Interview with Clark Miller
Clark Miller is a Professor in the School for the Future of Innovation in Society (SFIS) and Director of the Center for Energy & Society at Arizona State University. He is the Principal Investigator on an EEG project on improving the social and economic impact of energy infrastructure investments in Sierra Leone.
There is an assumption that access to electricity will automatically lead to economic development. Can you explain what is meant by the social value of energy access and why it is important for energy projects to be designed in ways that enable users to create value in their own lives?
The assumption that electricity access automatically leads to economic development is demonstrably false. Jamaica, for example, has 100% electricity access but very high levels of extreme poverty and extremely low per capita incomes. Even in the US and EU, very low-income families struggle with extremely high energy burdens that often perpetuate or even exacerbate poverty and inequality. In many rural areas around the world, communities may have electricity but never use it, because it’s just too expensive.
The “social value of energy” is an approach that asks how much net value does an energy user actually get from the use of electricity or other forms of energy. This could be business value, if the electricity use contributes to improving business revenues, or it could be a social value, such as enhanced education.
The key is that you have to observe or measure whether the energy is creating value for the user or not. You have to switch from measures of energy supply to measures of energy use and its impact. And you have to design for the uses that will be valuable – which means you need to be clear on what the electricity will be used for, at least in the beginning.
The idea of the “social value of energy” is very similar to energy efficiency. Energy efficiency measures whether you can achieve the same outcome while using less energy. We ask, here, whether, using the same amount of energy, you can create more value as a user.
We say “net value” because all energy comes with costs, risks, and burdens. It costs money. It creates risks, such as safety or environmental hazards. And it imposes non-financial burdens, such as requiring time to walk to a nearby community to recharge a battery. So, the true social value of energy is the benefits and value that the user is able to get from energy use, minus the costs, burdens, and risks.
How can the analytical approach you take help us to understand the impacts and values of having an electricity connection?
Our analytical approach forces the electricity project designer to ask difficult questions about the user(s) of an electricity service before they start designing the technology that would deliver electricity. The project designer needs to understand not only how the household or community is currently using energy that might be substituted by electricity but also how they might possibly use electricity productively, to create value, in the future. Also, important to understand is what kinds of energy services are needed in order to use energy in socially valuable or productive ways, and how those services will be provided from electricity (e.g., what kinds of additional equipment will be required). Third, it’s important to understand what knowledge and skills will be required to use electricity in valuable ways. Like any other piece of equipment, if people don’t know how to use it effectively, they won’t get much value out of it. Fourth, our approach emphasises the significance of understanding how the costs of electricity will fit into the financial capabilities of the household (see more below).
We often take a capabilities approach to our work, drawing on the insights of Nobel Prize Winner Amartya Sen. The point of development, in Sen’s approach, is to empower people to accomplish things that they feel are important to their wellbeing or livelihood. So, we ask, are people who gain access to electricity actually empowered? Are they actually able to do more, and, if so, what?
We also often take an approach that explicitly links electricity access (SDG7) to other SDG outcomes in project design. Can you show how access to electricity will lead to improved water or food security? To improved incomes and reduced poverty? To gender equality? If not, then perhaps it’s not designed sufficiently well to create social value.
All of this entails co-design or co-production of the project with the user(s), both before the project, in designing it to serve valuable uses (which are socially and economically contextual and different from household-to-household and community-to-community), as well as during and after the project, to collaboratively assess whether value and empowerment have actually happened.
As well as creating value for communities, you have suggested that energy connections can also extract value – can you explain more about this, and how the two might be balanced?
We’re very concerned about this and call it the energy-poverty nexus. We define the nexus of energy and poverty as the emergence and existence of negative feedback loops between energy insecurity and economic, health, food, or water insecurities that reinforce one another over time and contribute to enduring or worsening poverty.
