Energy Access and Human Development Transcript

Energy Access and Human Development Transcript
CLEAN TECH INNOVATION AND ENTREPNEURSHIP (12CIE45824) Co-‐ordinator Rafael Sardá (Ph.D., MBA) e-‐mail.-‐ rafael.sarda@esade.edu or sarda@ceab.csic.es Course objectives 1. To understand the energy scenarios, the three hard truths and the three hard needs. 2. To understand policy for emission reductions and the role of clean technologies and energy efficiency. 3. To explore the basis of sustainable energy. 4. To understand the benefits of the so-‐called renewable energies. 5. To analyse objectives to improve energy efficiency. 6. To analyse entrepreneurship related to this particular field of innovation. Lecture Summary This lecture discusses the relation between access to energy and human development. It debates what roles play RE technologies to overcome energy poverty and promote energy sovereignty. It presents different approaches or dilemmas, about how societies and companies manage energy ownership and accessibility issues. Students would also participate on one workshop about “How to challenge the New Political Scenario Hypothesis”. (Energy Outlook, 2012). SESSION 9: HUMAN DEVELOPMENT & RENEWABLE ENERGIES May 15th from 10.00am to 13.00Pm Frederic Horta (UPC) 1. Focusing the agreement [SLIDE2] We will go back to these dilemmas but let’s start with issues that almost everyone agrees. There is enough evidence to show how access to modern energy services drastically improved societies well -‐ being. A good way to show how energy serves people is Wendell A. Porter (University of Florida) bizarre parallelism: Number of Gallons Consumed in USA/Number of People USA = Gallons consumed per capita * Kwh/Gal * Year Working labourer (kw/h) = 166 serving each American citizen (Coursera, 2012). 10’ [SLIDE3] Therefore, electrification is behind the agenda of many development institutions i.e. UN Millenium Goals1 , EU Energising Development2 . However, still many work has to be done since, 1 http://www.un.org/millenniumgoals/
globally, over 1.3 billion people are without access to electricity and 2.6 billion people are without clean cooking facilities. More than 95% of these people are either in sub-‐Saharan African or developing Asia and 84% are in rural areas (IEA, 2013). The worst news are that the New Policy Scenario (WEO, 2012) describes and scenario which this disconnected volumes would not be reduced under 2030. 24’ [SLIDE4] The positive relation between energy access and some HD indicator is intuitive but also easy to show analysing data (9.1.1). • Gap Minder 1: Energy Use, per person/ Human Development Index • Gap Minder 2: Energy Use, per person / Income per person (GDP(capita, PPP$, inflation adj.) • Gap Minder 3: Energy Use, per person/ Literacy rate, youth total (% of people ages 15-‐24) • Gap Minder 4: Energy Health 40’ [SLIDE5] Some researchers have been worried to answer what is first the egg or the chicken. This means that the causality relationship between energy consumption and income (or GDP) is a well-‐studied topic in energy economics. This relation has been studied in many different countries. See for example; Ugur Soytasa & Ramazan Sarib (2003) for OECD countries, John Asafu -‐ Adjaye (2009) for developing Asian Countries or A.E. Akinlo (2008) for sub-‐saharian countries. Almost any paper answering this causality do it on Granger-‐based models and they always conclude stating positive causality. However, differentiating from short or long run the causality is bidirectional, unidirectional, mutually causal or neutral. Therefore, these studies refuse that energy and income are neutral with respect to each other, although, neutrality is observed in the short-‐run in few countries. As always, less consensus about if it is first the egg (energy) or the chicken (Income or GDP)…. But total consensus that if you have eggs you will have chickens. 50’ [SLIDE 6] My view on that, as we will see later, is that is the pre-‐demanded productive use of energy that determines when and how regions would be electrified. There is quite a lot of evidence that extractive industries (metals, coal…) or raw materials commerce (wood & rubber) are behind to many of energy planning initiatives. Something similar happens with other infrastructures like railroads. Therefore, frequently household electrification is a positive externality rather than the lei motive to extend grid. Therefore, productive uses of energy are a crucial issue to address when challenging rural electrification or other distributed energy systems (village heating systems). Productive uses means: agro processing activities, industrialization, health and education services…. 2 http://europa.eu/rapid/press-‐release_IP-‐12-‐372_en.htm
