More than a billion people around the world lack access to electricity, most of them in Asia’s developing areas. This stark fact will top the agenda in Manila as the 2015 Asia Clean Energy Forum gets underway today.
The forum needs to address the crucial question of how to reshape policies and regulations to jump-start investment in clean energy access. More specifically, how can we shift policy and regulation to scale up distributed renewable energy—for example, solar home systems or village-scale solar power systems—that could help many of the world’s poorest get access to electricity for the first time?
This is not a new question. The UN Sustainable Energy for All initiative, the US Power Africa initiative and the Norway-led Energy+ partnership, and others, are helping to expand the clean energy access conversation. Some of these initiatives also come with financial resources, and while there’s scope for investment in individual projects or enterprises to provide clean energy access, these initiatives can also invest in technical assistance and capacity building to help countries craft policies and regulations that foster rapid expansion of distributed renewable energy.
To ease this policy shift, it makes sense to work with those already making clean energy accessible in developing countries on a large scale. This idea was the basis for a new WRI Issue Brief, Clean Energy Access in Developing Countries: Perspectives on Policy and Regulation. We interviewed entrepreneurs in Kenya, India, Bangladesh and Indonesia—all countries where the energy access challenge is acute or has unique features—and asked them what changes in policy and regulation would help expand access to energy through distributed renewable sources.
While policies and regulations differ greatly from country to country, the entrepreneurs came back to common themes that informed two key recommendations about how changes to policy and regulation could help scale up—and unlock investment for—distributed renewable energy:
1. Invest in platforms to make it easier for stakeholders to participate in policy and regulatory design. Distributed renewable energy enterprises, among other stakeholders, need platforms for enhanced participation in policy, regulatory and energy planning processes. A platform is not just a network to exchange ideas, but could help to elevate the voices of enterprises, end users and other stakeholders so they can become active participants in developing policy and regulation. Policy and regulation designed without this input often misses the mark. Future financing and investments to ease energy access should ensure adequate support for participation and consultation of enterprises and other stakeholders in both international processes and national regulatory and policy decision-making. For example, India’s nascent Clean Energy Access Network is helping to bring together disparate voices to enhance policy and regulation for distributed renewable energy in India.
2. Support changes to financial policy and regulation, and build local capacity, to unlock domestic commercial finance. Financial policy and regulatory barriers can hold back the ability of enterprises to deliver clean energy access solutions. For example, a loan manager at a local bank might not know how to assess risks and rewards in lending to clean energy enterprises or end users, resulting in expensive loans, or loan terms that keep clean energy enterprises from growing quickly. Investments to build the capacity of domestic lenders to help them understand the clean energy access opportunity can help overcome this barrier, and increase access to finance for enterprises and end users. For instance, our new Issue Brief includes a package of recommendations on shaping financial policy and regulation to help scale up clean energy access.
The excitement around clean energy access through distributed renewable energy has a good basis in real world experience: more than 15 million people in Bangladesh—almost 10 percent of the population—have benefited from solar home systems. By creating the right policy and regulatory conditions, international clean energy access initiatives can help other countries benefit from greater access to electricity through distributed renewable energy. By elevating the voices of entrepreneurs, our new Issue Brief offers insight into how this can be done.