KEY ROADBLOCKS IN PROVIDING ACCESS TO MODERN ENERGY

When I was talking to one of my senior colleagues last week on issues related to access to modern energy, we could identify a series of factors, which negatively influence initiatives on providing access to modern energy. A few of such key roadblocks are- (i) Politically linked decisions (which we generally avoid in our discussion), (ii) lack of institutional capacity in facilitating the system for providing access to clean energy sources to poor, (iii) absence of private sector involvement in the supply chain owing to non-conducive investment environment for its resources and (iv) acute poverty of people and therefore weak ‘ability to pay (ATP)’ by the households.

With respect to the political roadblock, it was apparently clear from literatures review that political interference in development is unavoidable and most of the time, it becomes inhibitory in its actions. For instance, most political parties in India advocate for free, or highly subsidised, often unmetered electricity supply to poor. After electricity was put under public control and local states received the authority to set electricity prices in 1948 following the Electricity (Supply) Act, electricity pricing rapidly emerged as a powerful political tool and stake (Swain, 2006). Since then, political parties have campaigned for a subsidised or free electricity supply at least for agricultural consumption, in anticipation of capturing farmers’ political support. Subsidy has become such a political node that, in recent years, it has gained a prominent place in party manifestoes. Elections are sometimes won or lost on the basis of political parties’ commitment to this policy.

But, how useful this type of politically moved decisions is? Can we expect to develop a commercially viable market place for promoting access to modern energy sources to rural poor in this type scenario? Perhaps, this is a million dollar question and needless to say that this type of political myopia kills market potentials and continue to keep poor people at the level of poverty even in the coming years.

Lack of institutional capacity in facilitating the system for providing access to clean energy sources to poor is also a major roadblock. The deficiency in institutional capacity is observed at all level, starting from lead renewable energy agency in a country to the sub-national level and services centre, NGOs and communities. I believe that there is an urgent need to make an assessment of capacity building to manage the processes for effective deployment of modern energy sources. This assessment should outline where human resources could support the public sector.

There are limited funds available for developing and least developed countries to bear the initial finance and maintenance costs of project development. The lack of financial institutions and limited collateral to get a loan is a related hurdle. Besides, for many countries like in Nepal, conducive FDI policy is absent, which makes private sector involvement more difficult. As an immediate patchwork, government can consider providing attractive tax benefits or importing duty exemptions to the private importers, however, countries need a more organised solution to systemically remove this barrier.

At last, access to sustainable sources of clean, reliable and affordable energy has a profound impact on multiple aspects of human development; it relates not only to physical infrastructure (e.g. electricity grids), but also to energy affordability, reliability and commercial viability.  In practical terms, this means delivering energy services to households and businesses that are in line with consumers’ ability to pay. Unfortunately, the aspect of ATP is very often neglected.

I think, this is now key to work together to remove barriers to access to modern renewable energy solutions and improve access, quality, security and affordability of clean energy around the globe. SNV is committed to this endeavour.

Keshav C Das

Senior Advisor, Renewable Energy and Climate Change

Reference:

SWAIN, A. K. (2006), “Political Economy of Public Policy Making in the Indian Electricity Sector: A Study of Orissa and Andhra Prades”, M. Phil., Jawaharlal Nehru University

In Pursuit of Energy Efficiency in India’s Agriculture: Fighting ‘Free Power’ or Working with it?, Ashwini Swain, University of York, Olivier Charnoz, PhD, Agence Française de Development, 2012