International Development Commons Select Committee
“Aid for Community-led Energy”
SUBMISSION FROM SMART VILLAGES RESEARCH GROUP LTD
SUMMARY OF KEY POINTS
WHO WE ARE
Smart Villages welcomes the opportunity to submit evidence to the House of Commons International Development Select Committee inquiry on Aid for Community-led Energy. We were among the first to rigorously research this issue in the Cambridge-based Smart Villages Initiative (“The Smart Villages Initiative: Findings 2014-2017”, https://e4sv.org/smart-villages-findings/ ).
In the Smart Villages model, the provision of sustainable energy services to rural communities in the Global South can have a catalytic impact on the lives of villagers when appropriately integrated with other rural development initiatives. This is to say that no-one actually wants kilowatt hours on their own. What excites people and makes decentralised energy worth funding, is how those kilowatt hours can be harnessed to deliver sustainable development outcomes and impacts.
The shorthand for this in the sector is to talk about productive uses of energy, energy services, and energy nexuses (eg energy & agriculture, energy & healthcare, energy & democratic engagement), which we encompass in the term “integrated” or “holistic” energy access and rural development. Almost all of the sustainable development goals need some degree of energy provision to be achieved. Smart Villages therefore sees energy as a catalyst for rural development, a necessary precondition for many of the wider impacts of sustainable development to be delivered. There are other technologies that can also act as catalysts, such as ICT and internet access, but energy is one of the most fundamental.
The aim of the Smart Villages Initiative until 2017 was to research and identify the conditions necessary for the provision of energy services to villages to enable the livelihood opportunities, services (healthcare, education, clean water, and sanitation) and empowerment embodied in the Smart Villages concept. With partners, we worked globally looking at the barriers and opportunities experienced by grass-roots practitioners, the role of the private sector, innovative technologies and business models, what governments could do to encourage the development of the sector, and why projects failed.
After 2017, we founded Smart Villages Research Group as a company to take this work forward, and we have now carried out more than 30 projects across Africa and beyond to innovate and implement technologies and business models for energy access and energy-catalysed integrated community development. In our day to day work we are only too well aware of the critical importance of community energy systems in achieving sustainable development impacts in the global South, but also the disconnects and challenges that still remain within the sector and make it more difficult to achieve successful outcomes. It is our hope that the findings of the House of Commons International Development Committee’s inquiry into these matters will highlight the importance of our sector, and help resolve the remaining barriers and challenges.
COMMUNITY ENERGY
Community energy in the context of aid encompasses a very broad range of solutions and technologies. At the bottom end of the scale at the level of the individual these can include simple and small-scale wind-up torches or radios. More sophisticated household-level solutions range from 10W solar home systems that can charge a cell phone and power a single LED bulb to 200W ones that can power a range of appliances like TVs and fridges. At the top end of the scale are 10-100+kW community-wide minigrids that provide wired connection and electricity meters to every household and shop in the community, and allow entrepreneurs to use higher-powered appliances for productive use and income-generation.
Community energy also encompasses more efficient cooking technologies, allowing rural populations to move away from the environmental and health disbenefits of cooking over smoky open fires, either with more efficient low-emissions cookstoves, or electric cooking devices, or biogas systems that allow populations to transform local agricultural waste material into efficient and affordable cooking fuel.
For many, the most important word in “community energy” is “energy”, and their focus is often just on the technology. Under the Smart Villages approach, “community” is the more important word. One of the strongest and most consistent messages from our research Initiative was the need for off-grid energy initiatives to be founded on close and extensive community engagement to ensure the support of villagers so that the energy intiatives can benefit from, and build on, local knowledge, cultures, and customs. In the absence of such engagement and buy in, energy initiatives are likely to fail. Villagers should retain control of their development path and should be the main drivers of energy initiatives. The priorities of international development initiatives do not necessarily reflect those of villagers.
Such engagement takes time – typically six to 18 months – and needs to build trusting relationships, potentially by working through individuals and organisations that are already trusted by the community. The effort required should not be underestimated: we heard various formulations along the lines of projects being “70% social / 30% technical”. While village chiefs and elders will play an important role, and it is appropriate to identify and nurture champions within the village, care should be taken that there is a voice for the poorest and marginalized within the village, not just the powerful. Energy access initiatives should be seen as a mechanism to build the social capital of communities, and support may need to continue after project construction is completed.
