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Energy Poverty Alleviation – 3

The four quadrants of EPA matrix 1. Community Driven EPA Initiatives Availability of Resource – High Capacity to Pay – Low There are many villages which have abundance of sunlight, are in deep forests with lot of biofuel available but the local population is deep in poverty depending on natural habitat agriculture and cattle grazing for survival. Their lifestyle can be changed for better through intense awareness drive to make them knowledgeable about the benefits of energy access to health, hygiene, education and productivity but such initiatives have to be community driven with upfront support for installation of Energy Supply devices by local government or NGO. In North Eastern India there are dense forests and extreme poverty. Lifestyle of many villages got transformed through the initiative of Local Government and self help groups and more than 1,50,000 roof top Solar PV panels have been installed and are operating satisfactorily for more than a decade now. 2. Commercially Driven EPA Initiatives Availability of Resource – High Capacity to Pay – High Another striking example of a successful business model addressed to the bottom of the pyramid is again from the peripheral villages of Sundarban in North East India where there are different villages still out of reach of electricity grid Bio-fuel based off-grid/distributed electricity generation helped bring prosperity to these villages and consumers were willing to pay a reasonable tariff to make business sense to the entrepreneur. The only problem in such cases is that once the grid connectivity reaches these villages the DDG becomes commercially non-viable which is a big deterrent to the Entrepreneur willing to set up Units in such areas. The issue is compounded by the fact that at times for political benefit leaders make very optimistic and promising commitment for grid electricity reaching these villages much ahead of practically possible dates which puts off entrepreneurs decisions to provide DDG due to inadequate risk coverage and fear of loss of business once grid electricity reaches these places. In such cases it is desirable to have proper institutional and policy support cover the risks and ensure appropriate technology and scale of project to get the optional fit. 3. Institution Driven EPA Initiatives Availability of Resource – Low Capacity to Pay – High There may be places where the available resources may be scarce or fully utilized however; the local villagers may be willing to pay an affordable price for energy they may still not have access to. Such structures calls for exploring the possibility of extra grid connectivity or developing decentralized system using resources imported from neighboring areas careful selection of technology to be adopted and suitable higher size units can be used on a commercial scale. A mix of various available resources used through a smart mini grid may also solve the problem in such cases. For example we can extend a gas pipeline to such areas and it can be tapped at a number of places for small generating units and as fuel for cooking/heating to meet local need. 4. Socially Driven EPA Initiatives Availability of Resource – Low Capacity to Pay – Low The severest cases of energy poverty prevails in areas which are deprived of natural resources of energy and most of the available source of energy is used up in finding means of survival with little or no money spare able for energy access. Such villages should get first priority to access philanthropic funds, CSR initiatives and grants to improve their health, hygiene and lifestyle through energy access. However, the challenge here is that on one hand any project in such locations has to be totally supported through grants and charity still due to lack of awareness its acceptability is local community may be low. There is also a threat of disturbing the fragile socio-economic balance and linkages that marginalized communities have with their local ecosystems. We have to tread softly in such areas and create awareness through training/ education and advantages through live demo to meet the basic minimum requirements of people. Despite modest government lead efforts, most small scale energy production in the energy impoverished world is being taken on by nonprofits and local organizations. These small scale solutions are spreading throughout Africa and other parts of the developing world as a result of small businesses and nonprofits. Some such organization invests in green businesses in developing country to provide them with the capital to implement off the grid energy solutions. Some small American Solar companies, that sells solar powered lanterns to rural and urban homes so homes do not have to rely on kerosene and firewood for lighting; a $224,241 investment to an Indian company, , has sold small scale solar systems to more than 70,000 households in India, and an equity investment in Chinese company that manufactures mini hydropower systems that are used to generate electricity in rural China. Many other organizations are working towards fighting energy poverty by allowing individuals to make micro loans to entrepreneurs in developing countries. Many larger organizations across Globe have taken initiatives to “enable small companies to innovate more rapidly, advises international organizations how to support these emerging [energy] markets, designing market research and performing market research, and helps students engage in the issue.” Individuals can choose from a list of green entrepreneurs on their website, make a loan to help fund green energy projects, track the progress of the project, and eventually get repaid. This is a sustainable and affordable way for ordinary citizens to become involved in remedying energy poverty. Many organizations across the Globe are doing inspiring work, have noble goals, and continue to make a real impact on the lives of the world’s poorest citizens; however, they are small organizations with limited capacity and funds. Small scale projects are for now, the most feasible and economical way of bringing people out of energy poverty, but the projects are just that, small. For the nearly 3 billion people living in energy poverty, this relief is not coming fast enough. It is understandable, then, why private-sector investments in clean energy technology are so small. Yet, while it may make sense for individual companies to make these choices as there is vast opportunity in energy. Prices are declining in solar energy and wind, and they could fall further with new technology. Investment into energy R&D would help secure future, for the billions living in energy poverty. The small scale renewable projects provide the best opportunity for alleviating poverty while not adding to greenhouse gas emissions. By driving down the cost of solar cells, wind turbines, and energy storage electrifying rural areas could become not only become a cost effective proposition for governments, but profitable endeavor for private investors. Conclusion Energy poverty is one of the most important and devastating social issues of our time that has been sidelined for too long, and bringing half of the world’s population out of energy poverty is an enormous task. Innovative policies are needed to bring energy to people who live away from the grid and financing is needed to implement those solutions. As we look to the future we need to develop innovative practices and technologies that will deliver clean energy to the developed world as well as the developing world, and in doing so, we have the opportunity eliminate energy poverty.

