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Shift to Solar Power Raises Incomes for Salt-mining Families in India

Every year, whole families in the rural Kutch region of the Indian state of Gujarat await the end of the rainy season, when they make their trek to the salt-rich Thar desert. Tens of thousands of men, women and children migrate there for eight months a year during which they dig wells that fill with groundwater brackish enough to produce tons of salt. They pump the water into flat pans spread out in the hot sun, where it evaporates, leaving behind heaps of salt crystals. It's a livelihood of hard labor and low returns.

But for Divuben Rathod and her family, their labor was eased and their income increased after they borrowed $2,600 from India's Self-Employed Women's Association Bank in 2012 to buy a solar water pump.

L to R: Nawal al-Hosany, Kandeh Yumkella, Ramilaben Rohit, Divuben Rathod, Mohinder Gulati, and Heaben Dave

Shifting to a solar-powered pump was a leap of faith for them, as the diesel pump it replaced costs only $340. But the gamble paid off, as the solar pump uses no fuel. They use the diesel pump only after dusk, now, thereby reducing their fuel costs by 70 percent. Meantime, their salt production rose by 40%, from 500 to 700 tons over the eight months. 

"Never in our lives have we earned so much," said Ms. Rathod, who invested some of her earnings in a flight ticket to New York City, where she told her story to a roomful of diplomats, financiers and development bank officials gathered at a Sustainable Energy for All (SE4ALL) Forum, co-sponsored by the World Bank Group and the United Nations. "I used the money I saved to bring the voice of 30,000 of the poorest women of Gujarat here to the policy makers of New York," she said.

Chad Holliday, Chairman of Bank of America Merrill Lynch and also Chairman of SE4ALL's executive committee was moderating the session at which Ms. Rathod spoke.  He said hers was "the most moving speech I have heard at this forum." Her example shows that investments in renewable energy can pay, he said, not just by reducing greenhouse gases, but also by creating economic opportunities that transform people's lives. 

Ms. Rathod's intervention came during a three-day gathering of over 20 energy ministers, who joined over 30 members of the SE4ALL Advisory Board and nearly a thousand delegates, including energy company executives, entrepreneurs, leaders of civil society organizations and officials from governments and international agencies. The meeting's focus was to consider recommendations for action from working groups that focused on each of the three SE4ALL goals to be achieved by 2030, respectively:

  • Achieve universal access to electricity and modern cooking and heating solutions
  • Double the rate of improvement in energy efficiency
  • Double the share of renewable energy in the global energy mix

A fourth working group concentrated on strategies to mobilize an estimated $755 billion a year in new energy financing to achieve the three goals — the amount identified by the SE4ALL Global Tracking Framework launched last year

Its chairman, Luciano Coutinho, President of BNDES, Brazil's national development bank, reported the working group's conclusion that to deliver energy solutions for low-income countries — and communities like Ms. Rathod's — subsidies, grants and concessional financing will be required. SE4ALL Advisory Board member Reema Nanavaty, who also heads the Self-Employed Women's Association that provided the loan to Ms. Rathod, said access to credit is essential to help women in poor communities get access to energy for their families and their businesses.

Expanding access to modern energy services, that is providing electricity to the world's 1.2 billion people without it and the 2.8 billion who still use wood and other biomass to cook and heat their homes, is the goal with the lowest price tag, $45 billion a year, according to SE4ALL's Global Tracking Report. The same study found that $390 billion will be needed to achieve the energy efficiency goal, and up to $320 billion to finance new investment in renewable energy to double its share of the global energy mix from the current 18 percent to 36 percent.

For all three goals, Coutinho reported, the SE4ALL working group on finance recommends that the World Bank Group and other international financial institutions:

  • support early-stage project preparation
  • develop and deliver financial instruments that reduce risk
  • provide policy and regulatory tools to make renewable energy more competitive with fossil fuel sources, and to boost investment in energy efficiency

"The World Bank Group is firmly committed to working with you in this action phase of SE4ALL," said Jim Yong Kim, the Bank Group President, in a video message to delegates. "We are taking action to help countries create incentives for energy investment, taking action on financing instruments, such as green bonds, on tapping new sources of capital, and on preparing energy projects that are bankable. It is an ambitious agenda, but we are on our way."

