Enabling Economic Growth Through Energy

In “Fixing the Disconnect Around Energy Access” (Issues, Winter 2022), Michael Dioha, Norbert Edomah, and Ken Caldeira contrast the tale of two communities in Nigeria to highlight the daunting challenge of bringing universal energy access to low-income countries in a financially sustainable way. Although the article focuses on two communities in Nigeria, it speaks to a broader issue across the African continent.

In a recent World Bank book that I coauthored, Electricity Access in Sub-Saharan Africa: Uptake, Reliability, and Complementary Factors for Economic Impact, we addressed this very issue and laid out ways to think about electrification in sub-Saharan Africa. We reported an example similar to that of Kigbe, one of the authors’ case studies. In this case, the community of Gabbar, Senegal, implemented an off-grid solar energy system to help in producing onions for export to cities across the country. Elsewhere, we have also seen financially strained communities trying to get off a $7 per month installment contract they signed to acquire a solar home system—only to realize that they cannot afford the cost a few months down the road.

We also argued, as do Dioha and coauthors, that all electrification efforts should start with viewing it as a means to a greater end rather than an end in itself. This perspective is even more important in poorer countries that may lack the means to plan, fund, and excuse rapid electrification. It also requires understanding that although energy is crucial to most modern productive economic activities, it is still an input that needs complementary investments to turn access into impact.

The question is, why is this seemingly straightforward logic broken? Dioha and coauthors provide an excellent diagnostic of the problem, but they do not address the why. Understanding the main reasons this is happening can help pave the way to better global development policies in areas beyond energy. In the mid-1970s, the British economist Charles Goodhart coined the Goodhart’s law, stipulating that “When a measure becomes a target, it ceases to be a good measure.” The United Nations Sustainable Development Goals (SDG), and in this particular case SDG’s Goal 7, which calls for ensuring access to affordable, reliable, sustainable, and modern energy for all, has fallen prey to Goodhart’s law. Counting the number of households that gained some form of access to modern energy from one year to the next has become an end in itself.

How can this challenge be addressed at the global level? The successor of the SDGs, if any, should focus on fewer targets centered on prosperity and let the local contexts determine how to get there. Alternatively, the SDGs should be much more ambitious. The Modern Energy Minimum produced at the Energy for Growth Hub, listed as a recommended reading by Dioha and coauthors, is an excellent example of rethinking the SDG’s Goal 7. This kind of effort should extend beyond energy to rethink more broadly a new approach to setting global targets for development.

Moussa P. Blimpo

Michael O. Dioha, Norbert Edomah, and Ken Caldeira highlight that electricity access programs too often fail to deliver “much-needed outcomes in pace, scale, and improvements in quality of life.” Drawing on two Nigerian mini-grid case studies, the authors argue that in order to transform lives, energy access interventions must be paired with economic empowerment. While they focus specifically on community-level interventions, their three core messages also apply to larger, national-scale efforts.

First, Dioha and coauthors argue that community-level energy access programs must focus on more than connecting individual households to electricity; they must be paired with support for broader economic activity. This is equally important at larger scales. The primary international metrics for defining electricity access and success toward eradicating energy poverty focus principally on power consumption at home. These metrics drive much of the global energy development agenda, placing a political premium on achieving universal household access. But globally, 70% of electricity is consumed outside the home, where it powers economic activity and job creation. Energy development efforts, including electrification programs, need to balance connecting households with targeted investments in energy for businesses, manufacturing, and industry. These larger consumers not only power economic activity and job creation, but also serve as anchors for a more diversified and financially sustainable system.

Second, the authors stress the need to consult with affected communities, making the essential point that energy is a social challenge, not just a technical or economic one. At the community level, people gaining access to electricity for the first time need the “the opportunity to imagine what they would do with electricity access and how they might use it to change their lives.” This is equally true at the macro-level. Efforts to support large-scale energy systems development—especially those driven by outside funders and partners—need to better account for national development plans and industrialization goals. This means, first of all, listening to what communities, states, and nations want to achieve with energy—and then helping figure out how to power it. The reverse approach, of having a technological solution and then looking for a place to sell it, is unfortunately all too common.

Finally, the authors rightly point out that many energy access programs have focused too heavily on electricity supply, rather than on the broader enabling infrastructure that ensures power can be distributed and consumed. At a macro-scale, investing in modern grid infrastructure is crucial and often overlooked. Solving this bottleneck will become even more relevant as countries work to build flexible, resilient systems with greater shares of variable renewable power.

While we do see progress in each of these areas, there is much work left to do. The authors have done a service in highlighting these important issues and recommending a path forward.

Todd Moss

Katie Auth