It’s time to change the way we measure energy

For years, we have used growth in energy generation capacity and consumption as a measure of development in emerging countries. But on the basis that what you measure is what you get, this suggests a development future dominated by heavy industry and urban consumption – the major consumers of large quantities of electricity.

In many developing countries, such as those in sub-Saharan Africa, the requirement is more basic. With only some 31% of households connected to the grid in urban environments and just 14% in rural areas (IEA World Energy Outlook 2011), the problem is not the quantity of electricity but is largely one of access to any electricity at all.

At a consumer level, electricity, of itself, is not useful. What matters is the ability to turn the electricity into end user benefit – the ability to improve lives, make products, make money, save costs and reduce environmental impact.

So how do we link the use of electricity and the end benefit?

In 2000, Dr Alan Pasternak published a paper – Global Energy Futures and Human Development: A Framework for Analysis – in which he compared the average per capita energy consumption with the United Nations Human Development Index for a wide range of countries. His conclusion was that for developing countries at least, those with higher levels of electricity use per head had higher levels of human development.

But with the advent of the Internet and low power solid state devices, the linkage between electricity consumption and standard of living has become a whole lot muddier.

Take for example a light bulb. Today, there are standard incandescent bulbs or low cost LED equivalents. Both give roughly the same benefit, but the LED bulb uses four times less power. So are we saying that a household that uses LED lighting is somehow less developed than the one using older technology?

Similarly, the impact of a given amount of electricity varies hugely depending on how it is used. Just as in the Internet where the same amount of data can deliver thousands of tweets or a fraction of a second of high-quality video, the energy needed to boil the water for a cup of coffee could power a small Internet tablet for 2 hours or basic lighting for a rural home for a day. Which of these is more valuable depends entirely on context. If I am a Western city dweller, a cup of coffee is more useful than adding a fractional quantity of extra light to my house. If I still read by candlelight (as many millions of people are still forced to do) it is clear that the step up to LED lighting far outweighs the need for convenient access to a cup of hot water.

In other words, the benefit of electricity depends on the context in which it is used, with those that consume the least feeling the greatest gain from more power. Yet these users barely feature in the energy consumption statistics.

This makes for a puzzling problem. If the benefit of energy is subjective and context dependent, then how do we measure an improvement? Instead of looking at absolute levels of consumption, should we not focus on the change that more energy can bring about?

It’s time for a customer-centric view. Let’s stop talking only about the quantity of electricity generated and talk instead about outcomes across a population – access to basic capabilities such as lighting, media, entertainment, the Internet, access for productive purposes and access for convenience – and weigh these against the cost of providing each. With such a measure, let’s develop the most appropriate means of delivering the end requirement.

In a city, a power station and grid may be the ideal way to deliver copious access to power. But does a rural farmer in Africa need to wait for the grid or will a stand-alone solar home system be more effective? And given the choice, is it better to deliver more low-cost electricity in a city (with only a marginal improvement in living standards) or much smaller power systems in rural areas that, in relative terms, are able to transform the living standards of the individual?

In a world that is run by sound bites it is easy to see how a simple metric such as electricity capacity can be used as a clarion call to development. But it’s time to go below the surface and appreciate that such a measure is at best inaccurate and at worst misleading. It’s time to create metrics that help us measure the benefit of power and then to think of creative ways of delivering that benefit to those that need it.

Simon Bransfield-Garth is Chief Executive Officer of Azuri Technologies and a World Economic Forum Technology Pioneer. He is participating in the World Economic Forum’s Annual Meeting 2014 in Davos-Klosters.

Image: Light bulbs decorate a tree in central Malmo January 29, 2011. REUTERS/Marcelo del Pozo