Access to modern energy, including electricity and clean cooking, is increasingly recognised as a key enabler of economic growth and poverty reduction in developing countries. Electricity, in particular, can drive economic and social development by increasing productivity, enabling new types of job-creating enterprises and reducing household workloads, hence freeing up time for paid work.

Productive uses of electricity are particularly important for income generation and poverty reduction among consumers, but also essential for the financial viability of electricity suppliers whether on or off-grid.

When electricity is only used for lighting during a few hours in the evening, as often happens in poor rural communities, expensive power generation and distribution infrastructure remain idle for most of the day.

This leaves electricity providers with two undesirable alternatives: either recover upfront investments by charging expensive tariffs for the few kWh consumed; or charge affordable tariffs but face bankruptcy. When electricity is used productively during the length of the working day, upfront costs can be shared among more kWh and cheaper tariffs are possible. At the same time, the resulting income improves consumers’ ability to pay, starting a virtuous circle of affordability and financial sustainability.