Energy

Globally, approximately 1.6 billion people have no access to electricity. For billions more, electricity is often scarce, unreliable, and disproportionally expensive. For people living at the BOP, energy is not just about providing light or cooking food. Access to electricity can mean the difference between being able to study after dark, storing medicine, generating an income - or not having these possibilities. In other words, access to energy is often a prerequisite for creating development in other areas. The BOP energy market is complex and challenging, but with the right knowledge and willingness to innovate, it is an opportunity waiting to be explored for the benefit of companies as well as end-users. Nordic companies offer a unique array of sustainable energy products and technologies, and have many years of experience commercializing energy products. If adapted properly, Nordic energy solutions have the potential to help solve the energy challenges in low-income markets and to generate profitable business models.

Size of the market

The total BOP energy market is estimated to be around USD 433 billion world-wide, with large regional variations. A person living at the BOP will typically spend an average of around seven percent of his total household budget on energy. The biggest regional share is by far the Asian BOP energy market with a total spending on energy of USD 351 billion (PPP). See figure.  In Asia, the average annual spending on energy per BOP habitant is USD 123; in Eastern Europe it is USD 100, in Latin America USD 85, and in Africa USD 55. 

Where is the market?

Energy use and spending patterns differ between rural and urban areas. Urban households spend 44 pct. more money on energy than rural. However, due to the large number of rural BOP households, 60 pct. of all energy spending in the BOP segment is utilized in rural areas. There are large regional variations. In Africa, 55 pct. of the BOP energy market is rural, where in Asia the majority of the countries have a bigger rural market share, for example 85 pct. in Cambodia. Especially in Eastern Europe, but also in Latin America, the urban energy market dominates.

What does the BOP buy?

Many people living at the BOP rely on firewood for their daily cooking, especially in Asia and Sub-Saharan Africa. They use different types of simple and often inefficient stoves and cooking devices, and spend much time collecting firewood. In rural areas, 76 pct. use firewood compared to only 20 pct. in the urban areas. The last 80 pct. in urban areas often use petroleum products or charcoal for cooking purposes. Kerosene for light purposes is predominant in rural areas, but is also used in urban areas, where electricity is not available.

Estimations are based on World Resources Institute, Next 4 Billion 2007.