Jul.26.2012 | The News > Special Report
Energy Poverty Alleviation – 2

AGENDA for ACTION The world is grappling with the challenge of providing energy access to nearly 2bln people deprived of it. Alleviating energy poverty poses numerous problems. Most of the energy poor live in remote rural areas making it difficult and costly to connect to the electrical grid. Some energy poor countries simply do not have the infrastructure or economic means to connect rural inhabitants to the grid. Environmental and climate change issues also makes dealing with energy poverty a tricky situation, mostly because coal remains the cheapest source of energy for much of the world. If electricity was generated from clean, but more expensive sources like wind and solar, rural inhabitants would likely be unable to afford it. Over a billion people are without electricity, so how do they improve their quality of life without adding huge amounts of greenhouse emissions to the atmosphere? There are two main ways to provide energy sources to hitherto under-serviced population: 1. Grid extension – this involves expanding the existing transmission and distribution system to reach hitherto underserved areas. However, since there is a tremendous shortage of generation assets any extension of the T&D systems has to be met with an associated investment in generation assets to be effective. While there continues to be peak energy deficits and considerable investment still required- mainstream capital, both debt and equity, have supported large scale power generation, transmission and distribution companies and the projects they have undertaken. These are typically large scale infrastructure projects that already command a relatively higher share of mainstream commercial credit disbursed to infrastructure. 2. Distributed Generation and Standalone House Systems – this involves funding decentralized small scale projects and consumable energy items (lanterns, torches, stoves etc). Funding for this category of energy access for low income segments needs specialized and targeted funding with small ticket sizes, understanding of the local conditions and end user requirements. While some of the energy service providers- i.e the providers of new technologies and equipment manufacturers might require larger funding and have access to ‘mainstream commercial’ capital there is a large demand from the small scale enterprise, vendors and distributors, of product/services with last mile connectivity to a dispersed and discrete market-base. Therefore the success of funding energy access is inextricably linked to the success of funding of small scale initiatives in general. Funding small scale ventures is particularly difficult in the social space (such as energy access) there is still little awareness in terms of the business models and without appropriate collateral debt funding is in short supply. There are some widely accepted reasons for the shortfall of funding • Lack of sufficient or appropriate collateral • Opacity in operations, • Dominance of proprietorship pattern of ownership • Lack of credit history since the ventures may be less mature or may not have maintained appropriate documentation- issues associated with insufficient and asymmetrical information • Lack of credit appraisal system with inadequate risk assessment techniques. A World Bank survey revealed that most of the small scale enterprises in South Asia faced ‘moderate’ to ‘major’ constraints while accessing bank funding due to high interest rates or inadequate collateral. Implementing Rural Energy Projects for poverty alleviation For implementing an effective Village electrification project we may need to first understand the following support system: • Physical maps of the area (geological maps) showing topography, forest cover, water bodies etc. • Socio –political Map / Census data helps in identifying different groups, fixed and migratory communities, Number of households, adults, women, children , social and cultural values etc. • Pre existing energy infrastructure such as proximity to electricity grid/sub stations, gas pipelines, solid fuel availability and delivery system. • Availability and proximity to motor able roads, railway tracks, waterways etc. • Availability of Schools, Banks, post office, Primary health centers, ponds, wells, tanks etc. • Level of education and skill sets of local people will help in understanding the most effective means of communication like posters, leaflets, talks and drama etc. • Income levels in community and how is the wealth held – in cash, fixed assets like land, building, capital goods, livestock etc. • Decision making process in community, stakeholders, gatekeepers, influence groups • Predominant commercial activity /business in the community such as making handicrafts from local produce, pottery, carpet making etc. • Whether income is mostly locally generated or comes from elsewhere e.g. migratory workers in other states or foreign countries. • How does income vary across the year e.g. with agriculture harvesting, remittance from abroad or regular salary payments from local industry and offices. • What is the current level of expenditure by local people per month to meet their energy needs (in cash or kind). • An understanding of the ability to pay by local people and their willingness to pay • It helps to understand the pattern of expenditure by local people as it helps in understanding their priorities. • Sense of ownership and attitude towards theft and pilferage by local community. • Modalities for collection of revenue. Who will collect? Where will the cash be kept ? periodicity of collection regular or harvest linked ( payable when able) The above information may be collected through appropriate survey /consultation at Village level and also to identify Local Entrepreneurs willing to take up energy access projects on a sustainable business model. The key to success in sustainable energy poverty alleviation would rest with identifying willing and committed local entrepreneurs and then enabling and empowering them to take up Energy access Projects using locally available resources. We would also need to impart requisite skills to the Local Entrepreneur and do hand holding till the EA project becomes sustainable.

