By Christiane ilaca, Carlos Santos

Sustainable development has become a widely recognized goal for human society ever since deteriorating environmental and social conditions in many parts of the world indicate that its sustainability may be at stake.

How do we define sustainable development? Sustainable development is defined as development that meets the present needs and goals of the population without compromising the ability of future generations to meet theirs. (To sustain means ‘to maintain; keep in existence; keep going; prolong’). Sustainable development involves economic, social and environmental development.

Renewable energy can facilitate economic and social development in communities, but only if the projects are intelligently designed and carefully planned with local input and cooperation. Particularly in poor rural areas, the costs of renewable energy projects will absorb a significant part of participants’ small incomes. Communities cannot afford unsuccessful projects that may fail to meet development objectives and leave participants destitute.

Virtually every expert who has addressed the energy aspects of sustainable development has concluded that renewable resources should play a major role. Yet, while the use of these resources is growing rapidly in both developed and developing countries, use has not reached anywhere near the technical and economic potential that worldwide studies have attributed to them.

World Context  

As developing countries expand their economies and reduce poverty, they face major climate change and energy challenges. The mere facts are cause for alarm:

-World energy consumption is projected to increase from 138 TWh in 2006 to 162 TWh in 2015 and 199 TWh in 2030─an increase of 44%. Non-OECD countries are expected to increase their consumption by 73%, compared with only a 15% increase for OECD countries for the same period (EIA 2009).

-Developing countries today emit about half of global CO2 emissions. Under ‘business as usual’ scenarios, their future emissions increase faster than those of industrialized countries (den Elzen, M., and Hohne, N. 2008).

-1.6 billion people today, most of them living in Sub-Saharan Africa and South Asia, do not have access to electricity. Over two billion people remain dependent on biomass for their basic cooking and heating energy needs. 80% of Sub-Saharan Africa’s population relies on kerosene and batteries in their households and diesel generators for their businesses (World Bank 2008).

-Gross domestic product per capita and energy per capita will remain lower in most of the developing countries than in industrialized countries over the next decades. Energy-related CO2 emissions per capita will also remain significantly lower in most developing countries for the decades to come (World Bank 2008).

-In the face of growing energy demand, conventional energy sources are environmentally, economically, and socially unsustainable and their continued use will contribute greatly to an increase in CO2 emissions (World Bank 2008).

-Energy use accounts for about 65% of the world’s greenhouse gas emissions (OECD /IEA 2009).

All countries, whether industrialized, middle income or low income, place a high priority on providing their citizens with access to electricity. Despite this policy and the expenditure of billions of dollars, more than 1.5 billion people, mainly in Sub-Saharan Africa and South Asia, remain without access to electricity services today.

But the long-term sustainability of off-grid electrification depends on more than technology. It requires effective prioritization and planning to enable economic choices of technology, appropriate infrastructure to ensure that services are provided over the long run, and sustainable financing to make these capital-intensive technologies affordable.

Case Study: Mexico

During the last decade, few projects related to PV technology have been made to improve the quality of life in rural and isolated communities in Mexico but, there is one that we consider that is really fighting against poverty: the recently initiated, US$98-million Integrated Energy Services for Rural Mexico (IESRM) project that is a dedicated off-grid project that uses a variety of renewable energy technologies. The long-term national impact of this project is expected to be larger due to replication effects.

According to the last population census (INEGI, 2005), Mexico had already achieved an electrification coverage of 96.6%, serving approximately all but 3.5 million of the 103 million population. These 3.5 million people represent about 812,000 households concentrated in small communities, the majority under 500 people.

Electrifying the remaining households is challenging, since the majority of them are found in small, remote, isolated communities. Further, the un-electrified population is expected to increase by 20% through population growth over the next decade.

About 60% of the people with no electricity are indigenous. Typically, these communities also lack other basic services and infrastructure such as roads, water, telecommunications, education and health. 70% of the un-electrified population in extreme poverty is concentrated in the Southern States.

