India’s Growing Energy Disparity – Need for Energy Inclusion and Social Innovation

Majority of world’s 1.6 billion un-electrified population lives in India. More than half of the women and children who die in the world because of indoor air pollution are Indians. These statistics are not being presented from a depressing point of view but to put reality right up-front. It also puts the 8-9% growth of India into perspective. Now let me throw out one last statistics for the readers – at-least 500 million people in India survive on one dollar or less per day. Most, if not all of them, are the very population that do not enjoy the benefits of energy services which most us, in urban India and rest of the world take it for granted.

The growing disparity, in energy consumption, which is resulting in the increasing divide between rich and the poor is socially, economically and environmentally unsustainable for India.  Repeated studies, around the world, show that maps of conflict zones and maps of energy and economic poverty overlap.  We, the so-called educated Indian should take note of, rather not sweep these problems under the carpet or believe that market forces and market capital will solve the solutions. Market forces and market capital have never in history solved the basic needs of the poor, in any country.

The greatest threat to India and the world today is poverty. Poverty is major threat to social sustainability – the basic fabric of eco-system needed for all business to flourish. Dig deep and one will realize that lack of access to reliable energy is critical to pull people out of poverty. Access to energy means education, economic development, cleaner living conditions – all aspects many of us Indians take it for granted.

To alleviate poverty, we all know one needs to increase incomes. To increase incomes, one needs to create income-generating activities in the un-served areas. Many of the income generating activities require access to reliable energy. Contrary to the popular economics and policies, it is not advisable to wait for centralized energy solutions to provide that particular economic impetus. Inefficiencies, hidden subsidies, poor implementation and lack of transparency have never been properly factored while comparing centralized versus decentralized energy options. Also one needs to factor in the loss to the world well being on not (or delay in) providing the poor with reliable energy. The result is very evident – the large numbers of poor have remained poor with no options of avenues for increasing their income or their quality of life. The cost is not only enormous but is often neglected.

Today are we, the educated Indians, hiding behind the poor? Are we not subsidizing ourselves by enjoying the services of the poor, in the name of providing them with employment, e.g., maid servants, drivers. Many of companies are defending their strategies as inclusiveness by producing ‘cheap’ products. The justification of inclusion is here that by buying the cheap products, the poor are paying their salaries. These types of justifications are very insulting for a ‘fast’ growing nation like India, where there is often a complete lack of understanding of the poor and their needs.

India can call itself a potential superpower and a leader only when its responsible citizens truly include all its marginalized. Inclusiveness, my fellow Indians, is when poor become employers and employ the rich. Inclusiveness is when the rich also start buying from the poor. Today many of the solutions and supply chains are one-way traffic, from the rich to the poor. The only traffic the other way (poor to the rich) is money!

Today India stands at cross roads. It wants to be a superpower and a major force in the world. It has a wonderful chance to be a leader by being the solution provider of the world: innovative sustainable solutions to eradicate poverty in a sustainable manner. These solutions matter to rest of the 4 billion people in Africa, Latin America and South East Asia. Is that not called responsible leadership and true superpower!?

The need, taking into consideration the population and energy diversity of India, is social entrepreneurs and social enterprises. Social entrepreneurs and enterprises provide sustainable solutions where typical market and government solutions have failed. Let me explain…

To provide energy access to the poor, a complete ecosystem needs to be built. The sustainable ecosystem consists of the poor as clients and owners, customized solutions, innovations in business and financial models (many of them do not exist today) and pro-poor policies. Let us again look at the needs and enormity –

a) There are the huge populations in greatest need of energy services and incomes.
b) The poor are not currently being served by the industrial energy model, the opportunities for disruptive innovation are likely to be the greatest here, meaning that there will be more development AND climate co-benefits from interventions aimed at these groups.
c) The base of the pyramid has the potential to provide enormous scalability for appropriately designed innovations. Here sustainable scaling means replication – thus giving more importance to site-specific solutions (technology, finance, culture etc). Traditional definition of scale might just take away the freedom of choice for the poor.

These solutions can only be provided by enterprises that look beyond shareholders as their primary stakeholders or quarterly results as their goals. There are proven sustainable models (financially and socially) and processes that link sustainable energies to poverty alleviation. Social enterprises have the deeper understanding of the local economy and exploring innovative ways in which energy generation can be coupled with better livelihoods that are locally relevant and feasible – inclusive in the truest sense. Inclusive, where all the stake-holders are equal – the end-users, employees, management, the board and the shareholders.

What needs to be done?

Provide better rural energy access to the poor through the following:

• Focusing on product options using sustainable energy
• Creating stable supply chains for poor households to access energy to ensure energy equity
• Energy access should be linked with productive end use that will increase the income of poor families. Income generation also ensures their ability to pay for access to energy.
• Setting up training institutes to impart generalized broad-based technical skills
• Involving local financial institutions to create targeted financing for energy products and technologies

How can this be done?

We need to completely shift the traditional market thought process of innovation by:

(a) Completely designing, from bottom up, needs-based products (for income generation), and not only concentrate on redesigning existing products in order to sell it to the poor.
(b) Creating new segment-based financing (matching the cash flows of the poor) and NOT fitting existing financial products that were designed for the rich.
(c) Creating reverse market linkages (encouraging the poor to be a part of the formal economy) and NOT always creating a supply chain that flows from the rich to the poor.
(d) Thinking about the poor as partners and not as beneficiaries.

India, as a nation, was born on the mantra of decentralization. Even for providing energy access it should look at decentralized energy, decentralized solutions, decentralized enterprises and decentralized eco-systems for which we need more social enterprises. All these are fundamentals of creating a strong nation to lead in the sustainable alleviation of poverty.  India has the necessary tools to demonstrate models of linking sustainable energy to poverty alleviation that could be easily replicated in Africa, Latin America, and Southeast Asia.  Now, my fellow Indians, is the time to prove it.

Harish Hande

 

Editors Note
Harish Hande, Managing Director, SELCO Solar Light (P) Limited, India
Social Entrepreneur; Schwab Fellow of the World Economic Forum

SELCO Solar Light provides sustainable energy solutions and services to under-served households and businesses in India.