Power in private hands
We remain locked into dirty and unsustainable energy sources, with two-thirds of our energy still coming from fossil fuels. And the big energy companies rake in the profits, with little to no accountability to the general public. Energy watchdog Ofgem has predicted that average profits for the Big Six energy companies will rise to $160 per customer per year over the coming year.
Our energy systems weren’t always controlled by big business – but in the 1980s the Conservative government aggressively privatized our state-run organizations. Numerous studies have found that private provision is less efficient than public provision, and in Britain fuel prices have increased eight times faster than average incomes since 2010, so it’s hardly surprising that it has the highest rates of fuel poverty in western Europe.
It’s painfully obvious that privatized power is not working, yet our government is pushing privatization around the world as if it is some kind of panacea for developing countries. Justine Greening, the head of state for international development, has been clear that she wants to ensure British businesses benefit from the aid budget. In Nigeria, $160 million of British aid money is being spent supporting privatization.
Already there have been efforts in Nigeria to increase prices for energy consumers to ensure profits for investors, and the government promised to use tax revenues to guarantee energy purchase in contracts with power companies. Meanwhile, the adviser of President Goodluck Jonathan who is overseeing privatization has a commercial interest in one of the companies which will be selling electricity to the grid.
Why is our government so committed to exporting this model when it clearly doesn’t work? Neoliberal think-tank the Adam Smith Institute (ASI) has long pushed ideologically driven privatizations across the world. The Institute, which refuses to reveal who its main funders are (though it has confessed that 3 per cent of it comes from tobacco companies), has a history of promoting policies likely to boost the profits of transnational corporations. Its consultancy spin-off, Adam Smith International, received $58 million from the Department for International Development (DfID) in 2011 and has a contract for a further $148 million to support energy and transport privatization in Nigeria.
ASI is a proud proponent of neoliberalism, putting laissez-faire economics and deregulation at the heart of their agenda and pushing private enterprise as the solution to the world’s problems – including the issue of energy distribution. It’s an approach we’ve seen fail time and time again. In fact, private energy companies are less likely to invest in the infrastructure necessary to bring energy to impoverished rural areas when profit is their bottom line. Simply put, spending money on expensive grid extensions to communities that are not going to use a huge amount of energy will not make them a profit, while selling to grid-connected middle-class neighbourhoods and industry will.
The only thing that has ever delivered large-scale grid connection is public investment. A study by the World Bank found that private companies had contributed only 11 per cent of investment in electricity infrastructure in Sub-Saharan Africa, and that most of this has been for power stations to generate electricity, rather than extending the grid into poorer areas.
But despite this push for privatization from the British government and organizations such as the World Bank and IMF, countries from Bolivia to Belize and from Venezuela to Lithuania have begun to renationalize their energy systems, having found privatization to be failing their citizens.
Approaches which bring power back into community control through a process of community commitment and ownership are also taking off – World Development Movement outlines some of these in its Towards Energy Justice briefing. In Germany, the energy system is undergoing a huge transition towards renewable energy. Communities are often doing this themselves, through a process of re-municipalization. Like nationalization, municipalization creates public ownership, but at a local government level. The city of Boulder in the US also had success in municipalizing its energy in 2011.
Energy co-operatives small and large are also experiencing great success. Some co-operatives are giving communities collective control over small-scale renewable energy sources – most commonly using solar and micro-hydro. Other large-scale co-operatives have a long history: Bolivia’s Cooperativa Rural de Electrificacion, for instance, has 276,000 members; there are numerous co-operatives in the US, which supply 13 per cent of American households with energy. In Denmark, which in 2013 produced almost a third of its electricity from wind power, co-operatives have installed almost 90 per cent of the country’s wind turbines.
Corporate-controlled energy systems don’t work in the interest of communities – but around the world people are showing how there are fairer, more sustainable and more democratic alternatives.
Sam Lund-Harket is the Energy Justice campaigns and policy assistant at the World Development Movement.
Help us produce more like this
Patreon is a platform that enables us to offer more to our readership. With a new podcast, eBooks, tote bags and magazine subscriptions on offer, as well as early access to video and articles, we’re very excited about our Patreon! If you’re not on board yet then check it out here.