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January 06, 2012

Sustainable Energy for All in 2012

India femal-solar-engineer
At the outset of this new year, under the banner of the United Nation’s sustainable energy for all campaign, the voices clamoring for a revolutionary shift from centralized fossil power, to decentralized clean energy are growing louder. What’s more, they are increasingly coming from traditionally conservative corners that are recognizing that the only way to deliver energy access is to rely on decentralized clean energy. The best news of all is that 2012 is the year that this innovative new approach that will deliver hundreds of millions from poverty, firmly entrench clean energy, and help democratize the world begins.

The foundations for this departure from orthodoxy have been laid by the International Energy Agency (IEA), which has essentially admitted in a series of energy access papers that the majority of those without electricity today will never be wired to the grid (PDF). The Government of India goes even further estimating that two-thirds of its unelectrified households need distributed power after it spent a decade increasing centralized energy supplies (by 60%) only to see a correspondingly paltry increase in energy access (10%). To these realizations can be added a growing number of countries seeking to throw off the shackles of dirty kerosene expenses (see Kenya’s call to be ‘Kerosene free’)and it’s clear the situation is ripe for change.

At the same time decades of experience from a broad set of actors are bringing successful models to fruition placing the lofty goal of universal energy access firmly in the realm of the possible. This grassroots effort is colliding with a fundamentally shifting economics for clean energy vis-a-vis fossil fuels that is ensuring decentralized clean energy is the best option for off grid areas.

Here’s how the UN SEFA campaign can take advantage of these aligning stars to shift the focus from pilot projects to scale, from traditional aid based models to a dependence on enterprise. Doing so will catalyze revolutionary changes that will reverberate throughout societies around the world:
  1. Create an Energy Access Enterprise Investment Fund to finance cell phone tower conversions away from diesel to clean energy.
     There are 639,000 existing off grid cell phone towers powered by expensive diesel generators. Converting these towers to clean energy already makes economic sense (PDF), but liquidity constraints make financing these conversions difficult in today’s market. The campaign should work to identify sources of funding that can finance the conversion of these towers by allowing them to be the first call on the capital. More importantly, the campaign should leverage its position to ensure that a portion of the installations are built with excess capacity that local entrepreneurs can use to power surrounding communities; a concept referred to as Community power which is one of the most exciting innovations in rural electrification.

  2. Make electricity an associated product with cell-phones, or as a product charged through cell-phones.
    Cell phone companies are scrambling all over each other to provide free charging to their off grid customers because they only way they can increase their revenue is if customer’s phones stay charged. When their push is combined with emerging pay-as-you-go business models that create radical affordability we can serve 600 million people -- over half the population lacking access to electricity. This is already happening in a number of exciting ways, but needs to be scaled. The campaign should help bring together big mobile phone off-grid operators and investors to catalyze financing that will make this happen in a big way.  

  3. Provide electricity for the bottom-half of the off-grid world.
    The other half of the off grid world – the half that doesn’t have a cell phone and is really the poorest of the poor – will require concessional capital that must come from international public institutions like the World Bank or exciting new initiatives like Norway’s Energy Plus initiative. The problem is institutions like the World Bank are still pouring billions into failed grid extensions that are doing little to solve the problem of energy access. These portfolios should be redeployed to support decentralized clean energy and combined with concerted advocacy aimed at world governments to gradually shift existing fossil subsidies towards a United States Small Business Association model that provides 90% loan guarantees to rural electrification efforts based on decentralized clean energy. The campaign can reward the World Bank and innovative governments who make bold pledges with international recognition at the Rio +20 conference in June.

  4. Create Consumer Demand and Awareness.
    Sociological models show that disruptive technological adoption tends to proceed from a small subset of consumers to the more conservative majority once a certain momentum has been built. The gap between the early adopters of a new technology, and the early majority, can be the most important, and significant, barrier to widespread adoption. Public institutions can play a vital role in overcoming this barrier by financing the early stage marketing and awareness campaigns that NGO’s, social entrepreneurs, and small businesses alone can’t afford.  Institutions like the World Bank can and should provide grants for fleets of Solar Demonstration Centers like the one SELCO-India operates in rural India to demonstrate the multiple services clean energy can provide poor consumers including, mobile phone charging, lighting,  and purified water. Such a fleet, coupled with broader policy support for enabling environments - like creating stable supply chains, support for products and services that increase income generation and productivity, training institutes to impart generalized broad-based technical skills, and the provision of appropriate financing – would undoubtedly generate much needed momentum for renewable energy adoption and energy access worldwide.

These are just a few of the many opportunities the 2012 sustainable energy for all campaign must seize in order to catalyze off grid markets. Doing so could, as my colleague Carl Pope points out, lead to outsized impacts including half of humanity being powered by decentralized solar. But entrenched interests, failure of vision, and the crushing weight of the status quo threaten business as usual. In 2012 this campaign must rally behind the realization that business as usual means failure as usual, a situation that the world’s poor simply can’t afford.

-- Justin Guay, Sierra Club International Program

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