* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
Decentralised solar energy can support climate-friendly livelihoods and drive green growth - but it needs coordinated help to get off the ground
The COVID-19 pandemic has pushed millions of vulnerable people in South Asia and sub-Saharan Africa back into poverty. Micro and small businesses that can withstand future shocks in a climate-changing world, thrive on local value-chains, promote jobs and minimally impact the environment are the way forward.
Yet lack of electricity for nearly a billion people continues to be a binding constraint to unlocking economic opportunity and sustainable livelihoods such as farming and agro-processing, textile manufacturing, carpentry and retail.
Recent progress in India to mainstream decentralised renewable energy (DRE), such as rooftop solar and micro-grids, to power businesses and communities, offers lessons for many amid plans for a global green recovery. By leveraging collaboration among government, the private sector and civil society, DRE is poised to increase farm incomes, strengthen rural healthcare, catalyse billion-dollar markets and foster a new wave of innovative companies.
Moving from policy talk to government action
Realising the need to catalyse sustainable livelihoods, the Indian government recently released a draft policy framework to facilitate large-scale adoption of renewables for “livelihood applications”. Once formalised, India is likely to be the first nation in the world with an explicit policy to leverage and scale DRE to boost incomes.
India also prides itself as the world’s leader in deploying solar water pumps (more than 300,000). It has ambitious plans worth $18 billion to deploy more than 2.5 million solar water pumps for irrigation by 2022.
Beyond agriculture, it is also pioneering DRE-use in its healthcare system. In 2016-17, Chhattisgarh, a central Indian state, solarised all its primary healthcare centres – an approach to marrying clean energy with healthcare, which is now widely recognised in developing countries for its foresight given the pandemic.
Surfacing a $50-billion opportunity
Civil society in India is also stepping up to showcase the possibilities. Organisations like Selco Foundation have helped innovate more than 50 solar-powered applications that support livelihoods – from age-old professions such as blacksmith to modern-day applications like IT kiosks that provide internet access.
The Council on Energy, Environment and Water (CEEW), a think-tank, has estimated a market potential of more than $50 billion in India alone for solutions such as cold storage, looms, rice mills, sewing machines and many others. CEEW and Villgro have initiated a $3-million programme supporting social enterprises towards commercial scale-up to realise this massive opportunity. Sustain Plus, a $50-million partnership between IKEA Foundation, Tata Trusts and Selco Foundation, is extending support for the adoption of DRE solutions for healthcare, education and work.
Pooling capital and fuelling entrepreneurship
The private sector, comprising a robust innovation and entrepreneurial ecosystem, is an essential piece of the puzzle and is showing early traction. Ecozen, a solar cold storage manufacturer, recently raised $6 million in funding, while SFS Technologies, a solar dryer and sun-dried product company, raised $1.75 million.
Powering Livelihoods, an initiative backed by Britain and various European foundations, has brought together more than 15 funders looking to extend equity, debt and grants to the sector. These include Acumen, the International Fund for Agricultural Development, Rabobank, Beyond Capital Fund, OikoCredit and the Bill and Melinda Gates Foundation.
While the India story is encouraging, it hasn’t been without challenges. Lessons learned can help other developing economies accelerate a green recovery from COVID.
One: Catalysing an early-stage market is hard. Customers and financiers are not aware of the products, making demand generation and financing difficult. Public investment plays an important role here. Dedicated policies, like the upcoming one in India, are crucial for signalling and awareness. Interlacing clean tech and other livelihood programmes across ministries, as is being done in India, enhances awareness across the ecosystem.
Two: Attracting private investment to an early-stage sector is difficult. Investors are looking for proof of viability and initial market uptake before putting in their capital, something enterprises cannot show without concessional finance. Concerted efforts, such as Powering Livelihoods and Sustain Plus, offer a way to leverage philanthropic money for generating evidence that can attract patient and private capital.
Three: Most entrepreneurs know technology, but not markets. While technology is critical, only business growth leads to impact at scale. Incubators and accelerators play a crucial role in India in translating sound technologies into viable solutions. A South-South collaborative platform could help many other developing countries leverage India’s experience on DRE-technologies and their scale-up.
Finally, these lessons have one common thread: mutually beneficial partnerships. Taking cues from India, the global community has an opportunity to build a multilateral partnership to scale decentralised renewables rapidly. Such a platform, led by the private sector, backed by large philanthropies and development banks, and supported by national governments, can ensure an inclusive global energy transition.
Climate action must keep vulnerable communities at the heart of a green recovery, enabling more livelihoods, better incomes and healthier populations.
Abhishek Jain is Director, Powering Livelihoods at the Council on Energy, Environment and Water, and William Brent is Chief Campaign Officer at Power for All.