Once you focus on the word “community” rather than the word “energy”, this also leads you as a developer or funder to also realise that for communities, the energy is a means to a development end. It is extremely rare for communities or individuals to want energy for energy’s sake. They want what the energy can do for them – an improved quality of life, a more healthy environment for cooking, children better able to do homework, youth acquiring new skills, the ability to start new businesses, no longer having to walk hours to access healthcare services that require powered equipment, cold storage to reduce post-harvest losses, the ability to be better informed and improve their democratic engagement.
This is why our work now in SVRG is bottom-up, community led. We always engage with communities first to help them determine their priorities, and then try to design an integrated solution that includes as many of those priorities as possible, alongside a community operating model that allows it to be delivered in a sustainable manner. That way the benefits and impacts of a community energy solution are seen much less in terms of kWh or connections, but more in the broad range of long-term metrics that indicate meaningful and lasting socioeconomic development in the communities concerned.
In our experience, the greatest risk is that the community is not involved sufficiently in planning and implementation of projects, which is sadly still too often the case, and risks a mismatch in the solution and community expectation, a lack of sustainability, and sometime even complete project failure.
There are technical shortcomings within the sector as well – which are explored further in the section below on the challenges we see. The greatest flexibility and simplicity for communities would clearly come from the electricity grid being extended to reach them, and grid generation being increased to meet this new demand. However, this is cost prohibitive, so for now, a decentralised approach to energy access is still the most cost-effective way of providing the conditions necessary for rural development.
UK ODA and ENERGY
The UK is a global leader in funding decentralised energy access initiatives for the global South out of the ODA budget and its International Climate Finance portfolio. This includes components such as the £1bn committed for RD&D in this space under the Ayrton Fund, collaboration and initiatives between the Foreign, Commonwealth & Development Office (FCDO), the Department for Energy Security and Net Zero (DESNZ) and the Department for Science, Innovation and Technology (DSIT), and including the UK Research Councils and InnovateUK.
Specific initiatives supported under this pool of funding include initiatives such as Partnering for Accelerated Climate Transitions (UK PACT), Loughborough University-led Modern Energy Cooking Services (MECS), Carbon Trust-led Transforming Energy Access (TEA) initiative, and Energy Saving Trust-led Efficiency for Access (E4A) as well as open grant funding from UKRI, including the InnovateUK Energy Catalyst programmes, the Research Councils’ Ayrton Challenge Programme. In addition, there are specific in-country activities and projects supported by various FCDO Embassies and High Commissions directly out of their budgets around the world.
Grant funding for international collaborations in this space has significantly shrunk in recent years, especially since the global COVID pandemic and the pressure that placed on international aid budgets for governments around the world. Indeed, for international collaborations in the space of decentralised energy access research and implementation, UK programmes like the InnovateUK Energy Catalyst are among the few remaining opportunities for competitive funding, and stakeholders around the world eagerly await news of each successive opportunity.
This is not only good for the development impact the UK is able to deliver, but also the soft diplomacy impact for the UK, and the benefits and opportunities of R&D, partnership and networking for UK academic and private sector organisations (such as Smart Villages), allowing “UK plc” to show international leadership in this field.
We believe more could be done, however, to make this impact even greater:
There is also a funding gap for the private sector to bridge between initial R&D grants and the private finance available once a technology or business model has been proven and reached a certain scale. This “early scaling” or evidence-building phase is very hard for start-ups and small companies to fund under existing mechanisms, and is one of the barriers holding back scaling and impact of innovation in the sector.
DEVELOPMENT FINANCE INSTITUTIONS
In our initial research, we identified access to finance as a significant barrier to universal electricity access and deployment of clean cooking technologies. Since then, interest in the energy access sector has grown substantially in development finance institutions, with the support and encouragement of the UK government amongst others. However, serious issues remain, including the availability of funding for the private sector in local currencies, interest rates and transaction costs/complexity to allow project developers to be able to access private sector funding, and availability and affordability of micro-finance for end users to be able to access energy technologies and productive use equipment.
In our opinion, there are two problems with how development finance is being applied to the sector. The first is that, despite the large amount of finance now being deployed, it is very top-down, with multiple initiatives led by large international players such as the World Bank, Rockefeller Foundation, Energy Sector Management Assistance Program (ESMAP) etc. By the time these turn into national initiatives, they can end up very fragmented, and challenging for developers and grass roots stakeholders to engage with. For example, the ESMAP Global Facility on Minigrids in 2022 identified the need for 217,000 new minigrids by 2030 to meet the energy access targets of Sustainable Development Goal 7, at a cumulative cost of $127bn, which is part of the drive behind the current Mission 300 initiative (https://mission300africa.org/ ). Clearly, it is not going to be possible to build this many minigrid in this amount of time, but even more modest ambitions will face logistical and bureaucratic challenges to implement solely on a top-down basis.