Electricity projects are always expensive, and the current default practice is for electricity users to pay for the cost of projects. While wealthy populations around the globe typically pay only a few percent (3-5%, often) of their income for energy, low-income populations often face total energy burdens of 25-50%. This forces stark trade-offs with payments for housing, food, water, and other necessities. It often impacts nutrition and children. Worse, if the uses to which electricity is put have little or even negative value (e.g., a lot of television), they may significantly drain financial resources over time from a household or community, perpetuating or even exacerbating poverty. Because basic infrastructure costs typically do not scale proportionally with income, lower income households and communities often are impacted by costs at much higher levels.
We often find negative feedback loops between energy insecurity and economic insecurity that reinforce one another over time, e.g., where high energy burdens reduce income available for technology upgrades that would reduce energy costs, meaning that low-income communities often have much less efficient devices, which in turn further exacerbate energy costs. Another example is when electricity shut-offs occur due to failure to pay bills (again, a problem dominated by low-income households), with users then forced to pay exorbitant reconnection fees that further reduce income. We also often find for a variety of economic, social, political, or even military reasons that marginalised communities have higher exposure to unreliable electricity services, which reduce their capabilities, in turn increasing vulnerability and economic insecurity.
We see the energy-poverty nexus as closely related to the social value of energy. If the net costs of using electricity are higher than the social value created by the use of energy, the situation will be extractive and the household or community will be worse off over time.
The EEG project you are leading is investigating the social and economic impact of energy infrastructure investments in Sierra Leone through the enhancement of social value creation. Can you tell us more about what you are testing and what you aim to achieve?
This is really our first systematic attempt to measure the social value of energy and the energy-poverty nexus and how they play out for households and communities on a day-to-day basis. We are looking at existing energy systems (electric and non-electric) and what kinds of value creation and costs are already occurring for households and communities. And we are also looking at potential future value creation that might come from electrification. We’re comparing different communities, in different contexts, including urban neighbourhoods, smaller towns, and remote communities, both with and without electricity – to see whether the dynamics of the social value of energy and energy-poverty nexus are similar or different.
We are also exploring with different agencies in Guyana whether and how these ideas might be usefully integrated into the design of energy projects, energy regulations, and energy policies.
Do you have any early results you can share?
We do. First, we have found that the energy-poverty nexus is very strong in Sierra Leone. Even among electrified households in Freetown, many struggle to afford significant electricity use, they pay high costs for electricity, and they confront a variety of additional costs as well (e.g., purchasing cheap, poorly functioning or badly refurbished electrical devices that quickly fail or having devices damaged by voltage and frequency fluctuations). This reminds us that having electricity is insufficient – we need an ecosystem that enables impactful and valuable energy use.
In this nexus, a number of social, economic, political, and climatic factors undercut the potential value of electricity for households. Some prominent pressures in Freetown include: (1) lack of gainful employment that lowers economic capability of households, (2) limited participation and voice in the governance of basic services, (3) poor quality and reliability of basic services including electricity, (4) declining drinking water quality and increasing prices of bottled water due to climate change and population pressure, and (5) a lack of financial support and weak technology innovation ecosystems. A combination of these pressures drives energy use costs high, collectively straining household budgets and preventing households from fully utilising current appliances productively and/or owning newer appliances.
Through our collaborative engagements with Sierra Leone communities, we have also co-identified potential pathways for increasing the social value of energy for households and communities. Some of these pathways involve identifying potential productive uses of energy that could enhance household or business revenue creation. Many households, for example, see potential opportunities in refrigeration to sell cold drinks, although this is out of their current price range. Another potential supplementary income using electricity is the potential to establish internet cafes and printing businesses. However, given high unemployment, supplementary income activities are currently fulltime livelihood opportunities for many underemployed people. Therefore, how much of this opportunity can be realised would depend on positive shifts in the skilled job market of Freetown. Other pathways involve opportunities to deploy new, lower cost, higher reliability electricity options, such as solar systems, to meet key needs, especially for businesses, clinics, and other larger suppliers. Finally, pathways exist for improving the electricity innovation ecosystem through socio-technical design improvements, such as ensuring a higher quality flow of electrical devices to consumers and improving transparency and clarity in rules and regulations of service, as it pertains to the distribution of electricity. The data suggests high degree of customer dissatisfaction and low trust in the electricity sector, which contributes to financial burdens.
