The following article is the result of a discussion with Glycon Garcia providing an insight of a project of slum electrification in São Paulo, Brazil. The article is published as an eBook so you can scroll the different pages using the titles bellow. The full article is also available right.
Glycon Garcia, leader of the sustainable electrical energy programme of ICA Latin America and manager of the pilot project, describes the situation in the favela.
‘Paraisópolis is situated in the centre of metropolitan São Paulo, bordering on middle- and upper-income residential areas. It lies in a large steep-sided ravine and has a physically challenging geography. It is an extremely densely populated area, with an estimated population of 80,000 to 100,000 people.
Most of its residents have migrated to this favela over the years from the poor countryside in the north of Brazil. Paraisópolis is quite literally a city within a city, with every kind of business imaginable: bars, grocery stores, hairdressers, mobile phone shops, and even shops selling building materials. But the community is completely informal and it is lacking virtually all of the usual municipal services and infrastructure.’
Millions of people all over the world are living in slum areas without a legal connection to the electricity supply. Many of them risk their lives to make intricate, illegal connections to overhead lines. These activities often result in fatal accidents and the wasting of electrical energy. In 2005, the International Copper Association (ICA) and United States Agency for International Development (USAID) set up an international programme to promote sustainable electricity services in slum areas. A pilot project was initiated in 2006 in the favela (slum area) of Paraisópolis in São Paulo, Brazil.
That the community is informal does not however mean that there is no electricity grid in the area. Brazilian law number 10.438, which went into effect in April 2002, mandates that utilities cover 100 per cent of their service area. ‘The overhead lines are there, but nobody pays for a connection’, explains Garcia.
‘Households and businesses have been making their own, illegal connections to the lines, using cheap, poor quality equipment. They use all kinds of wire, basically anything they can find. The result is a chaotic tangle of poor wires going in every direction. Power outages due to short circuits are common, and it is certain that many people die from electrocution, although nobody knows the exact number of fatalities.’
Since people in the area do not pay for the electricity service, they do not manage their consumption efficiently and many of their appliances are old and poorly maintained. Consequently, electricity consumption is very high — around 325 kilowatt hours per household.
Paraisópolis is not a unique case. In Brazil alone, the number of people living in slums is estimated to be two million. Similar situations exist in many other countries in Latin-America, Africa, and Asia. That is why the International Copper Association (ICA) and USAID launched the Slum Electrification and Loss Reduction Programme (SERL) in October 2005.
The programme is starting in Brazil and India, but will expand to other countries in a later phase. The idea is to support development projects that aim at improving safety and quality of electrical power for slum residents and that allow utility companies to recuperate at least part of their so-called ‘non-technical losses’. In Brazil, the partnership for a pilot project was set up with AES Eletropaulo (a utility company in the São Paulo metropolitan area), Nexans (a cable manufacturing company), and Itaipu (a transformer manufacturer).
‘We chose the slum of Paraisópolis for the pilot project in the Eletropaulo service area because of its high non-technical losses. We also felt that such a project would have a high probability of success in that location’, recalls Garcia.
‘Contrary to what you might expect, most people in the favela are willing to pay for their electricity in exchange for a better quality of supply and increased safety. Their income is sometimes actually higher than that of people from the lower-middle class quarters. In fact, it is often at a level that disqualifies them for a social tariff.
One of their biggest challenges is that they live completely outside of the formal social structure: they have no official identification and no official residence. As a consequence, they cannot get a bank account, postal services, a telephone connection or other normal social amenities. If they join the electrification project however, they receive an official form which they can use for identification. In other words, they become a legal citizen, which is an advantage they greatly appreciate.’
However, given the previous high levels of energy that favela residents are consuming, the electricity bills would be so high that few would be willing or able to pay, despite all of the advantages. ‘That is why we are putting so much effort into energy efficiency’, says Garcia.