The project is a five-year, adaptable program financed by the Global Environmental Facility, the Government of Mexico and the private sector. The project is designed to increase access to electricity services and promote social and economic development in the rural areas of the poorest States of Mexico. The geographical scope of the Project includes primarily Oaxaca, Veracruz and Guerrero (period May 2007-2012) with the possibility of extending to Chiapas and Puebla after 2008. Will focus on communities or aggregates of communities in the range of 50 to 500 households. The initiative will target 50,000 households in the period May 2007-2012.

The project has five main components:

1. Strengthening of strategy, policy, and regulatory frameworks,

2. Investment in rural electrification sub-projects,

3. Technical assistance and capacity building activities necessary to ensure the success and sustainability of the Project at different stages of implementation,

4. Technical assistance to increase productive uses of electricity and co-financing─on a pilot basis─of a limited number of productive or micro-business activities, and

5. Project management.

The project is designed to be implemented over a five-year period. The institutional structure for the implementation of the Project includes the participation of key government organizations at the Federal, State and Municipal levels, community leaders, the private sector and the civil society (NGOs).

The project will target less than 6% of the 4,692 communities in the Southern States whose primary electrification alternative is an off-grid technological solution. The project has, therefore, a significant potential for replication in the remaining 94% of un-electrified communities and in other States of Mexico.

The solution of using PV systems to supply electricity to populations in remote areas targeted by the project is, from an economic perspective, the least-cost supply option-based on an economic-engineering analysis performed by the Mexican Institute of Electrical Research (Division de Energias Alternas).

The economic benefits have two components:

1. The avoided costs for lighting and batteries (dry cells and rechargeable car-batteries) that households will not incur when the PV systems are installed,

2. The consumer surplus resulting from the increased consumption at lower per unit prices.

With regards to the costs of PV panels, a recent market assessment conducted in Mexico determined that the costs of PV panels vary between US$6.90 and US$8.50 watt peak (before taxes). These prices are much higher than in Germany, Spain, Japan and the U.S.A., where average prices are estimated in US$5.45, US$5.60, US$5.35 and US$5.20 respectively.

Based on the economic analysis, the Solar Home Systems (SHS) component of the project shows high economic returns. Under relatively conservative assumptions, the Economic Rate of Return (ERR) for the total SHS component is about 40%, with an economic net present value of about 805 million pesos (about US$73 Million), reflecting a significant improvement in the quality of lighting and battery services using PV systems in households. The economic returns of the SHS component are robust, and risks are considered minor.

The main technological options considered under the program include:

a. Photovoltaic systems serving a single customer, customer clusters or community center (e.g., hospital, school, other) and,

b. Wind generators serving a single customer, customer clusters or community center.

It is expected that these two types of technologies will be the most appropriate solution for about 85% of households targeted under the project.

Poverty is a striking hindrance to human life quality, a hindrance to economic development worldwide, and can breed an immense amount of problems in the future, if not solved quickly. There are many definitions around the world for poverty, yet the same common element remains in most of them, which is the low quality of life and the little expectations there can be to overcome that particular situation. Several approaches have been taken in order to considerably and drastically reduce the percentage of poverty, although not all of them have been effective. Programs of general aid have turned out to be largely ineffective, mainly because they do not reduce the incapacities or obstacles that the least well off sector of society face, and which effectively hinder an improvement in their quality of life. In Mexico, a rich variety of programs have been implemented in order to reduce the levels of poverty. Nevertheless, very few have been successful in both reducing poverty, and having a lasting effect. PV technologies have managed to be a tool for improving quality of life unfortunately not all people can pay for it. With the use of these technologies, we could develop big changes; poor people just need the tools to be able to develop.  

Christiane llaca is Co-Manager Project Ciudad Rural, Puebla Mexico and SEDESO Ministry of Social development, Puebla, Mexico.

Carlos Santos is Master in Science, Florida Institute of Technology, the U.S.A. and Systems Engineer, UDLA, Mexico. He is also a freelance IT consultant.