Furthermore, almost by definition, top-down initiatives are very bad at allowing the sort of adaptive design, development and implementation that we have argued is necessary for impact and sustainability at community level. We believe this model risks imposing “quick fix” top-down “cookie-cutter” solutions that will not generate the expected impact in communities, and will lead to higher rates of project failure.
The second problem is that there has been a similarly enthusiastic shift in some development finance circles toward support for private finance in this space. Having identified that it was challenging to access private finance for energy entrepreneurs and project developers, development finance has been directed towards the private finance sector, and training and support for accessing it. But this has not made it any easier for developers and entrepreneurs to secure such finance. Many energy access solutions and technologies are still seen as too costly or risky to meet the risk profiles of the investors, which is unsurprising given the sector involves large-scale infrastructure for some of the poorest consumers in the world. Business models for some of the highest impact solutions (like minigrids) are notoriously difficult to generate positive returns from and to de-risk. And once again, tailoring solutions individually to particular community needs and having community ownership and operation makes the business model even worse, even though the impact and sustainability increase.
Private investment and top-down initiatives have their place in encouraging a flourishing ecosystem in this sector, but we think a much more straightforward development finance solution would complement these in ensuring a quicker and more sustainable rollout of universal energy access. Our own energy infrastructure in the industrialised Global North was constructed almost entirely under government subsidy which the top-down initiatives and government support of private financing implicitly acknowledge.
We believe if development funders could agree a simple subsidy formula supporting capital costs of installation of energy infrastructure per connection, and supporting – at least initially for one or two years – operating costs of installations across a broad range of geographies in the Global South with a standardised and low-burden community-focussed regulatory framework, this would substantially derisk, incentivise and accelerate private and third-sector initiatives in this space to provide community energy solutions.
SUCCESSFUL PROGRAMMES AND INITIATIVES
In our opinion, one of the most successful programmes to use UKAID funds to enhance access to clean, affordable and inclusive energy systems is the InnovateUK Energy Catalyst programme. Now in its 10th round of funding, the Energy Catalyst has supported more than 340 projects across more than 40 countries (largely from ODA funding), networking UK companies and Universities with partners around the world and delivering significant innovations as well as development impact, and helping support a vibrant SME sector for energy access and clean energy technologies in the UK.
Many of our own activities have been funded through the Energy Catalyst, for example the creation of our Smart AgriCentres (https://e4sv.org/solutions/smart-agri-centres/ ), community hubs for offgrid rural communities in Uganda which simultaneously deliver energy access to community businesses and institutions as well as offering agri value-addition services to farmers. Our impact analysis shows a quadrupling of farm incomes across the community, with other impacts across the spectrum, in skills, entrepreneurship, education, health and gender.
Other interesting companies and innovations to have been supported through the Energy Catalyst over the years include SteamaCo (https://steama.co/ ) who have developed leading smart metering and data collection technologies and platforms to facilitate more rapid energy access, and Mobile Power (https://mopo.co/ ) whose pay-as-you-go and rental battery solutions are a leading solution for energy access, e-mobility and entrepreneurship in locations where larger fixed systems such as minigrids are not feasible.
Apart from Energy Catalyst, we think that initiatives like Modern Energy Cooking Services (to promote modern clean cooking adoption) and the long-running Transforming Energy Access programme have also had significant impact and fostered UK thought leadership in the field.
The Loughborough and Durham University-led UK Low Carbon Energy for Development Network (LCEDN) was also a very useful initiative in building the capacity of UK researchers and businesses to innovate and network in the energy access field, and many successful collaborations and innovations stem from relationships that were seeded by LCEDN. Whilst LCEDN did receive some funds through UKAID initiatives, there is now little funding available for such general network and peer-to-peer learning within the UK or internationally either (where for example a very successful three year webinar series that Smart Villages used to run provided a discussion and networking environment for more than 2000 stakeholders from 100 countries between 2016 and 2018, similarly catalysing a number of successful high-impact partnerships and projects on the ground). Ideally, such networking opportunities should be better supported within the UKAID “portfolio” of interventions in the field.