60’ 2. Focusing the dilemmas So yes, Modern Energy is good for us but… What is the best way to access it? Some ones will claim that answering this question is just about technical feasibility. However, other ones will recognize that answering this question force us to consider energy-‐ecology-‐society relations (John Byrne, Cecilia Martinez and Colin Ruggero, 2009). Indeed, the dispute between different energy development models is not new. See for example, Amory Lovins’ dicothomoy (1977) between “the hard vs. the soft path” that was mainly related to threatens associated to energy strategies (oil, gas, coal, nuclear power) with likelihood of raising costs, adverse environmental impacts, safety concerns and weapons proliferation. Other examples are social movement post 68 related to energy: anti-‐nuclear, environmentalist (Renewables)… 65’ Opposite forces to focus the disputes: • Conventional Fuels vs. Renewable Energies I believe that this is the most cited dispute. Some ones will claim that Energy Transition requires neglecting any effort on improving technologies related to non-‐renewable energy sources (oil, coal, nuclear, natural gas). This means just work towards improving and deploying renewable energies (wind, solar, thermal, hydropower, ocean power, bio gas). • Technology Frontier vs. Appropriate Technologies [SLIDE7] Some viewers consider technological development as a homogeneous process that puts forward an abstract knowledge frontier; one unique frontier implies that one technology solution solves the overall problem i.e. one size fit all. However, some others claim that energy development and accessibility will not depend on founding the Holy Grail. In contrast, the appropriate technology approach consists on choosing and deploying the technology that better suits each specific need. E.F. Schumacher was the first author to quote this term in a collection of essays titled “Small Is Beautiful: A Study of Economics As If People Mattered“ (1973). Since then, many followers have been working under this paradigm. See for example MIT D-‐Lab3 , “Development through Dialogue, Design & Dissemination”. Some examples of frontier technologies [SLIDE8] 75’ • Grid vs. Off-‐Grid [SLIDE9] Some technologies, i.e. big generation infrastructures, require efficient grid extensions to distribute energy through final users. It also implies that spatial distance between generation and consumption is not critical when planning. In the other hand, some other technologies push towards generation close to final consumption. Therefore, grid is not longer required to 3 http://d-‐lab.mit.edu/
facilitate energy access. Grid extension seems reasonable in urban areas (dense population) but some ones claim that off-‐grid solutions, i.e. generation close to consumption, are what should be used in rural areas where population is widespread across wide territories. Be aware that off-‐grid solutions can be powered using fossil or not fossil fuels. See S. Szabó, K. Bódis, T. Huld, M. Moner-‐Girona (2011) as study about technology election feasibility for distributed energy systems in Africa. [SLIDE10] 85’ • Farming/Factoring vs. Auto-‐consumption [SLIDE11] Being in a Business School, I would say that this difference is fundamental. Indeed, it has massive implications on issues related to finance (long-‐term bond schemes vs loans at household level) and also to issues related to ownership (means of production at user level versus utility infrastructures). • System Robustness vs. Autonomy Some ones claim that big infrastructures enjoy of economies of scale on CAPEX and maintenance. It also being claimed to be the best solution to minimize blackouts and match efficiently demand and supply loads. In contrast, come authors defined the The fourth revolution energy 2010 "instead of a few owners we will have hundreds of thousands..." "energy supply will receive a democratization” Scheer H. (2007): Energy Autonomy: The Economic, Social & Technological Case for Renewable Energy. From “not in my backyard” to “do it yourself” 95’ • Top-‐down Dissemination vs. Bottom-‐up Empowerment “To prevent starvation, poverty and misery that global climate change brings with it, we need energy miracle". Bill Gates (2013). “PV at the top of the house? Everyone ones to be cute” Bill Gates (2013) In Contrast, Rifkin argues that as the ability to tap, generate and distribute power shifts from the exclusive province of governments and lease-‐holding corporations toward individual actors and communities armed increasingly with solar panels and wind turbines and smart grids, so too will bedrock relationships between producer and consumer, the government and the governed, be forever changed. (Rifkin, 2013) If the industrial era emphasized the values of rigid discipline and hard work, the top-‐down flow of authority, the importance of financial capital, the workings of the marketplace and private property relations, the collaborative era is more about creative play, peer-‐to-‐peer interactivity, social capital, participation in open commons and access to global networks. (Rifkin, 2013) 105’
