More Stories Like ThisEnvironment
Sustainable Energy for All? Linking Poor Communities to Modern Energy Services
Sustainable Energy for All? Linking Poor Communities to Modern Energy Services
Related
Agriculture
Energy
Environment
The UN Sustainable Energy for All initiative (SE4ALL), launched this year, places great emphasis on the role of the private sector in delivering universal energy access. A key challenge is how to make energy supply chains more inclusive or enable low-income consumers to buy goods and services, such as efficient cook stoves, solar lamps or electricity, that are available in more developed markets. Achieving the ambitious goals of SE4ALL (which also focus on efficiency and promotion of renewable energy) will require a mix of actors – public and private sector and civil society – as well as new innovations in energy delivery models.
A new IIED research paper, Sustainable energy for all? Linking poor communities to modern energy services, by Emma Wilson, Rachel Godfrey Wood and Ben Garside, explores innovations in energy delivery models and multi-sectoral partnerships to deliver affordable and sustainable modern energy services to the poor. The term energy delivery model refer to the combination of technology, finance and management needed to supply energy to users. The delivery model can be designed as an enterprise, development project or a government programme, but innovations in the key elements of the model will help ensure positive sustainable development impacts.
The paper uses four case studies as the basis for analysis:
- The Project for Renewable Energy in Rural Markets (PERMER), Argentina
- Portable solar product companies (Tough Stuff and d.light) in southern Asia and sub-Saharan Africa
- The Anagi stove programme in Sri Lanka
- Micro-hydro development in Nepal (the Rural Energy Development Programme)
The case studies cover a range of energy delivery models and show how they have been adapted to help deliver affordable and sustainable energy services to poor customers. They were selected to illustrate a range of energy products and services, diverse socio-cultural contexts, various business models and partnerships, and varying degrees of formality in the markets under consideration. All of the case studies reveal the challenges of reaching the very poorest even with pro-poor innovations put in place.
The paper offers a framework for analysis that distinguishes between the delivery model itself and two key contextual elements that influence the design of the delivery model: the enabling environment of policy, regulations, incentives and established services such as financial services; and the socio-cultural context that encompasses local cultural preferences, awareness of technologies, local leadership and social organisation, and community cohesion or levels of conflict. These contextual factors determine not only the design of the delivery model, but also the need for additional support services to enable start up or scale up operations.
A business school tool, Osterwalder’s Business Model Canvas, is used to map the energy delivery model itself. Central to this is a “value proposition” which, in the case of models that benefit the poor, explicitly incorporates social and environmental value as well as more traditional economic value. Within the pro-poor delivery model conceptualised here, value is created not only for consumers but also for producers and distributors in the chain – many of whom may be part of the informal sector. Distribution channels for energy products and services are particularly important in reaching rural and outlying communities. The additional support services needed to get a model up and running might include micro-finance, awareness raising or skills training. These require targeted resources and explicit recognition in delivery model.
The paper highlights a number of lessons:
- Private sector interventions alone often cannot reach the poorest of the poor. ‘Business as usual’ is unlikely to reach the poor as profit margins and time frames are less attractive. Pro-poor models usually require ‘non-traditional’ business partners, such as government, non-government organisations, enterprise associations, social enterprises and communities themselves. A key challenge is targeting government and donor support to stimulate and enhance private sector involvement.
- Understanding the socio-cultural context is important in designing models that reach the poor. This research highlights the importance of understanding the socio-cultural context. This understanding may help identify new entry points for the poor and ways of capturing their dynamism and innovation in designing products and services that meet local preferences. Designing a model that incorporates local preferences and expectations – such as women’s views on health and the commercialisation of fuelwood – can be a short term investment that ensures the long term viability of the model.
- The success of energy access initiatives should be measured in terms of development benefits not the number of households connected to the grid or efficient cookstoves distributed. The ‘indicators of success’ should be defined with the end-users and reflect the development benefits generated by access to energy, such as improved health, education and livelihoods.
- Lack of knowledge and understanding of delivery models is a key obstacle to investment. There is a need for more systematic analysis of delivery models, in order to provide investors, governments and donors with evidence of their impact, financial sustainability and potential return on investment.
- Employing business analysis tools to in-depth case studies can be an effective way to highlight pro-poor innovations within a delivery model in a way that doesn’t compromise the key elements of a sustainable enterprise. Central to our model is the use of a value proposition that incorporates social and environmental as well as economic value. Applying such tools to in-depth case study analysis, along with development tools such as ‘market mapping’, allows us to analyse the appropriateness of a particular energy delivery model within a specific context. This approach also highlights the risks of replicating ‘successful’ delivery models when contextual factors are uncertain or inappropriate to a given model. The framework developed in this paper can be explored further to identify and categorise contextual factors to allow for more systematic analysis.
By exploring how ‘energy delivery models’ – involving public, private and civil society actors – can deliver fair and inclusive benefits to the poor, we can inform efforts to ensure that energy access interventions and enterprises are able to deliver lasting development impacts.
This paper is the first in a new IIED series of research papers, called Linking Worlds. This series looks across sectors – agriculture, mining, energy and textiles – at innovative organisational models that engage with small scale producers or low-income consumers to achieve greater fairness and equity.
For more information about the paper: Sustainable Energy for All? Linking poor communities to modern energy services, contact emma.wilson@iied.org, or ben.garside@iied.org
For further information on the Linking Worlds series see: http://www.linkingworlds.org/ or contact abbi.buxton@iied.org
FEATURED
Spotlight
Business Fights Poverty is proud to be a Founding UK B Corp.
© 2021 Business Fights Poverty. The Business Fights Poverty logo and tree device are registered trademarks. View Terms and Conditions.