Background

What is the World Bank Group Doing to Achieve the SE4ALL Goals?

The World Bank Group has launched initiatives and programs that seek to achieve the three SE4ALL goals on multiple fronts. These include:

Country Action Plans

Country Action plans are under way in nearly 30 of the 83 developing countries participating in SE4ALL. Rapid Assessments or Gap Analysis are completed in 43 countries. Under the Bank Group leadership, and through its Energy Sector Management Assistance Program (ESMAP), investment prospectuses are being prepared to scale up energy access programs in Burundi, Guinea, Liberia, Mozambique, Myanmar, Nepal and Senegal, Honduras, Nicaragua and Guatemala. Technical assistance includes pre-feasibility studies and institutional and policy reforms. These investment prospectuses complement the market opportunity segment of the SE4ALL Finance Committee's work.

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SE4ALL Knowledge Hub

Together with ESMAP, the World Bank Group hosts SE4ALL's Knowlege Hub and leads three key knowledge projects.  

  1. The Bank Group, International Energy Agency, and 13 other partners prepared a Global Tracking Framework that allows monitoring of global and national progress towards the three SE4ALL objectives; work on the 2015 global progress update is already underway.
  2. The Bank Group is also preparing the Readiness for Investments in Sustainable Energy or RISE, a score-card type decision-making tool for policy makers and investors that provides information on investment enabling elements. RISE will provide policy makers with new information on the institutional, regulatory, and legislative systems that best support investments in sustainable energy, and monitor country performance on these indicators. 
  3. The Bank's knowledge contribution to the SE4ALL initiative also includes the State of Access Report (SEAR), which outlines parameters for access to electricity and modern household fuel solutions that are meaningful, actionable, and measureable.

High-impact actions under the aegis of SE4ALL and led by the World Bank Group also include:

Renewable Energy Resource Mapping: The Bank's ESMAP has launched a major initiative on renewable energy resource mapping, mobilizing $21 million for 12 project proposals from countries in sub-Saharan Africa, North Africa and the Middle East, and Asia. These will undertake mapping of one or more renewable energy resources, and support for geospatial planning, strategic environmental assessment, and policy development. Information will be - open data - in partnerships with experts such as the IRENA Global Atlas.

The Global Geothermal Development Plan and Fund will scale up geothermal power by mobilizing technical support and financing to validate geothermal resources through exploratory drilling. This ESMAP initiative Clean Technology Fund has approved funding for $115 million for it and work is under way in Djibouti and elsewhere in East Africa, Turkey, Armenia, Indonesia, Chile, Nicaragua, Dominica, Saint Lucia and Grenada.

City Energy Efficiency Transformation Initiative: This ESMAP initiative helps 50 cities identify, develop, and mobilize finance for transformational investment programs in energy efficiency, integrating urban energy efficiency in city planning.

The Global Gas Flaring Reduction Partnership (GGFR) has assisted Mexico's Ministry of Energy, Pemex, and the country's regulators in achieving a 66% reduction in gas flaring in just two years, mainly from its Cantarell field. In Iraq, GGFR helped the government develop an integrated energy strategy and a plan to structure the gas value chain from production to end-user, both of which will enable development of a market for gas that otherwise would have been flared. In Azerbaijan, the national oil company (SOCAR) reduced gas flaring and venting by almost 50% in two years. In Nigeria, GGFR partners are investing several billion dollars to cut gas flaring by 4 bcm over five years. In Gabon, GGFR assisted the government in reaching its objective of reducing flaring by 60 percent. In Kuwait, the Bank's technical advice to the national oil company helped it achieve a gas flaring level of less than one percent.

Lighting Africa, a joint World Bank-IFC program to increase access to modern off-grid lighting in Sub-Saharan Africa through mobilizing the private sector, has helped 13.5 million people in Africa gain access to clean lighting and better access to energy. The long term goal is to enable the private sector to reach 250 million people with modern lighting products by 2030. Lighting Africa is aligned with SE4All by increasing energy access at the lower level tiers (Tier 1 access with current products, and Tier 2+ access with increasingly larger products), while increasing the use of renewable (solar) energy.

This article was originally published on The World Bank and was republished with permission.

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