• Multinationals, Banks and Governments vs. Grass-‐root organizations On the industrial era, electrification comes from the commitment from governors, utilities and financial establishment to plan big infrastructures and grid extension. Under Public Monopolies or all sorts of public-‐private engagements. Distributed Energy Systems frequently requires the involvement of local players to deliver service, collect payments or any other kind of maintenance and operation activity. Idea of social bankability4 Social bankability, simply put, is the decision, by fiat, to use public funds to fill in gaps where private banking has failed, but where the evidence shows the investments are entirely credit worthy and socially desirable. That's what Franklin Roosevelt did in 1933 when he decided that American farmers setting up electricity co-‐ops were creditworthy, even though banks didn't trust them. Muhammad Yunus did the same thing for enterprise loans to the poor with micro-‐ credit. Now a new class of entrepreneurs are demanding the World Bank step up and do the same for off-‐grid clean energy access. • Know how vs. know why? Users experience is contrasted with technological capabilities development. Those concerns are not just be related to the realm of technology transfer or intellectual property rights. IT has implication about employability opportunities at local level or long terms path of technology assimilation. It also talks about at what level of governance happens the energy services. Who posses the means of production to dispose energy. • Microsoft vs. Google [SLIDE12/13] Bill Gates Portfolio; Terranova, Storage (Ambri, Aquionenergy, Lightsail) Green Google (Smartcity, Bloomenergy) 3. Understanding the dispute These opposite forces evidence that not all societies organise in the same manner how energy is generated and distributed. As an example, in many countries, energy inequality is visually understood when a urban elite has access to Electric Grid meanwhile big majorities are disconnected, or with poor services and relying on Traditional Energies i.e. Biomass, Wood. See, as an example, this young Guineans, without access to electricity, study under carpark lights at G'bessi airport in Conakry, Guinea. Photograph: Rebecca Blackwell/AP [SLIDE14]. Some politicians will claim on how diligent are they citizens that keep reading all day long!; some NGOs will claim for their rights to energy at home; some utilities might saw them as “free riders”. 4 http://www.huffingtonpost.com/justin-‐guay/off-‐grid-‐clean-‐energy_b_2959494.html
Energy as a commodity, gift or right Majority of citizens in OECD countries understand energy as a “commodity” i.e. meaning a marketable good that satisfy wants and needs. Commodity is as abstract as, that the USA Federal classification of CO2 as both a commodity (by the Bureau of Land Management) and as a pollutant (by the Environmental Protection Agency)5 . It means that the distribution criteria is based on willingness or capacity of payment and measured as any currency per gallon or Kwh. It is also broadly accepted that this prices are fixed according to demand and supply, market mechanism. However, there is evidence in many countries where markets are far from the perfect competence assumptions. Therefore, It is not evident that prices paid depend on the market mechanism. [SLIDE15&16] Indeed, not everyone does direct payments, pay-‐per usage, for the energy that they consume. And, more important, not always, big utilities are in church to bill and collect payments. Some ones understand energy sources as a commons, gifts or rights. Those ones in rural areas relying on Traditional Energies receive commoditized energy products (candles, coal, oil lamps) from local suppliers but also natural gifts in the form of wood or water flow. [SLIDE17&18] Furthermore, many others receive modern energy services but also as a gift from Governments (Diablito) and NGOs (HSH). [SLIDE19&20] Therefore, any RE based company deals with one sometimes-‐difficult question to solve: who is paying the bill? Indeed, just a few minorities of households and companies are currently electrified based on a metering usage contract as we are used. Furthermore, electrification is not normally run as pure private business where total top-‐down control of supply chain is possible at private hands. Indeed, in almost all countries, governments and other institutions are behind to push to provide electricity to households and companies. To explain that fact in today’s data consider this graph implications (Energy for all financing access for the poor pg. 13, 2011) This could be explained based on natural monopoly6 argument. For example, competing on distribution grid does not have too much sense. In countries with energy public utilities, energy service relies more on tax collection than per-‐usage billing to final users. In many occasions, taxpayers understand access to energy and low prices as a social civil right. Just as an example about it. When Riots, Bad Governance -‐ Riots Energy 2013, three examples [SLIDE21] 02/2013 Bulgaria – Precio Luz http://internacional.elpais.com/internacional/2013/02/19/actualidad/1361298147_010757.ht ml 04/2013 Honduras – Precio Luz 5 http://en.wikipedia.org/wiki/Carbon_capture_and_storage 6 http://en.wikipedia.org/wiki/Natural_monopoly
