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Helping the Poor through Energy Solutions

By Harish Hande
[© SELCO]

In an age of increased disparities, few income-generating opportunities are created for the poor. The lack of opportunities means that the rural poor are unable to shape their own livelihoods, which leaves them with no other alternative but to migrate; this inevitably leads to overpopulated cities.

Many of the world's problems today, whether social unrest or environmental degradation, are related to poverty, and more specifically to energy poverty. While the growth engine of many developing countries is moving at a fast pace, millions of people are being left behind, creating an ever widening gap between the rich and the poor.

Two of the primary barriers for the poor are access to value-based technology and reliable energy.

The lack of access to electricity prevents the poor from creating sufficient employment opportunities and enterprises. The poor have little chance of being anything more than part of a cheap labor force.

Many of the needs of the poor have been misunderstood, and the solutions provided are more often than not developed from a "one size fits all" approach. There is an underlying assumption that the poor are a homogeneous group and that they need standardized technology-focused solutions. The reason for favoring standardized energy solutions is that they can bring down costs, making them affordable to the poor, but the definition of affordability needs to be challenged in my view.

Linking Energy to Livelihood

Decentralized, sustainable energies like solar power, when effectively linked to livelihoods, can act as a catalyst to empower the poor to create assets for themselves. Today, solar power is only being used for lighting, but there are numerous other ways that solar power could benefit the poor.

Over the past 18 years, SELCO has pioneered these linkages, implementing innovative financial, business and technology models that create avenues for the poor to improve their livelihoods. The models and linkages described here can be replicated throughout the rest of the world.

Technological interventions are frequently carried out without properly assessing the needs of the communities they are intended to benefit. For this reason, many projects have created false expectations with negative consequences.

SELCO maps the needs of the poor at the level where the solutions are implemented. For example, we focus on industries directly related to people's livelihoods (such as agriculture, silk production and the home-based garment industry) and formulate technology interventions that have the potential for integration with renewable energy. An efficient small sewing machine, for example, can run on solar for home-based tailoring units. But we are not shy of coming up with other technological solutions that may also be required by the community; for example, there may be a soldering iron that needs to be modified so that it can be used by a local entrepreneur to repair mobile phones.

In cases where technology already exists, SELCO pilots and modifies the technology according to the needs and expectations of the targeted community.

SELCO is responsible for coming up with appropriate business and financial models for renewable energy technology solutions which are distributed in a holistic manner by conducting pilot projects in selected areas and replicating successes in other areas.

Key Lessons

For the overall development of society to take place, it is critical that poverty be alleviated. For poverty to be reduced in a sustainable manner, the poor need income-generating activities to become owners, employers and asset creators. Energy provides the key to this.

Studies show that more than two billion people in the world lack access to electricity (so-called "off-grid" communities) and that three billion people still use forms of dirty fuels for basic cooking. These figures have not changed over the past 20 years.

However, the United Nations has declared 2014ñ24 as the Decade of Sustainable Energy for All, which has given impetus to the movement of providing people with access to energy. Many stakeholders globally realize that equity is necessary for social sustainability, and lack of access to energy is a key factor preventing the equitable distribution of wealth.

The numerous models that have sprung up with the aim of providing energy access to the poor, though well-intentioned, often suffer from fatal flaws. The lessons can be summarized as follows:

Energy center at Dharmasthala, India [© SELCO]

First, there needs to be a specific link between energy access and livelihoods. Many of the models equate energy access with simply providing lighting. While this may be adequate for some communities, it is not enough for others.

Second, in many of the models, the poor are still considered to be the end-beneficiaries, not the primary players or owners.

Third, a certain ecosystem needs to exist for mature markets to flourish. Often, this is missing, as there is an underlying assumption that the poor are a homogeneous group based on an economic pyramid with divisions between income streams such as very high income, high income, middle income and poor without any differentiation within groups.

The Missing Ecosystem

The economic pyramid as defined today is too simplistic. If the poor are to be lifted out of poverty completely, a well thought-out ecosystem needs to be in place for sustainable implementation of solutions that link energy services to livelihoods. Solutions should be customized for the different levels of the economic strata.

The ecosystem that holds everything together has many parts. SELCO puts together the parts of the ecosystem by, for instance, creating appropriate market linkages; appropriately adapting technology; developing site-specific and segment-specific financing; capacity building in terms of skilled human resources, as well as giving access to appropriate financial resources for enterprise funding for the poor.

Each part of the missing ecosystem is interconnected. For example, a solar-powered sewing machine can be a reliable solution, but the end user needs to find ways to pay for the system with his or her available cash flow. The end user of a technology should be viewed in conjunction with the market. Solar-powered sewing machines should be evaluated once the market for the end product is defined. Otherwise, the technology will become a debt burden on the poor.

There are very strong connections between renewable technologies such as decentralized solar power and improved livelihoods. As seen above, many of the challenges are huge, but the solutions are highly replicable. Presently, the partnership between the International Renewable Energy Agency (IRENA) and SELCO emphasizes the utilization of technologies such as solar, not from an environmental point of view, but from a livelihood and development point of view.

Harish Hande is a social entrepreneur and managing director of SELCO India headquartered in Bangalore, India. Hande cofounded SELCO as a social enterprise that provides sustainable energy services to the poor in India. With a staff of almost 300, the company has installed more than 150,000 solar lighting systems. Harish completed his doctorate in energy engineering at the University of Massachusetts in the United States. See www.selco-india.com for more information.
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