Filling the Access Gap: The Role of Renewable Energy in Reducing Energy Poverty Inequality

Abstract

This study examines the relationship between renewable energy consumption and energy poverty inequality in five Sub-Saharan African countries—Kenya, Tanzania, Uganda, Ghana, and Nigeria—over the period 2000 to 2023. Using a panel data fixed effects model, the analysis constructs an Energy Poverty Inequality Index (EPII) based on the disparity in urban and rural electrification rates. The objective is to assess how renewable energy deployment affects the distributional aspect of energy access within these countries. The findings reveal a complex relationship. Overall, renewable energy consumption is associated with an increase in energy poverty inequality. However, this relationship is significantly moderated by rural population share. In countries or regions with higher rural populations, the inequality-widening effect of renewable energy is reduced. This suggests that renewable energy initiatives may have limited impact—or even unintended adverse effects—on equity unless they are specifically designed to meet rural energy needs. Furthermore, the analysis shows that GDP per capita is negatively associated with EPII, indicating that economic growth contributes to reducing energy poverty inequality. On the other hand, Foreign Direct Investment (FDI) appears to have no statistically significant effect on EPII, implying that not all forms of economic engagement lead to improved energy equity. These results underscore the importance of crafting inclusive energy policies that prioritize rural electrification and are integrated with broader development strategies. To foster equitable energy transitions, policymakers must ensure that renewable energy deployment is aligned with local demographic realities and is supported by targeted interventions aimed at marginalized communities.