Whilst we would not state that any UKAID funding “could have been better used”, we think there is scope for making some of that funding more flexible and inclusive, to better engage the sector and generate better and more rapid impact. For example, Research Council funding to Universities in this space could be opened up to the inclusion of partner organisations such as charities and businesses, which could help deliver those research projects more quickly and efficiently, and to greater long-term impact, than the UK academic institutions are able to do on their own.
MAIN CHALLENGES IN ENERGY ACCESS
When we began our research in 2011, more than 1 billion people were without access to electricity. That number has now improved to around 700 million, mainly in sub-Saharan Africa. Unfortunately, that number is likely to remain relatively static, because population growth in Africa is balancing out the electrification rate. And many of the issues we identified in our original research initiative still apply 8 years later. These challenges include:
1) A lack of integration and coordination. Whilst there is now much more coordination for energy access globally (for example through the leadership of the UN’s SE4ALL, and Mission 300), there is still a lack of cross-sectoral integration. Village level development initiatives – for example for electrification, health, education, gender, agricultural productivity or entrepreneurship – still tend to be undertaken and funded separately with little or no coordination. Consequently, potential synergies are missed, costs are higher, and full development benefits are not realized.
2) A lack of supportive policy frameworks. Effective and supportive policy and regulatory frameworks and technical standards can enable rapid rural energy access reaping substantial development benefits. Much effort has been made in recent to develop frameworks in more countries, but the effectiveness of some of these is questionable. Often developed with the assistance of consultants with little understanding of the realities at the grass roots, many of these frameworks still impose high transaction costs, complexity, uncertainty, and delay on practitioners and private sector developers. And almost universally, those policy frameworks are solely focused on energy, and not the integration with other aspects of rural development referenced above.
3) A lack of bottom-up approach. The entire Smart Villages model is built on being community-centric. Without this level of engagement and focus, it is much less likely that energy initiatives will achieve lasting development impact. Yet the top-down approach currently prevalent ignores that. Without projects providing the funding and the time necessary to involve the communities, the technical flexibility to adapt solutions to the particular priorities of each community, and giving those communities a role in the management and governance of their energy systems, it is unlikely that we will maximise the development outcomes that should come from decentralised energy access programmes, and we risk further project failures down the line.
4) Access to finance. As referenced above, ESMAP estimated that it would cost $127bn to achieve SDG7, ensuring universal energy access by 2030. There is now much more interest in the field from development funders and development finance institutions, so the problem now is less the total investment in the field – rather it is how it is applied. The focus on market-based solutions and top-down initiatives concentrates the application of the funding at the top of the delivery pyramid rather than at the bottom. If mechanisms could be found to feed some of that financing to the bottom of the pyramid instead (for example more affordable and available microfinance for end users, or funds for villages to be able to choose their own community energy solutions), it is likely that community empowerment, resilience and long-term development impacts would be significantly enhanced.
The market-based focus also ignores the experience of the industrialised world, where utility infrastructure installation has been publicly funded. Expecting all these costs to be recovered commercially by developers from poor rural customers is naïve, which is why minigrid business models are notoriously fragile. (As a graphic example, the power distribution infrastructure of the Oxfordshire village in which Smart Villages is based could be paid for with around 2 weeks of electricity usage of the residents. In one of the villages in which we work in Uganda, a similar sized network would need more than 30 years of billing at a similar tariff to just recover the cost of the connections to the houses, before any of the generation and operation costs are considered.)
We believe that creating a scheme across multiple geographies for developers and communities to be able to access a fixed subsidy payment to help offset installation and operating costs (for example, a certain amount per household connection to a decentralised energy system, and a certain amount per MWh generated) would derisk projects for developers and greatly accelerate energy access and long-term development impact.
5) Capacity and communication. Shortfalls in skills and capacities are acting as a brake on the deployment of rural energy technologies and their use in supporting productive enterprise and key services. Such skills and capacities are a “public good”, and it therefore falls to governments, supported by development organisations, to take the lead on building them. This is not only for technical skills in implementing and regulating energy access, but also in maximising the development benefits of such deployment. For example, governments and development bodies should invest in business incubation and advisory support services, and set up training programmes for village level entrepreneurs in how to run a successful business to take advantage of access to energy. These initiatives should ensure that women and marginalised sectors of communities have full access to capacity building programmes. Currently Smart Villages tries to deliver service like this within the projects that we implement, but there is little support available to us for doing so.
