Poverty has been, and continues to be, one of the major problems facing both developed and non-developed countries across the world. According to the 2010 U.S. Census Bureau, over 45 million Americans are listed as having an income below poverty level. However, while the focus domestically is mostly on income as a driver of hardship, worldwide there are several more classifications.
The area of poverty with the greatest potential for positive impact is energy.
Simply defined by the International Energy Agency (IEA), energy poverty is “a lack of access to modern energy services.” Specifically, the IEA interprets services as “electricity and clean cooking facilities” where clean means non-polluting.
The statistics on energy poverty are heartbreaking. Nearly 1.4 billion people, almost 20 percent of the global population, have no access to electricity. Approximately 95 percent of these people live in either sub-Saharan Africa or developing Asia. Additionally, 2.7 billion people live without access to heating or cooking fuel. Just preparing a cooked meal requires hours of work, searching out burnable wood, peat or dung. Often the only alternatives are dangerous flammable materials, most notably kerosene.
Put yourself in their shoes. Imagine coming home after a hard day at work: it is dark and you want to make dinner. You have no lights, no stove and no oven. You cannot even use the light from a mobile device as it has ran out of batteries and you have no way to charge it.
Unfortunately, energy poverty has a more lasting impact than inconveniencing dinner. More than 3.5 million premature deaths each year are linked to household air pollution stemming from using solid fuels for lighting and cooking. Education is also impacted as students have no way to continue reading or writing at home after nightfall.
Environmental damage adds to the cost; most notably in Pakistan where less than 5 percent of its original forest cover remains. Lastly, gender equality suffers as women are forced to spend much of their time gathering fuel, and often water as well, limiting opportunities.
The main challenge facing the fight against energy poverty is how best to combat this problem. In the developed world, energy is produced, stored and distributed across massive grids. These require time, significant investment and other resources. Plus, this model is strained when applied to rural areas, often requiring even more capital and resources to reach those far away from city centers. And yet, despite these precedents, several startups have begun developing solutions that fly in the face of this traditional understanding of energy.
Similar to how several poorer countries leapfrogged landline phone networks straight to mobile phones, entrepreneurs are moving past the centralized grid in favor of local power generation. One company, D.light, supplies solar-powered lanterns that can last for 12 hours after a day of charging. Husk Power Systems, an Indian startup, has combined diesel generators with biomass gasifiers that can be powered by rice husks, typically a waste product. These generators, which produce enough power for around 600 families, have turned a profit in only six months of operation while providing very cheap energy. Another firm, Emergence BioEnergy, helps farmers harness methane produced from cattle manure to power a small kilowatt generator. On top of providing energy needed to preserve milk, the generator also produces a surplus that can be sold to neighbors at an affordable price.
These innovations, coupled with work by NGOs and government initiatives, are part of the fight against energy poverty. As awareness grows and entrepreneurship flourishes, significant progress will most likely be made in the near future.
John Hoffmire is director of the Impact Bond Fund at Saïd Business School at Oxford University and directs the School of Business and Poverty at the Wisconsin School of Business at UW-Madison. He runs Progress Through Business, a nonprofit group promoting economic development. Ben Young, Hoffmire’s colleague at Progress Through Business, did the research for this article.