Energy Poverty: What it Means and What to Do 1

Monday, August 15th, 2016
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The term ‘energy poverty’ has two different meanings, and which meaning you use depends largely on whether you are in the developing world or the developed world.

But the common denominator is energy; its supply and its cost.

In the developing world, it is the lack of modern energy supply that is the issue. With demand growing day by day, many countries are struggling to keep up. This demand also puts pressure on global goals to reduce carbon emissions, as much of the developing world energy demands are being met by coal or other types of carbon rich sources such as firewood, charcoal, manure and crop residues to provide light and heat for cooking, or diesel for electricity generators. Poverty in this sense can also refer to the minimum amount of energy required for those basic needs, such as cooking and lighting, plus the type of energy used by those on the poverty line.

The World Watch Institute says that although more people have access to electricity than ever before, governments and development organisations need to continue investing to help meet demand, which ultimately provides health, environmental and societal outcomes. The International Energy Agency also estimates that 1.2 billion people do not have access to electricity and the United Nations Foundation says 1 billion have access that is unreliable. The regions most affected are sub-Saharan Africa and South Asia; combined they are reported to represent over 95 per cent of people lacking electricity around the world.

It is a major challenge. An even greater one for the world, however, is that if the developing world is to meet its energy demands, how can it do so without raising carbon to higher levels? If low carbon renewable energy supply such as solar and wind is not applied due to cost, it will be counteractive to the efforts of countries striving to lower their carbon output.

Closer to home in Australia and the developed world, energy poverty refers to those households that spend a high percentage of their income on energy and struggle to keep up with rising energy prices. In some cases, they are unable able to pay bills, so their power is cut, or they have to switch appliances such as air conditioning and heating off. By switching off, certain groups – such as the elderly or sick – run the risk of further compromising their health. If they have no heating in winter or cooling for those very hot summer days, it can sometimes result in death.

As July 1 marked the beginning of another energy price rise for Australia, these costs will hit the population harder than before, but mainly the low income households.

A Bankwest Curtin Economics Centre (BCEC) report published in June explains that low income households in Australia are spending 12.5 per cent of their income on utility bills and fuel each week, whereas those in high income brackets only spend 2.9 per cent. When this is combined with rising costs for housing, particularly rent (in Western Australia the BCEC reports this has increased from 32 per cent of disposable income in 2003/4 to 43 per cent in 2013/14), it is not a pretty picture for struggling families, particularly single parent families which spend seven per cent of their gross household income on energy.

The BCEC findings also show that less than 40 per cent of privately rented properties are properly insulated compared to 80 per cent of owned properties. Furthermore, 20 per cent of owned properties now have solar power for hot water, with the figure for rented property coming in at only four per cent. Clearly, the divide is large.

Research published last year by the CRC for Low Carbon Living (CRLCL) which analysed figures from the past two decades (1993-2012) also confirms that low income households and those caught in the housing affordability trap feel the brunt of energy costs, whilst higher income households are unaffected because their income rises above inflation and in line with electricity prices.

However, these figures are talking about energy as a whole without taking into account access to low carbon energy supply. For low income families, access to solar and renewable energy for low carbon living seems almost impossible.

Ongoing research yet to be published indicates that there are many barriers to low carbon living, the largest being financial and societal. For example, surveys conducted as part of this research reveals that many in this income bracket do not fully understand what low carbon living entails or how they can tap into it. This is through no fault of their own, but it often occurs because of a lack of information, or information that is hard to understand. Some may only be able to access information online, and if you cannot afford energy, having a computer or access to the internet at home is unlikely.

Providing fair and equal access to low carbon energy, including reduced reliance on grid electricity, is therefore important. This is why we need to expand our planning and thinking around energy supply to help support those in energy poverty.

One way to address this is for our future cities to have precinct-based distributed energy production and supply, where renewable energy can be locally created and shared so that consumers are also providers. Whether these be residential households or businesses, the energy they create can help reduce energy costs and therefore help those in low income brackets. Emerging technologies and business models are already in the making for precinct-based electricity generation, use and trading of low-carbon energy through a mix of renewable sources, and energy storage. It will be a game-changer for our cities and communities.

Community groups that come together through organisations like the Coalition for Community Energy (C4CE), which is focused on providing renewable energy to a variety of regions around Australia, can provide another solution. At C4CE, there are 73 groups running projects to develop different energy programs such as installing solar and battery storage to help replace diesel in remote communities, setting up bioenergy facilities or working with wind and solar developers. These community groups will seek out funding and support are another way to bring renewables to the energy poor. The C4CE project alone embraces 21,000 people and was reported recently to produce 50,000 MWh of electricity per year, avoiding 43,000 tonnes of carbon dioxide emissions.

Energy provision is a landscape that is under great change globally. It’s a time where governments, energy suppliers, researchers and the community  must work together to find solutions so all get the energy they need, at the right price and with a clean bill of health.

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  1. Barry b.

    I would expect the decreasing costs to sooner or later make solar PV an economically viable option for low-income homes, and probably the best means at hand for solving energy poverty around the world without worsening greenhouse gas emissions.