This paper revisits the roles that energy plays in poverty reduction. First, while energy does not reduce poverty itself, it delivers energy services. These services can improve poor people's welfare both directly by enhancing their own productivity, education and health, and indirectly by changing the economy around them. The paper provides a simplified framework for thinking about these energy services, and then reviews the literature on their importance to poverty reduction. From this framework, we draw a series of three important conclusions about energy priorities and their implications for poverty reduction and development.
- Tackling energy poverty will have less to do with ambitious expansion of electricity capacity, and more to do with ambitious distribution of energy services to poor people.
- Expansion in centralized power generation serves industry, the services sector and already-connected households, before it serves the poor.
- Distributed, clean energy interventions are best suited to tackling energy poverty -- and poverty more generally.