Clean Energy for Rural Economy

What is the issue?

• Lack of access to electricity remains a huge barrier for rural businesses.
• It is high time that the potential for clean energy innovations is tapped effectively.

What is the dire need?

• The rural economy is underserved by existing electricity sources.
• It relies on human labour or fossil fuels such as diesel.
• It thus affects livelihood through various income-generation opportunities.
• Clean energy innovations for agriculture and non-farm micro-enterprises could help.

• It can complement the government’s electrification strategy which is more household-oriented.
• This can be achieved by leveraging distributed renewables coupled with energy efficiency.

What are the concerns in agriculture?

• About 40% of the agriculture produce is wasted before reaching consumers.
• The market value of the produce does not get reflected in the farmer’s revenues.
• Moreover, their real incomes remain low because of rising cost of agri-inputs.
• These include seeds, fertilisers, pesticides, irrigation equipment and services, among others.
• These issues are amplified in the case of small and marginal farmers (86% of cultivators in India).
• The fragile economic condition makes them more vulnerable to the effects of climate change.

How can clean energy help?

• Innovative technologies could reduce input costs and deliver higher farm outputs, better market opportunity.
• These may include clean energy-based cold chain, seed sowing, fertiliser application, pesticide spraying, or irrigation.
• This will also aid innovations such as solar-powered milking machines, and charkhas (spinning wheels).
• In this context, just 3 activities have a total market potential of about $40 billion.
• These are pesticide spraying, rice transplanting, and harvesting of grain crops.

How is the non-farm sector?

• The non-farm sector also suffers from lack of reliable electricity access.
• The enterprises include that on custom tailoring, food processing, poultry and livestock rearing, and hairdressing, etc.
• Lack of electricity has limited the number of non-farm activities undertaken in rural areas.
• These are indicative of the latent demand in India’s rural non-farm economy.
• Clean energy-driven and energy-efficient machines could help meet existing demand.
• It can as well offer hope for addressing latent demand.
• The rural population could find more viable non-farm activities to supplement farm incomes.

What are the lacunae?

• Billions of dollars worth of market opportunities remain untapped.
• The path from concept to commercialisation faces technical failure and market failure.
• The deployment of these innovations at scale continues to be plagued by

1. high upfront cost of distributed renewables
2. low and fragmented rural demand
3. paucity of long-term debt to end-consumers
4. missing incentives to adopt energy efficient practices

What lies ahead?

• Council on Energy, Environment and Water (CEEW) is planning to build an ecosystem for clean energy innovations for rural economy.
• The platform would provide

1. affordable market intelligence to enterprises
2. facilitate strategic pilots
3. enable enterprise and consumer financing
4. connect with MSMEs to help manufacture and distribute at scale
5. engage with policymakers to improve technology transfer

• The commercial deployment of clean energy innovations needs partnerships.
• It must include the public institutions, philanthropic foundations, private firms, and the international development community.

Source: Business Standard