Domestic energy in developing countries
Availability/Use of domestic energy over the last 70 years in developing countries
Introduction
Energy Trends
Energy Trends
- Current Energy demand increase 5% p.a
- Solid Fuels
- Demand for more convenient fuel sources.
- Stable demand (1970 - 1995)
- Fuel choice (1990 - 2015)
- Access to electricity (1990 - 2015)
Solid Fuels
- Wood, animal dung & crop waste
- 3 billion cook with solid fuels
- Widely used in rural areas
- Time consuming to collect
- Higher quantity of biomass sources in Africa
- Health implications
Solid Fuels
Demand for more convenient fuel sources
- Increases with development
(higher disposable incomes / lifestyle changes)
1) Solid fuels
2) Petroleum products
3) Natural gas & electricity
1970 - 1995
- 1970-1995 Energy demand stable in non-OCED countries
- Declined in North America
- Increased efficiency
- saturation of electrical appliances
- Higher consumption /availability of biomass in Africa
Per capita housenhold energy consumption
Per capita housenhold energy consumption
Fuel Choice
Influencers
- Fuel cost
- Household expenditure
- Education
- Urbanisation
- Electrification status
- Water source
Multiple fuel sources for cooking
Access to Electricity
Reduction in people without access
1.54 to 1.07 billion
Fuel switching is unlikely to occur without electrification
Access to Electricity
Energy Demand
Energy demand
Urbanization
For the past 50 years, developing countries has experienced movement of population and consequently, rapid urbanization (Kojima, 1996).
Urbanization
- Promotes economic activity growth
- High concentration of energy consumption
- Pressures the energy supply system
Energy consumption x Urbanization
Energy consumption x Urbanization
- Increase in energy demand
- Dependency in foreign energy supply
- Impact in the economic growth and energy efficiency
Benefits of energy
- Improve living standards
- Healthcare
- Education
Differences in developing : electricity access
Benefits of energy
Depends of economic, social, political and cultural issues
Chad
- 8% of the population in 2014
Infrastructure
Improvements in this sector are commom responses to the rapid urbanization.
Infrastructure
- Investments in domestic production
- Importing energy
- Transition of technology
Investments of $125 billion annually would be needed in developing countries to provide adequate supplies of electricity.
The World Bank
Financial constraints
Financial constraints
Government Interventions
- Taxes and Revenue
- Increase in taxes to reduce spending cuts
- Decrease in taxes -->Encourage saving and investment from nation's workforce
- Bank Loans
- Open to forms of corruption, such as capital flight, opposition bribery, fund warfare
- Used to purchase oil -->oil crisis
- Banks could not manage; spiked interest rates
Foreign Debt
- Oil Shock caused high levels of debt via loans.
- Some capital lost in capital flight
- Lower GDP
- Affects exchange rates
- IMF & WB stepped intervention
- Long term Issue
External Debt Post Oil Shock
Foreign Investment
- Financial Direct Investment (FDI)
- Also referred to as the direct method
- Horizontal or vertical.
- Not without it's drawbacks
- Regulated by a body (UN, OECD etc)
- Financial Portfolio Investment (FPI)
- Less risk for the investor as security measures have been put into place.
Government interventions
Government intervention
-Inefficienct State Intervention
- Private Sector Investment
Problems with State Intervention
Problems with State Intervention
- Poor Productivity
- Inadequate management
- Lose experienced staff due to uncompetitive employment conditions and poor job satisfaction
- Inefficient operation and maintenance
- Deteriorating equipment
Private Sector Investment
- Investment in the Private Sector is crucial to developing the energy sector
- Government subsidies are not sufficient
- Challenge to developing countries: Difficult to make outward investment an attractive option
- Private Participation in Infrastructure (PPI)
Benefits of PPI
Benefits of PPI
- Transfers: Production technology, skills, innovation and organisation and managerial practices
- Increases efficiency of the sector
- However - States need to establish the right business regulatory and legal environment to sustain investor interest
Difficulties in encouraging investment
Difficulties in encouraging investment
PPI in Developing Countries
PPI in Developing Countries
The Global
Economy
- Challenge: The Global Economy is out of Government control
- Why Developing countries are more vulnerable
- How the changing of oil prices affects them
Oil Prices Fluctuation
- Oil Vulnerability Indicators:
- Level of net oil import
- The oil share in energy mix
- Energy efficiency of production
Oil Prices Fluctuation
Future expectations
Many countries signed the Sustainable Development Goals.
From 2015 to 2030
Future expectations
Conclusion
- Rapid urbanisation
- Increased demand for energy
- Factors that influence energy transitions
- Foreign investment tends to be the most secure and viable
- Developing countries are unattractive to private investment
- Oil Price vulnerability
- Socio-economic and political factors are related and interlinked and they impact on energy availability and use
Conclusion