Grid growth and wealth

A recent article about the impact of electric grid power expansion in India and Africa peaked my interest and so reviewed some of the papers on the topic spanning decades. While I obviously can’t declare definite conclusions they seem to point to problems with base assumptions made by advocates of broad electrification.

The blog post was a quick review of a couple of recent studies discussing the expansion of electric power to villagers in rural India and Kenya. The studies are very different looking for different things. But they both show that the expected economic boost from the build out of the electrical power grid has not arrived, at least not yet, and some of the data indicates a net negative impact.

In general it appears that the cost of the service is too high to pay off for these poor farmers/villagers is modest at best and in some ways is a net negative.

This is contrary the experience in places and times, most specifically the US where rural electrification was a vast boost to the economy.

The situation needs study but the thing that comes to my mind is that the served populace needs a certain amount of wealth to make use of electricity.  On its own electricity does nothing, its what it enables that is the important thing.  Many of the areas that have already electrified were both relatively wealthy and had existing in service infrastructure that could be made more productive powered by electricity rather than the prior human, animal, steam or wind power.

Today the urge is to spread the grid out into the poorest rural areas, these are subsistence farmers not commercial farmers and these people have little or no infrastructure to make more productive. Not to say that they cannot move up the chain with time but the move from subsistence to commercial farming is non trivial. Transportation infrastructure and marketing/sales infrastructure are critical while cell phones are a huge enabler the rest of the picture is still fuzzy at best.

Also one has to wonder if this uplift isn’t facing a very stiff counter wind from the global economy. It is very cheap to move products in bulk across the major transport networks it could be that farmers, selling a local staple product will find it very hard to compete even if the distance to market is relatively short.

Though this is only one data point, it seems to point out that implementation of small scale solar/battery systems for light and telecom are the most important stepping stone for these subsistence farming communities.  That the improvement of transportation infrastructure might be of value before a major build out of electrical grids.

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