The report, titled Energy Safety Nets, released jointly by Sustainable Energy for All (SEforALL), the Overseas Development Institute (ODI), and the Catholic Agency for Overseas Development (CAFOD), looks at how social assistance mechanisms can be effectively used to close energy affordability gaps for the poor.
The report examines the current approaches in six countries (Brazil, Ghana, India, Indonesia, Kenya and Mexico) and offers recommendations for the future design of government-led measures to support very poor and vulnerable people to access essential modern energy services, such as electricity and clean fuels and technologies for cooking, by closing the affordability gap between market prices and what poor customers can afford to pay.
The report argues that national governments are uniquely positioned to target and support disadvantaged populations most in need of energy services by providing safety nets for those living in energy poverty. It presents some key recommendations for governments and policy makers to consider when designing energy-focused social assistance mechanisms:
- The type of subsidy delivered and the mechanism for delivering it will have an impact on effectiveness of the initiative. Energy safety nets must be tailored to the particular energy needs of specific groups within the population, for example, by taking into account the different needs of women and men.
- A lack of evidence about the energy consumption levels within vulnerable households has hitherto prevented policymakers from determining appropriate thresholds for subsidies. Additional data collection on the specific energy needs of the poor, building on research such as the Multi-Tier Framework surveys, is needed to enhance programme design and so enable policies to be more efficient.
- Household connections – to a local mini-grid or LPG system for example – carry little long-term benefit if an individual cannot afford to pay for consistent supply
- Energy safety nets should be appropriate to the country’s institutional, geographic, economic and social context. For example, ensuring energy access for women can play a part in wider efforts to promote gender equality. Initiatives must also be adapted to changing social and economic conditions and they should also be modified when lessons are learned through implementation.
- The success of energy safety nets depends on strong, multi-year political commitment by governments. National-level pledges to achieve universal energy access, supported by policies of social assistance for poor and disadvantaged groups, may be necessary to ensure universal energy access goes beyond energy connection targets and includes essential energy consumption levels.
The analysis of the various energy safety nets approaches in the report includes The Energy and Cash Plus Initiative, which is contained in The Kenya Case Study.
The Energy and Cash Plus Initiative, also known as Mwangaza Mashinani, is a pilot project by UNICEF Kenya, commissioned to Energy 4 Impact and launched in August 2018 with the aim of enabling marginalised off-grid households in Kenya to access solar energy.
The initiative is unique insofar as it is designed to integrate with the National Safety Net Programme of the Kenyan Government. The Energy and Cash Plus Initiative seeks to bolster progress on the government’s universal energy access goal by reaching the most vulnerable and disadvantaged households. It builds upon the National Safety Net Programme’s tried-and-tested cash transfer system in which selected beneficiaries receive a top-up on current cash transfers received under the programme. This top-up enables them to purchase a solar lantern or a basic solar home system of their choice from pre-qualified suppliers.
Ultimately, UNICEF’s project aims to investigate how improving household access to energy for lighting also impacts quality of life indicators such as health, learning for children and the household’s sense of ownership (having purchased their solar home systems through a 10% contribution fee).
For this pilot, Energy 4 Impact seeks to investigate the effect of top-up cash transfer on the solar products market, observing distortions if any. It also aims to record occurrences of product leakage, in which a household sells off the solar lantern or solar home system after the end of the programme.
As the pilot began disbursements in early June 2019, monitoring and evaluation is still ongoing. Nevertheless, the pilot will provide lessons for programme scale-up due to begin in early summer 2020. UNICEF hopes to influence the national government to take up and scale the initiative to other counties at the end of the 20-month pilot.