Jul.26.2012 | The News > Special Report
Energy Poverty Alleviation – 1

“It takes as much energy to wish as it does to plan.” Eleanor Roosevelt Today the world, our earth stands at a critical juncture, where disasters of our own making are coming back to us. One of the biggest challenges that the entire world faces today in unison is energy poverty. Briefly defined, Energy Poverty is a term for a lack of access to electricity, heat, or other forms of energy. Often referring to the situation of peoples in the developing world, the term also implies any quality of life issues relating to this lack of access According to the Energy Poverty Action initiative of the World Economic Forum, “Access to energy is fundamental to improving quality of life and is a key imperative for economic development. In the developing world, energy poverty is still rife. Nearly 1.3 billion people still have no access to electricity, according to the International Energy Agency (IEA). Sustainable Energy for All is an issue intriguing thinkers, planners, and government agencies worldwide. Energy Transforms lives, businesses and economies. For sustainable growth everyone should have access to sustainable energy. The United Nations Secretary General launched a pioneering new initiative “Sustainable Energy for All” to mobilize urgent global action. Also the year 2012 was declared the International Year of Sustainable Energy for All, recognizing that “… access to modern affordable energy services in developing countries is essential for the achievement of the internationally agreed development goals, including the Millennium Development Goals. Achieving sustainable energy for all is an ambitious but achievable target. The need of the hour is to move from Advocacy to Action, to remove conceptual cobwebs, to collaborate for some out of the box innovative strategies, policies and initiatives and make the difference in the lives of people who have yet to receive modern energy services. It is not only important that we reach out to the energy starved people in the farther most corner of the globe, but we must also ensure its sustainability with minimal adverse impact on environment and the energy supply should be acceptable and affordable to the local people. The relationship between energy and poverty has been an issue preoccupying development specialists for many decades. Running modern economies without modern energy is impossible as it is quite well accepted that modern energy use is related in some way to economic development. The concern is whether the provision of energy services leads to economic development or economic development leads to expanding demand for energy. The generally accepted wisdom is that energy is a necessary but not sufficient condition for development. However, this begs the question as to whether the lack of energy, especially modern energy, is one of the causes of poverty. In this paper we examine the impact of energy on poverty reduction and whether it is possible to establish a level at which people can be perceived as “energy poor.” In this sense energy poverty is the point at which people are using the bare minimum energy needed to sustain a healthy life. Beyond this point, energy contributes to increased welfare and higher levels of economic well being. Dimensions of Energy Poverty With the 2015 deadline to achieve the Millennium Development Goals fast approaching ,the world is on a path to an “unacceptable failure, both moral and practical”. None of the MDGs can be delivered without access to modern energy services for the 1.3 billion people who today live without it. A lack of basic energy service impacts all aspects of these people’s lives, from healthcare to clean water, safe housing, education and the potential to earn a living. Rural communities account for 85% of energy poor. Institutions, including the International Financial Institutions and also most governments focus on grid-expansion and densely populated urban areas. This simply leaves the rural poor perpetually exposed and in the dark. Key challenges include the lack of adapted financing mechanisms that can deliver on rural energification schemes; inadequate education and shortage of local skills for project initiation, implementation and system operation; the absence of easy local access to components for equipment maintenance and enhancement; the lack of understanding and political support necessary to replicate enduring local ownership models. Situational Analysis: 1.3 billion people lack access to network electricity. In the absence of vigorous new policies, more than 1 billion People will still lack electricity access in 2030 . • 4 out of 5 people without electricity live in rural areas of the developing world, mainly in South Asia and sub-Saharan Africa • 2.7 billion people rely on traditional biomass – wood, agricultural residues and dung – for cooking and heating. • Poor people in developing countries spend up to a quarter of their cash income on energy • Firms in developing countries lose around 5 percent of their annual sales due to power outages • As of 2004, the richest 20% of the world’s population consume 58% of total energy, whereas the poorest 20% consume less than 4% • Urban air pollution, primarily transport-related, is responsible for upwards of 800,000 deaths globally each year • The world’s billion poorest people use only 0.2 tons of oil-equivalent energy per capita annually, while the billion richest—those earning on average over US$20,000 a year—use nearly 25 times as much • Developing countries have only developed about 20% of their hydropower resources, in comparison to 70% in OECD countries • The electricity sector’s ability to deliver improved service is constrained by poor resource utilization, low asset yields and commercial and technical inefficiency with system losses for ranging from 15% to 45% of electricity distributed • High transaction and unit investment costs constrain service provision in rural areas because of low demand and dispersed populations. • Energy production and use is the source of about two thirds of all global greenhouse emissions, and is by far the largest source of CO2 • 1.6 million women and children die prematurely from indoor air pollution caused by burning solid fuels in poorly ventilated spaces. 40 new million new cases of chronic bronchitis are caused by exposure to soot and smoke every year • Low grade fuels and poor environmental controls in transport and industry are a leading cause of severe urban air pollution in the fast growing cities of developing countries. More than 80% of all deaths in developing countries attributable to air pollution-induced lung infections are among children under 5.

Jul.26.2012 | The News > Special Report

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