Energy poverty is a major development issue: nearly 1.2 billion people, or close to one-fifth of the world’s population, have no access to electricity. Close to 85 per cent of them live in rural areas. After falling out of favour in the 1980s, electrification is again seen as central to poverty reduction efforts.
Electricity improves users’ quality of life and can enable income generation when used for productive activities, hence supporting an escape from the poverty trap. Where generation comes from renewable sources, it also makes a positive contribution to low-carbon development; for many, this is a classic ‘win-win’ situation.
This report uses the evidence collected through a comprehensive literature review to develop a policy tool to maximise the poverty impact of electrification projects. It can be of use for development and climate finance institutions funding renewable energy projects in developing countries, and keen to enhance the poverty impacts of these projects.