From Poverty to Power- Investigating essential energy services in low-income households in developing nations

Background

Residential energy provisioning is essential for efficient healthcare, reduced time-budget constraints, economic growth, improvements in indoor environmental conditions, productivity, and overall well-being. However, energy consumption can burden households among low-income populations, particularly in developing countries. Slums and rehabilitation housing often consume less than required for their subsistence due to financial constraints. As the global average temperature rises, more families are likely to reduce their electricity consumption due to rising costs. This can result in a poor standard of living and severe impacts on health, particularly in the tropical climate.

Enhancing energy efficiency is essential to limiting global warming. However, ensuring access to minimum energy is critical for billions deprived of basic needs. To address this twin goal of fulfilling basic needs within the environmental boundaries, there is an urgent need to identify the determinants that significantly affect the use of essential or elementary energy services in low-income households.

The vital practices that consume energy in homes relate to comfort, cooking, lighting, sleep, and communication. They are fulfilled through appliances such as fuel type, ceiling fans, washing machines, refrigerators, and lights. The current study examines the effect of factors such as income and education, in addition to appliance efficiency, that influence households’ usage of essential services such as cooling, health preservation, and domestic welfare.

Aim and methodology

The study uses primary data from household surveys conducted in low-income households across Mumbai, India, to collect information on appliance ownership, efficiency and use patterns, and household characteristics like income, education of the head of household, tenure status, and employment type, among others. The conditional logit model is used to determine the socioeconomic drivers that affect the use/ choice of an appliance or energy service in terms of utility. It also analyses the marginal effect of increasing incomes and appliance efficiency on appliance adoption probabilities.

Potential contribution

The findings of this study can help identify the drivers of demand for energy services in developing and emerging countries and quantify the effect of changing income and reliability of electricity supply. They shed light on households’ trade-offs between appliance ownership and income levels, providing valuable insights for energy policy formulation and household welfare. Additionally, it can help policymakers decide on appropriate subsidies to enhance access to essential energy services such as cooling, health preservation, etc. Estimating the underlying determinants is crucial for energy security.