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Access to electricity in the World Energy Council's global energy scenarios: An outlook for developing regions until 2030 [1]

['International Energy Agency', 'Iea', 'World Energy Council', 'Wec']

Date: 2016-03-01

Access to electricity is essential to overcome poverty, promote economic growth and employment opportunities and support the provision of social services such as education and healthcare that lead to sustainable human development [1]. The International Energy Agency (IEA) defines electricity access as a first supply connection to a household and then an increasing level of electricity consumption to reach the regional average. This approach reflects the fact that the eradication of energy poverty is a long-term endeavour [2]. Following the IEA definition 1267 million people worldwide did not have access to electricity in 2010 [3]. This figure increased to 1285 million in 2012 [4], implying that population growth outpaced the number of new electricity connections. More than 95% of the population without access to electricity lives in developing Sub-Saharan Africa, Asia and Latin America (Fig. 1).

In September 2011, UN Secretary-General Ban Ki-Moon launched the initiative “Sustainable Energy for All – SE4All” to mobilise action from all sectors of society to promote universal electricity access by 2030 [5]. The initiative has generated significant momentum and more than 100 countries are already participating in it. As global development agendas are increasingly recognising energy access and energy poverty as essential issues for society, it is important to address them in the context of two other significant socio-ecological issues of our time: energy security and environmental sustainability [6]. This triple challenge is referred by the World Energy Council (WEC) as the “energy trilemma” [7].

The Paul Scherrer Institute (PSI) together with WEC developed two energy scenarios to 2050 assessing the energy trilemma at global and regional scales [8]. The two scenarios incorporate a coherent set of key economic, social and political drivers that are quantified and implemented with a detailed energy system model. The WEC/PSI scenarios are exploratory in their nature in the sense that no specific targets were set along the axes of the energy trilemma. The first scenario (“Jazz”) is market-facilitated with a focus on achieving economic growth through competitive and low-cost energy. The second scenario (“Symphony”) considers stronger policy regulations with priority given to environmental sustainability and energy security. Both scenarios include climate policies and recent technological advances.

In this paper, we present a detailed analysis of the two WEC/PSI scenarios regarding electricity access in developing and emerging regions. We focus on regions in which a significant share of the population lacks access to electricity: Sub-Saharan Africa, developing Latin America, India, Central Asia, developing Pacific Asia, Middle East and North Africa.3 For each region, we present the outlook of electricity access in WEC/PSI scenarios until 2030, we discuss the key socio-economic drivers affecting it and we evaluate the additional investment effort in power generation infrastructure required to achieve universal electricity access by 2030. In our assessment, we use an analytical approach, in which we couple a large scale bottom-up energy system model that identifies long term cost-optimal configurations of the energy system with regional reduced-form econometric models4 that forecast the population with access to electricity.

