Highlights
•Renewable energy development can impact energy poverty in Guatemala via increased electricity prices.
•We assess the electricity cost mechanism using an electricity model plus empirical survey framework.
•Renewable energy development impacts will affect already poor, energy stressed regions most.
•Renewable energy subsidies would minimize effects on low-income customers.
•The least-cost policy in Guatemala includes both renewable and fossil fuel technologies.
Many countries have taken on ambitious but potentially costly renewable energy development goals to combat climate change. The government of Guatemala has introduced a plan to increase renewable generation capacity, while an estimated 76% of Guatemalans are energy poor. In this paper, we evaluate the trade-offs between alleviating energy poverty and achieving renewable energy goals in Guatemala. We present a framework that combines an electricity cost model with a household expenditure survey to assess the effects that a national renewable energy development goal could have on energy poverty through added electricity expenditures. We find that the development of new renewable electricity generation has potential to significantly increase tariffs for residential electricity consumers across the country, whereby 80% of municipalities could experience more than one-third increase in monthly energy expenditures. More importantly, we find that the distribution of impacts will not be equal everywhere: households in the western, rural part of Guatemala that are already energy stressed will likely experience the greatest cost burdens because natural resource availability is low while overall poverty is already high. In addition, we compare the costs of renewable versus fossil fuel development and find that the least-cost policy in Guatemala includes a mix of both renewable and fossil technologies.
