Despite the continuous efforts of developing countries and the international community to reduce energy poverty, some 2.7 billion people around the world still rely on traditional biomass for cooking and heating and 1.3 billion people do not have access to electricity. Over 80% of the energy poor live in rural areas and roughly two thirds in sub-Saharan Africa and India. While fossil fuels will inevitably play a major role in expanding on-grid energy supply, this study shows that renewable energy sources – and especially small decentralised solutions – have huge potential for providing reliable, sustainable and affordable energy services for the poor, particularly in rural areas of developing countries. Many challenges remain, including financing, capacity-building, technology transfer and governance reforms. A careful assessment of the environmental impacts of renewable energy technologies, particularly those on water, is an important prerequisite for donor finance. With the right design, energy access projects can also bring a host of developmental co-benefits. It should be possible for international initiatives including the UN’s Year of Sustainable Energy for All and the EU’s partnership with Africa to build on the rich experience and lessons learned from pilot projects over the last two decades in order to optimise donor effectiveness in this area.
Arno Behrens is Head of Energy and Research Fellow at CEPS and lead author of this CEPS Working Document. Glada Lahn is Research Fellow at Chatham House, UK. Eike Dreblow is Researcher at Ecologic Institute, Germany. Jorge Núñez Ferrer is Associate Senior Research Fellow at CEPS. Mathilde Carraro was an Intern at CEPS. Sebastian Veit is Senior Climate Economist at the African Development Bank.