The World Bank recently announced that between May 2014 and May 2015, Kenya’s national .
The electrification of poor settlements clearly .
But in most cases the electrification of poor rural settlements has yet to spur the transformational economic growth – in productivity, manufacturing and off-farm employment – that many had hoped for. Evidence suggests that, when it comes to turning around rural livelihoods, targeted government support for off-grid energy often holds greater promise, with reaping the most benefits.
There are several reasons why improved energy access has failed to transform rural economies. Poor entrepreneurs tend to use electricity to operate small, consumption-focused businesses – for example, charging phones, refrigerating drinks, running small cinemas – or to keep small stores open after dark.
These service-sector enterprises don’t become much more efficient as they grow, and hence tend to stay small, limiting their found it represented no more than four per cent of firms’ total costs. 
But 70 per cent of the world’s poor depend on a livelihood that is transformed by electrification: farming. An electric irrigation pump can .
The grid isn’t the solution here, due to frequent and sustained power outages in many countries. For reliable irrigation, many farmers must therefore invest in off-grid pumps, powered by solar energy or diesel/butane. Of the two, the upfront costs are higher for solar, at US$ 3,000-$ 7,000 per pump before subsidy versus US$ 500 for diesel pumps. But solar has the greatest transformative potential: compared to diesel, it saves farmers money in the long run, it saves hundreds of thousands of tonnes of carbon dioxide and it can .
Uptake of solar pumps has been low, however. A lack of information and finance seem to be the main barriers: almost all solar pumps installed in developing countries were promoted heavily, and sold at a highly subsidised price. In Punjab in India, for instance, solar pump purchases dropped from 460 a year in 2000-04 to zero in 2005-13 when the government subsidy was . Punjab’s solar pump penetration is low, but still almost the highest in India, with no other state offering such generous subsidies.
The case of , then, highlights the potential gains from better targeting of energy investments. Currently investments in household electrification and grid roll-outs dwarf investments in off-grid irrigation. Governments and donors who are serious about ending poverty and dramatically improving rural lives should make off-grid irrigation support for farmers a far bigger part of their energy portfolios.
Sally Murray is a country economist at the
References (The World Bank, 2008)
 Andrew Scott and others (Overseas Development Institute, July 2014)