FCDO AND GEDSI
The FCDO and other organisations disbursing UKAID funding are consistent in their efforts to ensure that GEDSI (gender, equality, disability and social inclusion) are considered in any supported initiatives. For InnovateUK, for example, a question on GEDSI contributes to the overall scoring of a project application, and the Energy Catalyst provides expert support to SMEs and other applicants who may be less familiar with these issues to help build them into their project plans.
There is a great deal of evidence (including our own technical report on Energy and Gender https://e4sv.org/smart-villages-the-gender-and-energy-context/ ) that access to modern energy can have a significant impact on women and girls in developing community, since for example activities such as gathering firewood, walking long distances to fetch water or charge phones, or cooking over smoky wood fires fall disproportionately on females. Furthermore, our evidence from work we have done in communities in sub-Saharan Africa suggests that where savings are made because of the availability of energy services or where there are new earnings from energy-catalysed entrepreneurship, women are more likely to reinvest these in social benefits with long term impact, such as children’s education, than men are.
Almost by definition, the populations of offgrid rural communities in the Global South are poorer and more marginalized, so energy access also achieves a benefit for the marginalized by default.
An important question, however, is how project implementers ensure these sectors of the community are engaged, involved and empowered. This is at the heart of the Smart Villages bottom-up approach, where we always seek to ensure that initiatives are community-led, that the community plays an important role in the co-design of solutions, and communities are empowered to be able to manage, operate, maintain and govern energy systems installed there. We seek to ensure through our community engagement methodology that key sectors such as women, and youth (who tend to be more “marginalized” in the communities in which we work than are “elders”, for example) are engagement separately to make sure they are fully involved in the solution and that their particular priorities can also be met. This is also the objective of the expert GEDSI support that Energy Catalyst provides to applicants.
We believe that three things could be done to ensure GEDSI is mainstreamed more widely in funded initiatives:
1) Ensure expert advice and support, such as that within the InnovateUK Energy Catalyst programme, is provided universally
2) Insist as a condition of funding that initiatives incorporate (and are funded to include) significant engagement and co-design with communities and marginalized/vulnerable sectors, and that where possible they are involved in the operation, maintenance and management of energy solutions
3) There is a great deal of research on energy and gender in development. Other marginalized subsectors, such as the priorities of and impacts on people with disabilities in offgrid rural communities, are much less well researched and understood. More research should be funded on the link between energy access and these groups, to ensure maximum longterm impact.
EVALUATION
In our view, the evaluation and impact assessment of energy access projects and initiatives is often weak. Reporting metrics will often be the immediate output/outcome of a project – the number of household connections, for example, or the number of devices installed/distributed, jobs created, the kWh generated or the tonnes of CO2 emissions avoided. These things are relatively easy to measure or extrapolate within the limited timescale of a two-year grant.
Such simplistic metrics tell us almost nothing about the long-term impact of those initiatives though. Smart Villages believes that the real impact metrics of development-aid funding in this area should for example be the change in health or education outcomes in a community after 5 or 10 years of having access to energy, the change in status of the women in the community, the number of sustained new businesses, the level of skills, community cohesion, environmental stewardship, democratic engagement, or even just perceived quality of life. Smart Villages attempts, where possible, to reflect this broader range of impacts in how we report on our work (for example, https://e4sv.org/uganda-smart-agricentre-project-impact-report/ ).
But those metrics are much harder, more expensive and resource-intensive to gather. And the time scale of a funded project is rarely long enough for such societal socio-economic changes to manifest themselves. The tragedy is that without such evidence and data, it is harder for development donors or governments to justify investment. An energy access solution whose impact is measured in connections and kWh is likely to excite only a Ministry of Energy. One that can evidence long term sustained impact on health, education, farm yields and women’s empowerment, on the other hand, is likely to receive much wider support.
A further problem is that data and metrics gathered by such initiatives is often seen as IP or a USP, and jealously guarded. It is rarely the case that such datasets are openly shared, which makes it harder to scale energy access projects and to make a case for supporting them.
We believe that three things could be done to encourage more meaningful evaluation of such projects:
1) Funding, including that coming from UKAID sources, could incentivise the more costly baselining and collection of this wider range of impact metrics
2) Funding could provide for a long “tail” of funding to allow project developers/implementers to return to communities after 3, 5 or 10 years to be able to carry out the long-term impact assessments, despite the constraints imposed by time-limited government spending reviews and funding settlements
3) Funding could be allocated to developing a widely accepted and applied open-source methodology and set of measures for such wide-ranging impact assessment, allowing for more effective evaluation and comparison of different approaches
12