Charles Landau, MPP, Staff Writer, Brief Policy Perspectives
You may not realize it, but one of the most important pieces of our energy infrastructure is right outside your home. In early 2015, the FCC issued highly publicized “Net Neutrality” rules governing internet access. One criticism of the policy is that it did not implement “last mile unbundling.” Internet providers share common “backbone” or “trunk” infrastructure, mostly high capacity fiber optic cable lines, but the connection that reaches your home is proprietary. Unbundling these connections, the argument goes, would make it easier for new firms to enter the market.
The “last mile” problem is a cost problem: in essence, it’s a way of saying that the most expensive part of connecting a home to the grid is the line running from the end of the driveway to the house. This is as true for electricity as it is for broadband. Any infrastructure that forms a “tree” with high capacity “trunk” lines tends to have trouble paying for the “twigs.” For telecoms firms and regulators, this problem is already front of mind, but policymakers at all levels should plan the last mile of rural and developing world electrification both in their policy proposals and in their budgets.
It doesn’t need to be a mile, it can be a short walk across the yard or a parking lot. Volkswagen made waves when they announced their “Last Mile Surfer,” a lightweight electric scooter that can take you from the farthest end of the parking lot to the front door of your office. Flipkart, an Amazon equivalent popular in India, generated similar buzz when their Last Mile Delivery team brokered a new partnership with a Mumbai Dabbawala union (think of a large team of GrubHub bicyclists). It is increasingly important to find entrepreneurial solutions to “last mile” problems, and policymakers focused on energy have a variety of sectors to take their cues from.
A Pressing Need in the Developing World
The World Bank estimates for 2012, the most recent year where data was available, only 84.5% of the world’s 7 billion people have reliable access to electricity. That’s just over a billion people without electricity. Predictably, many of the countries with low rates of electrification are among the world’s poorest. In nations that it categorizes as low-income, the World Bank pegs the average rate of electrification at 25.4%. Given the severe lack of access to electricity in many nations, it is vital to look for solutions. In order to have the most impact, connecting the “last mile” needs to be part of the strategy.
This is particularly difficult to do in Sub-Saharan Africa, where you might need to cross several national borders just to reach a nation with greater than 23% electrification. Uganda, Rwanda, and South Sudan not only have low electrification rates, but they are completely surrounded by nations with low electrification. In Ethiopia, a 2009 World Bank report found that it would cost an average of $75 for a poor household to connect to the grid – an estimated 15% of annual income.
Another country that has difficulties with “last mile” connectivity is India. India’s rate of electrification in 2012 was relatively high at 79%, however India’s population was 1.25 billion people in that year, meaning over 265 million people did not have reliable access to power. In 2014, the Modi Government announced their signature “Deendayal Upadhyaya Gram Jyoti Yojana” initiative to electrify rural villages and agricultural communities. Since then, central government figures have shown a marked increase in rural electrification, but recently critics have suggested that the government figures don’t reflect last mile connectivity. Central government data, they say, only counts whether a village has a power transformer and other basic grid infrastructure, and if at least 10% of their households are on the grid, they count the whole village as “electrified.”
Going the Extra Yard
Because electrification is the bedrock of so many other parts of our lives, policymakers should look at electrification in terms of an array of outcomes. If you electrify the homes of a billion people, what is the impact on climate change, social welfare or the global economy? Policymakers and stakeholders should look for smart ways to target foreign aid and foreign direct investment that can empower vulnerable populations in the developing world through electrification. Approaching these issues requires a case-by-case approach: the World Bank study in Ethiopia suggests that the problem is the cost to families, whereas in India critics say the problem is more about how public policy define ‘electrification.’ In resource-rich nations like the U.S., policymakers focused on rural development can examine energy policy and look for ways that electrification can empower communities and make them more just. Electricity can help make the developing world more prosperous and secure, so public policy should refocus on electrification in the places where it’s needed most.