Improving social and economic impact of energy infrastructure investments in Sierra Leone through enhancement of social value creation

Background, challenges and context

Far too often, energy projects operate on the assumption that if energy technologies are built and deliver energy, then the social and economic benefits of energy access will flow automatically to the recipients, users, and consumers of that energy. Over time, however, it has become increasingly clear that this assumption is frequently untrue.

Energy is ordinarily assumed to be an enabler of capabilities, allowing people to either do things they otherwise would have been unable to do, or to do them more easily. But this view is too limited. Even if people technically have access to energy, their capabilities to use it in enabling or empowering ways can be restricted – for example, energy may not be available when people need it, they might not have the necessary appliances to use the energy in ways that create meaningful value, or the costs of both energy and appliances may be unaffordable.  

It is important to understand the use of energy as a complex function that includes not only the value created but also the costs required – whether that be money to purchase energy or appliances, or the time required to acquire and use them. When these additional costs are factored in, energy use may end up undermining overall capabilities rather than empowering them.

In the coming decades, Sierra Leone intends to significantly upgrade its energy infrastructure to provide a firm foundation for economic development, social welfare, and long-term sustainability. There is a need for research that can help increase the social and economic impact of energy projects, especially with regards to locally significant forms of value creation, including new jobs and businesses, business growth, and local sustainable development.

Research overview and objectives 

The purpose of this research was to develop, pilot, and evaluate the use of novel methods for measuring two critical parameters that influence the social and economic impact of energy projects: the social value of energy and the energy-poverty nexus.

The social value of energy is defined as the net value created by a household, business, or community through their use of energy. This value includes both financial and non-financial forms of value creation (the former includes income, business revenue etc, and the latter includes educational or health benefits, improved security etc) – while also accounting for the costs of paying for energy, the environmental and health risks or burdens posed by energy systems, and any other burdens imposed by energy systems or energy use (e.g. time burdens).

It is thus a composite measurement that accounts for the net economic and non-economic value created, less the costs, risks, and burdens of energy. Unfortunately, for many communities, especially those experiencing poverty, the value created through the use of energy is lower than the aggregate costs associated with energy use, resulting in a net negative social value of energy.

The energy-poverty nexus is the feedback that occurs in households, businesses, or communities between energy security/insecurity and economic security/insecurity. Where these feedbacks are predominantly negative, energy use can erode the financial and economic security of households, sometimes significantly, thereby exacerbating or perpetuating poverty and inequality. Where feedbacks are predominantly positive, by contrast, energy systems contribute over time to alleviating poverty and strengthening economic and financial resilience and security.

The study evaluated the social value of energy and energy-poverty nexus for households in Sierra Leone, and whether energy use was empowering or eroding people’s capabilities. It focused on the people that use energy, in different forms, for different purposes, and the value they can create for themselves, their families, organisations, or communities. The team also wanted to understand opportunities for enhancing the social value of energy for users in the future, whether by increasing value creation or reducing energy costs.

Research methodology

The team’s research approach was grounded in a multi-layer framework created at Arizona State University for analysing socially valuable energy use by users and the contextual factors that impact the value generated. The framework has seven tiers:

1. Socially valuable uses of energy – assesses the practical use of energy by users for diverse purposes and the value created for the user through that use of energy (for example, someone using an electric sewing machine to produce clothing for sale for income).

2. Socially valuable energy services – assesses the energy services required by users in order to generate value through energy use (e.g. light, heat or cooking, cooling or refrigeration, water pumping, power for equipment, transportation, computing, or communication etc). 

3. Socio-technical practices and arrangements – assesses the social and technical elements required to produce a specific socially valuable energy service (sewing clothing, for example, requires a functioning sewing machine, an electrical outlet to plug the machine into, and knowledge and skills in clothing design and using a sewing machine).

4. Energy system organisation and workforce – assesses the work of producing, delivering, and selling energy and the organisations that do that work.

5. Ownership and financial flows – assesses the ownership of energy assets and financial flows associated with energy production and consumption.

6. Energy policy and institutions – assesses the policy and institutional context that regulates the generation, delivery, and sale of energy.

7. Energy innovation ecosystem and markets – assesses the ecosystem of participants that are required to advance and enable innovative new approaches to energy production, delivery, and consumption.

Over a three-year period from 2019 to 2021, a comparative analysis was carried out in four areas of Sierra Leone: Freetown (the capital city), Bo and Kenema (two smaller cities undergoing grid extension projects), and Segbwema (a rural community with a standalone, solar-powered micro grid).

Data collection involved four methodological approaches: household surveys; surveys of businesses involved in electrical appliance markets; focus groups in community spaces and facilities (e.g. markets, schools, places of worship, and clinics); and informal discussions and open-ended interviews with diverse stakeholders, conducted individually and in groups, in the public, private, and non-profit sectors.

When collecting data from respondents, the team aimed to capture a wide range of elements that characterise the social value of energy, the energy-poverty nexus, and people’s capabilities, including differentiated energy uses and values; comprehensive energy costs and burdens; the net social value of energy; energy appliance markets; and prospective pathways for enhancing the social value of energy.

Research results, key messages, and recommendations

Overall, the results suggest that energy plays a mixed role in Sierra Leone’s economy and society. The people of Sierra Leone are able to create diverse forms of social and economic value from their access to electricity and other forms of energy. However, value creation is severely limited by a wide range of factors, including inadequate and unreliable energy supplies, lack of access to electricity, and limitations on the use of energy to create value.

When considered in relation to the cost of energy and electricity for Sierra Leone households, the net social value of energy for the large majority of households is negative, meaning that, as currently organised, the country’s energy and electricity systems act as a drag on social and economic development and security and, instead, contribute to perpetuating and exacerbating poverty and inequality.

The team was able to identify and differentiate multiple categories of households, each of which encountered very different conditions, experienced the limits of electricity access differently, and require different strategies for developing and implementing solutions. For example, for some households, the primary limiting factor on the net social value of energy is cost, for others it is reliability of electricity supply.

The study also found that the supply and use of electrical devices and appliances are essential to the translation of electricity access into positive social and economic impact and social value creation and that the limited range and cost of such appliances in Sierra Leone was in itself a constraint.

Transforming energy systems will not be easy – but the project team was able to identify a wide range of potential pathways for enhancing the social value of energy. They cover a range of improvements in:

• Uses of energy that are productive, revenue-generating, or generate significant social value creation.

• The availability and affordability of appliances necessary for value creation.

• The reliability of electricity supply, including fewer interruptions, improved control of voltage and frequency, and longer hours of operation.

• The quality and efficiency of appliances.

• Reducing the financial burden on households to purchase electricity or fuel.

• Education about the social value and productive use of energy.

The study offers valuable insights into the factors that enable and constrain the social and economic impact and benefits of electricity access projects. The findings suggest that projects would benefit considerably from paying explicit attention to how users will use the energy, and whether economic growth and human development are likely to be enhanced.

Local partner

Center for Economic Research and Capacity Building (CERCB), a local NGO