Rodrigo Osorio
Director General
Energy Agency of Puebla
Expert Contributor

Energy Poverty: The Incessant Struggle

By Rodrigo Osorio | Wed, 09/09/2020 - 15:06

"What people want in life is a purpose. They don't want to merely survive what they want is an opportunity to provide a life for themselves and a chance to prove their worth. Getting them out of energy poverty gives them that opportunity." - Scarlett Johanson for the UN’s Wind for Prosperity
Despite the technology and scientific advances that have occurred in the energy sector, we’ve fallen short regarding energy access. Energy poverty is understood as the inability of households to access energy services at an affordable cost. It is caused by the interplay of three main factors: low incomes, high energy needs due to inefficient housing and high energy prices. Other elements to take into consideration are climate variations, availability of resources and their connectivity, and the storage capacity of regions. This type of poverty results in adverse consequences for people’s health and well-being – with respiratory and cardiac illnesses, and a negative effect on mental health, exacerbated due to low temperatures and stress caused by unaffordable energy bills.

Even though energy poverty began as a field of study in the United Kingdom and some European countries, the problem is worldwide. According to the International Energy Agency, it is estimated that 1.3 billion people on the planet experience energy poverty, thus experiencing its multiple adverse effects on both the social and economic sectors. In Mexico, approximately 12 million households are in some state of energy poverty (Zarco, 2019), which translates into 36.7 percent of the population having no access to the needed energy resources to ensure a good quality of life, especially in regions with extreme temperatures.

The World Health Organization (2020) considers that temperatures between 18º and 24ºC are generally accepted as “comfortable” and pose few health risks. This organization has accumulated evidence suggesting that indoor temperatures (below 18ºC) or higher (above 24ºC) can have harmful effects on the physical and mental health of the occupants of a home. This demonstrates that air cooling or heating is not a luxury but a health issue that should be accessible to everyone. Unfortunately, Mexico is far from achieving this due to a combination of high energy prices, low household incomes, inefficient buildings and appliances, and specific household energy needs.

Addressing energy poverty has multiple benefits, including less money spent by governments on health, reduced air pollution, better comfort and well-being, improved household budgets and increased economic activity. Nonetheless, the big question arises: how could we possibly tackle it? Due to the multicausal nature of the problem, we cannot address it with one single formula. An integral strategy that includes energy enterprises, state energy agencies, local governments and citizens is needed to eradicate energy poverty. The goal should be to make the National Energy Network System much more efficient. The time for renewable energy sources is now.

Renewables, particularly wind and solar energies, have seen an important reduction in their costs. In the period from 2010 to 2018, the cost of photovoltaic systems decreased by 75 percent and it is expected that for the period 2018 to 2025 this trend will continue, resulting in a reduction of 30 percent in costs. According to Bloomberg, the cost of producing an energy unit with solar or wind systems in Mexico today is equal to that of a combined cycle gas plant. This downward trend in cost is in alignment with the urgent need of achieving social welfare, generation of economic wealth for the communities involved and the reduction of pollutants that affect health and those that cause climate change, placing renewable energy as the logical path to follow.

However, the transition must be consciously planned from an Energy-Well Being focus (Osorio, 2020), and the incentives to invest in renewable energy infrastructure should be encouraged by governments. Recognizing that this change will not be achieved overnight, there are some actions that can be taken immediately to alleviate energy poverty. First of all, the state can take into consideration the different needs of its regions during the different seasons and adjust tariffs accordingly, under the premise that affordable energy is not optional. Some regions’ energy consumption will be more intensive during months with extreme weather but this should not endanger people’s ability to pay for basic needs such as medicine and food. The state should be more aware of the impact of its policies on the price of energy.

Another way of contributing to the eradication of energy poverty may be the implementation of on-site audits of households to evaluate energy efficiency and find solutions to lower the energy bill month after month. Most of the time, the high costs of those bills for consumers is due to faults in their appliances or system. Identifying these possible causes may result in a dramatic reduction reflected in the monthly income available for a family. In this way, energy efficiency acts as a preventive method for energy poverty. Information availability about energy efficient appliances is also key to keeping the domestic economy as healthy as possible.

The only viable way to eliminate energy poverty is recognizing the unbreakable link that exists between society and the energy sector, and realizing that energy should be available and affordable for everyone, no exceptions. Thus, for energy to contribute to people’s well-being, it is necessary to have a comprehensive perspective that encompasses its economic, social and environmental implications and then act accordingly. Reducing energy poverty will improve human development and reduce inequalities in society if the respective will of the private and public sectors intertwines and works toward the same goal.