Access to Energy for the Base of the - Ashoka

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The focus on access to energy for low-income people
arises from pressures seemingly at odds with each
other. Access to energy is a development imperative, as
it increases income, by enabling households to work at
night. It protects health, by reducing indoor air pollution
due to smoky fires. It has a disproportionate benefit for
women and girls, who bear the largest burden from
unsafe or inaccessible energy. The environmental
imperative is no less acute; access to clean energy
accomplishes development goals without advancing
climate change. Finally, access to energy for low
income people is a $500b market. Market-based
solutions are sorely needed to provide a better
alternative to the unhealthy, environmentally destructive
and expensive options the poor already pay for.
We hope our investigation has made a convincing
case for action.
Though our work was sponsored by three
corporations, we know that all key players in
development have a role to play: Aid agencies,
Governments, Strategic social investors and
foundations, Social entrepreneurs, Citizen Sector
Organizations and Multinational companies.
The following pages attempt to draw the implications
of our investigation for each of these categories of
players.
Aid agencies
* * *
Market-based solutions are a powerful tool, but as the
cases demonstrate, this tool will not reach the poorest
or replicate as fast as is required without the type of
targeted support that aid agencies are uniquely qualified
to provide.
Aid agencies have an instrumental role to play in
ensuring market-based solutions reach the poorest of
the BOP. For example, solar home systems currently
reach the BOP2000 at best, failing to serve half of the
world population. Targeted interventions are needed to
extend lower in the pyramid. In addition, the spread of
even the most successful of these initiatives has been
worryingly slow. Aid agencies can play an important
role in advancing replication and scaling up.
In order to extend energy solutions lower in the
BOP pyramid, aid agencies can:
1. Design targeted subsidies for the poorest
2.
customers. Even with low-cost funds grid
connections only reach the BOP1000. In the near
future this circumstance is unlikely to change. Aid
agencies can play a role through vouchers or
incentives to MFIs to help extend energy solutions
lower in the pyramid. Such direct subsidy systems
risk to create market confusion and the two
following options are probably better.
Support social entrepreneurs with grants or lowcost
financing. Nearly all the cases highlighted here
employed grants or low-cost financing, at least at the
start. At this stage of market development, such
assistance is an indispensible asset to energy
entrepreneurs and an important service to lowincome
people. Most social (non profit) enterprises
will use these additional resources to penetrate lower
income segments, actually many of them are already
engaged in some forms of cross subsidization of the
poorest customers by the (relatively) wealthier.
3. Finance ecosystem for poorest customers,
especially MFIs. For the more complex solutions,
microfinance is essential to reduce the upfront
price burden on low income people and allow them
to pay back over time. Aid agencies can continue to
support the spread of microfinance in geographies
were lowest-income people are over-represented.
In order to accelerate replication and scaling up,
aid agencies can:
4. Invest in programs designed to create the
required “infrastructure” for the energy
initiatives. Aid agencies have an important role to
play in improving the ability of entrepreneurs to grow
energy enterprises with a combination of capability
building and financing for small entrepreneurs. Other
targeted interventions could address bottlenecks
such as the lack of skilled staff as technicians.