Jarnail Singh: How business innovation is kick-starting off-grid energy in India

Reading time: 4 minutes
14 August 2015

Ahead of the first-ever India Off-Grid Energy Summit in New Delhi, Jarnail Singh, India Program Manager, The Climate Group, writes about the potential of creating an innovative financing facility to shift India's decentralized renewable energy landscape for the better.

Access to energy is crucial to a country’s social and economic development. And yet globally over 1.2 billion people remain without access to electricity.

But while the promise shown by decentralized renewable energy to achieve universal energy access is phenomenal, challenges remain in four key areas including technology innovation, policy frameworks and institutional capacities - as well as the all-important access to finance.

In India, a variety of institutional and delivery models for rural energy access have been tried that were either community operated or a combination of cooperative and community ownership structures.

Unfortunately the disproportionate dependency of energy service revenue on specialized services or livelihood activities has time and again led to financial unviability.

However, as The Climate Group's own research through our Bijli - Clean Energy for All project has revealed, the three major areas of concern that continuous business innovation could address are:

  • Operational and technical sustainability due to limited after-sales service.
  • Financial viability, particularly when productive applications are limited to just one or two areas.
  • Sustainable incentive structure to ensure institutional sustainability due to limited sense of ownership and responsibility at the local level.

At the enterprise level, it has emerged that access to affordable finance is perhaps the single biggest challenge. This is partly because the private sector perceives the decentralized renewable energy (DRE) sector too risky as compared to other alternative, straightforward investment options.

The Climate Group's Bijli initiative of The Climate Group has demonstrated the use of grants to catalyze finance and institutional innovation among existing stakeholders within the Indian DRE sector.

Bijli has supported different business models to implement innovative financing mechanisms including end-user financing, trade-financing, working capital as well as debt collateralization.

But the creation of a futuristic and innovative debt financing facility holds tremendous potential to change the DRE landscape of the country and emerge as the go-to agency for financing the needs of the decentralized renewable energy sector in future.

Join us at the Off-Grid Energy Summit in New Delhi on August 19 to hear more about the potential of innovative financing facilities and more. You can also follow our activity at the Summit on social media using hashtag #OffGridSummit.

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You can follow the conversation online in the lead up to and during the summit on hashtag #OffGridSummit.

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