‘We are giving out energy efficient refrigerators and light bulbs for free, and we are teaching the people how they can restrict their consumption yet enjoy the full benefits of a safe and reliable electricity supply.’ In this way they should be able to bring their consumption down to a fraction of what they used before.
‘If everything works out as we expect, the project should be a winner for all parties’, continues Garcia. ‘As for the utilities, they will now be able to bill for the energy they are supplying anyway.’ It is very important for them to reduce their non-technical losses. The government has set a cap on the percentage of the non-technical losses the utilities can charge through to the other customers, and this cap is expected to gradually grow stricter.
Another important aspect is that Brazilian electricity demand is growing at 6 to 7 per cent annually, requiring investments to build an extra 6,000 MW each year. Energy efficiency programmes should keep this growth within limits. There is also a law that mandates that utility companies invest at least one percent of their profits in energy efficiency projects. Slum electrification programmes with energy efficiency improvements count toward this quota.
A final argument for persuading the utility companies to participate is that official connections in slum areas reduce the number of line disturbances that are induced on the distribution net in this area. Legal connections will improve the power quality of the distribution grid in the surrounding neighbourhoods.
‘The project in Paraisópolis is not the first slum electrification project in Brazil’, notes Garcia. ‘In Rio de Janeiro city, where non-technical losses amount to 40 per cent, the local utilities have tried similar projects. But after a few years, there were high rates of recidivism. Even advanced technology like remote connection control and anti-theft cables could not prevent people from making illegal connections again.
The problem with those projects was that they did not provide a continuous presence in the slum areas. Such a presence is really crucial for such projects to succeed’, observes Garcia. ‘No matter which technology you use, people will always find some way to sidestep it. A slum is a strong and densely populated community. If one person finds a way to avoid paying for their electricity, many others will quickly follow. This is one of the elements that make slum electrification totally different from rural electrification projects.’
‘We followed a different approach in Paraisópolis’, says Garcia. ‘We are also using anti-theft coax cables, but the social part of the project is just as important. We created several working groups in the area, involving many people from the neighbourhood itself. And we ensured that other staff working there has a strong understanding of the mentality of the favela.
In a later phase, we will open several offices in the area. We are also training many residents as electricians — a unique opportunity for them to receive this qualification. In this way, we will have a continuous presence in Paraisópolis after the start-up phase of the project. I believe that is the only way to avoid recidivism.’
It looks like the total approach of the Paraisópolis project is already paying off. It is estimated that 80 percent of the residential consumers have joined the project. Currently, project staff are working hard on the implementation. After completing the installation of a new grid with anti-theft coax cables, people were supplied with a safe, official connection, together with energy efficient light bulbs and refrigerators and advice on how to save energy.
‘The residents now know how much they are consuming, but the utility has not started billing yet. People first have to get used to the idea of minimizing their consumption. In a few months, the utility will start registering the energy consumption and the following month they will send out the first bills. We do not expect many unpaid accounts among the residential customers. People are generally positive about the project and find it very normal that one has to pay for the service.’
Among the business customers however, things may not work out that easily. ‘Many of them are consuming relatively large amounts of energy and are simply unable to pay for it. We are currently working hard to find solutions for that. We conduct small energy audits in their buildings and teach them good practices for saving electricity.
We realize that some businesses will find it really difficult to drastically cut down on consumption and that they do not earn enough to pay the bill. We are proposing that they change profession, for instance, to become electricians. We are currently monitoring these efforts with business customers to see if they are having the desired effect.’
ICA and USAID hope that the project in Paraisópolis will be the first of many. According to Garcia, in theory there is a lot of money that could become available for slum electrification projects; money from international development organizations, NGOs, and local governments. Many utility companies may also be interested in investing in these sorts of projects.
The problem in the past was that those organizations doubted the practical and economic feasibility of slum electrification. This pilot project is intended to demonstrate that a different approach can work very well. In this way the complete concept of slum electrification will gain credibility.
Hopefully, the approach of the Paraisópolis project will be replicated in many places around the world.