http://www.laprensa.hn/Publicaciones/Especiales/Honduras-‐indignada/Notas/Indignados-‐ protestan-‐contra-‐altos-‐precios-‐de-‐energia-‐en-‐Honduras#.UX5K7yuAtvA 03/2013 Colombia – Precio petroleo http://www.telesurtv.net/articulos/2013/03/03/transportistas-‐colombianos-‐siguen-‐en-‐paro-‐ al-‐no-‐llegar-‐a-‐acuerdo-‐con-‐gobierno-‐1430.html When energy is a commodity… What to price? First Sources Forestry Non-‐exclusion, rival Sun Non-‐exclusion, non rival River Non-‐exclusion, rival Wind Non-‐exclusion, non rival Coal Exclusion, rival Crude Oil & Derivatives Exclusion, rival Second Sources Candles Exclusion, rival Lamps Exclusion, rival Batteries Exclusion, rival Grid Electricity Non-‐exclusion?, rival? Remember that price appears on scarce goods, when energy forms do not permit to generate exclusion, it is better priced the generation infrastructure. i.e. transformation equipment. RE permit to turn energy source in hands to final or regional users, therefore, price per kwh or gallon, are not the reference cost when thinking about distributed energy systems and auto consumption schemes. Evidence to explain that many energy distribution models coexist, and that energy is treated as a commodity but also as a gift or right, is to analyse the Solar Home Systems (SHS) widely disseminated since the 80’ in rural areas worldwide. It also a good case study to see delivering, funding and pricing models. The literature evidence that many provision schemes are under consideration. For Example, E. Martinot, A. Cabraal, S. Mathur (2000) recognize the following schemes: • Private Sector and NGO Delivery Model • Consumer Credit Delivery Mechanisms • Pay first-‐cost subsidies and offer affordable system sizes Bottom of Pyramid; clients, distributors or engineers? Pyramid of Capitalist System, issued by Nedeljkovich, Brashich, and Kuharich in 1911. Published by The International Pub. Co. , Cleveland OH [SLIDE20] Post -‐ fordism capitalism needs to incorporate “We consum and we indebt for all”. An example of this is C. K. Prahalad and Stuart L. Hart (2007) [SLIDE21], that explain how companies like Unilever are reaching the BoP. In Energy, some Business models developed incorporate BoP, as not just clients. Examples: Energy Shops: BoP Distribution (E-‐chaja) [SLIDE22]. Business Model Based on Renting a Energy Box. Local entrepreneurs sell energy services on rural areas.
Local Utilities: O&M (Inensus). Inensus proposes a Business Model based on mini-‐grids at village levels. Local Authorities are involved on collection and maintenance issues. Users would be billed based on a pre-‐payment scheme. Politics of Energy The dispute has also implications about regional and spatial economics i.e. population distribution (rural population vs urban). But also how are they reached on communication, fiscalization, and bankability. Private markets failure Last but not least, many people would claim that where private market fail, government has to intervene. Those ones consider access to energy as a social right that must be provided and defended by governments. Off course, according to these arguments, government has to play a redistribution role (transfer of income between population) and also leaves and open door to Government participating on Industrial Policies and Urbanization. Subsidies on R+D or deployment, according to BG more on deployement, Feed-‐in tariffs, Subsidies Service Level Agreement and Disconnection Policies. Greece 30.000 thousands of families disconnected per month Highly regulated and intervention Difficult to reject that accessing energy and energy science is a highly politicized arena. It is not surprising that this happen when a hot-‐button issue like energy is at the roots to determine quality on education and health, but also what appliances could you have at home or if it I feasible to spend the weekend 200 km far from your home town. There are many arguments to think about the relation between energy and politics. One way to organize it is to think about what is the concerning phenomena that raise politicians and social society interest. National Supremacy: Irak as a Business Model. That’s at the roots of this war according to many. Revolving door phenomena. Geopolitical Interests [SLIDE25&26&27] SESSION 10: RENEWABLE ENERGIES DISRUPTIVE TECHNOLOGIES & COMPANIES May 15th from 14.00Pm to 17.00Pm Frederic Horta (UPC) Where to invest? http://www.technologyreview.com/news/422295/is-‐renewable-‐energy-‐a-‐good-‐investment/ More optimistic views solve the dilemma between what technologies and business models deploy……. USING PORTOFOLIO DIVERSIFICATION! Who Invests?
