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May 10, 2012

Energy Access Entrepreneurs Seek $500 Million from World Bank at Rio +20

Selco solar install
Twenty of the world’s leading off-grid clean energy entrepreneurs sent a letter (http://bit.ly/IzuDSU) today to World Bank Group president Robert Zoellick requesting $500 million in financial commitments to help them deliver on the world’s energy access goals. The group’s letter was backed by a letter of support (http://bit.ly/JRLBOT) from the CEOS of more than 25 leading civil society organizations from around the world, which calls for these commitments to take the form of a pledge at the upcoming Rio+20 earth summit.

The call comes six months into the United Nations Sustainable Energy for All (UN SEFA) campaign, which seeks to deliver universal energy access by 2030. In order to make good on that pledge the International Energy Agency (IEA) has found (http://bit.ly/zNduXr) that half of all energy services must be provided by off-grid clean energy.

Unfortunately, today’s investments in energy access are heavily skewed toward traditional grid extension, with billions going to large scale centralized power projects which are often heavily polluting coal plants.  Worse, according to the IEA, an over reliance on these investments at the expense of off grid clean energy investments will leave one billion of the world’s poor without energy access by 2030.

“There are literally one billion reasons to change our current approach to energy access,” says Justin Guay, Washington Representative with the Sierra Club’s International Climate Program. “The World Bank has a tremendous opportunity to do just that by committing to rapidly scale up investments in off grid clean energy at Rio.”

Entrepreneurs agree. The letter states in part, “We work in these markets and we know they suffer from, among other things, a distinct lack of access to finance.”  The entrepreneurs go on to argue that a significant investment in the sector from the World Bank Group can reduce perceived risk and unlock private sector investment – and along with it the vast potential of clean energy to serve the world’s poor.

The entrepreneurs expressed their support for existing World Bank programs such as Lighting Africa, Lighting India, and Green Power for Mobile and asked for increased funding for programs like these going forward.

The market potential in serving the world’s poor is enormous. Lighting, just one of many energy requirements, is a $36 billion a year industry. However, while the poorest fifth of the world currently pays one-fifth of the world’s total lighting bill, it receives only 0.1 percent of the lighting benefits. Worse it comes from heavily polluting and dangerous kerosene which can cost as much as 25 to 30 percent of a family’s income. Diverting this expenditure to clean energy can reduce pollution and expenses over time.

 “A continued reliance on huge coal, nuclear, and hydro plants has done little to alleviate energy poverty, forcing the poor around the world to rely on kerosene for their meager energy needs,” says Harish Hande, founder of SELCO-India (http://selco-india.com/), and recent recipient of the prestigious Magsaysay award. “The poor are best served by small scale, distributed clean energy which is faster, cheaper and more effective for addressing their needs and delivering on the world’s energy access goals.”

Entrepreneurs like Hande are doing so by providing, small scale solar home systems for communities and households that don’t have access to the grid. The combination of prohibitive costs of grid extension, highly innovative business and financial models, and plummeting cost of renewable energy have enabled them to demonstrate the financial viability of the sector.

Now a new generation of entrepreneurs are experimenting with ‘pay-as-you go’ systems, mobile banking payments, and community power that extends clean energy from off-grid cell phone towers to surrounding communities. In essence they are laying the foundation for the developing world to leap frog the expensive, polluting, and inefficient grid that dominates the developed world.

“The opportunity this presents is just tremendous,” says Simon Trace, CEO of Practical Action (http://practicalaction.org/). “These entrepreneurs are laying the foundation for a clean energy future by serving those who need it most. It’s high time they got the finance they need.”

“Rio +20 is an incredible opportunity for the World Bank Group,” added Jake Schmidt, International Policy Director for Natural Resources Defense Council (NRDC) (http://www.nrdc.org/). “This is a global platform and the time is right to make a statement on off grid clean energy.”

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