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Productive use of energy can help in fight against poverty

India has made significant progress in ensuring access to energy to millions of rural businesses and microenterprises, and now the focus should shift to the next phase of ensuring reliable energy and enabling productive use

November 30, 2021 / 10:54 AM IST
(Representative Image: AFP)

(Representative Image: AFP)

Ending poverty has been a top priority for policy makers across the globe for decades now, as reflected in the United Nations Sustainable Development Goal 1. Pursuant to this, substantive subsidies, schemes, and other welfare measures have been experimented with, and while we have made progress towards this goal, the reality remains that even before COVID-19 baseline projections suggested that 6 percent of the global population would still be living in extreme poverty in 2030, missing the target of ending poverty. In India alone, the fallout from the pandemic has caused over 10 million job losses, and 97 percent of households have seen a decline in income levels.

The poverty trap is a vicious cycle, and is exacerbated by a lack of access to adequate, affordable, and reliable energy services. According to the Global Energy Assessment by the International Institute for Applied Systems Analysis, people who lack access to cleaner and affordable energy are often trapped in a re-enforcing cycle of deprivation, with lower incomes, and limited means to improve their living conditions.

The positive news is that India has made significant strides towards increasing energy generation, and access. India’s energy generation capacity is growing year-on-year at 3.5 percent, with renewables contributing to 100 GW of India’s total power capacity of 386 GW. At the same time, the percentage of the population which has access to electricity has increased, from 67.6 percent in 2011 to 97.8 percent in 2021.

While these developments are significant, and a necessary first step, we need to raise our energy ambitions, and ensure reliable energy access if we’re looking to break the cycle of poverty and direct energy towards productive use.

The current approach to fighting energy poverty is to provide basic electricity access for every household, which is the pre-requisite to measure success towards SDG 7. The current minimum threshold for achieving ‘energy access’ is just 100 kilowatt-hours (kWh) per person per year. This amount of energy is not adequate to help people improve their livelihoods, and lifestyles. This is barely enough to power a few lights, or charge a mobile phone, let alone stimulating an economy and creating jobs. So, despite some of these households technically having access to electricity, they are not able to leverage the same to escape the poverty trap.

To add to this, two-thirds of rural and two-fifths of urban households still face outages once a day. Without reliable access to energy, many businesses stop functioning, including critical sectors such as healthcare facilities, industries, etc. Due to this, many small and medium scale entrepreneurs suffer from productivity loss, as they cannot operate after sunset. According to a research by Catalyst Off-Grid Advisors, titled ‘Unlocking Climate Finance to Accelerate Energy Access in Africa’, this results in an average of 4 percent loss in business revenues. It is clear that thriving in a modern economy requires access to reliable, affordable, adequate, and productive-use energy that is consumed at scale.

To plug in the gaps of reliability and to ensure that generation capacity, and delivery of energy is increased to meet the demands of the vast population, the government should look at alternative, sustainable, and localised sources of energy. This would ensure that businesses have access to a continuous supply of energy that is not dependent on the grid, which is vulnerable to an increasingly volatile climate.

Through our work in mini-grids with Smart Power India (SPI), we have impacted the lives of over 469,743 people in a positive way. Third-party impact reports on businesses connected to SPI’s mini-grids indicated that businesses thus helped saw an average 49 percent increase in monthly revenues, and 43 percent of enterprises purchased new appliances and equipment to grow their businesses.

Further, according to the report by Catalyst Off-Grid Advisors, the proliferation of decentralized renewable energy would also green up the backup electricity generation, reduce diesel and gasoline bills by $28-50 billion per year, and deter release of 135-159 million tons of carbon dioxide. The promotion of such distributed renewable energy (DRE) systems can help in bridging this gap while also contributing towards India’s climate goals.

India has made significant progress in ensuring access to energy to millions of rural businesses and microenterprises, and now the focus should shift to the next phase of ensuring reliable energy and enabling productive use. Through carefully-crafted policies and interventions, we can address the long-term challenges posed by Climate Change, generate new jobs, and at the same time help create locally-sustainable communities.

Deepali Khanna is Managing Director, Asia Regional Office, The Rockefeller Foundation. Views are personal and do not represent the stand of this publication.

Deepali Khanna
first published: Nov 30, 2021 10:54 am