http://www.khoslaventures.com/sustainability.html http://www.fool.com/investing/general/2013/03/31/if-‐you-‐want-‐to-‐invest-‐in-‐energy-‐dont-‐ follow-‐warren.aspx https://www.bpcap.net/cgi-‐bin/index.pl Students Participation 9.1 Players: Companies or Labs (excel) ABB -‐ http://www.abb.com/ 9.2 Student Participation • Choose case studies to further discuss. • Where to invest to get rich? • Where to invest to get social impact? • How to grasp opportunities as entrepreneurs? 9.3 Concluding Remarks, be back to dilemmas. REFERENCES: John Asafu -‐ Adjaye (2009): “The relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries”. Energy Economics Pages 615-‐625 Ugur Soytasa & Ramazan Sarib (2003): “Energy consumption and GDP: causality relationship in G-‐7 countries and emerging markets”. Energy Economics Pages 33–37 A.E. Akinlo (2008): “Energy consumption and economic growth: Evidence from 11 Sub-‐Sahara African countries”. Energy Economics Pages 2391–2400 John Byrne, Cecilia Martinez and Colin Ruggero (2009): “Relocating Energy in the Social Commons Ideas for a Sustainable Energy Utility”. Bulletin of Science Technology & Society 29:81 Lovins, A. B. (1977): Soft energy paths: Toward a durable peace. San Francisco: HarperCollins C. K. Prahalad and Stuart L. Hart (2007): The Fortune at the Bottom of the Pyramid S. Szabó, K. Bódis, T. Huld, M. Moner-‐Girona (2011): Energy solutions in rural Africa: mapping electrification costs of distributed solar and diesel generation versus grid extension Scheer H. (2007): Energy Autonomy: The Economic, Social & Technological Case for Renewable Energy.
J. Rifkin (2013): The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World, Global Sustainable Energy: Past, Present and Future by Wendell A. Porter (coursera, 2012). https://class.coursera.org/globalenergy-‐001/class/index Technology Roadmap Carbon Capture and Storage in Industrial Applications http://www.iea.org/publications/freepublications/publication/ccs_industry.pdf (21/3/2013) Prices for Renewable Energies in Europe: Report 2011-‐2012 http://www.eref-‐europe.org/attachments/article/92/EREF-‐Price-‐Report-‐2012.pdf (21/3/2013) E. Martinot, A. Cabraal, S. Mathur (2000): “World Bank/GEF solar home system projects: experiences and lessons learned 1993–2000”, World Bank, 1818 H St. NW, Washington, DC 20433, USA Measuring progress towards energy for all Power to the people? http://www.worldenergyoutlook.org/media/weowebsite/energydevelopment/2012updates/ Measuringprogresstowardsenergyforall_WEO2012.pdf Bill Gates on Energy Innovation (2011) http://www.youtube.com/watch?v=-‐S6tQpeXpVE DC GRIDS http://www.technologyreview.com/featuredstory/513736/supergrids/ The disadvantages of HVDC are in conversion, switching, control, availability and maintenance. http://en.wikipedia.org/wiki/High-‐voltage_direct_current MIT Review http://www.technologyreview.com/news/512516/why-‐we-‐need-‐more-‐solar-‐companies-‐to-‐ fail/ MIT Review http://www.technologyreview.com/news/510481/novel-‐designs-‐are-‐taking-‐wind-‐power-‐to-‐ the-‐next-‐level/ MIT Review http://www.technologyreview.com/news/512516/why-‐we-‐need-‐more-‐solar-‐companies-‐to-‐ fail/ MIT Review http://www.technologyreview.com/news/510481/novel-‐designs-‐are-‐taking-‐wind-‐power-‐to-‐ the-‐next-‐level/ Smart Grid Pioneers http://www.pecanstreet.org/ Bill Gates on Energy Innovation http://www.youtube.com/watch?v=-‐S6tQpeXpVE

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