Finally, our research highlights the complexities of advancing socio-technical systems change to improve social value creation. For example, some entrepreneurs are taking advantage of the high value attached to clean drinking water to market refrigerated bottled water and other drinks. This generates income for them, and for the bottling industry, but also imposes a high financial burden on households to pay for clean water. Alternative strategies, such as improved public drinking water systems or private household filtration systems would potentially reduce that cost burden on households, even as it would potentially disrupt bottled water businesses.
Your project also involves capacity-building, training and the creation of decision support tools to prepare energy professionals at national and local levels – can you explain what this involves and what has been achieved so far?
We are working with the Centre for Economic Research and Capacity Building in Sierra Leone to train a young generation of knowledgeable energy professionals who are positioned to conduct social inquiry and integrate analyses of the social value of energy and energy-poverty nexus into the work of Sierra Leone energy institutions.
We have over 20 field researchers who have participated in our training activities and/or worked with us in the field. We are also working with Sierra Leone energy institutions to identify specific places within their decision-making processes where these kinds of inquiry and analyses would be valuable, and we are developing training materials for their staff. A critical area of capacity building that has been identified by national stakeholders is the ability to continuously, at low cost, produce the kind of granular data enabled by our project.
To what extent has COVID-19 affected your research? Have you had to adapt your plans?
COVID-19 created delays in our field work due to efforts to prevent transmission and prevented international travel. We adapted in ways to strengthen the capabilities of our local field teams and engage communities and institutions in safe ways.
You recently took part in EEG’s webinar Does energy access promote economic growth? A look at the evidence. What are your key takeaways from the event?
Our key message to the webinar was that energy innovation can drive economic growth, if projects design explicitly for that outcome. I think we saw that across a number of the presentations in the webinar. If projects just bring electricity to people by deploying technologies, but fail to attend to the ecosystem of energy use – the knowledge, skills, and capabilities that people need to be able to use electricity impactfully; the provision of reliable equipment at affordable prices for the productive use of energy; the availability or creation of market opportunities to sell new products – then the most likely outcome is that electricity access will either be meaningless (people won’t use the electricity) or it will be extractive (making people worse off by imposing high energy costs and burdens).
On the other hand, when projects pay careful attention to what kinds of opportunities exist to use energy productively or to create other kinds of high social value outcomes – and when projects ensure that people are empowered and have the capabilities to take advantage of those opportunities – then we can see dramatic economic growth happening. Moreover, in those latter contexts, where people are able to generate high levels of social value from energy use, they are better able to pay new electricity bills, which makes projects more bankable and more easily financed.
We think energy access can be informed by the lean start-up model of entrepreneurship. In that model, entrepreneurs are highly encouraged to get out of their own offices and start talking, at length, to their potential customers. The reason for that is that a start-up business succeeds or fails based on whether it creates value for its customers. If it does, they will come back for more and encourage their friends, too. If it doesn’t, they’ll go elsewhere. Too rarely, electricity projects and providers care whether or not they’re creating value for their customers.
What are your hopes for COP26?
Solar panels are the fastest, cheapest, more flexible tool for bringing new energy resources into communities that don’t currently have electricity. I’d love to see humanity flow free, high-quality solar panels to the youth of these communities (say, 1x400W panel per person in the community) – along with training programs in solar utilisation and electrical work and a mandate to figure out how to use the panels to the greatest benefit of their communities – just to see what the world’s youth could do if we unleashed their solar imagination. It’s not enough, but even if it stimulates only a fraction to create truly innovative approaches to putting energy to work on behalf of improving community outcomes, the impact would be enormous. And at one 400W panel per person, these communities would significantly exceed the minimum energy access standards set by SDG7.