In general, the majority of research on improving electrification in developing countries, analysing its impacts on energy supply and emissions and identifying drivers and policies with significant contribution to the electricity access, can be divided into four main categories. The first category includes studies that describe current situations of energy demand or consumption and evaluate the outcomes of policy and programs in developing countries. This includes assessments of funding needs and financing mechanisms (e.g. Ref. [9]), evaluations of electrification programmes (e.g. Ref. [10]), policies and reforms required (e.g. Ref. [11]), and case studies at national and regional levels (e.g. Refs. [12], [13], [14], [15], [16], [17], [18], [19], [20], [21], [22], [23]). The studies belonging in this category of research include legal, social and fiscal aspects of the policies and programs. However, they are usually highly case-oriented and it is difficult to obtain ideas applicable to other areas. The second type of research category focuses on the potential of various electricity supply technologies to increase electricity access such as solar photovoltaic systems (e.g. Refs. [24], [25]), decentralised generation and micro-grids (e.g. Refs. [26], [27], [28], [29], [30]), nuclear power [31], biomass [32], etc. This type of studies often contains highly disaggregated or highly precise data, but policy implications to promote these technologies are usually not sufficiently discussed. The third category includes studies investigating relationships between electrification, poverty and economic development on national and regional scales. These studies can be qualitative, based on empirical results from past experiences (e.g. Refs. [33], [34], [35]), or quantitative, based on econometric analysis (e.g. Refs. [36], [37], [38], [39], [40], [41], [42], [43]). The majority of these studies identify poverty, income, foreign direct investments (FDI), urbanisation, country policy and institutional development, electricity prices, subsidies and average electricity consumption per capita as key factors of electricity access. Finally the fourth type of research, to which the present study belongs, involves the combined application of top-down and/or bottom-up economic and energy system models with specific micro-economic consumer choice models or econometric models. These studies forecast the population with electricity access by taking into account economic developments, technological parameters and governmental policies. At the same time, they evaluate the broader impacts of increased energy access on energy supply and demand fuel mix, investment requirements and greenhouse gases emissions. Bottom-up modelling frameworks, such as TIMES [44], have been employed in projecting rural electrification (e.g. for Africa in Refs. [45], [46], and for other developing regions in Ref. [47]). Top-down approaches have been used for electricity access scenarios for Sub-Saharan Africa [48] and for assessing the impacts of increased energy access on greenhouse gases emissions and global warming [49]. In Ref. [50], a consumer choice model based on micro-economic foundations is implemented within the cost optimisation energy system model MESSAGE [51]. The model analyses the determinants of fuel consumption choices of heterogeneous household groups by taking into account effects of income distribution, consumer preferences and discount rates. It has been applied to explore response strategies for energy poverty eradication in India [50] and in South Asia [52], and to evaluate pathways to achieve universal electricity access by 2030 [53], [54], [55]. The International Energy Agency applies an econometric model to generate projections of electrification rates by developing region. It is based on panel estimation of historical electrification rates of different countries over income, urbanisation, fuel prices and subsidies, electricity consumption, electrification programmes and other variables [56]. The model is interfaced with IEA's World Energy Model (WEM) in the World Energy Outlook series (e.g. Refs. [2], [3], [4]). In Ref. [57] a bottom-up residential energy use model was developed, which determines the fuel use in households based on relative differences in perceived costs by following a causal chain from population and income trends to intermediate physical indicators and energy uses. It makes also use of correlations derived from econometric studies and regression analysis to project household energy consumption and electrification rates in urban and rural areas. The model is integrated into the IMAGE/TIMER global energy simulation model [58], and it has been applied to determine the fuel use in households in India [57] and to evaluate universal electricity access scenarios [54]. In Refs. [59], an econometric model for projecting the rural electrification in developing countries is described. The model uses multi-variate regression analysis including as statistical significant variables (among others) the electrification level, the population density, the urbanisation, the average per capita income, the exports of goods and services, the fuel exports and the foreign direct investments. The projected rural population electrification rates are then used in a simple power grid expansion model that takes into account the costs of different grid components in order to evaluate the cost of increased electricity access. We contribute to the existing literature described above by applying a modelling framework that is based on the coupling between a very detailed bottom-up energy system model that assesses cost optimal configurations of the energy system, both at global and regional scales, with a reduced-form econometric model that takes into account key socio-economic factors for the electrification of the population. The same conceptual modelling framework has been applied in assessing long-term electrification rates in Sub-Saharan Africa [60] and it is extended in the current study to cover additional developing regions. Our methodology differs from the methodologies described above in the following aspects: a) the underlying energy system model, which is interfaced with the econometric model for electricity access, is a bottom-up cost optimisation model (in contrast to TIMER and IEA's models that are simulation models) and it has a detailed representation of the energy systems of 15 world regions; and b) we apply a reduced-form econometric model that is estimated using polynomial distributed lags in order to take into account both short-term and long-term effects of key determinants for improving electricity access such as poverty, urbanisation, policy and institutional development for each developing region. To the best of our knowledge this type of modelling framework for electricity access has not yet been applied in literature for all developing regions. Similar to the approaches presented in [50], [56], [57], [59], [60], the modelling framework applied here is suitable to: a) investigate the critical components affecting the electrification rate of the population; b) assess the different energy supply and demand options; c) estimate the broader implications of increased electricity access on the energy system and on GHG emissions; and d) evaluate the effectiveness of policies and supports designed to achieve universal electricity access. Main strengths of the proposed framework are also: a) its transparency, since it is based on open source modelling using publicly available databases; b) its scalability that allows for higher regional detail to enable in-depth analysis; c) its generic interface, which enables the coupling of the econometric model for electricity access with different underlying energy system models. The present work therefore makes a contribution to research in the direction of coupling large scale energy models with empirical models for estimating energy access, to assess not only future electrification rates of the population in developing regions but also to assess the broader impacts of increased electricity access on the energy system and environment (e.g. demand and supply mixes, investments, greenhouse gases emissions, energy system costs and energy prices). In addition to the methodological aspect, we also contribute to the literature regarding scenarios for increasing electricity access in the developing regions, complementing the studies presented by the International Energy Agency (IEA) in (e.g. Refs. [2], [3], [4]), by the International Institute for Applied Systems Analysis (IIASA) in (e.g. Refs. [53], [54], [55]), by the Netherlands' National Institute for Public Health and the Environment (RIVM) in (e.g. Refs. [54], [58], [59]) and by others (e.g. Ref. [48]). The two scenarios describe two different worlds, one with focus on low-cost energy in which the energy markets are fully liberalised and technologies compete on the basis of their production cost and resource availability; and a second one with a focus on sustainability in which the governments set the energy policies and promote technologies.

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[1] Url: http://www.sciencedirect.com/science/article/pii/S2211467X15000450

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