Tackling the Rural Energy Problem in Developing Countries - Finance & Development - June 1997 - Douglas F. Barnes, Robert van der Plas, and Willem Floor

NERGY MARKETS do not function efficiently in many developing countries, particularly in rural areas, where nearly 2 billion people do not have electricity or access to modern fuels such as oil and gas. The problem is likely to worsen in coming decades. The population of the developing world is expected to increase by 3 billion over the next forty years, and energy demand per capita will grow rapidly. As countries’ economic development proceeds, their per capita consumption of commercial energy increases. Per capita consumption of commercial energy in the United States, for example, is 80 times higher than in Africa, 40 times higher than in South Asia, 15 times higher than in East Asia, and 8 times higher than in Latin America. Inadequate energy markets threaten to dampen economic growth, hobble development, and keep living standards low. Although grid electrification is the traditional means of providing reliable electricity supplies, connection to distant grids will be too expensive to be cost effective for many rural areas. Fortunately, there are a number of promising alternatives for increasing energy supplies even in very remote areas, ranging from more efficient use of traditional fuels to advanced technologies based on renewable energy sources. The current situation Efforts since 1970 to increase electricity supplies in developing countries have been remarkably successful (see table). But because of population growth, the number of households without electricity is still large and is even growing in some regions. One-third of all energy consumed in the developing world comes from biomass. In addition to being their primary source of energy, biomass also provides many people in the developing world with a livelihood. In Africa alone, the production and marketing of wood fuels (fuelwood and charcoal) is a $5 billion business that employs more than 400,000 people. Wood and other traditional fuels such as dung have numerous disadvantages, however. They are far less efficient than other energy sources; a kilogram of wood, for example, generates only one-tenth of the heat yielded by a kilogram of liquid petroleum gas (LPG). Moreover, burning these types of fuels in an enclosed, poorly