This course gives students an opportunity to explore the following questions:
- How can developing nations expand access to electricity for all segments of their economies?
- What is the relationship between economic development and energy access?
- What role should renewable resources and energy storage technologies play in expanding energy access?
- How should international efforts to mitigate global climate change be factored into the decisions of developing nations?
- What financial and commercial models are being used to increase energy access in developing economies?
- What is the relationship between government policy and energy access in developing economies?
- What tools can help us understand the economics, investment needs, and political ramifications of these intertwined issues?
Electricity is a critical element of industrialized life — perhaps the most critical. Without it, nothing else works. Water, sanitation, food, healthcare, education, entertainment: without power these activities grind to a halt.
There are roughly 1.5 billion global citizens who have no electricity at all. There are another couple of billion whose access is inadequate. There is a strong relationship between energy usage and economic well-being. Reliable, cost-effective electricity is widely seen as a necessary precursor to economic development.
In the OECD — the coalition of 36, mainly Western, developed economies — per capita electricity consumption is around 8,000 kilowatt-hours (kWh) per year. By contrast, in North Africa, this figure is closer to 1,600 kWh per year. And in sub-Saharan Africa, the average is a mere 500 kWh/year. These stark differences are mirrored by similar gaps in per capita GDP and income.
By 2050, the world is expected to need about twice the total energy we now consume. Almost all this growth is expected to take place in developing economies, and for this development to occur, electricity supply will need to be vastly expanded. In the past couple of decades, the economy of China has roared ahead. Chinese GDP and income per capita have grown, along with a vast expansion of energy supply, much of it in the form of electric power. Many developing nations aspire to follow the Chinese path.
A different drama is playing out in the developed world, but one that has implications for developing economies.
Electricity markets in the developed world are in the midst of a transformation that began in the late 1970s. At that time, nations and states began to change the ways in which electricity markets are structured and regulated, with the goal of increasing competition and reducing monopoly. Technology has evolved, and the development and deployment of new supply-side technologies (including renewables) is also a main driver of transformation. Innovations on the demand-side, such as energy efficiency, demand management, energy storage, and “smart” technologies, are also key agents of change. Finally, environmental regulations have altered the landscape, and efforts to reduce man-made greenhouse gas emissions have moved to center stage in the global political theater.
The most aggressive deployment of renewable energy has occurred in the developed world, best exemplified by Germany and several U.S. states, including California and Texas. In the same vein, the most aggressive policies aimed at reducing emissions linked to climate change have also emanated from the developed West. There is often an explicit link assumed between these initiatives. Renewable energy is assumed to equal climate mitigation. There is also an assumption that international economic development must occur in a way that does not adversely affect global climate. In fact, there are advocates would argue that energy options for developing nations should be restricted to wind, solar and storage.
There is tension between the behavior and policy objectives of the wealthy west and the poorer, developing world; one of the key objectives of this course will be to better understand the dimensions of this tension.