoted the efficient use of energy and increased access to financing.

Our hope is that the experiences drawn from these projects will be useful for others that are helping communities – especially poor, rural communities – in creating initiatives to take advantage of more affordable, efficient, safe and convenient forms of energy.

Based on the case studies reviewed, the factors that contributed to successful energy projects can be summarized as follows:

• Projects should involve participatory consultations both at the community level and in policy development at the national level in order to ensure the needs and priorities of communities are addressed.
• Regardless of whether an integrated or a single-issue approach is used, projects must remain focused on securing benefits to reach development objectives that improve the livelihoods of the poor.
• Gathering and analyzing accurate and realistic information on the socio-economic context, the barriers to improved energy access and the benefits of different options is critical to ensuring projects reduce poverty and enhance development outcomes.
• Cost-effective solutions exist and can provide affordable, efficient and quality energy carriers and energy services to meet the divergent and differentiated needs of rural populations.
• Projects can be designed to provide energy services that can free up people’s time, reduce the burden of difficult and repetitive tasks, increase productivity and reduce expenditures on energy.
• The use of appropriate energy carriers and end-uses for productive purposes can expand opportunities for income generation. However, it should not be assumed that productive uses will occur automatically as a result of the provision of energy services, especially with the expansion of electricity.
• Projects that are able to offer a combination of energy carriers, technologies and end-uses will be more likely to satisfy a range of people’s needs and priorities, including cooking and heating needs, mechanical power and electricity for illumination and communications.
• While the main focus of capacity development efforts has been the transfer of information on energy technologies, effective capacity development is best centered on the acquisition of knowledge based on a prior understanding of the local socioeconomic context, technical practices and policy environment.
• The outcomes of energy projects are more likely to be sustained when projects take into consideration technical and financial sustainability, coordinate with local institutions and develop business skills in addition to technical skills.
• Taking into consideration local energy project experiences can help to develop national policies that are adapted to local conditions. At the same time, energy projects that advance national development objectives are more likely to be mainstreamed into national policies if they are flexible and adapt to changing conditions.
  

Success FACTORs

Based on the experiences summarized in the report, a number of principles of successful energy projects can be gathered and summarized as follows:

• Projects should involve participatory processes both at the community level and in policy development at the national level in order to ensure the needs and priorities of communities are addressed. Projects should be sensitive to the different roles and entitlements between wealthier and poorer members of participating communities, between men and women, and of disadvantaged groups. Consultations should ensure that the poor, women or vulnerable are included.
• Regardless of whether an integrated approach or a single-issue approach is used, projects must remain focused on securing benefits to reach development objectives that improve the livelihoods of the poor. An integrated approach addresses the needs of communities based on the community’s identified priorities for improving livelihoods. On the other hand, a single-issue approach starts with an identified issue and works to find communities that will benefit from the approach.
• Gathering and analyzing accurate and realistic information on the socioeconomic context, barrier to energy access and the benefits of different options is critical to ensuring projects are designed to reduce poverty and enhance development outcomes. A common problem in energy development is a lack of understanding of the role energy can play in reducing the burden associated with repetitive or time-consuming tasks and freeing up people’s time for income-generation activities, education, health and other basic needs.
• It is not enough just to make energy available, but it is necessary to ensure that end-use devices critical to women and men are actually made available to them and are managed or owned by them. This means not only consulting men, women and vulnerable groups directly to understand their energy needs, but also including them in the implementation, management and ownership of a project.
• Energy end-uses and services for productive purposes can expand opportunities for income generation. It is therefore a very powerful approach to meeting the energy needs of the poor and simultaneously increasing their incomes. However, it should not be assumed that productive uses will occur automatically as a result of the provision of energy services, especially with the expansion of electricity. Expanding access to reliable modern energy services increases opportunities for income generation for the poor when the energy services provided are designed for productive applications in a way that increases the affordability of basic energy services and also their accessibility. While different approaches can be used, they are all based on improving productivity and livelihood options.
• Cost-effective solutions exist and can provide affordable, efficient and quality energy carriers and energy services to meet the divergent and differentiated needs of rural populations. Solutions can be scaled up and mainstreamed, but this requires harnessing the lessons from experiences and building on them, as well as adapting technical solutions to the community needs.
• A combination of energy sources and technologies is generally needed to satisfy the range of people’s needs and priorities, including cooking and heating needs, mechanical power and electricity for illumination, communications and other needs. Projects can be designed to provide energy services that can free up people’s time, reduce the burden of difficult and repetitive tasks, increase productivity and reduce expenditures on energy. Energy efficiency and conservation can provide energy savings, the provision of fuels for cooking and heating needs can reduce the burden of fuel wood collection, indoor air pollution and energy expenditures, which are especially burdensome on women and children, and mechanical power can reduce the burden of repetitive and burdensome tasks, such as milling and grinding.
• While the main focus of capacity development efforts has been the transfer of information on energy technologies, effective capacity development is best centered on the acquisition of knowledge based on a prior understanding of the local socioeconomic context, technical practices and policy environment. Being innovative in how capacity development is delivered will help to tailor efforts to the individual, organizational and social capacity needs.
• The outcomes of energy projects are best ensured when projects take into consideration technical and financial factors coordinate with local institutions and develop business skills in addition to technical skills. This involves addressing issues of quality, fit for - purpose, standards and warranties for maintenance, high up-front costs, a lack of access to credit, a lack of capacity of local institutional partners and energy entrepreneurs.